A week that Andrea Orcel will hardly forget. After the warm reception of the market to the piano Unicredit Unlocked (yesterday a boom of + 10% of the title), today the first round of the legal dispute against Banco Santander ends with the sensational victory. The Spanish banking giant will have to pay Orcel a maxi-check worth 68 million euros for having withdrawn an offer to become its CEO.
The Court of First Instance of Madrid considered the contract between the current CEO of Unicredit and the Iberian institute to be considered valid which provided for Orcel 17 million as an entry bonus, 35 million for long-term incentives, 5.8 million for two annuities. In addition, 10 million was calculated by way of compensation for moral and reputational damage. In support of his request, the Italian banker had made it available to the court recordings and messages exchanged with the president Ana Botìn.
The knot of contention
Orcel had demanded 76 million euros from the largest Iberian bank for breach of contract, claiming he had lost millions of dollars in deferred compensation from his former UBS employer and years of potential salary in Santander. Orcel, before joining Unicredit this spring, spent a long time without any major role in the banking sector.
The dispute began January 2019 when Santander overturned the decision to hire Orcel that had been announced in autumn 2018. The step backwards was due to the conflict over the issue of his deferred UBS compensation. Santander expected the Swiss bank to pay at least 50% of the deferred remuneration Orcel was expecting to receive.
Santander is not there
Ana Botin said the contract with Orcel was never fulfilled, so the appointment never took effect. The bank also accused the Italian executive of having recorded private conversations. “We strongly disagree with the ruling,” Santander said in a press release. “The Santander board is confident that we will be as successful on appeal as it was in the two criminal charges already examined by the court in relation to this matter”.
As a Bloomberg article recalls today, the choice of an investment banking star like Orcel to lead a bank primarily focused on consumer credit was heavily criticized at the time. Yet, Orcel – nicknamed the CR7 of the bankers – had been a collaborator of Santander for years and trusted adviser to Emilio Botin.