New CEO with a new incentive plan. Cellnex’s board of directors has approved a new bonus for the chief executive who replaces Tobías Martínez. It maintains the parameters of the previous one, although it becomes more demanding to reach the maximum remuneration. This measure comes after the payroll of the current CEO for the year 2022 has been affected after the incentive plan has not been paid due to the severe adjustment of the stock on the stock market.
Specifically, the incentive plan will be for the period 2023-2025. It proposes a bonus of 183% of the annual fixed remuneration and a maximum of 610% annualized if the pre-established objectives are “overachieved”. In other words, this ceiling will be 1.118% of the fixed remuneration of the new CEO. This salary was set in 2023 at 1.3 million euros. The period for measuring the objectives is from January 1, 2023 to December 31, 2025. 40% is granted in shares and 60% in rights over the revaluation of shares.
The Board’s Appointments Committee on the metrics to ensure its “alignment” with the strategic priorities of the new stage: achieving investment grade rating with the S&P rating agency; drive the organic growth of the company, bypassing any relevant corporate operation, and “maximize” shareholder value. In this way, they give a weight of 60% to the evolution of the share -compared to rivals such as American Tower, Crown Castle, Inwit or Vantage Towers-, while free cash flow represents 20% and sustainability objectives (ESG) account for another 20%, between consumption of green energy, the level of commitment to employees or the presence of international talent.
Despite the improvements made in the remuneration policy, the board of directors had “a relevant level of dissent” mainly due to the multiplier that set the top of the incentive for the management team. The refusals were expressed by ‘proxy advisors’ and institutional shareholders during the second half of 2022. Finally, the presenting Commission presented to the council a model with a single maximum incentive level, equivalent to that 610% opinion of the fixed salary. This would only apply if the total shareholder return is “excellent”: a total return of 119% in three years, equivalent to 30% in annualized terms and placing the company in position 1 or 2 compared to comparable companies.
This model was approved at the session of the highest body last Tuesday, as reflected in the annual remuneration report. It will imply a modification on the remuneration policy, which will have to be carried out at the general meeting of shareholders. It is not the only change that has been made. The company has also proposed maintaining the remuneration of directors without increases in amounts and increasing a selection of senior management positions, whose total fixed remuneration is below the ‘top 25’ in the market.
The Commission presented to the council a model with a single level of incentive that is equivalent to 610% of the fixed salary
Logically, this new incentive plan will not benefit Tobías Martínez at the head of the tower and telecommunications infrastructure manager. He will leave on June 3 and will do so with compensation of 2.6 million euros and the proportional part of the fixed elements of the salary corresponding to that period. “He will not be eligible for this incentive plan, being effective for the new chief executive who is named in substitution,” the company says in the report. This new CEO will arrive, if there is no ‘extra’ delay, before June 3, when the resignation of the current executive becomes effective.
Martínez’s last full year ended without being able to collect his incentive from the 2020-2022 plan. “The accrued incentive is zero, since it does not reach the minimum revaluation threshold of the share established at the beginning of the plan,” explains the company. The drop in the stock market was close to 40% and placed the Catalan group in 9th place among comparables. The CEO insisted this Thursday in the presentation of results that there was a penalty, since the group was included by investors in two ‘categories’: growing and indebted companies. “Algorithms penalize these companies,” he adds. Even so, he defends that they have fallen to levels similar to the Nasdaq and some of the ‘tech’ companies.
Without the incentive plan due to the evolution of the action, Martínez received 1.57 million euros of variable remuneration, together with the 1.3 million fixed euros. To this is added the fixed remuneration for the board of 125,000 euros, the contribution to the pension plan of 325,000 euros and the remuneration in kind that is 33,600 euros. The drop in everything accrued is 32.4% compared to the successful year 2021, when the executive touched 5 million euros in total.
Cellnex closed the year 2022 with revenues of practically 3,500 million euros, 38% more, thanks to the latest acquisitions carried out during the year, such as the Hutchison towers in the United Kingdom. The infrastructure manager shot up recurring cash flow by almost 40%, but kept the red numbers in the income statement due to amortizations, although with a more or less significant reduction compared to last year.
