UniCredit, backwards and forwards with Glass Lewis over Orcel's enormous wage | EUROtoday

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The UniCredit board's proposal to assign a remuneration of 9.75 million euros to CEO Andrea Orcel finally ends up on the heart of the controversy amongst proxy advisors, who’re offering contradictory indications on the vote within the assembly.

The division

On the one hand, the proxy firm ISS has expressed its help for UniCredit's remuneration coverage. On the opposite hand, the Glass Lewis firm – along with criticizing UniCredit's presence in Russia which “exposes the bank to reputational risks” – really useful that shareholders vote on the assembly on 12 April towards Orcel's remuneration as a result of it’s “excessive”.

The place of the financial institution

Glass Lewis' stance provoked an uncommon response from UniCredit's remuneration committee which, with a letter to shareholders, signed by its president Jeffrey Alan Hedberg, contested the proxy advisor's objections level by level. “We imagine that Glass Lewis neglected some key factors in making his advice and that a few of his arguments seem inconsistent. Furthermore – writes Hedberg – Glass Lewis' last vote advice appears to contradict their appreciation for the overall coverage expressed in numerous factors of their report”. The UniCredit board member highlights how Glass Lewis states that the bank “has carried out constructive adjustments to the remuneration coverage”, adding that he “welcomes the corporate's ex-post disclosure and the robust response to shareholder dissent”, recognizing “the constructive monetary and operational efficiency within the final monetary 12 months”.

Despite these recognitions, Glass Lewis concludes that the compensation strategy is not “sufficiently aligned with the most effective pursuits of shareholders”, without providing further details. According to Hedberg, these are “inconsistencies” to which the remuneration committee responds in the objection letter attached to the official documentation in view of the shareholders' meeting. «Glass Lewis states that the remuneration is excessive compared to other players on the market, without however taking into account the fundamental difference in performance achieved in recent years». Performance that Hedberg details by explaining that UniCredit is in first place for total shareholder return with returns 4.2 times higher than the average of its competitors and equal to double the second bank in the ranking.

Another point criticized by Glass Lewis concerns the choice of the board of directors “to compensate the distinction ensuing from the change in complete remuneration ensuing from the EBA's ruling relating to the strategies for assigning the worth of the shares”. Criticism to which Hedberg responds that “given the EBA's clarifications, the necessity to restore correct compliance, along with the unprecedented outcomes, we felt it was our fiduciary obligation to behave in the most effective pursuits of the corporate.”