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Expert Corporate Governance Service (ECGS)
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Yara International – AGM 7 May 2020

In general, Yara International is in compliance with the Norwegian regulations relating to the organisation and procedures of the AGM.

 

Under ITEM 4.1 the board of directors seeks approval of the Company's remuneration guidelines. As the proposed remuneration structure is NOT in line with its guidelines, ECGS recommends to vote OPPOSE.

 

Under ITEM 4.2 approval is sought of the guidelines for share-related incentive arrangements. ECGS notes that the Company's share-related incentive arrangement consists of restricted cash of which the net amount has to be invested in company shares. The vesting period for time vesting awards is 3 years and after this period participants are free to keep or sell the shares at their discretion. In view of the low level of transparency, specifically regarding the performance conditions applicable to the arrangement (undisclosed ROIC target), ECGS recommends to vote OPPOSE.

 

Under ITEM 5 approval is sought of the Company's report on corporate governance. ECGS notes that Yara International reports one deviation of the Norwegian Code of Practice for Corporate Governance which relates to the bundled election of the board of directors. Since ECGS considers it to be best practice for directors to be elected on an individual basis, it does NOT approve of the deviation. Accordingly, ECGS recommends to vote OPPOSE.

 

Under ITEM 6 the board of directors seeks approval of the auditor's remuneration. In view of the current term in office of the external auditor, ECGS recommends to vote OPPOSE.

 

Under ITEM 11 authority is sought for a capital reduction by cancellation of part of its holding of treasury shares. In ECGS'view, a reduction of share capital by cancellation of shares is a technical issue that does not negatively impact shareholder interests. As a matter of principle, ECGS will only oppose share cancellations which significantly deplete cash flow provided that a company is not able to pay a dividend. However, whereas ECGS acknowledges that the company is currently well capitalised, it considers that it should wait until next year to cancel its repurchased shares. In case there is a further deterioration of the market, Yara International could decide to re-issue the treasury shares to strengthen its capital base. Therefore, ECGS recommends to OPPOSE.

 

Finally, under ITEM 12, authorisation is sought to repurchase own shares. Although the authority requested would meet its guidelines, ECGS considers that it is currently not the right moment to proceed to a new share buyback programme in view of the recent events relating to Covid-19. Accordingly, ECGS recommends to vote OPPOSE.

Underlying
Yara International ASA

Yara International is a holding company. Through its subsidiaries, Co. converts energy, natural minerals and nitrogen from the air into products for farmers and industrial customers. Co. provides mineral fertilizers, industrial products and environmental products and services to its customers. Its mineral fertilizer portfolio, sold as five main brands (YaraMila, YaraLiva, YaraVita, YaraBela, YaraVera) represents a range of crop nutrients. Its industrial portfolio contains a range of nitrogen chemicals as well as CO2 and dry ice. Its environmental product and services reduce NOx emissions, control unpleasant odor, prevent toxic gases, avoid corrosion and improve water quality.

Provider
Proxinvest
Proxinvest

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.

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Expert Corporate Governance Service (ECGS)

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