(Bloomberg) -- UniCredit SpA said that Chief Executive Officer Andrea Orcel's 2.5 million euro ($2.75 million) fixed-pay package is in line with compensation at other comparable banks, and rejected a recommendation by shareholder proxy Glass Lewis to vote against the remuneration policy for top management.
Glass Lewis said they had “severe reservations” about the remuneration policy including over a “lack of an explicit response” to concerns raised last year. UniCredit argued, in a letter to shareholders dated March 25 and seen by Bloomberg, that the arguments made by the proxy firm “are incorrect and may lead to wrong conclusions.”
UniCredit is proposing a pay package for its executives in which Orcel is set to receive a fixed remuneration in line with last year, while the variable compensation will be linked to the delivery of the performance targets outlined in the bank's plan.
Orcel's first pay deal after he joined UniCredit last year raised eyebrows as it granted him the maximum amount of variable pay -- 5 million euros -- not subject to performance. The award was on the grounds that he could not be expected to be measured against outcomes prior to his arrival, and the clause was amended for 2022.
UniCredit's letter, signed by personnel head Andrea Vintani, argued that Orcel's deal is “between the median and third quartile of our benchmark European peers.” The bank also highlighted that it had substantially replied to a previous Glass Lewis complaint.
The letter was confirmed by a spokesman for the bank.
UniCredit investors are due to vote on the pay policy at the annual general meeting on April 8. Rival proxy firms Frontis and ISS gave their support to the proposals. ISS, which advises a larger number of UniCredit shareholders, said “the company remuneration policy is well described and overall well aligned to best market practice.”
Orcel has buoyed investors with a better-than-expected performance last year and a capital return plan that's among the most ambitious in Europe. Italy's No. 2 lender plans to distribute 3.75 billion euros in a mix of cash dividends and share buybacks on last year's earnings, part of a broader plan to distribute about 16 billion euros by 2024.
The lender has said it is considering an exit from Russia following the invasion of Ukraine.
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