Shareholders advised to vote against Repsol chairman over pay and independence

ECGS, ISS and Glass Lewis offer different voting advice ahead of today’s AGM

Proxy advisors have issued diverging voting recommendations at Spanish oil and gas firm Repsol, which holds its AGM in Madrid today.

While North American firms ISS and Glass Lewis have sided with all management recommendations, the Expert Corporate Governance Service (ECGS), the European network of proxy advisors, has objected to the re-election of long-serving chairman Antonio Bufrau.

Bufrau’s previous 15-year tenure as Repsol’s CEO conflicts with the governance guidelines of ECGS, which do not encourage the election of a former CEO as chairman.

In addition, ECGS has highlighted that Bufrau’s high remuneration package could be perceived as an impairment of his independence and non-executive function.

Bufrau takes home a fixed remuneration of €2.5m (compared with the €300,000 average non-executive compensation) plus other benefits and perks, such as residence costs covered based on company representation needs.

ISS and Glass Lewis have not expressed concerns about Repsol’s remuneration policy, with the former highlighting that Bufrau has relinquished life insurance worth c.€300,000 annually.

Repsol is also due to announce today an energy transition strategy dubbed “Book on Climate Change” which features a carbon intensity indicator to monitor progress towards Paris emissions reduction goals, as well as an internal carbon price of $40/t CO2 by 2040, starting from the $25/t CO2 mark in 2018.Meanwhile, ISS has noted that Sacyr, the Spanish construction company that is Repsol’s largest shareholder with a 7.9% stake, is over-represented on Repsol’s board.

Sacyr co-founder José Manuel Loureda Mantiñan and current Chairman and CEO Manuel Manrique Cecilia account for 13.3% of Repsol’s 15-member board.

Trade union Comisiones Obreras (CCOO) has also issued voting recommendations on Repsol.

They are aimed at union representatives who are trustees of corporate pension plans in Spain (CCOO also runs a small €11m pension plan for union members which is a PRI signatory).

CCOO recommended abstaining on the election of Henri Philippe Reichstul, due to overboarding concerns.

CCOO was the only advisor that has recommended voting against the non-financial information statement of the company, a unique feature of Spanish AGMs introduced by the law which transposed the EU Non-Financial Reporting Directive.

Its objections focused on social and governance issues such as remuneration gap and collective bargaining agreements.

Luis Cabra, Executive Managing Director, Technology Development, Resources and Sustainability at Repsol is speaking at RI Europe on June 11.