UniCredit’s board has proposed raising chief executive Andrea Orcel’s salary by 30 per cent — from €2.5mn to €3.25mn a year — just weeks after the head of the Italian bank’s remuneration committee quit.

Orcel is already one of the best-paid bankers in Europe, with a pay package of €7.5mn.

The new proposals announced on Wednesday envision him keeping that level of total pay if he hits the bank’s current targets, such as profits and return on equity. However, if he exceeds those targets his total pay could increase to €9.75mn.

Under EU rules, bonuses are capped related to annual fixed pay.

UniCredit investors are broadly satisfied with Orcel’s performance as they begin to reap profits after years of restructuring under his predecessor, Jean Pierre Mustier.

Italy’s second-largest lender has been one of the best-performing banks in Europe since Orcel joined in April 2021, with its share price more than doubling.

Annual profit rose 48 per cent to €5.2bn in 2022. It plans to distribute at least €5.25bn to shareholders this year through share buybacks as part of its goal to return €16bn by 2024.

However, the pay increases proposed by the board have proven to be a highly sensitive issue at the bank.

Press reports about board-level conversations around Orcel’s salary requests were followed by an internal investigation into the source of the alleged leaks and ultimately led to Dame Jayne-Anne Gadhia’s resignation last month.

As chair of the remuneration committee, Gadhia, the former chief executive of Virgin Money in the UK, was responsible for overseeing pay for senior executives.

The Financial Times reported this week she had been accused of the leaks. While the unsubstantiated allegations were withdrawn, she felt her position had become untenable and chose to step down “as a matter of principle” just three weeks ahead of Wednesday’s crucial proposals.

The chief executive’s proposed new package is the culmination of months of work for the remuneration committee. The panel of three board members is also charged with seeking the support of investors who have to vote on the proposals at an annual shareholder meeting. The next such event is due to take place on March 31.

Orcel’s pay package was only narrowly approved two years ago, when 42.7 per cent of shareholders voted against it, including BlackRock, the bank’s single-largest investor.

In 2022 board and CEO agreed the issue would be revisited this year.

Some shareholders think Orcel should be paid more based on UniCredit’s strong performance in 2022 and the amount of money from UBS that he sacrificed following his departure from the Swiss bank. Others believe his current salary is sufficient especially in the context of the bank’s cost-cutting strategy.

Shareholders will now have one month to review the board’s proposals.

Last month, a Madrid court upheld Orcel’s multimillion-euro lawsuit against Spanish lender Santander over its aborted offer to make him CEO in 2019 and awarded him €43.5mn in compensation.

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