In item 2, the Board of Directors proposes to distribute a total dividend per share of €0.70 on 2019 results, corresponding to a pay-out ratio of 149% of consolidated net earnings. The proposed dividend is 10.7% higher than that distributed last year, despite the 47.5% reduction of consolidated net income. 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. Thus, although we acknowledge that the proposed distribution is fully covered by free cash flow, we consider that the distribution of dividends not fully covered by consolidated net earnings is not appropriate in this moment. Therefore, we recommend opposition.

In item 6, shareholders are called to an advisory vote on the remuneration policy proposed by the Remuneration Committee. We have concerns over the Committee's composition, as it includes 2 representatives of Amorim Group and only 1 independent member. The overall executive remuneration amount is reasonable (the aggregate variable remuneration is capped at 60% of the base salary) and performance conditions are disclosed. However, the portion of variable components depending on a qualitative assessment (35%) is too high and there are no equity-based incentives. Furthermore, we regret that 49% of the annual bonus and 36% of the long-term incentive depend on the same performance condition (Cash Flow From Operations), which means that executives are rewarded twice for achieving the same target. Hence, we recommend opposition.

In item 7, we also recommend shareholders to oppose the authorization to purchase own shares and bonds, because the maximum price of the repurchases (120% of the market price) exceeds ECGS' voting policy limit of 110% of the market price. Furthermore, in view of the recent events relating to Covid-19, ECGS considers that it is not the right moment to proceed to a new share buyback programme.