Expert Corporate Governance Service (ECGS)
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Grifols - AGM 23 May 2019

In item 5, the Board proposes to reappoint KPMG as the main auditor and Grant Thornton as joint auditor for the individual accounts of the parent company Grifols SA. We welcome the appointment of a joint auditor for the individual annual accounts, and audit fees paid to Grant Thornton are reasonable (€ 37'818 in 2018). However, we have serious concerns over the excessive tenure of KPMG, which has been the Company's auditor for the last 28 years. Hence, we recommend opposition. For the same reasons, we recommend that shareholders oppose the reappointment of KPMG as the sole auditor for the Grifols Group's consolidated accounts (item 6).

We have concerns over the composition of the Board, because it is chaired by the former CEO (and largest shareholder) and it does not have a majority of independent members (54% according to the Company's self-assessment, but 46% as per our guidelines). Therefore, we recommend that shareholders oppose the re-appointment of the executive Director Mr. Raimon Grifols Roura (item 7.3) and the non-independent external Director Mr. Tomás Dagá Gelabert (item 7.4).

In item 11, shareholders are called to an advisory vote on the Annual Report on Directors' Remuneration. Total remuneration amounts are reasonable, but we strongly regret that the Board has not proposed any changes to the remuneration policy, despite the high level of opposition of shareholders in 2017 (40%) and 2018 (36%). In our opinion, the executive remuneration is not effectively aligned with the creation of value in the long term, as there are no long-term incentive plans and the vesting of the voluntary deferred bonus (up to 50% paid in shares) is not subject to any "malus conditions". Furthermore, the bonus depends on only one absolute indicator (EBIT), and we note that the market value of bonus shares granted in 2018 substantially exceeded 50% of the bonus awarded during the year. Therefore, we recommend opposition.


Grifols is engaged in developing, manufacturing and distributing a range of plasma derivative products. Plasma derivatives are proteins found in human plasma, which once isolated and purified, have therapeutic value. These protein-based therapies extend the lives of individuals who suffer from chronic and acute conditions. Co. also specializes in providing infusion solutions, nutrition products, medical devices, diagnostic instrumentation and reagents for use in hospitals and clinics. Co.'s products and services are used by healthcare providers in approximately 100 countries. Co.'s business is organized into three divisions: Bioscience, Diagnostic, Hospital and Raw Materials.


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