By Valentina Za
MILAN (Reuters) -UniCredit shareholders on Friday backed a new pay policy for the group which would boost CEO Andrea Orcel's compensation package by 30% to 9.75 million euros ($10.6 million) if he manages to beat performance targets.
"The vast majority of positive votes were from UniCredit (LON:0RLS)'s active shareholders who share our long-term outlook," said Chairman Pier Carlo Padoan adding that voter turnout was the highest the bank had seen in many years.
The proposal was approved with 69.1% of votes, which compares with a figure of 74.6% last year, when attendance however was lower, and a narrow 54.1% backing for Orcel's pay package when he first arrived in 2021.
Two years ago shareholders had taken aim at his 4.8 million euro sign-on bonus and an up to 15 million euro severance payment.
Since then however, UniCredit's performance and generous distribution policy, one of the most ambitious in Europe, has won over shareholders.
Top investors Parvus Asset Management and Allianz (ETR:ALVG), who hold respectively 5.16% and 3.59% of UniCredit, had both openly backed the new pay scheme, which leading proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis had recommended rejecting.
Padoan said shareholders had been able "to cut through this noise and see the policy change as it is intended: a demonstration that UniCredit's success will be a truly collective one."
In a letter of reply to the proxy advisers, UniCredit had explained that a rejection would have resulted in a higher fixed pay for Orcel without a more challenging performance framework.
The new remuneration structure penalises underperformance more than in the past and extends to 2030 the period over which the all-share bonus is paid out.
Merely hitting the targets would see Orcel's pay unchanged at an overall 7.5 million euros, with a bonus reduction offsetting the 30% increase in the fixed part.
The fixed salary increase is a board decision which shareholders had no say over, so rejecting the changes would have resulted in the fixed salary rising without this being part of a new pay structure. ($1 = 0.9187 euros)