In item 2, he Board of Directors proposes to distribute an aggregate dividend of €0.25 per share on 2019 results, corresponding to a total dividend distribution of €501 million. The proposed dividend distribution is equal to 66.2% of consolidated net earnings, but it is not fully covered by free cash flow (€227 million in 2019). In view of the recent events relating to Covid-19, ECGS is in favour of postponing decisions on the dividend, reductions or suspensions that would allow companies to avoid liquidity risks or not generate risk for their survival. Although we acknowledge that the Company is currently well capitalised, we note that dividend distributions were not fully covered by generation of cash in the last 2 years. Also considering that the potential impact of the Covid-19 induced crisis is not yet known, we recommend opposition.

In item 5, the AGM is called to appoint the members of the Board of Directors on slate of nominees submitted by shareholders holding, even jointly 1% of Terna's share capital. We recommend shareholders to support the slate submitted by a group of institutional investors (sub-item 5.2), because all the nominees in the slate are independent from the Company and its shareholders.

In item 12.1, shareholders are called to a binding vote on the remuneration policy. We welcome the introduction of a performance shares plan (in item 10), which will replace the "phantom shares" plan approved in 2018. The quality of disclosure is good, as all performance conditions are disclosed and long-term targets are quantified. Overall remuneration amounts are reasonable (the CEO's aggregate variable remuneration is capped at 245% of the base salary) and, in our opinion, incentive schemes are adequately structured to align the interests of executives with the creation of sustainable value in the long term. Therefore, we recommend approval.