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Santander is facing a potential shareholder rebellion at its annual general meeting this month after influential proxy adviser ISS recommended that investors vote against executive chair Ana Botín’s pay package.
Botín is one of Europe’s highest-paid bank executives, having been awarded €12.2mn last year on the back of the Spanish lender achieving record profits thanks to rising interest rates.
Santander has asked shareholders to approve a change to its pay policy whereby the salaries of both Botín and chief executive Héctor Grisi would increase by 5 per cent, adding to the 3 per cent increase in Botín’s fixed pay last year.
The Santander AGM is due to take place on March 22.
In ISS’s report on the bank’s AGM, sent to shareholders on Friday and seen by the Financial Times, the proxy adviser recommends investors vote against the company’s new remuneration plan over concerns about the way pay and performance are matched.
ISS said the board had tried to justify the increase in Botín’s pay by pointing to the group’s strong results and shareholder returns, as well as the need to stay competitive with rivals.
But ISS concluded: “The chair remuneration package seems far from being uncompetitive, and the proposed increase is likely to exacerbate recurring pay-for-performance concerns.
“For this reason, support to the new policy is not warranted.”
ISS backed the rest of the bank’s proposals for this year. It supported the pay plan last year.
Botín’s total pay rose 4.3 per cent last year, with her €12.2mn package made up of €7.4mn in cash and €4.8mn in gross profit on shares and other special payments. ISS’s complaint is targeted just at her fixed salary, which would rise from €3.27mn to €3.43mn.
Grisi, who earned a total of €6.8mn last year, would see his fixed salary increase from €3mn to €3.15mn under the new plan.
Fellow proxy adviser Glass Lewis also highlighted Botín’s pay rise as a concern in its report seen by the FT, but backed the overall package because of the bank’s strong results.
Santander shares rose 32 per cent last year, though are down more than 40 per cent since Botín replaced her father Emilio as executive chair a decade ago.
“The board of Santander is committed to ensuring the remuneration of executives is fully aligned with the interests of shareholders,” the bank said in a statement, pointing to its more than 40 per cent total shareholder return last year.
“The bank has set stretching targets for 2024 and remains focused on delivering sustainable long-term value creation.”
Last year, Botín was one of several European bosses who spoke out against the European cap on banker bonuses, saying it put them at a disadvantage to global rivals after the UK lifted its own cap.
Speaking at the FT’s Global Banking Summit, Botín welcomed the UK scrapping its cap and when asked whether the European cap should also be removed, she said: “I think that [would allow] a better alignment with shareholders, so it would be positive, of course.”
