Report
Expert Corporate Governance Service (ECGS)
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Proxy Report - 12/04/2018

In item 2, the Board proposes to distribute a dividend of € 0.6132 per share on 2017 results, by 1.3% higher than the dividend paid in the previous year despite a 35.0% decrease in consolidated net income. The dividend distribution amounts to almost 100% of the consolidated net income (€ 385 million), which is significantly higher than the disclosed Company's policy to distribute from 40% to 50% of consolidated net income. We regret that the proposed dividend distribution is not fully covered by free cash flow (€ 249 million in 2017). However, dividends were fully covered by net earnings and cash generation in the previous years, and no concerns arise over the financial position of the
Company (net cash position of € 170 million). Therefore, we recommend approval.

In item 4, shareholders are called to an advisory vote on the remuneration report. We have serious concerns over the variable remuneration structure, as it exclusively depends on annual results and no limits to the maximum bonus are disclosed. As in our opinion the executive remuneration is not adequately linked to the creation of sustainable value in the long term, we recommend opposition.

Underlying
Jeronimo Martins SGPS S/A

Jeronimo Martins S.G.P.S. is a holding company. Through its subsidiaries, Co. is engaged as a food distribution company with operations in Poland and Portugal. Co. operates in four segments: Portugal Retail, which comprises the business unit of JMR - Gestao de Empresas de Retalho, SGPS, S.A. (Pingo Doce supermarkets); Portugal Cash & Carry, which includes the wholesale business unit Recheio; Poland Retail, which includes the business unit with the brand Biedronka; and Others, which includes marketing services and representations, restaurants in Portugal, health and beauty retail in Poland, and its retail business in Colombia.

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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