EssilorLuxottica - 2018 November 29
Following the combination of Essilor and Luxottica, Leonard Del Vecchio is now Executive Chairman of the company and Hubert Sagnières is Executive Vice-Chairman. Therefore, the roles of chairman and chief executive are not separated. However, we note that the company indicates in its press release published on October, 1 2018 that “The Nomination and Compensation Committee will be mandated before the end of January 2019 to lead the search process for a Chief Executive Officer”.
The main subject of this general meeting is related to the executives’ remuneration policy post-combination (ITEM 1). The only significant change made is regarding the fixed remuneration: it is proposed to increase it to €1,150,000, a 43.75%-increase. Hence, the remuneration policy here proposed has the same shortcomings as the previous one (excessive maximum bonus, not challenging performance condition of the performance shares, excessive LTI, retesting, etc…). And, on top of these shortcomings, the board wants to make a significantly negative change which will deeply negatively impact the entire remuneration policy. Proxinvest was already not supporting the previous policy considering shortcomings mentioned, so, as the board did not listen to its shareholders’ concerns and adds new flaws to the remuneration policy, we reiterate our recommendation not to support such a remuneration policy.
The company also proposes (ITEM 9) to replace retention bonuses granted to several Luxottica’s employees by free EssilorLuxottica’s shares. Amounts at stake are very generous, if not excessive (€4 M for Mr Milleri) especially considering the absence of any performance condition while some beneficiaries are members of the management board. Moreover, as this plan was implemented in December 2017, it was not integrated in values used to set the exchange ratios for the combination of Luxottica and Essilor. But, a €90 M cash based plan would have had an impact on these values and it should have been integrated to values used as per the combination.
Essilor International (Compagnie Generale d'Optique) designs, manufactures and sells ophthalmic lenses, ophthalmic optical instruments and equipment. Co.'s activities are divided into three segments: Lenses and Optical Instruments (Co. designs, manufactures and customizes corrective lenses such as: Varilux (progressive lenses); anti-reflective, smudge-proof and anti-static lenses (Crizal); Nikon lenses, Transitions variable-tint lenses and Kodak lenses under agreements; polarized lenses (Xperio) and fog-proof lenses (Optifog)), Equipment (Co. produces, distributes and sells equipment and consumables used by prescription laboratories) and Readers (Co. designs and sells reading glasses).
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