MILANO – Transparency is never too much: especially when it is low. Thus, from one of the 29 documents in pdf uploaded to the Unicredit website for the “Shareholders’ Meeting Documentation”, we discovered how much Andrea Orcel, the managing director in pectore who will take over as head of the group after the shareholders have voted him on the 15th, will earn April. Up to 7.5 million per year between fixed (2.5 million) and variable (5 million) remuneration. With the right to two years of severance pay – up to 15 million – when the Roman banker of the city will leave Unicredit. It turns out to be about the same salary checked with Banco Santander in 2018, to become head of it: even if that appointment jumped, amidst controversial aftermath.
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5 million variable pay is a award
In another of the 29 pdfs (the “2021 Remuneration Report”) we read that, to “favor the alignment of interests between the designated CEO and the shareholders, already in the first year in the role, the board of directors approved an award in shares, which represents the entire 2021 variable remuneration, payable in two installments, not subject to performance, malus or claw-back conditions “. Removed from English technical jargon, the new latinorum invariably used to make communications to Italian shareholders more transparent, means that the newcomer, unlike his colleagues, will have a variable incentive in any case in the first year, even if he does not achieve any of the objectives that the bank will give.
In fact they call it award: a prize, and one would logically put it in relation with the incentive packages for tens of millions that Orcel brings as a dowry from the noble past. In 2018, when he was called to head Santander, his UBS share package, the result of previous variable remuneration working for the Swiss bank, was around fifty million. Sum that the Spanish board of directors later refused to pay, and for this reason was dragged to court by Orcel, who is asking for € 112 million in damages (next hearing in Madrid on April 7, and rumors of settlement are racing after the ‘indication of the banker in Unicredit). The supervising ECB prohibits untying the variable remuneration from the achievement of the objectives: except in the first year of mandate.
The new highest paid banker in Italy?
Orcel virtually jumps to first place in the ranking of the highest paid bankers in Italy. To say it we will have to wait a few weeks for the 2020 figures to come out, but for sure with 7.5 million it will be among the first. Although in the roaring twenty years spent in London between Merrill Lynch (later Bofa) and UBS, the director of the great mergers in European credit has had better, to the point of earning the nickname of “Ronaldo of the bankers” from the British parliamentarians.
For comparison, in 2019 the highest paid in domestic finance were the CEO of Unipol, Carlo Cimbri (5.65 million), the CEO of Intesa Sanpaolo, Carlo Messina (4.57 million), the head of Generali, Philippe Donnet (4.51 million), Mediobanca CEO Alberto Nagel (3.02 million, but referring to the 2019/2020 financial statements which closes in June). Unicredit’s predecessor, Jean Pierre Mustier, even pales with its 900 thousand euros, after having renounced variable compensation of up to 2.4 million for the pandemic. The 2019 record in Italy went to Michael Manley, CEO of FCA who earned 13.28 million.
“Attracting and retaining high-level talents”
How much Orcel will earn, so far not expressly communicated by the bank, can be seen on page 4 of 13 on the “Group policy of severance payments”, which indicates the criteria for calculating the “severance”, severance pay in the event of resignation or dismissal ( without just cause then). There is talk of a “new competitive positioning” of the 2021 remuneration policy, which to “attract and retain high-level talents” has increased the maximum amount of bonuses “from 7.2 million to 15 million euros” per year: it is more than a doubling. Since the supervisory circular 285 requires the indication of the maximum severance, Unicredit has shown it at 15 million, as a result of two annual “global salaries”, between fixed and variable. The backward calculation, given the ECB practice for which European bankers are remunerated in a maximum ratio of 2 to 1 between fixed and incentives, dissolves the equation up to the initial cross-section. Eureka!
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