The head of UniCredit’s remuneration committee resigned following unsubstantiated allegations of leaking from the board, just weeks ahead of the proposal of a new pay package for chief executive Andrea Orcel, raising questions about corporate governance at the Italian lender.
Dame Jayne-Anne Gadhia — the former chief executive of UK lender Virgin Money who joined the board in 2021 — chose to step down as a non-executive director following the investigation, four people with knowledge of the process said. Two people said the allegations had ultimately been withdrawn.
Gadhia was interviewed by chair Pier Carlo Padoan and group legal officer Gianpaolo Alessandro, the people said, as part of the probe into the source of a series of media stories, including in the Financial Times.
While the bank eventually withdrew the allegation, Gadhia felt her position had become untenable as a result and decided to step down as a matter of principle, the same people added. She remains a senior adviser.
As chair of the remuneration committee, Gadhia was tasked with overseeing pay for senior executives and seeking the support of investors ahead of the group’s annual meeting on March 31. The bank will publish its policy on March 1 for shareholders to review.
The European Central Bank is likely to carry out an exit interview with Gadhia. This is often standard practice after a board member leaves, allowing the ECB to gather information for its overall supervision of a bank. It is especially likely for Gadhia because she is leaving abruptly before the end of her three-year term. The ECB declined to comment.
UniCredit said in a statement that after a series of “damaging” leaks, the board had “conducted a thorough internal audit”. The audit “was inconclusive, but the board is very clear of its fiduciary duties and obligations”.
The bank added that the board “has taken clear action and further strengthened its already robust policies to ensure the correct handling of confidential information in order to uphold the highest standards of corporate governance across the bank”.
Gadhia declined to comment.
The leak inquiry is the latest controversy at the Milan-based lender since the arrival of Orcel. The chief executive has courted controversy with his steadfast refusal to take a large loss to exit Russia swiftly and he reportedly fell out with politicians in Rome after a takeover of state-owned lender Monte dei Paschi di Siena was derailed at the last minute.
Orcel has also been in the news for his long-running legal dispute with Santander chair Ana Botín over the withdrawal of an offer to make him chief executive in 2019. Earlier this month a Madrid court upheld his lawsuit and awarded him €43.5mn in compensation.
The UniCredit board ordered the probe after several sensitive articles about the bank, including one about a clash with the ECB over its failure to cut ties with Russia and a generous policy to return cash to shareholders, the people said. Another story revealed that the bank was seeking to offer Orcel a bigger pay package to reflect improvements in performance.
Frustrated with media coverage, one investor told the FT they had also asked the board to investigate leaks.
One person familiar with the board’s thinking expects it to propose a 20-30 per cent increase in Orcel’s salary given the bank’s performance in 2022.
UniCredit has been one of the best performing banks in Europe since Orcel joined in April 2021, with its shares more than doubling. Annual profit rose 48 per cent to €5.2bn in 2022 and it announced plans to return at least €5.25bn to shareholders this year as part of its goal to return €16bn by 2024.
The bank said the reasons for Gadhia’s departure were “clearly set out” in a statement on February 10. At the time, UniCredit said that Gadhia had decided to resign “due to new professional ventures with significant time commitment”, referring to her January appointment as chair of Italian robo-adviser MoneyFarm. Gadhia is also chair of the HM Revenue & Customs board in the UK.
She was replaced as head of the remuneration committee by fellow board member Jeffrey Alan Hedberg a week later. Gadhia was also a member of the board’s governance committee.
The ECB said this month that almost half the banks it supervises were given new supervisory measures to address perceived weaknesses in their governance, including the “absence of a healthy challenge culture”, inadequate expertise and a lack of diversity.
Additional reporting by Martin Arnold