The CNMV forces the oil company to rectify the report of the contract of Luis Suárez de Lezo

The National Securities Market Commission (CNMV) asked the oil company Repsol rectify its statement that complies with the recommendation of good corporate governance in relation to the compensation provided for its executive directors, being forced to admit that it only partially complied until the termination of the contract with Luis Suarez de Lezo.

Suárez de Lezo's contract was resolved with the payment of more than 11 million euros after leaving at the end of last year his executive duties as general secretary of the company.

Specifically, the CNMV recommendation establishes that «the payments for termination of the contract do not exceed an established amount equivalent to two years of the total annual remuneration and that they are not paid until the company has been able to verify that the director has met the previously established performance criteria».

Repsol came in recent years indicating that it complied with this recommendation, which was added by the CNMV to the Good Governance Code of listed companies in 2015.

Breach with Lezo

However, in the specific case of the compensation of Suárez de Lezo was not fulfilled, since it received 8,741 million euros as economic compensation deferred equivalent to three annuities of your total annual compensation.

The former secretary general and former secretary of the board of directors of Repsol until the end of last year, whose executive functions were terminated at the end of last year by mutual agreement and "on the initiative and in the interest of the company", received an amount of 2.56 million euros as financial compensation for the pact of no post-contractual competition.

Thus, in 2019 he received a total remuneration of 19.26 million euros, including this compensation. Of this, 983,000 euros corresponded to the salary, another 2,996 million euros to long-term variable compensation and 840,000 euros to short-term variable compensation.

Limit of two annuities since 2014

In its explanation to the CNMV, Repsol notes that it considered that since 2015 it complied with this recommendation, since in February 2014 its board of directors approved the establishment of a limit of two annuities for compensation for termination of the new executive directors to be appointed since then and, singularly, with the CEO of the company and already sole executive, Josu Jon Imaz, when in April 2014 a limit to compensation for termination of two annuities of fixed and variable annual compensation.

However, Suárez de Lezo's contract was signed in 2005 and its conditions – which were detailed in each annual report on directors' remuneration and that included compensation greater than two annuities – "therefore respond to the circumstances in force then," says the group.

Thus, the company emphasizes that, in relation to this recommendation, “it therefore did not have freedom of action with respect to said contract, which is the very essence of any ‘recommendation’ and the principle of “complying or explaining”.

Thus, after the conversations held with the CNMV, Repsol has proceeded to indicate that the degree of follow-up to this recommendation has been partial until the end of 2019, thus modifying the criteria also included in the annual reports of Corporate governance since 2015 and until last year.