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HomeLatest NewsThe proxy Glass Lewis rejects the advance of the bonus in shares...

The proxy Glass Lewis rejects the advance of the bonus in shares to the leadership of Indra

Date: April 12, 2024 Time: 17:32:47

International voting advisor Glass Lewis will endorse all items on the agenda of the general meeting of shareholders that will certify the succession. With the exception of one: the advance of the bonus in shares accrued but not paid to the executive directors of the company. This means changing the policy approved and established in 2018 and 2021 and affects not only the former president, Fernando Abril-Martorell, but also the former CEOs Ignacio Mataix and Cristina Ruiz. The ‘proxy’ believes that this retroactive change “undermines the integrity of the approved plans.” The group justifies it in that the ultimate goal is to “adapt this remuneration concept to market practice in comparable companies”.

Item seven on the meeting’s agenda contemplates two modifications to the remuneration policy that cover the years between 2018 and 2023. These are two periods of three years in which the company proposed that 30% of the variable remuneration is shares collected primarily by executive directors will vest but not be paid until the third year. Given the departures of three of the top executives in recent years and the approval of a new policy, the company has taken the opportunity to eliminate this deferral.

Glass Lewis ensures that if this point is approved at the meeting that will take place on June 30, the deliveries of deferred shares that remain pending payment for the years 2020, 2021 and 2022 will be delivered to four executives. According to data from the adviser, the former president of the group, Fernando Abril-Martorell still has 20,666 titles without receiving; the two former CEO Cristina Ruiz and Ignacio Mataix add up to 35,600 and 56,200, respectively, and the current executive director and head of Minsait, Luis Abril, accounts for almost 43,800.

The company, as contemplated by the adviser in his report, has set the average prices at which these shares are assigned to executives: 7.35 euros for the year 2020; 9.3 euros for 2021, and 11.3 euros for 2022 Based on these prices, it would be total disbursements valued at 174,000 euros for Abril-Martorell; 335,000 euros for Cristina Ruiz; 569,000 euros for Ignacio Mataix, and 446,000 euros for Ignacio Mataix. Between all of them they would add about 1.5 million euros.

Indra alleges that it adapts this bonus “to the market practice in comparables” and insists that it would be coherent to eliminate the previous delay if this measure is incorporated into the new policy

Faced with this ‘ad hoc’ change and with retroactive effect, Glass Lewis is positioned against. In the first place, he assures that due to his policy, he usually supports these deferrals, since he “encourages executives to be aware of the possible consequences of their operational and strategic decisions and discourages risky or myopic strategies.” But also that companies must refrain from adjusting previously approved incentive plans, “in the absence of an exhaustive and convincing explanation of the need for adjustments.” They acknowledge that the deferral of variable bonuses is not a common practice in Spain, as Indra alleges. But he believes that the modification for earlier periods “undermines the integrity of the approved plans.” In addition, they emphasize precisely the evolution of the action. He is trading near its five-year high, “so he questions the decision to speed up the deferred stock payment.”

Indra explains in the Appointments Committee report that this modification responds to the same purpose indicated in the new remuneration policy that will come into force in 2024: “adapt this remuneration concept to market practice in comparable companies”. He understands that the coexistence of a deferral in the delivery of shares in previous years does not make sense “when the analysis carried out with external advice shows that it is not a good practice and is typical of entities belonging to regulated sectors to which it does not belong Indra”. In this sense, he points out that there is no restriction imposed for this advance and that, additionally, the measure “would reduce the complexity of internal management that the current model entails.”

Despite his rejection of this acceleration in the payment of bonuses in shares, Glass Lewis does support a modification of the remuneration policy that is in force today, until the end of 2023. This is the increase in the limit of shares to be delivered in the medium-term incentive plan for executives (Cristina Ruiz, Ignacio Mataix and Luis Abril) in the event that they exceed 150% of all the objectives of this incentive. It derives from the effect that the increase in the fixed remuneration of former CEO Mataix and the incorporation as a new beneficiary of Luis Abril has on the maximum total number of shares. For Glass Lewis, the addition of 33,600 shares (for a total of 1.25 million) is “acceptable”.

Glass Lewis does not identify “significant concerns” in the process of appointing the new CEO

Other points, a favor

Beyond these modifications, the new remuneration policy, which already includes this elimination of the delay in the collection of variables in shares, is supported by the voting advisor. Apart from this twist, there are no great novelties in the ‘road map’. The fixed remuneration of the new CEO, José Vicente de los Mozos, is updated after being increased in 2022 when Mataix assumed the position of chief executive. The maximum weight of the qualitative objectives in the variable is reduced, increasing that of the quantitative ones. In addition, the weight of the social responsibility objectives is raised from 10 to 15%. The power of the board to modulate the result of the variable remuneration of the executives is maintained, but it is limited to a maximum of 10% upwards or downwards. This point is criticized by Glass Lewis, but he stands by him for it.

The other highlights of the meeting have to do with the succession of the CEO and the arrival of Amber Capital to the highest decision-making body. “We did not identify significant concerns regarding the CEO appointment process,” says the ‘proxy’. The expansion to 16 in the number of posts and these two appointments are clearly supported by Glass Lewis. She believes that the diversity policy (38% of the members are women) is “in line with what can be expected from a Spanish company of a similar size”. He applauds keeping 50% independent.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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