By Jesús Aguado and Emma Pinedo
MADRID – A Madrid court has ordered Santander to pay Italian banker Andrea Orcel 67.8 million euros ($76.42 million) after it withdrew its offer to make him CEO, a pricey twist in an employment dispute that has captivated the world of high finance. The row between Orcel and Santander chairman Ana Botin ruptured a close professional bond – Orcel had previously been Botin’s investment bank consigliere – and put Europe’s star dealmaker abruptly out of a job.
Orcel and Botin ended up in court after Spain’s largest bank dropped its plans to make the former UBS investment banker its CEO as a result of a disagreement over his pay. Orcel had already left UBS to prepare for the new role.
The court said Santander’s job offer letter to Orcel was a binding contract. It also referenced a few “particularly eloquent” tweets by Botin, a TV interview and a video in which she said that Orcel’s appointment would be “effective from the beginning of 2019″.
Those elements helped establish that the document constituted a “valid and perfect contract” which was “unilaterally and arbitrarily” rescinded by Santander, Judge Javier Sanchez Beltran said in the ruling.
“The situation created by Banco Santander caused Mr Orcel clear moral damage,” the ruling, dated Dec. 9 but released on Friday, said.
Appeals could delay a final ruling for another one or two years if legal proceedings reach Spain’s Supreme Court, several court sources said.
A spokesperson for Santander said the bank would appeal the ruling. It has 20 days to do so.
“The Board of Santander is confident we will be successful on appeal,” the spokesperson said.
Orcel’s legal team and a spokesperson for the Italian banker declined to comment.
The court ruling caps a successful week for Orcel, who is now CEO of UniCredit. He won plaudits on Thursday when he unveiled a new strategy for the Italian bank, pledging to return 16 billion euros to investors.
But unions on Friday said that UniCredit was set to cut 950 full-time positions.
The court said Santander has to pay Orcel 17 million euros for a sign-in bonus, 35 million euros for a buyout clause, 5.8 million euros for two years’ salary and 10 million euros for moral and reputational damage, plus interest.
Some industry insiders considered the ruling a blow for Botin and the bank as she had personally courted Orcel for the role over the summer of 2018.
“It will be a blow for Santander but any reputational damage to Botin or the bank itself is expected to fade over time as the amount won’t really hit a bank with such a capacity to generate billions in profit,” Enrique Quemada, CEO of Spanish investment bank ONEtoONE, told Reuters when asked to comment on the ruling.
Quemada and lawyers said that the compensation Orcel was entitled to was in line with pay packages for top jobs in the industry.
“In a civil court, such an amount is not unheard of. The amount seems outrageous but he seems to be the Lionel Messi of banking,” said Eduardo Alonso, lawyer with Spanish firm A&M Asociados.
The case revolved around whether a four-page offer letter to Orcel in September 2018 was a binding contract or a non-binding initial offer, as Botin asserted in the first session of the Madrid court hearing in May.
In January 2019, Santander said the bank could not meet Orcel’s pay demands, which included covering up to 35 million euros of a 55 million euro compensation package he was due to receive in future years from UBS.
Orcel originally sought as much as 112 million euros from Santander for breach of contract and damage to his career for the bank’s sudden U-turn.
But in May he dropped the part of his legal claim that would require the Spanish bank to hire him. This was after he was appointed UniCredit CEO.
He also reduced his demand to between 66 to 76 million euros, according to sources close to the matter, a court document and Santander’s lawyer.
At the hearing in May, Botin and Orcel, who himself had not been called to testify, sat just a few seats apart.
Botin testified that Orcel had also breached the terms of the offer letter, which stated he would make his best efforts to reduce the amount of deferred compensation Santander owed him.
She said he had refused to deduct 13.7 million euros he was to receive as a bonus from UBS for work done in 2018 from the sum owed him.
But on Friday, the court said that it could not be considered as proven that Orcel did not make his best efforts to try to reduce the buyout.
“Mr Orcel’s best efforts are considered beyond doubt,” the court said in its 24-page ruling.
($1 = 0.8866 euros)