proxy report 28/06/2018
The Board of Gas Natural has recently approved a reorganization of the Group's structure, including several changes to the corporate governance. From item 6.1 to item 6.8, shareholders are called to approve several amendments to the Bylaws, which are in line with the Group's reorganization. We recommend that shareholders approve all amendments, except the change in the Company's name (item 6.1), as the new name was not made available to shareholders at the time of release of this analysis (June 8).
In item 9.1, the Board proposes to ratify the appointment of Mr. Francisco Reynés Massanet as Chairman-CEO. We strongly regret that the positions of Chairman and CEO have been combined, after they were split in 2016. As we have serious concerns over the lack of independent representation (40%), the excessive representation of significant shareholders (50%) and the concentration of powers, we recommend opposition. For the same reasons, we recommend that shareholders oppose the reappointment of representatives of significant shareholders in item 9.2 and item 9.3.
In item 10.1, the Board proposes to amend the remuneration policy for the 2018-2020 period. We regret that the Board significantly increased the fixed and variable remuneration of the new CEO, as compared with the ones of his predecessor, without providing a clear justification: the fixed remuneration from € 1.5 million to € 2 million, the on-target annual bonus from 80% to 100% of the base salary and the LTI from 70% to 125% of the base salary. We welcome the reduction in the CEO's severance payments, from 3 to 2 years of total remuneration, but in our opinion it is still too high, also considering the significant increase in the Chairman-CEO's total remuneration. In 2018, the former CEO received a severance pay of € 10.7 million plus € 3.6 million under a non-competition agreement. Under the new policy, the severance pay of the Chairman-CEO may be € 13 million, considering the on-target variable remuneration. Therefore, we recommend opposition.
Gas Natural SDG is a gas company based in Spain. Co. and its subsidiaries are primarily engaged in the supply, transportation, distribution and commercialization of piped natural gas, as well as the activities involving exploration and developing, supply, regasification, liquefaction and storage of natural gas, and the generation and commercialization of electricity. Co. operates mainly in Spain and also outside of Spain, especially in Latin America, Puerto Rico, Italy, France and Africa (through Maghreb-Europe gas pipeline and integrated LNG projects in Algeria).
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