Inditex revises its sustainability goals and announces a new incentive plan

“The magic of Inditex lies in our teamwork and our values, strongly influenced by self-demand. Nobody guarantees our future, and we must always keep that in mind,” stated Marta Ortega, president of Inditex, at the beginning of the company’s general shareholders’ meeting held on Tuesday, July 11. She presided over the second meeting, during which she made a brief speech highlighting the values that characterize the company as well as the “work, courage, and commitment” of its teams.

“The results achieved in 2022 and the beginning of 2023 are the consequence of the incredible work carried out by our teams, each and every person who is part of this company,” emphasized Marta Ortega in her speech, insisting that the company’s values “allow us to be small like a family but great as a project.” She concluded by stating, “We celebrate successes together and feel mistakes as our own. That is the strength that explains the trajectory of our brands and gives us our potential for future growth.”

Following the speech, the daughter of the company’s founder, Amancio Ortega, gave the floor to the CEO. “We have made our company stronger, more efficient, and capable of facing new challenges and growing with profitability and solvency in demanding environments,” stated Óscar García Maceiras, noting that in the latest financial results, the textile company has experienced “a distinctly positive evolution in all commercial channels and geographical areas.”

Regarding the company’s future projects, the CEO assured, “We have the necessary financial health to continue driving the foundations for future growth through new investments, developing new projects, and improving our commercial offerings in all markets, channels, and formats.” He added, “We have the necessary confidence and will continue on the path of continuous improvement that has characterized this company throughout its history, without losing its essence.”

The year 2022 was Marta Ortega’s first year at the helm of the textile conglomerate, and also the best fiscal year in the company’s history, exceeding by more than 10% the pre-pandemic year of 2019 in both profitability, earning 4.13 billion euros, and in revenues. During that period, the Galician company raised its 2021 sales by 17.5% to 32.57 billion euros, thus exceeding its own prior record from 2019 by 15%.

New sustainable commitments

With innovation as their primary goal for the future, Inditex has announced a series of new objectives in order to move towards a more sustainable value chain. These targets add to previous sustainability commitments made in 2019 and reviewed in 2021 during the tenure of CEO, Pablo Isla.

In order to fulfill their renewed commitment, Inditex has outlined four key areas of focus. Initially, they aim to employ “textile materials with lower environmental impact by 2030”. Around 40% of fibres used by the group’s brands will be the result of conventional recycling processes, while 25% will come from new generation fibres and another 25% from organic or regenerative agriculture.

Secondly, Inditex intends to spearhead supply chain transformation socially and ecologically concentrating efforts on water stewardship, waste disposal systems, managing chemicals, and energy efficiency. Lastly, Inditex promises to support projects that “protect, restore or regenerate up to five million hectares and contribute to improving biodiversity”.​

The Galician company also aims to promote circularity through its second-hand and repair service “Zara Pre-Owned”. Launched last year in the UK, this offer will be extended to “all key markets” by 2025. During the current financial year, it will be launched in markets such as Spain, France and Germany.

Through these initiatives, the textile conglomerate plans to reduce greenhouse gas emissions by more than 50 % by 2030 and to reach “neutral emissions by 2040 with at least a 90% reduction rate”.

A 250 million euro incentive plan for executives

Inditex’s board of directors also approved on Tuesday a new remuneration and long-term incentive plan for directors and executives, valid through fiscal years 2024, 2025, and 2026 effective February 1, 2024.

As previously announced, the company has decided to reduce its number of board members from 11 positions down to10 after the forthcoming departure of Emilio Saracho, former chairman of Banco Popular. The board will therefore consist of proprietary directors Marta Ortega, José Arnau, Amancio Ortega and Flora Pérez Marcote; Óscar García Maceiras, as executive, and as independent directors, Denise Patricia Kingsmill, Anne Lange, Pilar López Álvarez, José Luis Durán Schulz and Rodrigo Echenique.

In terms of dividends, Inditex will make a final payment of 0.60 euros per share on November 2, out of a total of 1.20 euros per share approved in March for 2022.

The new remuneration policy, based on a mixed reward (cash and shares), will remain in force until January 31, 2027, subject to any modifications or updates made by the board of directors.

The long-term incentive plan will contribute up to a maximum of 7.5 million shares (0.24% of the capital), valued at around 250 million euros over four years, for a maximum of 750 participants.

For García Maceiras, the same fixed annual remuneration of 2.5 million euros per year in 14 installments has been approved, along with a variable annual remuneration of 120% of the fixed remuneration (maximum 125% if objectives are met) and another variable component over time with a maximum up to 225% of the fixed annual remuneration for each cycle.

Triana Alonso with Europa Press