Expert Corporate Governance Service (ECGS)
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E.ON - AGM 14 May 2019

General: In March 2018, E.ON and RWE announced a complex EUR 43bn deal, see section 3.1 for details.

Item 2: Management and Supervisory Board are proposing a dividend of EUR 0.43 per share which corresponds to a payout ratio of 26.86% per share. The dividend is covered by earnings but is not covered by free cash flow. We note that over the past four years, the dividend has not been covered by earnings and moreover has not been covered by free cash flow already in financial year 2016. ECGS believes that dividends should be covered by consolidated earnings and/or free cash flow and supported by a strong balance sheet in terms of solvency and leverage. In line with our guidelines we recommend opposition.

Items 5a, 5b and 5c: PricewaterhouseCoopers, Düsseldorf, is proposed as auditor for the current financial year. While we have no concerns over the ratio of non-audit/audit fees we note that the term of office of the auditor exceeds our maximum acceptable term of office of 10 years in case no audit tender has taken place after the initial engagement period which has not been disclosed by the Company. We consider a longer term of office may impair the auditor's independence. We therefore recommend opposing the re-election of PricewaterhouseCoopers as auditor.


E.ON is an investor-owned energy company. The Generation global unit consists of all Co.'s existing (fossil and nuclear) generation assets in Europe. The Renewables unit is engaged in managing Co.'s carbonsourcing and renewables businesses. The Global Commodities unit buys and sells electricity, natural gas, liquefied natural gas, oil, coal, freight, biomass, and carbon allowances. The Exploration & Production unit is a active in the focus regions of the North Sea (U.K., Norway), Russia and North Africa. The New Build & Technology unit include Co.'s project-management and engineering operations to support the construction of new power plants and the operation of existing plants.


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