Luxottica | 2016

For the third year in a row, Etica Sgr attended and voted at Luxottica’s shareholders’ meeting, held in Milan on April 29th, 2016.

Etica Sgr voted in favor of approving the company’s financial statements and dividend distribution proposal: indeed, the company achieved particularly positive results in terms of key performance indicators, net investments carried out over the year, and the stability of the company’s net financial position. These results have also been reflected in the payout ratio over the years, which has been just as stable. Etica Sgr abstained from voting on the agenda item regarding the buyback of the company’s own shares: while the underlying goals of this share repurchase were clear, certain aspects were criticized, such as the significant use of reserves (over 70%) and the fact that the plan did not explicitly exclude the use of derivatives to purchase the shares.

Etica Sgr voted against the approval of the Remuneration Policy for management.

In that regard, Etica Sgr made sure to explain its reasoning behind the negative vote during its address to the meeting. Although Etica Sgr was pleased with the introduction of clawback provisions for variable remuneration based on short-term results, it determined that the justification for the amounts paid out to the two CEOs, Vian and Mehbob-Khan, did not appear to fully correspond with what had been set forth in the previous year’s Remuneration Policy. This was especially true as regards the MBO plan. Indeed, there is a lack of detailed information on the target indicators, including the weight attributed to each and how they are linked to short- and long-term variable remuneration. Additionally, there is a lack of parameters to measure social and environmental responsibility in determining variable pay.

On the other hand, Etica Sgr voted in favor of the appointment of Francesco Milleri as a non-independent director. As for the last agenda item, during the extraordinary part of the shareholders’ meeting, Etica Sgr again voted in favor of amendments to some articles of the company’s by-laws. In both cases, Etica Sgr did not observe any critical issues in particular.

In its address to the meeting, Etica Sgr highlighted the need for prudent governance, especially in light of the recent turnover seen in the company. Indeed, company leadership must continue to steer Luxottica towards investment and development strategies that create long-term industrial value, just as it must strengthen Luxottica’s ties with all of its stakeholders.

Etica Sgr also reaffirmed the importance of drafting and publishing a Sustainability Report, as it is an opportunity for the company to adhere to international best practices. Furthermore, Etica Sgr expressed its hope that Luxottica will develop a system which tracks environmental performance in key areas, and which is based on internationally-recognized standards such as those established by the CDP (Carbon Disclosure Project). This represents an opportunity for Luxottica to develop a clear environmental policy that can be applied to all of its production facilities.

Lastly, Etica Sgr highlighted the importance of adopting a specific human rights policy for all companies in the group – as well as for supplier selection – which conforms 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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