This Madrid County Court It partially upheld Banco Santander’s appeal against the first instance penalty for which the business was ordered to pay €51.4 million for the unsuccessful signing of Andrea Orcel c.He was appointed CEO in September 2018, reducing the compensation due to the Italian banker from 51.4 to 43.4 million euros, according to the fine reached by Europa Press.
In September 2018, Santander sent a letter of offer to then-UBS banker Andrea Orcel announcing that he would be appointed CEO a month from now, but in January 2019 the entity’s board decided to step back,I find it unaffordable to have to fully pay the deferred bonus that UBS has agreed to pay Orcel.
Thus, Andrea Orcel, the current CEO of UniCreditBanco sued Santander for stepping back from his appointment three and a half years ago. He demanded that the validity of the contract signed on September 24, 2018 be declared and that the organization be compensated for it.
In December 2021, Madrid’s 46th Court of First Instance ordered Santander to pay Orcel 68m euros for the unsuccessful signature, But reducing the amount of 112 million euros demanded by the Italian banker as compensation.
Judge sets 17 million compensation for founding bonusUndertaking (or ‘buying’) 35 million long-term incentives, 5.8 million equivalent to two salaries at Santander until signed by UniCredit, and 10 million for moral and reputational damages.
Subsequently, in January 2022, the same court clarified and corrected the previous penalty, reducing the compensation the bank had to pay Orcel to 51.4 million euros, because it determined the compensation to be paid as a ‘purchase’ of 35 million euros. did not take into account that Orcel had already received 6 million euros.
In addition, the final figure for the long-term incentive assumption was reduced from 35 million to 18.6 million Euros, in addition to the 29 million that would be generated as a result of deducting the said amount and discounting the tax equalization.
In the same decision dated January 2022, the judge draws attention to the fact that only 32.8 million of the compensation will be paid in cash, while 18.6 million of the long-term incentives will be paid in the form of shares and deferred.
Madrid County Court confirms validity of preliminary contract
Against the decision of December 2021, Santander appealed to the State Court of Madrid, where the validity of the preliminary contract, which was decided in mid-January and signed on September 24, 2018, was reaffirmed. By March 31, 2019, when the contract between Orcel and its former bank UBS was signed, it was a document “born with the intent to be fully enforceable” and therefore “both parties were bound to comply with the contractual relationship described”.
Thus, while the second-instance court pointed out that the bank’s decision to terminate the preliminary contract in January 2019 was “a unilateral decision contrary to the understanding”, it also draws attention to UBS’s stance on reducing the suspended fee or time. Prior to March 31, 2019, the notice to authorize Orcel’s incorporation was “known to Banco Santander from the very beginning”.
compensations
As regards compensation, the Madrid County Court reiterates that Santander paid Orcel 17 million euros for the incorporation bonus, 18.6 million euros for undertaking long-term incentives, and 5.8 million euros, the equivalent of two salaries at Santander. Until signed by UniCredit.
As for the final compensation for non-pecuniary damage, the judges accepted Orcel for the damage done by Santander’s decision to step back from his signature. Specifically, it argues that reputational damage “can be presumed to have occurred in an objectively shocking manner and so abnormally that it is possible to cast doubt on the qualifications of the affected party”.
Also, the court considers Orcel to be “highly frustrated” by accepting another job, which was later resolved and he was unemployed for two years.
ButIt rejects Orcel’s claim for ten million euros for non-pecuniary damage, considering it “high” and reduces it to two million euros as there is no evidence of a “more tangible” circumstance that allows us to appreciate it. “A special weight in Orcel’s personal or professional situation”.
Of these two million euros, the County Court also took into account that the unemployment situation lasted for a “relatively long period”, despite receiving some compensation from UBS while receiving deferred wages.
Finally, with regard to interest, the County Court notes that although the case only claimed interest on the €17 million corporate bond, the first instance penalty awarded all compensation to those who accrued. Thus, the new sentence cancels the statement in this section and limits it exclusively to the article requested by Orcel.
Santander will appeal the sentence in the Supreme Court
on his behalf Banco Santander expressed satisfaction with the partial estimate made by the Madrid County Court. recalls that in this decision and the compensation originally claimed by the Italian banker, the compensation was reduced from 112 million.
“As a result of the decision; The amount Orcel is entitled to receive in cash has been reduced to 24.5 million. ANDIn the future, the bank will need to deliver shares of about four million euros,” he said.
It should be noted that the bank has already provisionally complied with the first-instance court decision, which included a cash payment of 33 million euros. This reduction of 24.5m euros means that Orcel “must return eightm euros with interest”to existence.
Finally, Santander announces that he will appeal to the Supreme Court.