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Expert Corporate Governance Service (ECGS)
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Banco Sabadell - AGM 25 March 2020

In item 5, it is proposed to set at 200% of the base salary the maximum variable remuneration of all employees defined as Identified Staff, including the executive Directors. The proposed cap on variable remunerations is in line with the ECGS voting policy limit of 300%, and we note that, pursuant to the 2019-2021 remuneration policy, the maximum variable remuneration payable to executive Directors is lower than 200% of their fixed remuneration (144% for the CEO and 131% for the executive Chairman). However, we have concerns over the very high fixed remuneration of the executive Chairman (€1.94 million), which is equal to 162% of the median CEO's remuneration at large Spanish companies and 145% at European banks. In addition, we strongly regret that the executive variable remuneration depends more on annual than long-term results and the minimum level of achievement of targets for the vesting of short- and long-term incentives is not challenging enough. Therefore, we recommend opposition.

In item 7, shareholders are called to an advisory vote on the 2019 Remuneration Report. Due to the above-mentioned concerns over the executives' fixed remuneration and the structure of the variable remuneration, and also taking into account that short- and long-term incentives may vest in case of underperformance (the bonus' minimum vesting is set at 60% attainment of targets, and the LTI's minimum vesting at Banco Sabadell's TSR ranking 14th in a group of 18 banks), we recommend opposition.

Underlying
Banco de Sabadell S.A.

Banco de Sabadell is a bank holding company. Through its subsidiaries, Co. provides a range of banking and financial services in Spain and internationally. Co.'s activities include investment banking, private banking, portfolio management, mortgage loans, commercial loans and other financial products and services, deposits and international banking operations. Co. is also engaged in life insurance underwriting and brokerage. Additionally, Co. is engaged in capital property and development, as well as investing in environmental projects. As of Dec 31 2014, Co. had total assets of Euro163,345,673,000 and total customer deposits of Euro98,208,370,000.

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