EUR 1000.00 For Business Accounts Only

Naturgy Energy Group - AGM 17 March 2020

In item 6.2, it is proposed to ratify the appointment of the company Rioja Sàrl as "proprietary Director", representing the shareholder CVC Capital Partners (20% of Naturgy's share capital). We note that it is not really a new appointment, as Rioja Sàrl replaced on the Board Rioja Bidco Shareholdings, with the same representative on the Board, Mr. Javier de Jaime Guijarro, who was appointed for the first time in 2018. We have concerns over the lack of independent representation (42%) and the significant number of representatives of major shareholders on the Board (2 representatives per major shareholder, or 50% of Directors). Therefore, we recommend opposition.

In item 9, shareholders are called to a binding vote on the remuneration policy for the 2020-2022 period. We regret that the overall variable remuneration depends more on short- than long-term results, as the annual bonus is capped at 145% of the fixed remuneration and the long-term incentive at 125% on an annual average basis. We also note that the long-term incentive does not depend on multiple or relative performance indicators (only the absolute TSR generated in the 2018-2022 period), which is not in line with ECGS guidelines. Further concerns arise over the Chairman-CEO's fixed remuneration (€2,060,000), which is equal to 215% of the median at European Utilities companies and 172% of large Spanish companies, and we regret that the clawback clause is too short (time limit of 18 months). Therefore, we recommend opposition.

In item 10, shareholders are called to an advisory vote on the Remuneration Report. We strongly regret that non-executive Directors' fixed fees increased by 38% in 2019 with no clear justifications provided by the Board. Also taking into account our concerns over the very high Chairman-CEO's fixed remuneration, and the structure of variable remuneration schemes, we recommend opposition.