Expert Corporate Governance Service (ECGS)
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Etude l' AG du 19/07/2017

In item 4, the Board proposes to re-appoint Mr. José Arnau Sierra as "proprietary Director" representing the controlling shareholder Mr. Amancio Ortega Gaona (59.3% of the share capital). Mr. Arnau Sierra is the non-executive Vice Chairman of the Board and he is a member of all internal Committees. We have serious concerns over the composition of the Board of Directors, as the positions of Chairman and CEO are combined and the Board has not a majority of independent members (44% according to the Company and the ECGS guidelines). Therefore, we recommend opposition.
In item 6, shareholders are called to an advisory vote on the Annual Remuneration Report, including the remuneration policy and the amounts paid last year. The variable remuneration components are adequately structured to align the interests of the executives with those of the shareholders in the long term, but we have serious concerns over the excessive weight of discretionary assessments on the annual bonus (30%), also taking into account that the Board has not a majority of independent members. We also find as excessive the base salary of the Chairman-CEO (€ 3'250'000), on which basis the variable is calculated, and the leaving indemnities (€ 7.3 million under the defined contribution plan and a € 6.7 million severance pay). Also taking into account that the long-term incentive will vest even if operating targets are significantly missed (50% of the incentive will vest if only 50% of targets in terms of EBIT and sales are met), we recommend opposition.

Inditex S.A.

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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