Italgas – AGM 12 May 2020
n item 2, he Board of Directors proposes to distribute a dividend of €0.256 per share on 2019 results, corresponding to a total dividend distribution of €207 million. The proposed dividend distribution is equal to 49.6% of consolidated net earnings, but it is not fully covered by free cash flow (€15 million in 2019). 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. Although we acknowledge that the Company is currently well capitalised, we consider that the potential impact of the Covid-19 induced crisis is not yet known. Thus, in our opinion the distribution of dividends that are not fully covered by generation of cash is not appropriate in this moment. Therefore, we recommend opposition.
In item 3, it is proposed to terminate the mandate of PricewaterhouseCoopers, and to appoint Deloitte as independent auditor for the 2020-2028 period. The proposal aims to align the auditing procedures of Italgas with those of its main shareholder CDP Group. The selection process and the criteria for assessing the offers are duly disclosed. In our opinion, the appointment of a single auditor for all companies included in a consolidated group may ensure greater effectiveness and efficiency in the auditing process. Also taking into account that the annual fees proposed by Deloitte are reasonable, and that no concerns arise over the procedures for the selection of the new auditor, we recommend to vote FOR.
In item 4.1, shareholders are called to a binding vote on the remuneration policy. We welcome the increased weighting of sustainability-related indicators used to calculate annual and long-term incentives. Overall remuneration amounts are reasonable (the CEO's variable remuneration is capped at 250% of the base salary, which is below the median of European and Italian peers), and in our opinion the variable remuneration schemes are adequately structured to align the interests of executives and shareholders in the long term. Therefore, we recommend approval.
Italgas SpA. Italgas SpA is an Italy-based company active in the natural gas distribution. It operates a national distribution network of about 70,000 kilometers serving more than 7,5 million customers. Its services include also network monitoring, maintenance and digitalization and consume measuring. The Company is active locally.
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