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Expert Corporate Governance Service (ECGS)
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Inditex, 16 July 2019

In item 6.a, it is proposed to re-appoint the Chairman-CEO Mr. Pablo Isla Álvarez de Tejera. The positions of Chair and CEO will be formally separated after the AGM, through the appointment of Mr. Carlos Crespo González as new CEO (item 6.c). However, the roles of control and management will not be separated, as Mr. Isla will keep the position of executive Chairman. Therefore, we recommend opposition.

In item 9, the Board proposes to approve a long-term incentive plan for the 2019-2022 period. The incentive will be paid 60% in shares and 40% in cash and capped at approximately 200% of executive Directors' base salary (100% at on-target performance). In our opinion, the Plan is adequately structured to align the interests of the executives with those of the shareholders in the long term, but we strongly regret that the incentive may vest even if targets are significantly missed (50% of the incentive will vest if only 50% of targets are met). Therefore, we recommend opposition.We also recommend that shareholders oppose the amendments to the 2019-2021 remuneration policy (binding vote in item 11), because in our opinion the percentage of annual bonus depending on qualitative criteria (30%) and termination payments (on aggregate equal to 4.4 times the executive Chairman's fixed remuneration) are excessive.

Underlying
Inditex S.A.

Industria de Diseno Textil Inditex is the parent company of a group engaged in apparel and footwear manufacturing and retailing. The Group is made up of fashion retail chains, textile manufacturing, purchasing and fabric treating companies, logistics and construction companies which are responsible for store refits and manufacturing structure. Products include men's, women's and children's wear collections, footwear, and women's lingerie which are sold through the Group's retail store chains of: Zara, Kiddy's Class, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, and Oysho and Zara Home.

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