Spanish court trims Andrea Orcel’s payout from Santander by €8m

Madrid — A Madrid court has ruled Santander’s offer letter to Andrea Orcel making him CEO was a binding contract, but reduced the compensation for the Italian banker by €8m to up to €43.4m, a court document showed.

In one of the banking industry’s biggest rows over pay, Orcel and Santander ended up in court after Spain’s biggest bank dropped plans to make the former UBS investment banker its CEO in January 2019.

The latest ruling, dated January 20, comes after Santander appealed against a lower court order a year ago to pay him €51.4m and contested that Orcel’s job offer letter was a contract.

The court had initially awarded him compensation of €67.8m before reducing it as the judge later clarified that Orcel was not entitled to tax equalisation as part of a buyout clause.

In the new ruling, the judges cut to €2m from €10m the amount granted to Orcel for moral and reputational damages, but left the remaining compensation unchanged.

“We consider it more proportionate to set the compensation at the amount of €2m ...  after analysing the economic interests, remuneration, risks, responsibilities, expenses and standard of living of Orcel,” the court said in a 30-page document.

The court also took into account that Orcel was unemployed for a relatively long period of time.

Appeal

Santander welcomed the court’s decision to “significantly” reduce the compensation, but said it would file an appeal before Spain’s Supreme Court, delaying any final outcome further.

Orcel said in an emailed statement he was pleased that “today’s ruling vindicates truth and justice by proving incontrovertibly for the second time in a court of law that there was a fundamental breach of contract by Santander as we have always argued.”

The compensation includes €17m for a sign-on bonus, €5.8m for two years’ wages and the reduced €2m for reputational damage, plus interest.

Orcel is also to be awarded €18.6m in shares from a buyout clause and linked to long-term goals, which Santander said in a statement amounted to about €4m based on their current valuation, putting the total compensation at about €28.8m.

Santander said: “Mr Orcel will now have to return €8m, plus interest.”

Banks in Europe and at a global level had limited scope to pursue their normal dividend policy as central banks set limits for shareholder remuneration during part of that period due to the Covid-19 outbreak.

Orcel had quit his highly paid role at UBS in anticipation of taking up his new position at Santander, giving up sizeable deferred compensation.

He had originally sought as much as €112m for breach of contract. But once he became CEO of Italian bank UniCredit in 2021, he amended the lawsuit reducing the claim.

Reuters