In item 2, it is proposed to distribute a dividend of €0.19 per share on 2019 results. Total dividend distribution will amount to €695 million, and it is not covered by consolidated net earnings (€512 million) or free cash flow (€576 million). Although we note that dividends were fully covered by generation of cash in the last years, serious concerns may arise over the proposed distribution of dividends, taking into account the high level of debt of EDP (0.98 times the market capitalization at the end of last year) and uncertainties related to the current pandemic scenario of COVID-19. We also note that EDP Brazil decided to cut the proposed dividend distribution by approximately 45% on March 25. Therefore, we recommend opposition.

In item 4, it is proposed to authorize the Company to acquire own shares representing, jointly with treasury shares already held, no more than 10% of the share capital. The maximum purchase price shall not exceed 120% of the market price, which is above ECGS' voting policy limit of 110%. We also note that share buy-backs may be used to increase Earnings per Share, which is a key performance indicator for both the annual bonus and the long-term incentive. Therefore, we recommend opposition.

In item 7, shareholders are called to an advisory vote on the remuneration policy for executive members. The overall remuneration amounts are reasonable, but we regret that a significant component of the variable remuneration (20% of the bonus and 35% of the long-term incentive) is based on a qualitative assessment and does not depend on predefined performance conditions. Furthermore, the annual bonus and the long-term incentive almost entirely depend on the same performance conditions (only 7% of the annual bonus and 8% of the LTI depend on different criteria), meaning that executives get paid twice for achieving the same targets. Hence, we recommend opposition.