Board of Inditex. Pablo Isla’s compensation creates controversy »Social Investor

It takes less than a week for Inditex to be valid in its shareholders’ board. Marta Ortega will be confirmed as executive president and Oscar García Maceiras as a delegated councilor after almost two decades of Pablo Isla’s presidency.

The change in Inditex has been well received by voting assessors, so that it should not result in controversy over the designation of the new team, except in matters of remuneration.

In its analysis and voting recommendations for the next junta, the only point that creates controversy between the main proxies is the importance of compensation by the non -competition pact, which it will receive. Pablo Isla in compensation by filing for a company with similar characteristics or with a comparable business.

This indemnity reaches $ 19.7 million after being updated at the end of last year, once the Island’s departure was effective (he left the presidency in March, but the return was announced in November). In addition, they will get consolidated rights in pension plans, which are valued at 9,422 million.

The island accounts for 9,422 million euros in pensions

The council reviewed in December the terms agreed by Isla in its appointment as delegate councilor and vice president in 2005 (was elected president in 2011). So it was established as compensation for those two years of non -competition one year of the fixed salary, extending the ranks of non -competition and raising the ‘fine’ to Pablo Isla in case of non -compliance.

The revised commitments are those that are submitted to the junta on July 12 for validation. The compensation is extended to two years of the total salary, which includes as much as the variable and also receives the plan of long -term incentives (LTI) in analyzed terms.

So far, Pablo Isla alone has won 3.25 million in the non -competition pact. The remaining 16.49 will be deducted within the next 15 days when the new indemnity becomes valid by the council.

Is it excessive?

The debate around whether Pablo Isla’s new compensation scheme is excessive presents distinct temperatures depending on the voting assessor being consulted.

Glass Lewis it would be more in line with Inditex. The U.S. Electoral Commissioner recommends that funds support all points of the order of the day in the junta next July 12; includes the three points where remuneration policies are voted: the 7, which includes lthe update of Pablo Isla’s indemnity; the 8th, where a series of changes are made in remuneration policy and the 9, which is the point in which the 2021 remuneration report will be voted on.

The retributions were the most tense with the proxies in the 2021 junta.

With regard to the increase in Pablo Isla’s non -competition pact, Glass Lewis “recognizes” the role of the former president since his incorporation into the administration in 2005 and the paragraph with the recommendations of good government. National Commodity Market Commission (CNMV), which advises that this type of agreements does not exceed two times the total salary.

However, he showed his “preoccupation” with the increase, unless it was his vote recommendation, which would support the amendment, given that it would be in line with the other executives in the Spanish pocket.

ISS marks in its report point 7 with an alert for controversy or controversial theme

Institutional Shareholder Services (ISS) also recommends voting in favor, but marks this point of the day with a call for attention on controversies or controversial topics in its report of voting recommendations for minorities facing the junta. It also offers that alert at point 9, where the past year’s reimbursement consultancy report votes.

ISS justifies its vote in favor of Pablo Isla’s indemnity in that Inditex has been transparent in time to explain the reasons for the non -competency indemnity revision, with the objective of protecting the company from the impact it could have. of Isla as part of the competition.

Asimism, it is considered “just” to be in line with what other executives of the Island rank receive and to meet within the limits of best practices.

The risk of being caught in Pablo Isla

The conditions agreed in 2005, according to Inditex, had remained flawed and this posed a risk to the company. Pablo Isla has received a number of awards for his work in front of Inditex and the revision of the non -competition agreement has been accompanied by an expansion of themes – for example online sales – that did not exist 17 years ago.

However, this argument is not valid for all voting advisors. Corporancethe Spanish proxy integrated into the network Proxinvestrecommends shareholders oppose the increase in the importance of compensation due to Pablo Isla’s incompetence.

“We know that it is excessive, that it exceeds the limits of our voting policy,” he explains. For corporations, the added value to pay to the previous executive president is excessive, of “19.74 million, in addition to the 9,422 million of the consolidated current systems,” he recalled.

“Our voting directors recommend that the total amount to be paid should be one year’s remuneration (base salary and annual bonus). There are no restrictions, exceptions are made according to the practices of some countries, such as Spain, where the Proxinvest limit for non -competition agreements is two years of remuneration, basic salary and annual bonus, ”he added.

“This is a new package for Mr. It also includes the analyzed ILP, which can exceed an additional 62 percent of the base salary of the delegated councilor per year. Therefore, given that this broadly exceeds all limits, we suggest that the shareholders meet at this point, ”the Corporation concluded.

The Spanish voting adviser also recommends voting against point 8, which proposes a modification of the retribution policy approved by the general council of 2021 after the organizational changes, and of 9, which coincides with the report of remuneration.

Inditex will account for 45% of women’s weight in its council with the changes proposed to the council

Without hesitation, the Corporation positively values ​​the changes that Pablo Isla’s success has generated in the Inditex council. “After this council, the role of the president will cease to be the executive, which we support, and in addition there will be 45 percent of gender diversity on the council, fulfilling the recommendation of the CNMV,” he said.

Corporation recommends supporting all elections and re -elections -vote on ratification of Marta Ortegathe of Oscar García Maceiras and the elections of Pilar López Álvarez y Rodrigo Echenique-. ISS y Glass Lewis do it yourself.