Pirelli - AGM 15 May 2019
The AGM is called to ratify the appointment of Mr. Ning Gaoning as non-executive Director (item 2.A) and Chairman of the Board of Directors (item 2.B). Mr. Ning is the Chairman of China National Chemical Corporation Limited (ChemChina), controlling shareholder of Pirelli with 45.5% of the share capital. We have concerns over the lack of independent representation on the Board (53% according to the Company's self-assessment, but 47% as per our guidelines), and we note that the Nominations Committee does not include any independent members and is chaired by the Company's CEO, which is not in accordance with our guidelines and the Italian Corporate Governance Code's recommendations. Therefore, we recommend opposition.
In item 3, shareholders are called to an advisory vote on the remuneration policy for executive Directors and other executives with strategic responsibilities. The level of disclosure is very high, as all performance conditions are disclosed and quantified. However, we have serious concerns over the excessive base salary of the CEO (€ 2.4 million), significantly above market and sector practice, which is used as basis to calculate the variable remuneration and severance payments. The variable remuneration component depending on short-term results is capped at 275% of the CEO's base salary and total variable remuneration may amount up to 442% of the base salary, which is substantially above the ECGS' voting policy limit of 300% (150% for the annual bonus). Furthermore, the variable remuneration depends more on annual than long-term results (at maximum levels of performance, short-term incentives would represent 62% of the CEO's variable remuneration), and we strongly regret that it does not include any share-based incentive schemes. Therefore, we recommend opposition.
Pirelli & Co. is a holding company that manages, coordinates and finances the operations of its subsidiaries, which are mainly active in the tyre sector. Other activities relate to the emissions control technologies, renewable energy sources and fashion industries. Co.'s Total Tyre Business is split into: the Consumer Business segment that includes car and motorcycle tyres made for both the original equipment and replacement markets; and the Industrial Business segment that includes truck tyres, tyres for agricultural equipment, made both for the original equipment and replacement markets, and the steel cord business.
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.
Proxinvest main services are :
- Proxy reports
- Definition and monitoring of client customized voting guidelines
- Corporate Governance Data and Rating
- Thematic research
- Engagement support
Proxinvest has been a pioneer and champion of good corporate governance and has grown into a recognised expert in the field.
Proxinvest is independently-owned and only works for investors : Proxinvest does not provide consulting services to the companies it covers, mitigating related risks to its clients and ensuring the independence of our analysis. As a result Proxinvest is able to take a robust, independent, engaged and unconflicted view of the companies in which our clients invest.
As Managing Partner of Expert Corprate Governance Service Ltd (ECGS), Proxinvest has built a large network of corporate governance experts to support clients in corporate governance analysis worldwide.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.