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Expert Corporate Governance Service (ECGS)
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Etude de l'AG du 04/05/2017

In item 2, shareholders are called to an advisory vote on the remuneration policy. We have serious concerns over the possibility to pay "welcome bonuses" (€ 2.2 million paid to the new CEO in 2016), which are not linked to predefined performance conditions, and the egregious variable remuneration of the CEO Mr. Cattaneo, which is capped at approximately 864% of his base salary on an annual average basis (150% the annual cash bonus and 714% the "Special Award"). Furthermore, the variable remuneration exclusively depends on annual results: up to a maximum incentive of € 10 million may be granted each year, and paid at the end of a 4-year period, subject to the level of achievement of annual targets. In 2016, an incentive of € 9'344'842 accrued, of which € 1'868'968 will be paid in cash and € 7'475'873 in shares in 2020, not depending on additional performance conditions in the long term. Furthermore, we strongly regret that 50% of both the annual bonus and the "Special Award" depends on annual EBITDA, so that the CEO is rewarded twice for achieving the same target. Accordingly, we recommend opposition.

In item 6, the AGM is called to appoint the Board of Directors on slates of nominees submitted by shareholders holding, even jointly, at least 0.5% of the share capital. Two slates of nominees have been submitted, respectively by Vivendi SA (23.9% of the share capital) and a group of institutional investors (1.9%). One of the institutional investors that submitted the slate of nominees is Generali Investments, which is a client of ECGS partners Proxinvest and Frontis Governance. It is important to note that these partners do not provide consulting services to Generali. Voting advice is provided primarily as a source of information at general meetings.

We recommend that shareholders support the slate submitted by the group of institutional investors (sub-item 6.2), taking into account the professional backgrounds and aggregate time commitments of the nominees, who are all strictly independent of the Company and its major shareholder.

Underlying
Telecom Italia

Telecom Italia is a telecommunications group based in Italy. Co. is engaged in the communications sector and, particularly, the fixed and mobile national and international telecommunications sector, the television sector and the office products sector. Co. operates mainly in Europe, South America and the Mediterranean Basin. Co.'s operations are organized along two operating segments: Domestic - Italy (providing telephone and data services on fixed-line and mobile networks for final customers (retail) and other operators (wholesale)); and Brazil (operates in the mobile phone, fixed telephony, in long-distance and data transmission markets in Brazil).

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.

Proxinvest main services are :

  • ​Proxy reports
  • Definition and monitoring of client customized voting guidelines
  • Corporate Governance Data and Rating
  • Thematic research
  • Engagement support

Proxinvest has been a pioneer and champion of good corporate governance and has grown into a recognised expert in the field.

Proxinvest is independently-owned and only works for investors : Proxinvest does not provide consulting services to the companies it covers, mitigating related risks to its clients and ensuring the independence of our analysis. As a result Proxinvest is able to take a robust, independent, engaged and unconflicted view of the companies in which our clients invest.

As Managing Partner of Expert Corprate Governance Service Ltd (ECGS), Proxinvest has built a large network of corporate governance experts to support clients in corporate governance analysis worldwide. 

Analysts
Expert Corporate Governance Service (ECGS)

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