UniCredit, back-and-forth with Glass Lewis on Orcel's maxi salary
The proxy advisor disputes the CEO's remuneration of EUR 9.75m and calls on shareholders to vote against it at the shareholders' meeting. Remuneration committee chairman Hedberg's reply: 'Inconsistent and contradictory arguments'. Iss's favourable opinion.
.jpg?r=650x341)
2' min read
Key points
2' min read
The UniCredit board's proposal to award a remuneration of EUR 9.75 million to CEO Andrea Orcel ends up at the centre of the debate among the proxy advisors, who are giving contradictory indications on the vote at the shareholders' meeting.
The division
.On the one hand, the proxy firm Iss expressed its support for UniCredit's remuneration policy. On the other hand, the firm Glass Lewis - in addition to criticising UniCredit's presence in Russia, which 'exposes the bank to reputational risks' - recommended that shareholders vote against Orcel's remuneration at the shareholders' meeting on 12 April because it is 'excessive'.
The bank's location
.Glass Lewis's stance provoked an unusual response from UniCredit's remuneration committee, which, in a letter to shareholders signed by its chairman Jeffrey Alan Hedberg, challenged the proxy advisor's objections point by point. "We believe that Glass Lewis overlooked a number of key points in making its recommendation and that some of its arguments appear inconsistent. Moreover,' Hedberg writes, 'Glass Lewis's final voting recommendation appears to contradict their appreciation of the general policy expressed at several points in their report. The UniCredit board member points out that Glass Lewis states that the bank 'has implemented positive changes to the remuneration policy', adding that he 'welcomes the company's ex-post disclosure and strong response to shareholder dissent', acknowledging the 'positive financial and operational performance over the last financial year'.
Despite these acknowledgements, however, Glass Lewis concludes that the remuneration strategy is not 'sufficiently aligned with the best interests of shareholders', without providing further details. According to Hedberg, these are 'inconsistencies' to which the remuneration committee responds in the letter of objection attached to the official documentation for the shareholder meeting. "Glass Lewis claims that the remuneration is excessive in comparison to other market players, without however taking into account the fundamental difference in the performance achieved in recent years". Performance that Hedberg details by explaining that UniCredit ranks first in terms of total shareholder return with returns that are 4.2 times higher than the average of its competitors and twice as high as the second-largest bank.
Another point criticised by Glass Lewis relates to the board's decision 'to compensate the difference resulting from the change in total remuneration arising from the Eba's ruling on how the share price should be allocated'. Criticism to which Hedberg responds that 'given the Eba's clarifications, the need to restore proper compliance, together with the unprecedented results, we felt it was our fiduciary duty to act in the best interests of the company'.
