The head of UniCredit’s compensation committee has resigned following unsubstantiated allegations of board leaks, just weeks before a new salary package was proposed for chief executive Andrea Orcel, raising questions about corporate governance of the Italian lender.
Dame Jayne-Anne Gadhia – the former chief executive of British lender Virgin Money who joined the board in 2021 – has opted to step down as non-executive director following the investigation, four people with knowledge have said. the process. Two people said the allegations were eventually dropped.
Gadhia was interviewed by chairman Pier Carlo Padoan and group legal chief Gianpaolo Alessandro, the sources said, as part of the investigation into the source of a series of media articles, including the Financial Times. .
While the bank eventually withdrew the allegation, Gadhia felt her position had become untenable and decided to resign on principle, the same people added. She remains a senior advisor.
As chairman of the compensation committee, Gadhia was tasked with overseeing executive compensation and seeking investor support ahead of the group’s annual meeting on March 31. The bank will release its policy on March 1 for shareholder review.
THE European Central Bank is likely to conduct an exit interview with Gadhia. This is often common practice after a board member leaves, allowing the ECB to gather information for its overall supervision of a bank. This is especially likely for Gadhia as she leaves abruptly before the end of her three-year term. The ECB declined to comment.
UniCredit said in a statement that after a series of “damaging” leaks, the council had “conducted a thorough internal audit”. The audit “was inconclusive, but the board is very clear about its fiduciary duties and obligations.”
The bank added that the board “took clear steps and further strengthened its already strong policies to ensure the proper handling of confidential information to uphold the highest standards of corporate governance across the bank.” .
Gadhia declined to comment.
The leak investigation is the latest controversy at the Milan-based loanee since Orcel’s arrival. The managing director courted controversy with his unwavering refusal to take a big loss to quickly leave Russia and he would have fell out with politicians in Rome after a takeover of public lender Monte dei Paschi di Siena was derailed at the last minute.
Orcel has also made headlines for his long-running legal dispute with Santander chairwoman Ana Botín over the withdrawal of a bid to appoint him as chief executive in 2019. Earlier this month, a court in Madrid confirmed his trial and awarded him 43.5 million euros in compensation.
UniCredit’s board ordered the investigation after several sensitive stories about the bank, including one on a clash with the ECB on its failure to sever ties with Russia and a generous policy of returning money to shareholders, the people said. Another story revealed that the bank was looking to offer Orcel a larger salary package to reflect performance improvements.
Frustrated by the media coverage, an investor told the FT he had also asked the board to investigate the leaks.
A person familiar with the board’s thinking expects it to offer a 20-30% increase in Orcel’s salary given the bank’s performance in 2022.
UniCredit has been one of Europe’s best performing banks since joining Orcel in April 2021, with its shares more than doubling. Annual profit rose 48% to 5.2 billion euros in 2022 and it announced plans to return at least 5.25 billion euros to shareholders this year as part of its goal to return 16 billion euros by 2024.
The bank said the reasons for Gadhia’s departure were “clearly spelled out” in a Feb. 10 statement. At the time, UniCredit said Gadhia decided to step down “due to new professional undertakings with a significant time commitment”, referring to his appointment in January. as chairman of Italian robo-advisor MoneyFarm. Gadhia is also Chairman of the Board of HM Revenue & Customs in the UK.
She was replaced as head of the compensation committee by fellow board member Jeffrey Alan Hedberg a week later. Gadhia was also a member of the Board’s Governance Committee.
The ECB said this month that almost half of the banks it supervises have received new supervisory measures to address perceived weaknesses in their governance, including “lack of a healthy challenge culture”, a insufficient expertise and a lack of diversity.
Additional reporting by Martin Arnold