Tue. Apr 23rd, 2019

More than 15% of Santander shareholders vote against Carnegie-Brown for the failed signing of Orcel

More than 15% of Santander shareholders vote against Carnegie-Brown for the failed signing of Orcel


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MadridUpdated:

The shareholders of Santander Bank yesterday failed the management of the entity's management by the frustrated signing of Andrea Orcel as CEO. They did so at the time of approving the re-election of the chairman of the appointments and remuneration committees and independent director and vice-president of Santander, Bruce Carnegie-Brown, as a counselor of the group. This agenda was approved with 84.35% of the votes in favor, but that percentage of ratification also shows a 15.56% of votes against, an unusual percentage in a general meeting of shareholders, in addition to a 7, 44% of abstentions.

Several international firms specializing in advisory services to investment funds, the so-called "proxy advisors", had recommended in recent weeks to vote against the re-election of Carnegie-Brown as a counselor, considering him responsible for that episode because of his responsibility to in front of the appointments and remuneration commissions. These firms recalled in their reports the reputational damage that the reversion of the appointment of Orcel could have for Santander, as well as the economic cost that it can still entail.

The Santander announced in September 2018 the signing of Orcel as CEO, agreeing for him a remuneration equal to that of the current CEO, José Antonio Álvarez. The Italian banker also accumulated a bonus to collect in seven years of about 55 million euros for his career at UBS. The Santander management knew that it would have to pay part of that bonus to be able to incorporate to Orcel, but it made an estimate to the downside of its cost: He trusted that UBS, due to its historical relationship with this bank, would consider the Spanish bank a non-competing entity and therefore a good part of the bonus would be assumed by the Swiss bank, another Santander and Orcel himself renounced another. However, UBS called Santander a competitor, which would have forced Botín to pay the entire bonus to Orcel, who claimed it.

So things, last January the board of directors of Santander decided to stop the incorporation of Orcel to consider the cost unaffordable of his signing. It was an unprecedented and surprising decision that generated astonishment in the financial world, which was not explained as an entity of the stature of Santander could have committed such a miscalculation. "We have had two meetings with investors since then, one in January when we presented the results of 2018 and another one on the 3rd day during Investor Day, and none of the investors asked about this issue.", the group's president, Ana Botín, insisted yesterday, before the protests of the shareholders during the meeting by the image given by the bank during this episode.

Although the entity seems to settle the matter, the truth is that it can still collect. In the middle of last February, Orcel hired the law firm De Carlos Remón and since then has been studying with his lawyers a possible claim against the entity, to which Claims for compensation for the loss of property and the reputational damage suffered with his bankruptcy.

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