Santander Cancels Andrea Orcel's Appointment as CEO Over Compensation
16 January 2019 - 6:29AM
Dow Jones News
By Margot Patrick
Banco Santander SA says it has withdrawn a job offer to UBS AG
executive Andrea Orcel to be its next chief executive after
concluding that the high-profile investment banker was too
expensive.
The Spanish bank, which announced Mr. Orcel's appointment last
September, said the sum needed to compensate Mr. Orcel for deferred
pay he lost by leaving UBS was significantly more than it had
expected when it appointed him and would be an "unacceptable"
amount or money for it to pay a single individual.
Instead, current CEO Jose Antonio Alvarez will remain in the
role instead of becoming chairman of Santander Spain, as previously
announced. Mr. Alvarez has been in the job since 2015. The outgoing
Santander Spain chairman, Rodrigo Echenique, will stay until a
successor is named, Santander said.
Santander Chairman Ana Botin, who handpicked Mr. Orcel for the
job, on Tuesday said the decision not to hire Mr. Orcel was made to
"balance the respect we have for all or our stakeholders" against
the cost of hiring a single individual, "even one as talented as
Andrea."
Mr. Orcel left UBS in September when his new job was announced.
At the end of 2017, he had at least 1.3 million in unvested shares,
according to UBS's annual report. At UBS' current share price,
those would be worth around 17.2 million Swiss francs. A person
familiar with the matter said the overall bill to hire Mr. Orcel
could have been more than EUR50 million ($57.4 million).
UBS declined to comment.
Banking executives typically expect a new employer to compensate
them for shares and pay they will lose by leaving their firm.
For example, when UBS hired Mr. Orcel from Bank of America
Merrill Lynch in 2012, it paid him $6.3 million in deferred cash
and around 18.5 million Swiss francs worth of UBS shares to
compensate him for forfeited awards. UBS at the time said that was
"in line with market practice."
Mr. Orcel was, for years, the go-to investment banker for former
Santander Chairman Emilio BotÃn, working on deals such as the
Spanish bank's 2004 purchase of Britain's Abbey National PLC and
acquisition of ABN Amro NV with two other banks just before the
2008 financial crisis.
Santander is one of the world's largest retail banks, focusing
on selling mortgages, consumer loans and bank accounts to hundreds
of thousands of customers around the world. Mr. Orcel, by contrast,
is a longtime investment banker and his appointment had caught many
observers by surprise.
--
Patricia Kowsmann
in Frankfurt and Donato Paolo Mancini in Barcelona contributed
to this article.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
January 15, 2019 14:14 ET (19:14 GMT)
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