Report
Expert Corporate Governance Service (ECGS)
EUR 1000.00 For Business Accounts Only

Lanxess - AGM 27 August 2020

General: The AGM is to be held in the form of a virtual AGM in accordance with the German Law to Mitigate the Consequences of the COVID-19 Pandemic. The physical presence of shareholders or their authorised proxies is not possible. The voting rights may therefore be exercised solely by postal vote or by granting authority to the proxies designated by the Company.

Item 2: Management and Supervisory Board are proposing a dividend of EUR 0.95 per share (increased by 5.56% from EUR 0.90). 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. In fact, the COVID-19 pandemic has a major impact on the chemicals industry as a whole and also on the Lanxess Group's business in particular. On 6 May 2020, the Company adjusted its guidance for financial year 2020 due to the COVID-19 pandemic. Lanxess now anticipates EBITDA pre exceptionals of between EUR 800m and EUR 900m. Previously, the Company was expecting EBITDA pre exceptionals of between EUR 900m and EUR 1bn. Therefore, in light of the current uncertainties, ECGS considers that it is not in the long-term interest of the Company to propose an increased dividend in this uncertain environment. Thus, although we would not have had an unfavourable opinion on the proposed dividend distribution in a different environment, as it is covered by earnings and free cash flow, we will not have a negative opinion if the Company changes the amount distributed to shareholders. In the meantime, we exceptionally recommend shareholders to abstain from voting.

Item 4.10: We recommend to oppose the discharge of Supervisory Board member Ralf Sikorski due to his insufficient attendance at Supervisory Board and committee meetings in financial year 2019.

Item 6.1: We recommend to oppose the re-election of Dr. Matthias L. Wolfgruber to the Supervisory Board due to concerns over aggregate time commitments. Furthermore, we raise our concerns over the fact that the remuneration system for the Management Board, contrary to the announcement made in the previous year, has once again not been put to shareholder approval at this year's AGM. Dr. Wolfgruber is the Chairman of the Supervisory Board's Presidial Committee ("Chairman's Committee").

Item 7: The Management Board and the Supervisory Board propose to introduce an additional remuneration for membership on the Nomination Committee and an attendance fee for meetings of the Nomination Committee. We recommend to oppose the related amendments to the Company's Articles of Association as we assess the absolute amount of remuneration already as significantly exceeding market practice.

Underlying
Lanxess AG

Lanxess is a management holding company, engaged in chemicals enterprise with a portfolio ranging from polymers to industrial, specialty and fine chemicals. Co. has three segments, which comprise 14 business units. Co.'s Performance Polymers segments include five units, Butyl Rubber, Performance Butadiene Rubbers, Keltan Elastomers, High Performance Elastomers, and High Performance Materials. Advanced Intermediates segments include two units, Advanced Industrial Intermediates, and Saltigo. Performance Chemicals segments, include seven units, Material Protection Products, Inorganic Pigments, Functional Chemicals, Leather, Rhein Chemie, Rubber Chemicals, and Liquid Purification Technologies.

Provider
Proxinvest
Proxinvest

Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

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Analysts
Expert Corporate Governance Service (ECGS)

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