ISS advises UniCredit shareholders to reject CEO pay plan
ISS advised UniCredit investors to reject the 2025 pay report at the March 31 meeting. The firm cited concerns over CEO Andrea Orcel's 38-million-euro award.
The governance advisory firm Institutional Shareholder Services (ISS) has recommended that shareholders of the major financial institution headquartered in Italy vote against the 2025 remuneration report. This recommendation targets the upcoming general meeting scheduled for March 31, where investors will decide on the pay policies applied by UniCredit S.p.A. during the previous fiscal year.
While ISS acknowledged that the bank's 2026 remuneration policy and incentive systems show improvements and provide an acceptable framework, the firm highlighted significant issues regarding the current compensation of CEO Andrea Orcel. According to ISS calculations, Orcel's total compensation for 2025 reached 38 million euros, or approximately $44 million, when including deferred payments.
"the scale of the CEO’s total pay opportunity remains problematic"
The advisory firm noted that the package may not be fully supported by performance conditions of sufficient rigor, particularly within the long-term components of the incentive system. Although UniCredit's strong financial results and high returns for investors have mitigated some of these concerns, the structure of the deferred pay remains a point of contention.
A primary factor in the high compensation figure was a 28.6-million-euro deferred portion of Orcel’s 2022 variable pay, which underwent a three-year performance review ending in 2025. ISS raised questions regarding the bank's decision to increase this deferred portion by 30% after the performance period had already concluded. This adjustment was made by incorporating 2022 social security contributions, legal end-of-employment indemnities, and other benefits into the base used for variable compensation calculations.
"While the exceptional share price appreciation over the period should be acknowledged, questions arise from the company’s decision to increase this deferred portion by an additional 30% after the performance period"
European Union regulations typically cap variable pay at twice the amount of fixed pay. ISS expressed concern that these retroactive adjustments could set a troubling precedent.
"Such retroactive adjustments raise concern"
In addition to the pay report, the advisory firm has also suggested that investors reject a proposal to issue new shares intended for the 2022 group incentive system.
