Inditex - AGM 14 July 2020
In item 5, the distribution of a dividend of €0.35 per share charged to unrestricted reserves is proposed for approval. We note that the proposed distribution is fully covered by consolidated net income and free cash flow. In light of COVID-19, ECGS usually recommends that the Company postpones decisions regarding dividend distribution in order to avoid liquidity and financial risks. However, we acknowledge that the Board resolved to significantly decrease the dividend despite the higher net result of FY 2019 and that net cash position stood at €1'249 million. Hence, we recommend support.
In item 10, shareholders are called to an annual advisory vote on the Remuneration Report. ECGS considers Inditex's non-executive compensation to be high, substantially above the median at European and Spanish peers. Concerns arise over the high amounts of variable remuneration, albeit adequately structured, and termination payments, above ECGS guidelines. Hence, we recommend opposition.
Industria de Diseno Textil Inditex is the parent company of a group engaged in apparel and footwear manufacturing and retailing. The Group is made up of fashion retail chains, textile manufacturing, purchasing and fabric treating companies, logistics and construction companies which are responsible for store refits and manufacturing structure. Products include men's, women's and children's wear collections, footwear, and women's lingerie which are sold through the Group's retail store chains of: Zara, Kiddy's Class, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, and Oysho and Zara Home.
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