Expert Corporate Governance Service (ECGS)
EUR 492.40 For Business Accounts Only

Etude de l'AG du 04/05/2017

In item 3, shareholders are called to an advisory vote on the Annual Remuneration Report, including the remuneration policy and the amounts paid in the last year. The Company has improved the quality of disclosure, including the performance metrics used to calculate the 2017 bonus, but individual weightings are not disclosed and it is not clear whether a percentage of the bonus will depend on a discretionary assessment. In 2016, the Company paid an additional fee of € 1 million to a non-executive Director, for his "dedication and efforts". We strongly regret that extraordinary bonuses are allowed for non-executive Directors, as it risks to undermine their independent judgement. Longterm incentives do not depend on any performance conditions and short-term

performance conditions are not adequately disclosed. We also note that the same bonus amount was paid to the CEO at least in the last 4 years, regardless of the actual performance (the Company does not disclose the level of achievement of short-term targets). Also taking into account the egregious severance payments for the Chairman- CEO (aggregate pension contributions of € 39.7 million plus a severance pay capped at 5 years of total remuneration), we recommend opposition.

In item 6, the Audit Committee proposes to re-appoint Deloitte as the Company's auditor for an additional year. Although the level of non-audit fees does not raise concerns, the number of years in office is above the threshold defined by ECGS guidelines (10 years). We also note that the term of office of Deloitte is not in compliance with the new Spanish Accounting Auditing Law (Law n. 22/2015), prescribing a total maximum period of 10 years for the duration of the contract of listed companies' auditors. Therefore, we recommend opposition.

In item 9, we recommend opposing the authorization to repurchase treasury shares, as the maximum price of the repurchases (120% of the share market price) exceeds our voting policy limit of 110% and treasury shares may be used to cover the Company's stock option plans, which are not linked to any performance conditions.

Actividades de Construccion y Servicios S.A.

ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.


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