For the third year in a row, Etica Sgr voted at Brembo’s general shareholders’ meeting, held on April 21st, 2016. Brembo is an Italian company that manufactures high-performance braking systems for cars and motorcycles.
Etica Sgr voted in favor of all agenda items except for the Board’s proposal to approve the Remuneration Report: in this case, Etica Sgr abstained. While Etica Sgr was pleased with the introduction of clawback provisions in the new Incentive Plan 2016-2018, it nonetheless pointed out how certain improvements that had been proposed the year before were still missing, such as social and environmental indicators in determining variable compensation for the Executive Deputy Chairman and the Managing Director. Etica Sgr also highlighted that other relevant indicators were missing, such as the target values of variable pay parameters, as well as the existing ratio of CEO pay to median employee pay.
Etica Sgr did not find any critical issues in the parent company’s financial statements, the consolidated financial statements or the income statement, and thus voted in favor of their approval.
Etica Sgr voted in favor of the proposed distribution of net income, as the payout ratio (50.36%) demonstrates a good balance between internal growth objectives and paying out dividends to shareholders. This is also in line with Etica Sgr’s Guidelines on Active Shareholder Engagement.
Additionally, Etica Sgr decided to vote in favor of authorizing Brembo to buy back its own shares, as the information in its possession was comprehensive enough to approve of the share repurchase.
During its address to the meeting, Etica Sgr complimented Brembo on the excellent results of 2015. It stated its approval of the Group’s plan to expand internationally, as long as the “Made in Italy” label is honored, which will protect the company’s production facilities and employees in Italy.
Etica Sgr also reaffirmed its strong interest in seeing Brembo’s first Sustainability Report published, which will be available in 2017. This is in line with European Directive 95/2014 on the disclosure of non-financial information.
Etica Sgr expressed its approval of Brembo’s commitment to the CDP’s carbon footprint and water footprint disclosure program. The positive results achieved by Brembo are evidence of the company’s serious dedication to the issues of climate change and the efficient management of environmental resources. At the same time, Etica Sgr expressed its desire to see a higher degree of disclosure that goes into more detail on all of Brembo’s production facilities as well as its supply chain; it would also like to see disclosure of the percentage of energy from renewable sources.
Lastly, Etica Sgr highlighted the importance of adopting a specific human rights policy for all companies in the group, and that said policy should conform to OECD Guidelines and UN Guiding Principles on business and the protection of human rights. Knowing that this is an especially complex issue, Etica Sgr pointed out that, ethics aside, more and more investors are paying attention to how human rights issues are managed within a company; indeed, it is a way of evaluating a company’s risk, and thus a decisive factor when it comes to choosing whether or not to invest.
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