(Bloomberg) -- Italy’s UniCredit SpA increased the average bonus for its top managers by 12%, after the Italian lender posted a record profit and increased shareholder returns.

The total pool for so-called risk takers is about €128 million ($140 million), slightly below 2022 bonus pool, due to a reduction in staff from 935 to 827 individuals, according to the bank’s annual report released Tuesday morning. 

The bank said that non-executive staff will receive a bonus growth of between 9% and 27% depending on countries, business activity and performance.

The announcement confirms a Bloomberg report detailing lower-ranking employees would receive bigger gains than material risk takers and top executives, as part of the bank’s commitment to reward front line staff. Bloomberg also reported that the lender’s overall bonus pool for 2023 increased by about 16%.

Chief Executive Officer Andrea Orcel is seeking to reward employees and retain talent after a year that saw shares of the Italian lender almost double. The executive has scaled back bureaucracy, closed weak business lines and shifted resources to more profitable areas. 

CEO Pay Package

Having exceeded last year targets, Orcel’s variable remuneration for 2023 topped the €6.5 million cap, bringing his total compensation in the year to about €10 million.

Starting this year, UniCredit changed the calculation of share value given to top managers as part of their variable compensation. To comply with the European Banking Authority’s recommendations the share conversion price will not be adjusted for dividends as it happened  previously. 

To compensate managers for the lower fair value of stock received as a bonus, and keep unchanged the real value of the executives’ remuneration, they will receive a third of the loss with higher fixed salary paid in shares, and the remainder as a higher variable pay.

For the CEO, the application of the new pricing methodology to realign the fair value of the package to that of last year will translate in a fixed remuneration increase of €350,000 that will be paid in stock and in a total remuneration package of up to €10.8 million. 

 

 

(Adds more details on pay packages starting from sixth paragraph.)

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