Telecom Italia – AGM 23 April 2020
In item 3.1, shareholders are called to a binding vote on the remuneration policy. Significant changes are proposed to the 2019 policy, which was rejected by last year's AGM, including, among others, the elimination of discretionary bonuses, a new long-term incentive plan and the introduction of ESG-related performance conditions. The quality of disclosure is at the highest levels in Italy, as all performance conditions are disclosed and targets are quantified (both annual and long-term). The CEO's aggregate variable remuneration is capped at 350% of the base salary, above ECGS' voting policy limit of 300%, but we welcome the proposed changes to the policy and, in our opinion, overall variable remuneration schemes are adequately structured to realize an alignment of interests of executives and shareholders in the long term. Therefore, we recommend approval.
In item 3.2, shareholders are called to an advisory vote on the remuneration paid in 2019. Although we appreciate the changes to the remuneration policy for the 2020-2022 period, the amounts paid in 2019 result from the policy that was rejected by last year's AGM, which raised serious concerns especially with regards to the amount of variable remuneration (on aggregate capped at 500% of the CEO's base salary). Therefore, we recommend opposition.
In item 6 (EGM), the Board asks for the authorization to increase the ordinary share capital by up to maximum 1.1% in execution of the 2020 Employee Share Ownership Plan. The CEO and top managers of the Company do not participate in the Plan. Shares may be purchased at a 10% discount, and participants will receive 1 free share for every 3 shares purchased after a holding period of 1 year. The maximum number of shares to be issued and the discount offered to employees is reasonable. However, ECGS requires a minimum holding period of 3 years to apply any discount on the share's price. As in our opinion a holding period of only 1 year does not effectively support a long-term share ownership of employees, we recommend opposition.
Telecom Italia is a telecommunications group based in Italy. Co. is engaged in the communications sector and, particularly, the fixed and mobile national and international telecommunications sector, the television sector and the office products sector. Co. operates mainly in Europe, South America and the Mediterranean Basin. Co.'s operations are organized along two operating segments: Domestic - Italy (providing telephone and data services on fixed-line and mobile networks for final customers (retail) and other operators (wholesale)); and Brazil (operates in the mobile phone, fixed telephony, in long-distance and data transmission markets in Brazil).
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