Emilio Botin, chairman of Santander Central Hispano SA, predicted Spain's biggest bank will meet performance targets to trigger payouts now valued at 551 million euros ($716 million) under a stock-options plan for executives.
Santander met the first of two required targets: increasing shares enough to rank in the top 10 among 30 global banks it considers peers. Over a two-year period ending last month, Santander placed No. 8 in terms of share performance, Botin said today. Santander shares are up 60 percent in the last two years.
``It's probably the most demanding stock options plan for an international bank,'' Botin, said. ``I'm convinced we'll do it, which would be a great success for the bank.''
About 2,600 executives are eligible under the plan to divide up gains on 99.9 million stock options. Using Santander's closing price yesterday of 14.59 euros, the options mean executives would share total payouts of 551 million euros. Santander set the plan in 2004 to motivate executives to meet growth and earnings targets.
The bank will have to wait until March, when its peers have reported earnings, to see if it also meets the second target: a top-10 ranking in earnings-per-share growth. Santander today said 2006 net income rose almost a quarter to a record 7.6 billion euros, or 1.22 euros per share, surpassing Botin's June profit forecast of 7 billion euros, including one-time gains.
Santander, which acquired U.K. mortgage lender Abbey National Plc in 2004 to become Europe's fourth-biggest bank, increasingly measures itself against the biggest banks in the world, said Juan Antonio Maroto Acin, professor of economy and company administration at Madrid's Complutense University.
``If they want to play in a global arena, they have to judge their performance against global criteria,'' said Maroto. ``They're doing that very effectively it seems.''
The plan will allow the executives to convert options with an exercise price of 9.07 euros into shares at market price between Jan. 15 2008 and Jan. 15 2009.
Chief Executive Officer Alfredo Saenz was awarded 1.21 million options, Botin got 541,400, Matias Rodriguez Inciarte, third vice- chairman, got 665,200, and Francisco Luzon, executive vice- president in charge of Latin America business, got 639,400.
Ana Patricia Botin, Botin's daughter and chairman of retail unit Banco Espanol de Credito SA (BTO), won 293,692 euros. Using yesterday's closing share price as a guide, Saenz would have gross gain of 6.7 million euros, and Emilio Botin 3 million euros.
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