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Red Electrica, March 21 2019

In item 6.1, the Board proposes to ratify the appointment of the non-executive Chairman  Mr. Jordi Sevilla Segura. Mr. Sevilla Segura does not qualify as independent due to his  relationships with the Spanish Government and political institutions. We appreciate that the Board proposes to appoint an external non-executive Chairman, as it announced at  the time of the separation of the Chair and CEO positions in 2015. Furthermore, we  note that the Board has decided to appoint a Lead Independent Director even if the Chairperson is not executive. Also taking into account Mr. Sevilla Segura's professional  background, and the sufficient independent representation on the Board (50% according to our guidelines and 58% according to the Company), we recommend approval.

In item 7.2, shareholders are called to a binding vote on the 2019-2021 remuneration  policy for the members of the Board of Directors. We regret that the executive variable remuneration depends more on annual results (the annual bonus may represent up to 71.4% of total variable components at maximum levels of performance), and it is mostly paid in cash. However, we note that the annual performance indicators are defined in  line with the progress of the 2014-2019 Strategic Plan, and 25% of the bonus is paid in shares subject to a 5-year retention period, to further align the interests of the executives with those of the shareholders in the long term. Also taking into account that the overall remuneration amounts are reasonable (the CEO's fixed remuneration is 44% lower than the median at European utilities companies and Spanish large non-financial  companies, and total variable remuneration is capped at 116% of his base salary on an annual average basis), we recommend approval.


Red Electrica is engaged in the transmission of electrical energy, the operation of the system and the management of the transmission network in the Spanish electricity system. In addition, through its subsidiaries, Co. is engaged in the acquisition, holding and management of foreign securities, co-ordination of international exchanges, provision of telecommunications services for third parties, provision of consultancy, engineering and construction services outside the Spanish electricity system, securing of funds, carrying out of financial transactions and provision of financial services.


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