The president of Naturgy renounces a millionaire 'bonus' to have "independence" in the takeover bid finalized by Criteria and Taqa

Naturgy’s president, Francisco Reynés, has made the decision to forego the controversial extra remuneration that he was set to receive following the ongoing Public Offer for the Acquisition of shares (OPA) by Criteria Caixa and Taqa. In a statement to the National Securities Market Commission (CNMV), the energy company announced that Reynés is resigning from the Long-Term Incentives program, which would have resulted in a substantial bonus given the takeover bid situation. This move allows him to maintain independence and speak freely on the imminent acquisition of the company. Sources familiar with the matter indicate that Criteria Caixa’s president, Isidro Fainé, had expected this gesture from Reynés, particularly after supporting his remuneration package in the past, even against the opposition of other shareholders such as the Australian fund IFM.

By renouncing his bonus, Reynés avoids any potential conflicts of interest that could arise from supporting the Criteria and Taqa offer. If he were to retain his bonus, it would create a conflict of interest, as it would indirectly increase his personal compensation while endorsing the takeover bid. As per the statement, “the Executive President, with the objective of being able to continue acting with absolute independence and neutrality in the face of any potential offer, and thus continue defending the interest of the company and all shareholders, avoiding any possible conflict of interest linked to the result of any potential offer, has proposed to the Appointments and Remuneration Committee to return its remuneration scheme to the initial model provided for in its February 2018 contract and in the Remuneration Policy approved by the General Shareholders’ Meeting of June 2018”.

“The Board of Directors, unanimously and at the proposal of the Appointments and Remuneration Committee, has agreed to this modification under the current Remuneration Policy approved by the General Meeting of March 2022. This means that the CEO stops participating in the economic benefits of any possible liquidation of the ILP vehicle due to any potential current or future offer or for any other reason.

Although Naturgy has not disclosed the exact amount that Reynés is foregoing, the company’s most recent remuneration report states that the incentive could be collected if the minimum profitability threshold is met. This threshold implies a share price of 19.15 euros at the time of maturity of the ILP and assumes the distribution of all dividends outlined in the strategic plan. As of Monday, Naturgy’s share price closed at 23.3 euros, experiencing a 1.48% increase. The rising share value is attributed to the impending takeover bid being negotiated by Criteria Caixa and Taqa, and knowledgeable sources suggest that the bid will include a premium above the current value, potentially exceeding 27 euros per share. Unlike the government’s handling of the Saudi STC’s entry into Telefónica last September, it seems that the government is not exhibiting the same level of concern with regards to Naturgy’s situation.