The Board of Gas Natural has recently approved a reorganization of the Group's structure, including several changes to the corporate governance. From item 6.1 to item 6.8, shareholders are called to approve several amendments to the Bylaws, which are in line with the Group's reorganization. We recommend that shareholders approve all amendments, except the change in the Company's name (item 6.1), as the new name was not made available to shareholders at the time of release of this analysis (June 8).
In item 9.1, the Board proposes to ratify the appointment of Mr. Francisco Reynés Massanet as Chairman-CEO. We strongly regret that the positions of Chairman and CEO have been combined, after they were split in 2016. As we have serious concerns over the lack of independent representation (40%), the excessive representation of significant shareholders (50%) and the concentration of powers, we recommend opposition. For the same reasons, we recommend that shareholders oppose the reappointment of representatives of significant shareholders in item 9.2 and item 9.3.
In item 10.1, the Board proposes to amend the remuneration policy for the 2018-2020 period. We regret that the Board significantly increased the fixed and variable remuneration of the new CEO, as compared with the ones of his predecessor, without providing a clear justification: the fixed remuneration from € 1.5 million to € 2 million, the on-target annual bonus from 80% to 100% of the base salary and the LTI from 70% to 125% of the base salary. We welcome the reduction in the CEO's severance payments, from 3 to 2 years of total remuneration, but in our opinion it is still too high, also considering the significant increase in the Chairman-CEO's total remuneration. In 2018, the former CEO received a severance pay of € 10.7 million plus € 3.6 million under a non-competition agreement. Under the new policy, the severance pay of the Chairman-CEO may be € 13 million, considering the on-target variable remuneration. Therefore, we recommend opposition.
Naturgy Energy Group SA, formerly Gas Natural SDG SA, is a Spain-based company active in the energy sector. The Company's activities are divided into four business segments: Gas & Electricity, which includes generation and renewables businesses, gas supply, marketing and logistics of liquefied natural gas (LNG) worldwide, as well as gas and electricity commercialization in Europe; Infrastructure Spain & EMPL - Medgaz, which comprises gas and electricity network businesses in Spain and the Maghreb gas pipelines; Infrastructure Latin America South Zone that implies gas and electricity networks businesses in Chile, Argentina, Brazil and Peru, and Infrastructure Latin America North Zone, which includes gas and electricity network businesses in Mexico and Panama.
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The month of February was characterized by a generally mild weather pattern in Iberia, which impacted electricity demand, down 4.8% yoy to 24.3TWh (YTD -0.7% yoy). February was also weak in terms of hydro (3.6TWh, up yoy but 35% below the 5Y avg) and especially wind production, where the output of 4.5TWh was down 22% yoy and 34% below the 5Y avg (and the lowest February wind production of the last 8 years). However, the low wind/water impact on prices was cushioned by the low demand, with the thermal gap down yoy (-19% to 5.9TWh), while commodity prices were also marginally down vs Feb-18 (Bre...
Naturgy is the only integrated international Utility in Europe to which we ascribe a moat. This is driven by the high weight of gas regulated networks in which the group has a demonstrated ability to regularly outearn its cost of capital whether in Spain or in Latin America. We believe this will continue due to high regulated returns in Latam and the fact that returns are not regulated in Spain where the group benefit from its leadership position. Altogether, networks provide cash flow visibility and sustainable organic growth.With 378 TWh of gas sold in 2018, of which 141 were LNG, Naturgy is...
In general, Lundbergforetagen is in compliance with the Swedish regulations relating to the organisation and procedures of the Annual General Meeting. Under ITEM 12, approval is sought for the re-election of the board of directors. Although there is just sufficient independent representation on the board, ECGS notes that the number of executives (3) sitting on the board is NOT in accordance with provision 4.3 of the Swedish Corporate Governance Code. Aforementioned provision stipulates that no more than one (1) member of the board may be a member of the executive management. Based on the abov...
Merger with Hewlett Packard Enterprise, Profit Warning and Sale of SUSE Business On September 2016, the Company entered into a definitive agreement with Hewlett Packard Enterprise (HPE) on the terms of a transaction which provided for the combination of HPEns software business segment with the Company by way of a merger. The transaction was valued at $8.8bn. On March 2018, the Company issued a profit warning arguing that its revenues declined more than expected due to problems stemming from its acquisition of Hewlett Packard. On 22 March 2018, Hsu resigned from his position of CEO min order to...
In general, Hexagon is in compliance with the Swedish regulations relating to the organisation and procedures of the Annual General Meeting. Under ITEM 12, approval is sought for the (re-)election of the board of directors and the statutory auditor. Since ECGS does not approve of the (proposed) composition of the board of directors as well as the current term in office of the statutory auditor it recommends to vote OPPOSE. Under ITEM 13, it is proposed to establish a(n) (external) nomination committee. Like several institutional investors, ECGS has concerns over the bundled form under which...
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