1 IBEX 35 Companies Corporate Governance Study September 2019 Spain Private and Confidential 1 Table of contents 1 IBEX 35 CORPORATE GOVERNANCE OVERVIEW IBEX 35 Boards at a glance p. 8 A snapshot of IBEX 35 Directors’ profiles p. 9 IBEX 35 Board members’ professional expertise p. 10 Cross-linkages: Directors sitting on several IBEX 35 Boards at the same time p. 11 Re-appointment year of IBEX 35 Chairmen & CEOs p. 12 Ibex 35 Board Committees p. 13 2 IBEX 35 DIRECTORS’ ANALYSIS IBEX 35 Boards – share of Executive, Proprietary, Independent and External Directors p. 16 A spread-out trend to appoint LID even if it is not required by regulation p. 17 New Directors: a snapshot of the 74 profiles p. 18 A. Diversity • Presence of women among IBEX 35 Boards p. 20 • Women’s representation in IBEX 35 Committees p. 21 • Female Directors in IBEX 35 Boards – areas of expertise p. 22 B. Digital • Digital expertise in IBEX 35 Boards p. 24 • Digital Committees in IBEX 35 Boards p. 25 C. Internationalization • How many Directors come from abroad? p. 28 • Evolution of foreign Directors over time p. 29 3 IBEX 35 CEO’S ANALYSIS Overview of IBEX 35 CEOs profiles p. 32 Overview of IBEX 35 CEOs profiles – by nationality and gender p. 33 Private and Confidential 3 Methodology The following study is based on publicly available biographical data on Board members of IBEX 35 companies collected from their official websites, Boardex, RRA Global Data Base, RRA internal studies and CNMV (Comisión Nacional del Mercado de Valores) between January 2018 and February 2019. The data analysis was conducted by compiling companies' information and comparing it with the “Listed Companies Governance Best-Practices Code” established by the Spanish regulator, CNMV which provides both guidance and support in the maintenance of an adequate corporate governance. By identifying Ibex 35 companies' accuracy in the following of CNMV’s recommendations, our goal is to provide a stronger snapshot on their path to incorporate all best-practices in comparison to their similarly sized counterparts. Private and Confidential 4 Key Highlights in Ibex 35 Boards AGE • Significant dispersion effect in the age of the Board Members: • 62 years in average • Differences between men and female Directors impacted by international or national origin BACKGROUND • Statistically significant presence of financial background in the Board seats • Above 50% of Board Members have CEO and/or Chairman experience in listed or private companies GOVERNANCE I. Committees • 2 boards have established Digital Committees (Innovation/Technology/Cybersecurity). • Corporate Social Responsibility and Sustainability is being implemented with dedicated committees in several boards (2+6). II. Lead Independent Director • Progress in relevance of Lead Independent Directors regardless of Split of Chairman & CEO role (7 with no split and 21 with split) DIVERSITY • Mix of women has improved (around 25%) and the pace of growth is not enough to achieve the 2020 target of 30% • Low presence of female board members in Executive Committees • Only one Female CEO in Ibex 35 Boards DIGITAL • Scarce presence of Digital Board Members (only 7% of Directors) INTERNATIONAL • Room to improve international mix in the boards (around 22%) Private and Confidential 5 1. IBEX 35 Corporate Governance Overvieww Private and Confidential 7 IBEX 35 Boards at a glance Total IBEX 35 Directors: 456 (16% new appointments between 349 107 Jan. 2018 and Feb. 2019) (77%) (23%) AVERAGE DATA: Boards of Directors have the following characteristics: 1. 13 members 2. 22% Foreigners 3. 23% Women 4. 52% Independent Directors Age: 62 years old Tenure: 7.2 years IBEX 35 Committees consist of: 1. An Audit Committee with 4 members 2. An Appointments Committee with 4 members 3. A Remuneration Committee with 4 members 4. An Executive Committee with 3 members 5. One or more additional committees dedicated to risks, strategy, technology, corporate social responsibility or sustainability. Private and Confidential 8 A snapshot of IBEX 35 Directors’ profiles Directors’ average age* – by gender and by Progressivelly more international nationality Along 2017, 44 new Directors were appointed of which only 8 were non-Spanish. However, in 2018, 74 new Directors were appointed of which 20 were non-Spanish. 63.8 60.9 27% of foreigners 63.4 years old years old in 2018 years old Spanish Foreigners Male Male Male Directors Directors Directors Average age Average age Average age 18% of foreigners 20 62 in 2017 years old Directors’ Average age 8 57.3 56.8 59.0 54 years old years old years old Spanish Foreigners 36 Female Directors Female Female Average age Directors Directors Average age Average age 2017 2018 Spanish Foreigners * Average calculated using 92% of IBEX 35 Directors’ age. Private and Confidential 9 IBEX 35 Board members’ professional expertise In terms of expertise by sector, financial services is the most represented one, followed by public and energy sectors. In terms of function expertise, most of Board members have experience as Chairmen and CEO in a listed or unlisted company. Expertise by main sector background Financial Services 22.2% Function expertise Public Administration 8.9% Energy 8.3% Experience as Chairman 55% Industry 7.3% Construction/Infrastucture 6.6% Experience as CEO 49% Healthcare 4.9% Real Estate 4.9% Experience as CFO 11% Consumer 4.3% Technology 4.3% Experience as CIO/CTO 4% Telecommunications 4.3% Legal 3.9% Government/Regulatory… 26% Media 2.9% Academic 2.6% Academic Experience 20% Consultant 2.6% Transport 2.3% Private Equity 1.6% Hotels/Leisure 1.3% Insurance 1.3% Regulatory 1.3% Audit 1.0% Retail 1.0% Services 1.0% Private and Confidential 10 Cross-linkages: Directors sitting on several IBEX 35 Boards at the same time Number of Board members with Cross-linkages per company Acciona Viscofan Acerinox Telefónica ACS Técnicas 9 Acerinox 5 ACS Reunidas AENA Siemens 7 Banco Sabadell 5 Bankia Gamesa High Amadeus Repsol 6 Ence 5 Telefónica Arcelormittal Red 6 Indra Eléctrica Banco 4 Endesa 2 Mapfre Sabadell Naturgy Energy 3 Banco Santander 2 Mediaset Banco Merlin Santander 3 Red Eléctrica 2 Meliá Hoteles Properties Bankia 3 CIE Automotive 1 Viscofan Melià Hoteles 3 Merlin Properties 1 Acciona Bankinter Medium Mediaset 3 Repsol 1 AENA BBVA 2 Bankinter 1 Amadeus Mapfre 2 Caixabank 1 Colonial Caixabank Indra 2 Grifols 1 Enagás Cellnex Telecom 2 IAG 1 Ferrovial Inditex CIE Automotivew 2 Inditex Iberdrola Colonial IAG 0 Arcelormittal 0 Naturgy Energy Grifols Enagás Ferrovial Endesa Ence 0 BBVA 0 Siemens Gamesa None 0 Cellnex 0 Técnicas Reunidas +5 linkages Between 1 - 4 linkages No linkages 1 Board position 2 Board positions 0 Iberdrola Private and Confidential 11 Re-appointment year of IBEX 35 Chairmen & CEOs 8 chairmen and 4 CEO’s face a re-appointment of their term office in 2019. Chairmen CEOs * * *The Chairman and CEO is the same person. Private and Confidential 12 Ibex 35 Board Committees Apart from the regulatory Committees (Audit, Appointments and Remuneration), overall Boards have as well an Executive Committee. Occasionally, they have additional committees dedicated to risks, strategy, technology, corporate social responsibility or sustainability. 35 Audit Committees 35 Appointments Committees* 35 Remuneration Committees* 22 Executive Committees 8 Risk Committees 6 Sustanaibility Committees 2 Technology/Innovation/Cybersecurity Committees # of Committees35 Boards in Ibex 2 Corporate Social Responsibility Committees 2 Strategy Committees *These Committees can be found as a single or separated. Private and Confidential 13 2. IBEX 35 Directors’ Analysis Private and Confidential 15 IBEX 35 Boards – share of Executive, Proprietary, Independent and External Directors For the first time, the average share of Independent Directors exceeds 50% complying with the CNMV’s recommendation, which establishes that between a third and a half of the Board members must be independent. IBEX 35 8% 16% 24% 52% Acciona 18% 18% 64% Ferrovial 17% 12% 21% 50% Acerinox 7% 40% 53% Griolfs 15% 23% 8% 54% ACS 17% 24% 24% 35% IAG 17% 83% AENA 7% 53% 40% Iberdrola 14% 14% 72% Amadeus IT 18% 9% 73% Inditex 11% 33% 56% Arcelormittal 11% 11% 22% 56% Indra 23% 23% 54% Banco Sabadell 27% 6% 67% Mapfre 33% 20% 47% Banco Santander 21% 21% 58% Mediaset 8% 23% 38% 31% Bankia 33% 67% Meliá Hotels 9% 9% 36% 46% Bankinter 25% 16% 58% Merlin Properties 17% 17% 66% BBVA 27% 20% 53% Naturgy Energy 8% 50% 42% Caixabank 11% 39% 50% Red Eléctrica 8% 8% 25% 59% Cellnex Telecom 8% 33% 59% CIE Automotive 21% 64% 15% Repsol 13% 13% 20% 54% Colonial 18% 46% 36% Siemens Gamesa 15% 46% 39% Enagas 16% 15% 15% 54% Técnicas Reunidas 29% 14% 7% 50% Ence 21% 7% 36% 36% Telefónica 6% 12% 29% 53% Endesa 18% 36% 46% Viscofan 20% 20% 20% 40% External Executive Proprietary Independent Private and Confidential 16 A spread-out trend to appoint LID even if it is not required by regulation Companies that have a Lead Independent Director (LID#) Do not split Chairman & 7 CEO roles Do split Chairman & 21 CEO roles Year of 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Appoitment 28 of the LID (Total) CNMV’s Recommendation nº 34 clarifies the Lead Independent role principal functions: • to preside over the Board of Directors in the absence of the chairman and the vice-chairman • echo the concerns of non-executive Directors • maintain contacts with investors and shareholders • coordinate the chairman's succession plan. Private and Confidential 17 New Directors: a snapshot of the 74 profiles 29 Directors have experience as 33 Directors have experience as CEO Chairman 39% 45% Which sectors do they come from? Financial Services 19% Public 15% 7 are Digital Directors 23 Directors have worked for the Administration Government Industry 12% 9% 31% Academic 7% Telecommunications 5% Technology 5% Energy 12 Directors have academic 5% experience 16% Private and Confidential 18 A.