Orcel, Botin Court Showdown on Pay Halted After UBS No-Show
(Bloomberg) -- The courtroom showdown between new UniCredit SpA Chief Executive Andrea Orcel and Banco Santander SA Chairman Ana Botin over millions of dollars in lost pay took an unexpected turn Wednesday, after witnesses from Orcel’s former employers at UBS Group AG failed to attend the hearing.
The case, in which Orcel is suing Santander for reneging on an offer to hire him as CEO in 2019, was halted as a result of the absence of UBS Chairman Axel Weber and another executive. Orcel was head of the Swiss lender’s investment bank and walked away from an initial $50 million in deferred pay when he attempted to join Santander. He has since recouped some of those funds.
Orcel had been seeking as much as 112 million euros ($136 million), claiming Santander upended his career with its last minute decision. In turn, Santander has accused Orcel of secretly recording conversations on the matter. Botin argued in court Wednesday that the two parties had never agreed on the terms of Orcel’s buyout from UBS and as a result no contract had been reached.
“His appointment never took effect,” Botin told the judge. “The contract was never fulfilled.”
Botin said Orcel agreed to make his “best efforts” to reduce the cost of his appointment for Santander and the Spanish bank expected the Swiss lender would pay at least 50% of the 35 million euros ($42 million) deferred compensation the executive was expected to receive.
“The UBS witnesses had informed the court that they are willing to testify,” UBS said in a statement. “Due to ongoing COVID risks, the alternative of participating via video conferencing was offered but has so far not been taken up.”
When Botin entered the court, she said good morning but didn’t look at Orcel.
“Me personally and the board we were thrilled with Orcel joining the bank,” Botin said, adding that she considered him as “the best” negotiator and a very close advisor for many years.
Orcel cut the period for which he will seek financial compensation to two years from five, according to people with knowledge of the matter. The reduction reflects the fact that he took on a new role as chief executive officer of UniCredit on April 15, the people said, asking to not be named because the matter is private. Spanish newspaper Expansion reported Orcel is now seeking 76 million euros.
“It is important that the judge hears the facts, that is why we are here today,” Orcel told reporters outside. “This has always been about integrity and ensuring that the truth was put on record, and I think that we will achieve that today.”
Botin stunned the financial world in September 2018 by announcing Orcel’s hiring. The 58-year-old Rome native made his reputation advising on some of Europe’s biggest banking mergers prior to the financial crisis, and he had a long history working for Botin’s late father Emilio on deals. At UBS, he reshaped the investment bank as the firm pivoted toward wealth management, but waited in vain for the top role.
His move to Santander fell apart within months over the issue of the UBS bonuses that he risked forgoing by joining a competitor. In the Spanish bank’s version, its letter offering Orcel a job required him to reduce the cost to Santander of his deferred compensation from UBS. The Swiss lender did agree to pay him an amount of 13.7 million euros but Orcel refused to have that factored in to cutting the cost of his appointment, Santander said in a statement in July 2019.
The ongoing dispute has cast a shadow over his appointment to UniCredit. The Italian lender will not compensate him for deferred payments he will lose for joining a peer within seven years of leaving the Swiss bank in 2018.
The court will resume the hearing when informed of the availability of Weber and Shelton to attend.
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