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Iberdrola, March 29 2019

In item 5, the Board proposes several amendments to the Bylaws to formalize Iberdrola's commitment to the Sustainable Development Goals approved by the United Nations ("SDGs"). The proposed amendments are in line with Iberdrola's General Sustainable Development Policy and the strategic pillars under its 2018-2022 Plan. We commend the Company for its commitment to sustainable value creation, awareness of social impact and engagement with all stakeholders. Hence, we recommend approval.

In item 11, shareholders are called to an advisory vote on the Annual Director Remuneration Report. The quality of disclosure is very good, but we have serious concerns over the very high fixed remuneration of the Chairman-CEO (€ 3'170'000 in 2018, which is more than three times the medians at European utilities and Spanish large non-financial companies). In addition, the severance payments for the Chairman-CEO (5 years of base salary, including the compensation under a 2-year non-competition agreement) substantially exceed our guidelines. Concerns also arise over the very high compensation of non-executive Directors (on average € 375'167 in 2018), which risks to impair their independence. Therefore, we recommend opposition.

In item 18, the Board proposed to re-appoint the Chairman-CEO Mr. Ignacio Sánchez Galán. As a matter of principle ECGS believes that there should be a clear division of responsibilities between the Chairmanship of the Board and the executive management of the Company. The Chairman is responsible for leadership of the Board and ensuring that Board members receive accurate, timely and clear information to enable them to monitor management performance.  We also note that ECGS has recommended the separation of the Chair and CEO positions at least since 2010, and we question the lack of responsiveness of the Board in defining an adequate succession plan for the Chairman. In spite of the high independent representation on the Board (71% according to the Company and 50% as per our guidelines, due to excessive remuneration of non-executives), we continue to be concerned over the concentration of powers at the Company and we recommend shareholders oppose the reappointment of the Chairman-CEO.

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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