Report
Charles Pinel
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proxy report 17/07/2018

The agenda with 48 resolutions proposes to approve the combination between Alstom and Siemens’ mobility business. Originally presented as a merger of equals, Siemens will become the controlling shareholder of the new Group with 50.67% of the capital at the closing of the transaction and may hold 52% four years later. Siemens will have the control over the Board with 6 out 11 directors appointed by Siemens, including the Chairman, and 4 independent directors appointed by Alstom but agreed by Siemens.


The strategic interest appears to be real but Alstom shareholders should be granted a higher control premium: the implicit control premium only amounts to 13% and, under Proxinvest view, Siemens should pay an additional €1.1 Bln to Alstom shareholders as a minimum in order to increase the premium control up to 30%. The terms of the transaction will allow Siemens to control the main European player and the second world without paying the fair price. Under these conditions, the operation will not be supported by Proxinvest.


The remuneration policy of the Chairman-CEO was strongly contested last year by the shareholders. The company has made significant improvements in terms of disclosure and structure: the achievement rates of each criterion for STI are available and the performance conditions for LTIP are calculated over 3 years. However, vesting can be made in case of underperformance. The post-transaction remuneration policy with Siemens of the future CEO is also on the agenda. It is highly inflationary with a 20% increase of the base salary which also serves to calculate the other elements of remuneration. A negative vote is therefore recommended (resolution 46).

Underlying
Alstom S.A.

Alstom serves the power generation and transmission markets, and rail transport market. Co.'s activities are divided into four sectors: the Thermal Power Sector (Co. offers power generation solutions using gas or coal to services including plant modernization, maintenance and operational support); the Renewable Power sector offers EPC solutions, turbines and generators, control equipment and maintenance for Hydropower and Wind power activities; the Grid Sector designs and manufactures equipment and turnkey solutions to manage power grids and transmit electricity from the power plant to the large end-user; and the Transport Sector provides rail transport products, systems and services.

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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Analysts
Charles Pinel

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