MADRID (Reuters) – Spanish bank Santander has been ordered by a Madrid court to pay Italian banker Andrea Orcel 67.8 million euros ($76.40 million) over a withdrawn offer to make him chief executive.
The ruling came more than three years after Santander announced plans to make Orcel, one of Europe’s best-known investment bankers and now chief executive of Italy’s UniCredit, CEO.
Here are the main points on how things turned sour:
WHEN DID IT BEGIN?
On Sept. 25, 2018, Santander announced the appointment of Italian banker Andrea Orcel as its new chief executive officer to replace Jose Antonio Alvarez and said the appointment was expected to be effective in early 2019 following regulatory approval.
Santander said Orcel would bring a deep understanding of retail and commercial banking, as well as a strong track record in managing diverse teams, and would help build a global digital platform.
FIRST REACTIONS
Analysts at the time said they struggled to understand why Orcel, who had been the head of UBS Group’s investment banking business since 2014 and a member of the bank’s executive board since 2012, would become the CEO of a mostly retail bank.
His appointment immediately raised questions about a potential change in Santander’s strategy.
Chairman Ana Botin responded that Santander was not planning any major strategy change and would remain a commercial, rather than shift to being an investment bank.
SANTANDER WITHDRAWS ORCEL’S OFFER
Orcel resigned from UBS and was put on six-month gardening leave after signing a job offer letter from Santander.
But on Jan. 15 2019, Santander withdrew the offer to make Orcel CEO, making a rare, unexpected U-turn on such a high-level appointment.
Santander said the cost of compensating Orcel for the deferred awards he had earned over the past seven years at UBS and other benefits would be significantly above the board’s original expectations at the time of the appointment.
Santander did offer Orcel a senior advisory role in March of that year in an attempt to mend fences, which he rejected, according to a source familiar with the matter.
ORCEL FILES CIVIL LAWSUIT IN MADRID COURT
In late June 2019, Orcel sought as much as 112 million euro from Santander as part of a civil lawsuit for breach of contract.
Orcel’s claims were based on a four-page letter – signed by Santander’s general secretary Jaime Perez Renovales in September – in which the bank formally offered him the job along with a stock and bonus package to compensate for deferred pay he risked losing by quitting UBS.
The package consisted of “up to” 35 million euros’ of a 55 million euro package that Orcel was due to receive in future years UBS.
PASTURES NEW
After more than two years on the sidelines of European finance, Orcel return to executive life when he was appointed CEO of Italy’s UniCredit in early 2021. He subsequently cut his claim for compensation from around 112 million euros due to 68 million as he was taking up a new job.
SHOWDOWN
Orcel and Botin faced each other in May this year as the case finally made it to court. Botin testified that the offer was never a contract and that the board had not then approved Orcel’s compensation offer.
The public hearing concluded in October, when UBS chairman Axel Weber testified he made it clear the Swiss bank would not pay Orcel any deferred compensation if he quit to join a Spanish rival.
($1 = 0.8875 euros)
(Writing by Jesus Aguado and Rachel Armstrong; Editing by Jane Merriman)
