Report
Expert Corporate Governance Service (ECGS)
EUR 500.00 For Business Accounts Only

Recordati April 11th, 2019

In item 2, shareholders are called to an advisory vote on the remuneration policy. We strongly regret that the Board resolved to increase the base salary (+44%) and the maximum bonus (from 50% to 100% of the base salary) of the CEO, without providing any clear justifications. In addition, a new termination agreement was entered into with the CEO, providing for a severance pay exceeding the equivalent of 3 years of cash remuneration (fixed plus annual bonus). Also taking into account that short-term performance conditions are not adequately disclosed, and that the vesting of stock options under the 2018-2022 Plan does not depend on performance conditions, we recommend opposition.

In item 3, it is proposed to amend the 2018-2022 Stock Option Plan, to reflect the new position of the CEO, who is no longer an employee after the change in control of the Company (CVC Capital Partners acquired 51.8% from members of Recordati family in June 2018). No other changes are proposed to the Plan, other the participation of the CEO. As the vesting of stock options does not depend on performance conditions, and the vesting period is not sufficiently long (one-fourth of stock options are exercisable every year), we recommend opposition.

Underlying
Recordati

Recordati-Industria Chimica e Farmaceutica is a pharmaceutical group based in Italy. Co.'s operations are divided into two operating segments: pharmaceuticals (and pharmaceutical chemicals) and orphan drugs. Co.'s products include ZANIPRESS®/ZANEXTRA®/LERCAPREL®/LERCARIL®, an antihypertensive drug; ZANIDIP®/CORIFEO®/LERCADIP® (lercanidipine), an antihypertensive drug discovered and developed in Co.'s research laboratories; UROREC® (silodosin), a new drug indicated for the treatment of benign prostatic hyperplasia; and LIVAZO®/ALIPZA® (pitavastatin), a statin for the treatment of dyslipidemia, among others.

Provider
Proxinvest
Proxinvest

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Analysts
Expert Corporate Governance Service (ECGS)

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