October 21, 2020

Iberdrola returns to raise its discrepancies in the board of Siemens Gamesa

Iberdrola returns to raise its discrepancies in the board of Siemens Gamesa



The shareholders meeting of Siemens Gamesa has confirmed the increase in orders and optimism about the future of the company, but it has been marked because Iberdrola, second shareholder, has complained again about the management and what it understands is a loss of autonomy to the Siemens group.

Siemens Gamesa Renewable Energy held its shareholders meeting in Bilbao this Wednesday, after closing its 2018 fiscal year (from October 2017 to September 2018) with a profit of 70 million.

On the one hand, optimism about the future has been confirmed after achieving in the last quarter, which ended in December, new orders of 2,000 million euros, 6% more, in addition to the 22,800 million it already had, although no projections of net benefit have been given.

But, on the other hand, the tensions between Siemens, the majority shareholder of Siemens Gamesa, with 59%, and the minority Iberdrola -the 8 %- have resurfaced, which were considered surpassed when they will be two years after the merger between Siemens wind and Gamesa.

The representative of the Basque power company, Mikel Arrieta, has complained about the intergroup purchases of Siemens Gamesa from Siemens, the lack of information to the board about relevant operations and the management's remuneration, all because, in his opinion, it goes against the autonomy of the wind company.

There are three points in which the Basque electricity company disagrees: the first, the payments that Siemens Gamesa makes to Siemens for goods and services. According to Arrieta, there are 26 million euros that were previously contracted to other suppliers and are now bought from Siemens.

"The perpetuation and proliferation of contracts between Siemens Gamesa and the Siemens group is worrisome," said Arrieta, with agreements that "are even foreseen until the second half of 2021, which increases the group's dependence".

"Almost two years after the merger, Siemens Gamesa does not enjoy all the independence it should have," he stressed. Although it has recorded this opinion, Iberdrola has voted in favor of the management report.

Secondly, according to Iberdrola, limits have been placed on the board of directors of Siemens Gamesa to approve transactions with certain thresholds, which would prevent Iberdrola from having knowledge of relevant transactions. Therefore, he has asked the council to know all the important issues.

Finally, he has disagreed about the modification of the long-term incentives of the managerial staff. Arrieta has expressed the "concern" of Iberdrola for this proposal, in whose vote it has abstained.

He recalled that the compensation plan in effect until today was approved with 98% of votes in favor last year. Basically, he has opined, what underlies "is that the incentives of Siemens Gamesa are equated with those of Siemens, which translates into a further step in the total integration in Siemens and a significant loss of autonomy".

They have answered the president, Miguel Angel Lopez, and the CEO, Markus Tacke, who have defended the good corporate governance of the company. As they have reiterated, any transaction goes through the audit committee, composed of three people, all of them independent

The president has answered with a "no" when asked if Siemens Gamesa will be integrated into Siemens, and Tacke has added that they do not have "to favor or harm one company or another." Siemens Gamesa is independent, "he stressed.

They were not the only complaints on the Board: a representative of UGT has expressed concern about possible new cuts in the Spanish workforce, which, in his opinion, has already suffered the departure of more than 400 workers in the last two years, as well as its discrepancies with the application of variable remuneration for workers.

The CEO Tacke has responded that the staff in Spain has increased by 320 people in the last year.

The reticence of Iberdrola has covered the balance that the managers have made of the last year and their optimistic perspectives.

According to the president, the merger has been "a decisive step", which has provided the company in one year 700 million euros in recurring productivity gains and synergies.

The objective for this fiscal year is sales of 10,000-11,000 million euros and an EBIT margin of 7-8.5%. The novelty of today has been the data of the entry of orders during the last quarter, which continues to rise with 2 billion in new orders.

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