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Banco Santander is facing a potential shareholder revolt at its annual general meeting this month after influential proxy advisor ISS recommended that investors vote against CEO Ana Botin's pay package.
Botín is one of the highest-paid bank executives in Europe, earning 12.2 million euros last year on the back of the Spanish bank achieving record profits thanks to high interest rates.
Santander asked shareholders to approve a change to its pay policy, which would see the salaries of both Botín and CEO Hector Gresi increase by 5 percent, in addition to a 3 percent increase in Botín’s fixed pay last year.
Santander's general assembly meeting is scheduled for March 22.
In an ISS report on the bank's annual general meeting, sent to shareholders on Friday and seen by the Financial Times, proxy counsel recommended investors vote against the company's new bonus plan due to concerns about the way pay and performance are matched.
ISS said the board had tried to justify the increase in Putin's pay by pointing to the group's strong results and shareholder returns, as well as the need to remain competitive with rivals.
But ISS concluded: “The chair's pay package appears far from uncompetitive, and the proposed increase is likely to exacerbate recurring concerns about pay for performance.
“For this reason, there is no justification for supporting the new policy.”
ISS supported the rest of the bank's proposals for this year. I supported the wage plan last year.
Putin's total remuneration rose by 4.3 percent last year, with the €12.2 million package made up of €7.4 million in cash and €4.8 million in gross profit on shares and other special payments. The ISS complaint targets only her fixed salary, which will rise from €3.27 million to €3.43 million.
Gresi, who earned a total of €6.8 million last year, will see his fixed salary increase from €3 million to €3.15 million under the new plan.
Fellow proxy adviser Glass Lewis also highlighted Putin's high pay as a concern in his report seen by the Financial Times, but supported the overall package due to the bank's strong results.
Santander shares rose 32 percent last year, although they have fallen more than 40 percent since Botín replaced her father Emilio as CEO a decade ago.
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“Santander’s board of directors is committed to ensuring that executive remuneration is fully aligned with the interests of shareholders,” the bank said in a statement, pointing to total shareholder returns that exceeded 40 percent last year.
“The bank has set stretch targets for 2024 and remains focused on achieving sustainable value creation over the long term.”
Last year, Putin was one of several European presidents who spoke out against a European cap on bankers' bonuses, saying it put them at a disadvantage against global rivals after the UK raised its own cap.
Speaking at the Financial Times' World Banking Summit, Putin welcomed the UK's removal of the cap, and when asked whether the European cap should also be removed, she said: “I think… [would allow] Better alignment with shareholders, so of course it will be positive.
