Obrascon Huarte Lain (OHL) – AGM 12 June 2020
In item 5, it is proposed the re-election of Deloitte, auditor of the Company since 2002, for financial year 2020. The level of non-audit fees does not give rise to any concerns and we acknowledge that EY is proposed as statutory auditor for the period of 2021-2023 in item 6. Therefore, we recommend that shareholders support both resolutions. The re-election of Ms. Silvia Villar-Mir as proprietary Director is proposed in item 7. Since we have concerns over the low level of independence on the Board (33.3%), we recommend that shareholders oppose her re-appointment, and we urge the Company to nominate more independent Directors.
In item 9, shareholders are called on an advisory vote on the Directors'Remuneration Report for 2019. ECGS considers the breakdown of executive variable remuneration to be inadequate as it solely depends on financial objectives and is not geared towards the long-term sustainability of the Company. There is a lack of disclosure on the level of achievement of targets used to calculate the annual bonus, making it impossible to determine the link between pay and performance, and Board reserves the right to pay an extraordinary bonus without the approval by the AGM. Hence, we recommend opposition. Similarly, in item 10, the 2020-2022 Remuneration Policy is proposed. Due to the lack of transparency about the ³extraordinary bonus´and the absence of a Long-Term Incentive, we also recommend shareholders to oppose.
In item 11, the Board asks for a 5-year authorization to increase the share capital, by up to 50% of the issued capital with the power to exclude pre-emptive rights up to 20%, exceeding ECGS'voting policy limit of 10%. Although we recognise the flexibility required by the Board, we consider that the proposed amount risks to excessively dilute existing shareholders' rights, and the Board should limit the authorisation to a maximum of 18 months. Therefore, we recommend opposition.
Obrascon Huarte Lain is an international concession and construction groups based in Spain. Co. maintains significant operations in 30 countries across all five continents. Co. is engaged in hospital and railway construction, transport infrastructure concessions, oil and gas, energy, solids handling and fire protection systems and international contracts. Co.'s operations are organized along four divisions: OHL Concesiones, OHL Construccion, OHL Industrial y OHL Desarrollos. Co. is also engaged in real state project developments of mixed use managed by the international hotel chains.
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