A Star Banker’s Choice: Plum Job or Tens of Millions of Dollars

(Bloomberg) -- Andrea Orcel is facing the trade of his career: collect tens of millions of dollars in deferred compensation from UBS Group AG or keep a career in banking.

The former head of the Swiss lender’s investment bank can still contractually qualify for the backlog of compensation if he decides to work in another field or retires, according to people with knowledge of the company’s position. UBS doesn’t believe it would be obliged to make the payments if he joins any sort of financial-services competitor, the people said, asking not to be identified discussing internal decisions.

“We can’t comment on individual cases,” UBS said in a statement. “But if someone fulfills the requirements for career retirement at UBS, meaning mainly as long as they don‘t work for another financial services organization following a certain amount of years with UBS, they receive their deferred compensation. It’s granted on the existing deferral schedule.”

A spokesman for Orcel said he had no comment.

Speculation has swirled across Wall Street and Europe’s financial industry over where the 55-year-old star banker may land after losing the opportunity to run Banco Santander SA after the bank declined to pay his deferred bonuses and UBS balked at handing over the money. Some who know him suggest he may still try for a CEO posting, fulfilling a longtime goal, or set out to build a boutique investment bank, using his skills as a dealmaker.

Among some leaders of Zurich-based UBS, there’s concern paying Orcel could send the wrong message to remaining employees. Other camps argue that taking too harsh of a position would also highlight a risk they face: the prospect that money earned over a career might be unilaterally withheld.

Santander, which had announced Orcel’s hire as CEO about four months ago, reversed course last week, saying it would be too expensive to compensate him for past bonuses of as much as $50 million. Santander executives had wagered that once Orcel was gone, UBS would relent rather than risk losing it as a client. That backfired, leaving them with the prospect of spending a lot more than they had planned.

Orcel’s deferred compensation subject to negotiation was in a range of about 40 million Swiss francs ($40 million) to 50 million francs, people with knowledge of the matter said at the time. One of the people said the total cost could have climbed to as much as $60 million.

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