A proxy firm has called on shareholders at Italy’s UniCredit SpA to vote against a proposed compensation package for Chief Executive Officer Andrea Orcel and to oppose the bank’s new incentive plan.
(Bloomberg) — A proxy firm has called on shareholders at Italy’s UniCredit SpA to vote against a proposed compensation package for Chief Executive Officer Andrea Orcel and to oppose the bank’s new incentive plan.
A combination of a “30% fixed pay raise and the newly introduced discount on the conversion price of equity awards could lead to an excessive increase in the CEO’s total pay,” Institutional Shareholder Services Inc., known as ISS, said in a report dated March 13. The firm also said that UniCredit has failed to address concerns dating back to last year on proposed compensation if the CEO is at some point terminated.
UniCredit is proposing a pay package for executives that would see Orcel get fixed remuneration of €3.25 million ($3.5 million) this year, compared with €2.5 million last year. Variable compensation would be linked to performance targets outlined in the bank’s plan.
The variable portion of Orcel’s compensation is set to be capped at €4.25 million — lower than his 2022 bonus and leaving his total compensation unchanged — if the bank meets its goals. The total could rise to €6.5 million if the bank exceeds 2023 targets.
“Despite some positive changes, the 2023 group incentive system and the proposed amendments to the executive compensation framework do not warrant support,” ISS said.
The proposed package for the CEO follows a year which saw the bank post higher-than-expected profit of €6.5 billion while cutting costs by 2% and boosting shareholder payouts by 40%.
Read more: UniCredit Surges After Bank Pledges €5.3 Billion of Returns
Since taking charge of Italy’s second-biggest lender almost two years ago, Orcel, 59, has exited businesses, eliminated jobs in non-core locations and sought to focus on more lucrative products and capital-light activities. Shareholders will meet March 31 to approve UniCredit’s 2022 earnings and executives’ compensation packages.
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