Wednesday, February 21

The judge reduces Santander’s compensation to Orcel from 68 to 51 million

  • The magistrate has deducted from the amount initially set the bonus charged by the Italian banker

The Court of First Instance number 46 of Madrid has lowered to 51 million of euros the compensation that he Santander must pay the Italian banker Andrea Orcel for his failed signing as CEO of the entity. On December 9, the magistrate Javier Sanchez Beltran ruled that the bank should pay the Italian executive the sum of 68 million euros: 17 million in concept of incorporation bonus, 35 million in long-term incentives, 5.8 million euros in concept of two years’ salary not received and 10 million as compensation for moral and reputational damages.

In an order dated January 13, the judge clarifies and corrects said sentence, declaring the validity and perfection of the contract of September 24, 2018 and condemning Santander to pay Orcel the amount of 51 million euros, resulting from downgrade from 35 million to 18.6 million euros compensation for assumption of long-term incentives (‘buy out’). As ‘El Confidencial’ has advanced, the judge has discounted the six million bonus that Orcel has already received and subtracts the “fiscal equalization”.

The bank chaired by Ana Botin announced the hiring of Orcel as CEO in September 2018 and dismissed it without it becoming effective in January 2019. Botín defended during the trial that a contract was never signed formal and that Orcel had breached part of the commitments agreed for his signing by the entity of Cantabrian origin. However, last December the judge upheld the lawsuit filed by the Italian banker.

Santander, in any case, announced after learning of the ruling its intention to appeal it to a higher instance, so the collection by Orcel is still not certain. “We respect judicial decisions, but we are in totally disagree with the sentence known today. Santander’s council hopes to win the appeal that we will present before the Provincial Court, as has already happened in the two criminal complaints filed in court in relation to this matter, “sources from the financial institution pointed out that day.

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Orcel filed a lawsuit against Santander in May 2019, four months after the bank informed the stock market regulator that it was not continuing with the hiring. This complaint was admitted for processing in June of that same year, after the Italian banker presented recordings and messages of conversations with the president of the entity. In the ruling, Judge Javier Sánchez Beltrán stated that “the amount claimed for non-pecuniary damage is not considered excessive” taking into account the level of remuneration that Orcel received at UBS. Since his signing in 2012, Orcel received an annual base salary of 1.5 million francs (1.44 million euros, at current exchange rates) without including contributions to pension plans and other benefits accounted for as fixed remuneration.

The judge indicated in his sentence that the “prestige and training” of Andrea Orcel “were highly regarded in the European banking sphere” and that it can be understood that the bank’s decision not to proceed with his signing caused him “considerable frustration, unease, uncertainty and a certain disrepute in the banking sphere, for which it is clearly considered that the situation created by Banco Santander caused obvious non-pecuniary damage to Mr. Orcel”.