BANCO SANTANDER, S.A. 2019 INFORMATION ON CORPORATE GOVERNANCE AND REMUNERATIONS • 2019 annual corporate governance report • 2019 annual remunerations report • 2019 activities reports of the audit; appointments; remunerations; risk, supervision and compliance; responsible banking, sustainability and culture; and innovation and technology committees The corporate governance chapter of the consolidated directors’ report that forms part of the 2019 Annual Report of Banco Santander, S.A. ('Santander') is attached. The entire document is available on the corporate website (www.santander.com). This chapter includes the content of the 2019 annual corporate governance and remunerations report, drafted in a free format as last year according to the provisions of the relevant regulation of the the Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores), as well as the 2019 activities reports of the audit; appointments; remuneration; risk supervision, regulation and compliance; responsible banking, sustainability culture; and innovation and technology committees. The chapter must be read in conjunction with the other sections of the 2019 Annual Report given it forms part of it. In addition, due to that circumstance, it must be noted that the automatic links to other sections that are included in the attached document will not work. The references to find the above mentioned information within the attached chapter are the following: • 2019 annual corporate governance report Entire corporate governance chapter • 2019 annual remunerations report Sections 6 (excluding section 6.6), 9.4 and 9.5 • 2019 activities reports of the audit; Sections 4.5, 4.6, 4.7, 4.8, 4.9 and 4.10, respectively appointments; remunerations; risk, supervision and compliance; responsible banking, sustainability and culture; and innovation and technology committees Corporate governance a 1. Overview of corporate governance in 2019 148 5. Management team 212 Structure of our corporate governance report 148 6. Remuneration 214 1.1 Renewing the board 148 6.1 Principles of the remuneration policy 214 1.2 Responsible banking as a cornerstone of our corporate 6.2 Remuneration of directors for the performance of governance 149 supervisory and collective decision-making duties policy 1.3 Achieving our 2019 priorities 150 applied in 2019 214 1.4 Continued improvement in corporate governance 152 6.3 Remuneration of directors for the performance of executive duties 217 1.5 Priorities for 2020 152 6.4 Directors remuneration policy for 2020, 2021 and 2022 2. Ownership structure 154 that is submitted to a binding vote of the shareholders 227 2.1 Share capital 154 6.5 Preparatory work and decision-making process with a description of the participation of the remuneration 2.2 Authority to increase capital 154 committee 233 2.3 Significant shareholders 155 6.6 Remuneration of non-director members of senior 2.4 Shareholders' agreements 156 management 233 2.5 Treasury shares 156 6.7 Prudentially significant disclosures document 234 2.6 Stock market information 157 7. Group structure and internal governance 236 3. Shareholders. Engagement and shareholders meeting 159 7.1 Corporate Centre 236 3.1 Shareholder communication and engagement 159 7.2 Internal governance of the Group 236 3.2 Shareholder rights 161 8. Internal control over financial reporting (ICFR) 238 3.3 Dividends 163 8.1 Control environment 238 3.4 2019 AGM 163 8.2 Risk assessment in financial reporting 239 3.5 2019 EGM 165 8.3 Control activities 240 3.6 Our coming 2020 AGM 165 8.4 Information and communication 242 4. Board of directors 168 8.5 Monitoring 244 4.1 Our directors 170 8.6 External auditor report 245 4.2 Board composition 175 9. Other corporate governance information 248 4.3 Board functioning and effectiveness 182 9.1 Reconciliation to the CNMV's corporate governance report model 4.4 Executive committee activities in 2019 189 248 4.5 Audit committee activities in 2019 190 9.2 Statistical information on corporate governance required by the CNMV 251 4.6 Appointments committee activities in 2019 194 9.3 Cross reference table for comply or explain in corporate 4.7 Remuneration committee activities in 2019 197 governance recommendations 272 4.8 Risk supervision, regulation and compliance committee 9.4 Remuneration to the CNMV's remuneration report model 274 activities in 2019 201 9.5 Statistical information on remuneration required by the 4.9 Responsible banking, sustainability and culture CNMV 275 committee activities in 2019 204 4.10 Innovation and technology committee activities in 2019 207 4.11 International advisory board 209 4.12 Related-party transactions and conflicts of interest 209 Table of Contents 1. Overview of corporate governance in 2019 Structure of our corporate governance report On 12 June 2018, the Spanish National Securities Market 'Remuneration') and (2) our directors’ remuneration Commission (CNMV) approved new formats for the annual policy (see section 6.4 'Directors remuneration policy for corporate governance and remuneration reports Spanish 2020, 2021 and 2022 that is submitted to a binding vote companies are required to submit and, more importantly, of the shareholders'); allowed companies to draft their reports in a free format. • Provides in section 9.1 'Reconciliation with the CNMV’s As in 2018, the 2019 corporate governance report in this corporate governance report model' and section 9.4 chapter of the annual report follows a free format. Using 'Reconciliation with the CNMV’s remuneration report such free format allows this 2019 corporate governance model' cross references to where information can be report to include in one single document content that was found in this chapter or elsewhere in this annual report previously included in at least five different documents. for each section of the corporate governance and remuneration reports in the CNMV's prescribed format; The information below is provided to understand how this and chapter is organised and how it relates to the documents we published before 2018. This chapter and report: • Provides in section 9.3 'Table on compliance with, and explanations of, recommendations on corporate • Merges (1) the summary content on corporate governance' cross-references showing where the governance that we typically included in the annual information supporting each response for all report and (2) the legally required content for the recommendations in the Spanish Corporate Governance corporate governance report itself; Code for Listed Companies can be found in this 2019 • Includes the content that was previously set out in the corporate governance chapter or elsewhere in this annual reports on the activities of the board of directors’ report. committees (see sections 4.5, 4.6, 4.7 and 4.8); • In addition, this 2019 corporate governance report • Includes (1) the annual report on directors’ remuneration includes reports on the activities of the responsible that we are required to prepare and submit to a banking, sustainability and culture committee and of the consultative vote at our 2020 annual general innovation and technology committee (see sections 4.9 shareholders’ meeting (AGM) (see section 6 and 4.10). 1.1 Renewing the board Continued improvement in the board's composition Throughout 2019, we continued to renew and strengthen acquired through top positions held in companies such as the board, reflecting our strong commitment to ensuring Yahoo! Inc. and Google, Inc. For more information see balance and diversity. This renewal was conducted in line section 4.1 'Our directors'. with our policy for the selection, suitability assessment and • Mrs Pamela Walkden was appointed independent succession of directors, reviewed by the board in February director on 29 October 2019 through co-option. She filled 2019, which replaced the target for 30% of women the vacancy left by independent director Mr Carlos representation on the board, set in January 2016, to a new Fernández González. The ratification of her appointment target to reach a 40-60% women representation by 2021. has been submitted by the board of directors to our 2020 Additionally, in February 2020 we reinforced our process of annual general shareholders' meeting (2020 AGM). See succession planning for the board and we reviewed again section 3.6 'Our coming 2020 AGM'. said policy, which will be submitted for approval of the board in March 2020. Mrs Pamela Walkden brings to the board greater gender and geographic diversity, as well as a broad international The main board changes in 2019 were as follows: experience in the banking industry and audit , as she has • Mr Henrique de Castro was appointed independent held a number of senior management positions at director at our 2019 annual general shareholders' Standard Chartered Bank over a period of nearly 30 years. meeting (2019 AGM). He filled the vacancy left by With her appointment, we achieved our gender equality independent director Mr Juan Miguel Villar Mir on 1 target established in the policy for the selection, January 2019. suitability assessment and succession of directors more than one year ahead of the established target date. For Mr Henrique de Castro brings to the board his sound more information see section 4.1 'Our directors'. experience in the technological and digital industry along with significant experience in the US market, which he 148 2019 Annual Report Responsible Corporate Economic Risk management banking governance and financial review and control • Mr Rodrigo Echenique continues as a director but ceased to be vice chairman of the Board and to perform his Board committees executive functions on 1 May 2019. The board has made changes to the composition of its The following changes have been proposed for 2020: committees, in order to continue strengthening their functioning and support to the board in their respective • Mr Luis Isasi's appointment as a new external director has areas of action, according to the best international practices been proposed by the board of directors to the 2020 AGM and internal rules and regulations.