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Leonardo is the holding company for The Finmeccanica Group, and is responsible for guiding and controlling industrial and strategic operations, coordinates its subsidiaries. The Finmeccanica Group operates in the Aerospace and Defence sector, which includes the Helicopters, Defence and Security Electronics, Aeronautics, Space and Defence Systems segments; and in the Transportation sector, which also includes Fata S.p.a., in addition to the companies operating in the transportation sector.
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Leonardo, previously named Finmeccanica, largely completed its portfolio restructuring with the disposal of its energy business in 2013, followed by the sale of its transportation assets in 2015. With EUR 1.8 billion of proceeds and increasing profitability, management deleveraged from a staggering 7.7 times net debt/EBITDA at the end of 2013 to a more manageable 2.3 times at the end of 2017. The firm is a leading supplier of defence systems in Europe, and we believe it will benefit from the improved outlook for European defence spending.Large orders such as the 2016 contract to supply 28 Euro...
Leonardo Spa reported good first-quarter results with revenue up 11.2% year over year and 80 basis points EBIT margin improvement over first-quarter 2018. Reported revenue of EUR 2.7 billion came in 5% above consensus. EBITA, at reported EUR 163 million, registered less of a surprise, at only 1% above market expectations. While the shares have rallied this year, they are still trading below our fair value estimate. We maintain our no-moat rating and EUR 12 fair value estimate. The start of the ...
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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