Angel Cano Fernandez has made a killing for himself after a short stint as COO of Spain’s second largest bank by assets.
Following the announcement of his departure in May 2015, BBVA revealed that it had set aside a mindboggling €19.3 million in pension contributions to fund his lifetime pension annuity of €1.8 million. Prior to his appointment as COO in September 2009, Mr. Cano, who is only 53 years old, held several executive positions at the bank including CFO (April 2001 to January 2003), Human Resources and Services Director (January 2003 to December 2005), and Head of Global Transformation (January 2006 to September 2009).
More troublingly, BBVA shares have significantly underperformed other European banks. According to Bloomberg, since Cano took the reins as COO, BBVA shares have shed 22% of their value compared to an 8.6% fall in the STOXX Europe 600 Banks Price Index. Whereas the bank has weathered the storm better than its chief rival, Spain’s biggest bank, Banco Santander, which dropped 39% during the same time period, such an incredibly generous pension award is hard for investors to stomach. BBVA shares opened at €5.44 this morning, trading well below their September 2009 highs of €12.50.
Recent financial performance at the bank has been more promising. BBVA reported Q4 2015 earnings growth of 36% year-on-year, beating analyst expectations largely due to better than expected results from its stake in Turkey’s Garanti Bank, and a sharp decline in loan loss provisions. Although the bank reported gains in its digital transformation initiatives, profits in its flagship Spanish operations declined.
True to form, BBVA also announced that it is setting aside an additional €9.86 million, this time as a pension contribution to CEO Carlos Torres Vila, appointed in May 2015. He replaced the bank’s long-time boss, Francisco González Rodríguez, who remains at the helm as Executive Chairman.
Interestingly, Mr. Cano’s recent pension award is far from the only controversial aspect of his compensation. In 2014, the former COO’s total remuneration was increased by 35.2%, to €6.52 million unsurprisingly due to a pension contribution of roughly €2.62 million. ECGS, then as now, called upon its clients to vote against Mr. Cano’s remuneration package as part of the Say-on-Pay vote at the 2015 AGM.
In a particularly disheartening development, the Say-on-Pay vote (resolution no. 11) was adopted by a 97% approval rate at the 2015 AGM. Pension fund giants and other large institutional investors were among those who voted in favour. These included such celebrated names as CALPERS, TIAA-CREF, Capital Research, Allianz Global Investors, Ontario Teachers’ Pension Plan, Robeco, and Norges Bank Investment Management.
The time is nigh for institutional investors to not rest on their laurels and put an end to this blatant misappropriation of shareholder resources especially during situations of underperformance. Voicing its concerns over the bank’s remuneration practices, Proxinvest and ECGS urge these investors to vote against the remuneration report to be submitted to BBVA’s upcoming AGM on March 11, 2016.