Inditex proposes a new incentive plan for its managers worth 250 million

Inditex will bring a new long-term incentive plan aimed at members of the management team (including CEOs and other group employees) to its next shareholders’ meeting – to be held on July 11.

And this new document includes updates regarding the previous plans. The main one is that the amount of incentive that the textile industry directors will receive will largely depend on the movement of the multinational’s share price compared to the titles of 14 other large companies in the textile sector, which include companies such as Nike, H&M, AB Foods (Primark) , Zalando or Adidas.

This incentive plan is part of the variable compensation received by senior executives and part of the staff of the fashion giant. It combines payments in money and shares that are related to the achievement of certain strategic goals related to business operations and sustainability.

So, as it says in the documentation which follows the invitation to the meeting sent by Inditex to the CNMV, 25% of the incentive depends on achieving the gross profit target set by the multinational, the other 25% is determined by the company’s total sales; another 25% for total shareholder return (RTA) and the remaining 25% is calculated based on the sustainability index.

These last two points (RTA and sustainability) are responsible for the major newspapers included in the new stimulus plan. In the second case, in the case of sustainability, Inditex has incorporated new parameters into the aforementioned indexincluding, for example, the goal of reducing water consumption in the supply chain or greater use of recycled organic fibers.

But RTA also comes loaded with news. This indicator basically measures the profitability achieved by an investor who buys shares of a company at the beginning of each cycle, taking the value at the end of the cycle as a reference. And within this analysis, an important part is made taking into account the evolution of the company’s share price compared to the prices of its competitors. in previous plansInditex measured its shares with stock market indices, such as the Dow Jones Retail Titans 30, which included companies such as Costco, with a business model somewhat different from that of the Galician company. Now there is a mirror in which the textile giant tries to look at itself differently. To do this, he selected 14 large companies in the sector: his main competitors, including Nike, Uniqlo, Adidas, H&M, Puma, Zalando, JD Sports or Ralph Lauren.

The new incentive plan extends, along with senior management, to a maximum of 750 employees of the group, and the maximum number of shares to be distributed is 7.5 million, which represents 0.24% of the multinational’s share capital. The CEO, Óscar García Maceiras, will be able to receive up to 183,750.

The Inditex shares closed yesterday at 33.25 euros, so that at current market prices, the beneficiaries of the plan would share 250 million euros of ownership.

The plan has a total duration of four years and is structured in two time cycles, each independent of the other.