Corporate Governance:

Practical case 1
Fertinat, SA

Practical case 1
Company data
Name: Fertinat, SA
Foundation: Year 1960, Logroño, La Rioja, Spain
Sector: Agricultural Fertilizers and Pesticides
Founder: Roberto Ruiz
Majority shareholders: Children of Roberto Ruiz - 35% participation
Billing data: 500 million euros in 2018
Corporate Governance:
Practical case 1
Background
Since its foundation in 1960, the Company has gradually increased its importance in the sector, becoming a benchmark of
the business in Spain with a market share of 25%, occupying the second position in the fertilizer sector in Spain and earning
quota year by year continuously. It also has a strong presence in Europe with a production plant in the North of France in
addition to the central plant in La Rioja.
For health reasons, the founder, Roberto Ruiz, has gradually abandoned his day-to-day activities in the company, although
he continues to maintain his position as CEO of the company, in addition to continuing to chair the Board of Directors.
Mr. Roberto is concerned about the changing environment that forces the company to adapt to great challenges, the need
to expand the commercialization of its products to new countries, new increasingly stringent regulatory requirements
regarding pesticides, problems with Opinion Groups that press with more and more force demanding the closure of the
plants due to health problems in the environment, etc.
All this has led Mr. Roberto, against the opinion of his sons, to consider it necessary to hire an external consulting company
to advise him on the appropriate corporate governance to face new challenges and guarantee the future of the company.
Through Mr. Jesús Ruiz, member of the Board and son of Mr. Roberto, this consulting work has been contracted with one of
the main external auditing companies in the country. This company, in addition, is one of the 2 companies that participate
in the contest to be the new auditors of the company in 2019.
Corporate Governance:
Practical case 1
First data
From the first meetings of the external consultants with Mr. Roberto, and the members of the Steering Committee, several
issues are revealed:

- The CEO of the company is also the main shareholder. Personalism and strong interventionism in the daily management
of the company and also directly involved in the activity of the governing bodies themselves.
- Mr. Roberto’s has a great knowledge of the fertilizer and pesticide sector in Spain, in addition to maintaining close
contact with the people of the State Administration in charge of the processes for granting licenses for the manufacture
and treatment of chemical products, even maintaining relationships of friendship with many of them.
- Relative ignorance of financial matters of Mr. Roberto and the rest of the members of the Board.
- The Board of Directors is made up of 5 people: Mr. Roberto, 2 of his sons, the financial director and the person in
charge of business development.
- The person in charge of the Financial Area, Julián Noguera provides his services in the company since its foundation
and has been carrying out different positions in the company (Commercial Department, Human Resources and
Financial Area). He is a person fully trusted by the CEO and many of the decisions are made jointly, he has a lot of
experience but lacks in financial and accounting. Mr. Julián is also the only shareholder in the main company that
supplies Fertinat with office supplies.
- The Business Development Manager is a personal friend of Mr. Roberto and has been the main defender of the
company's expansion policy in Europe.
Corporate Governance:
Practical case 1
- The position of HR head has been vacant for months, since the previous manager left the company when hired by a
competing company, his functions have been assumed by his assistant with 2 years of experience in HR management.
- The HR department reveals to the consulting team the concern about the rarefied work environment with high
turnover of technical staff and discomfort among young recent graduates who, in many cases, see that projects that
present technical innovations that they consider beneficial for the company are dismissed without giving any
explanation.
- The staff demands defined career plans and a clear allocation process for variable remuneration.
- The company's head of Audit, who reports to the CFO, is about to retire due to age.
- There are no written codes or records of market activities of the members of the board of directors and key members
of the management.

Consulting objective
In the coming weeks, in your role as external consultants, you must present a document to the Board that contains at least:
- Brief presentation of what would be an appropriate structure and appropriate governance framework for Fertinat, SA
with the bodies and composition of the members of the Board and the rest of the Commissions.
- What procedures must be modified in the company for its proper functioning, briefly explaining them in the
presentation to the Board of Directors.