A2A – AGM 13 May 2020
In item 2, he Board of Directors proposes to distribute a dividend of €0.0775 per share on 2019 results. The proposed dividend distribution is fully covered by consolidated net earnings (pay-out ratio of 61.9%) and free cash flow. However, in view of the recent events relating to Covid-19, ECGS is in favour of postponing decisions on the dividend, reductions or suspensions that would allow companies to avoid liquidity risks or not generate risk for their survival. Although we acknowledge that the Company is currently well capitalised, we consider that the potential impact of the Covid-19 induced crisis is not yet known. Therefore, we recommend opposition.
In item 2.1, shareholders are called to a binding vote on the remuneration policy. Overall remuneration amounts are reasonable (the CEO's base salary is equal to 73% of the median of European peers and variable remuneration is capped at 40% of the base salary), but we strongly regret that the executive variable remuneration exclusively depends on annual results and it does not include any equity-based components. Furthermore, the CEO's variable remuneration does not depend on any relative performance conditions, which is not in accordance with our guidelines. Therefore, we recommend opposition.
In item 5.1, the AGM is called to appoint the members of the Board of Directors on slates of nominees submitted by shareholders. Two slates of nominees have been submitted, respectively by the Municipalities of Brescia and Milan (50% of the share capital) and a group of institutional investors (2%). One of the institutional investors that submitted the slate of nominees is Generali Investments, which is a client of ECGS partners Proxinvest and Frontis Governance. It is important to note that these partners do not provide consulting services to Generali. Voting advice is provided primarily as a source of information at general meetings. We recommend shareholders to vote for the slate submitted by the institutional investors (sub-item 5.1.2), because all nominees in the slate are independent from the Company and its shareholders.
A2A is a multiutility company. Co. primarily operates in the following sectors: the production, sale and distribution of electricity; the sale and distribution of gas; the production, distribution and sale of heat through district heating networks; waste management (from collection and sweeping to disposal) and the construction and management of integrated waste disposal plants and systems, also making these available for other operators; and integrated water cycle management.
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