Santander boss Ana Botin defended the bank’s actions in a court hearing in Spain today over the withdrawal of an offer more than two years ago to make Italian banker Andrea Orcel its chief executive.
The very public row, which has offered a rare glimpse into the inner workings of a top bank, ended up in a Madrid court after Spain’s largest lender dropped plans to make Orcel, previously the top investment banker at Swiss bank UBS, CEO following a dispute over his multi-million-euro pay package.
Orcel and Botin, both wearing dark suits and masks, sat in the front row of the hearing, which was held in a conference hall instead of a traditional court room due to Covid-19 protocols and because of intense media interest in the case.
The case revolves around whether a four-page offer letter was a binding job contract or a non-binding initial offer.
Orcel was initially suing for as much as €112m after Santander backed out of hiring him for the top job.
It had been expected to be concluded on Wednesday, but was suspended by the judge after a request by Orcel’s lawyers that top executives from UBS should testify. A verdict could take weeks or months after the hearing is concluded.
The Santander chairman, her mouth and nose covered by a blue mask during the proceedings, told the hearing that the letter offering Orcel the CEO role “was not a contract,” and that the bank’s board never approved his final compensation package.
“The buyout figure was not agreed. The maximum figure was set and the board decided to communicate the appointment on the basis that the overall package would be in line with the market. But the board did not approve the buyout figure,” Botin said.
She had earlier greeted Orcel, who has not been called to testify, with a “good morning” before taking her seat four spaces away from her former investment banking adviser.
Tracking the ‘Rainmaker’
Botin surprised the banking world when she offered Orcel the top job in September 2018, but Santander changed its mind the following January, saying it could not meet his pay demands.
These centered on covering up to €35m of his compensation package from UBS, where the high-profile “rainmaker” Orcel worked on deals for Santander as it built up its presence outside Spain over many years.
Botin said today that Orcel’s appointment as Santander CEO had never actually taken place and a contract was not fulfilled, although she had met him to discuss the Spanish bank’s strategy after offering him the top job.
She said the offer letter to Orcel had stated that any payments he was set to receive from his former employer UBS would help to reduce the total compensation paid by Santander.
After the CEO role at Santander fell through, Orcel had initially sought as much as €112m for breach of contract and damage to his career.
But sources close to the matter and a court document seen by Reuters on Tuesday showed he had cut his initial claim by tens of millions of euros.
The 57-year-old banker also dropped the part of his legal claim that would require the Spanish bank to hire him, because he has since been appointed as CEO of Italy’s UniCredit .
Pay has also been an issue for Orcel at UniCredit, where last month he only narrowly defeated a shareholder revolt over the terms and size of his up to €7.5m remuneration package.