Repsol - AGM 25 March 2021
The level of independence on the Board is adequate (60%), increasing since last year due to Mr. Dahan’s reclassification of independent Director (previous proprietary). However, we believe that Sacyr (holding 7.55% of Repsol’s share capital) is over- represented on the Board (with 13% of Directors). Therefore, we support all (re-)elections proposed in items 10 to 14, but oppose the re-election of Mr. Manrique as proprietary Director representing Sacyr in item 9.
In item 17, shareholders are called to approve the Directors’ Remuneration Report. The quality of disclosure is good: all performance conditions used to calculate annual and long-term incentives are disclosed, as well as the level of achievement of annual targets. The CEO’s variable remuneration is in line with our limit of 300% base salary at 288%. However, serious concerns arise over the level of non-executive remuneration, which is significantly above the median at European Energy companies and Spanish non- financial entities. The Chairman’s fixed salary of €2.5 million is double the CEO’s and that of the highest paid executives in European Energy companies, especially elevated considering he holds no executive functions. Hence, we recommend that shareholders oppose this resolution.
In item 18, the Board asks for the approval of the 2021-2023 Remuneration Policy. While we consider that the executive remuneration (base salary, annual bonus and LTI) are all in line with our voting guidelines, we have concerns over the Chairman’s base salary and the average level of non-executive compensation (that, even excluding Mr. Brufau, triples the median at European Energy companies) that risk to compromise independence. Moreover, the new Policy increased the percentage of the qualitative assessment to 25% (previously 20%, which is our limit). Hence, we recommend opposition.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
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