In item 7, the Board proposes to appoint Mr. Juan Sánchez-Calero Guilarte as non-executive Chairman of the Board of Directors. We welcome the separation of the roles of management and control, and Mr. Sánchez-Calero Guilarte is independent as per our guidelines. Also taking into account his professional background and aggregate time commitments, we recommend approval.
In item 8, we recommend that shareholders oppose the re-appointment of Ms. Helena Revoredo Delvecchio. Even though the Company considers her independent, she is not according to ECGS guidelines, since she is also controlling shareholder of Prosegur, a service provider of Endesa. Although the Board and the Audit Committee approved agreements with Prosegur without her participation, concerns may arise over potential conflicts of interest.We also recommend opposing the re-appointment of Mr. Garralda Ruiz de Velasco (item 9). He is independent according to our guidelines, but we have concerns over his aggregate time commitments (one executive and more than one non-executive positions at companies of significant size).
As we have concerns over the lack of independent representation (55% according to the Company but 45% as per our guidelines), we also recommend that shareholders oppose the re-appointment of Mr. Alberto De Paoli as proprietary Director in item 11.
In item 12, shareholders are called to a binding vote on the Annual Remuneration Report. We welcome that Endesa voluntarily submitted the Remuneration Report to a binding vote, going beyond the legal requirements. The quality of disclosure is good, and remuneration amounts are reasonable. However, we have concerns over the use of targets that are not challenging enough (almost the maximum bonus was paid despite the decline in 2 out of 5 performance metrics in 2018), and we have serious concerns over the aggregate severance payable to the CEO, which would amount to 24.2 times his base salary in 2019. Therefore, we recommend opposition.
Endesa is engaged in the production, transmission, distribution, and supply of electricity, through hydroelectric, fossil fuel, and nuclear generation. Co. is also engaged in the mining of coal for use in its fossil-fuel electric plants; mining research; land restoration, and environmental monitoring and control.
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The general evaluation of ENDESA SA (ES), a company active in the Conventional Electricity industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 4 out of 4 possible stars while its market behaviour can be considered as defensive. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Positive. As of the analysis date May 17, 2019, the closing price was EUR 22.79 and its potential was estimated at EUR 24.34.
We reiterate our EUR 19.50 fair value estimate along with our no-moat, stable trend ratings after Endesa released first-quarter results that were broadly in line with consensus expectations and maintained its 2019 guidance. The shares look overvalued to us; we prefer undervalued parent Enel, which has a more favorable dividend policy and higher earnings growth provided by its large international footprint. EBITDA increased 5.5% to EUR 928 million, in line with expectations. On the positive side, liberalized business' EBITDA rose 14%. Improvement of the integrated electricity unitary margin of...
Item 3: Approve the Remuneration ReportThe remuneration structure is satisfactory, though accelerated vesting is possible. Potential and actual total variable remuneration exceed guidelines, but not very much. They are moderate in comparison with UK market practice. Overall, the quantum during the year was not excessive. We recommend shareholders vote in favor.
Item 3: Approve the Remuneration Report The structure is weighted more heavily towards short-term performance. One of the performance metrics for the LTI is the payment of sustainable dividends, which is not considered appropriate as executives can potentially influence the payout level. The LTI also includes relative TSR as a performance metric. Nevertheless, the quantum is not excessive and even maximum potential amounts are moderate. On balance, we recommend shareholders vote in favor. Item 4: Approve the Remuneration PolicyThe main concern with the Company's remuneration policy is that pa...
Item 2: Approve the Remuneration ReportThe remuneration structure is unsatisfactory. The main concern at the Company is that the potential maximum incentive pay including the bonus, matching shares on the deferred portion of the bonus and the LTI amounts to 1000% of base salary, which is considered grossly excessive. Actual incentive pay during the year was1.6 times the ECGS limit. Furthermore, variable remuneration is overly reliant on a single performance metric, benchmark profit before tax. A second performance criteria will be used in the coming year. We note that the Company has adjusted ...
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