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Proxy Report - 14/04/2018

Pursuant to Spanish legislation, the remuneration policy for the members of the Board of Directors must be subject to a binding shareholders' vote once every 3 years. As three years elapsed from the last vote on the policy of Iberdrola (2015 AGM),
shareholders are called to approve the policy for the 2018-2020 period (item 11). No significant changes are proposed to the policy approved in 2015.

We have serious concerns over the remuneration of non-executive Directors, which is very high (on average € 370'286 in 2017, and € 517'000 to the LID) and includes
termination benefits capped at 180% the annual compensation under a non-competition agreement.

The executive variable remuneration is based on an annual cash bonus (capped at 144% of the Chairman's base salary and 100% of the CEO's base salary) and the 2017-2019 performance share plan. All performance conditions are disclosed and targets are quantified, but we strongly regret that the Company has not disclosed the number of shares granted to each executive Director under the long-term incentive plan. Furthermore, we have serious concerns over the excessive severance payments for the
executive Chairman, equal to 3 years of base salary plus up to 2 years of base salary under a non-competition agreement. Taking into account his current base salary of € 2'250'000, the Chairman will receive an aggregate severance pay of € 11'250'000.
For all the above mentioned concerns, we recommend that shareholders oppose the 2018-2020 remuneration policy (item 11) and the Annual Remuneration Report (advisory vote in item 10).

Iberdrola S.A.

Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.


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