EUR 508.94 For Business Accounts Only

Proxy Report - 05/04/2018

In item 5 and item 6, the Board proposes the distribution of 2 scrip dividends, giving shareholders the option to receive their dividend, in full or in part, in cash or free shares. The maximum aggregate amount of the distributions is equal to € 545 million, which is equal to 120% of consolidated net income in 2017. However, it should be considered that the actual cash payment will depend on the number of shareholders opting for the cash dividend (selling their rights of free allocation to Ferrovial at a fixed price). In 2017, more than 40% of shareholders opted for the cash dividend and the actual cash distribution was € 218 million. As the proposed scrip dividend program represents a valid option for the Company to preserve capital, maintaining the shareholders' right to alternatively decide whether to receive all or part of their dividend in cash or free shares, we recommend approval.

In item 7, the Board requests the authorization of shareholders to reduce the share capital by cancelling up to maximum 20.4 million treasury shares (2.8% of existing shares), and to purchase up to maximum 19 million shares (2.6%). The authorization to
buy-back and cancel treasury shares will be valid for one year, and the maximum aggregate consideration for the acquisition of treasury shares may not exceed € 275 million. The share capital's reduction is proposed to offset the effects of the repeated issuance of new shares related to the scrip dividend programs, including the potential dilution suffered by those shareholders that will not opt for the full payment of dividends through free shares. Also taking into account the reasonable amount of the share buyback program, we recommend approval.

In item 9, shareholders are called to an advisory vote on the Annual Remuneration Report. The quality of disclosure is good, as all performance conditions are disclosed and long-term targets are quantified. However, we have serious concerns over the
excessive weight of the qualitative assessment of the Board in determining the annual bonus (50% of the Chairman and 40% of the CEO's bonus). Furthermore, the overall variable is capped at 350% of the executive base salary, exceeding our voting policy limit of 300%, and it depends more on the short-term (64% of aggregate variable remuneration at maximum levels) than on long-term results. Therefore, we recommend opposition.