2026-2028 Transformation Plan
A plan that transforms Iberdrola and increases shareholder value
Iberdrola presented its 2026–2028 Transformation Plan at its Capital Markets Day on 24 September 2025. The Plan updates the company’s commitments and strengthens its investment strategy with the aim of transforming Iberdrola’s profile into a more regulated business, with electricity networks as its main growth driver —predictable and profitable— while maintaining financial strength and a growing dividend, creating sustainable long-term value, reaffirming its shareholder remuneration policy in line with results —through its profit distribution (payout ratio)—and increasing its social dividend.
What challenges will Iberdrola face during the 2026–2028 period?
Iberdrola, the world’s second-largest utility by market capitalization and Europe’s largest, remains focused on the electrification of the economy and plans to invest 58 billion euros through 2028 in the development of power grids. This plan will transform Iberdrola’s profile into a more regulated company, with grids serving as a growth driver.
Key Figures from the 2026–2028 Transformation Plan
Investments in electrification
Investments of €58,000 million over the 2025-2028 period to drive the electrification of the economy and the new needs of electricity networks. These investments represent an increase of 30% compared to the 2021-2024 period, focusing the Company on a more regulated environment, with the United Kingdom and the United States at the centre of these plans.
Countries with stable regulatory frameworks
85% will be allocated to countries with an “A” rating and stable, predictable and attractive regulatory frameworks. This will make it possible to drive more stable, predictable, profitable and secure growth. By country, 65% of the investment will be located in the United Kingdom (€20,000 million) and the United States (€16,000 million). This is followed by the Iberian Peninsula with €9,000 million, Brazil with €7,000 million, and other European Union countries and Australia, with €5,000 million.
Boosting the Networking Business
Analysing the main investments by business area, the Company plans to invest €37,000 million in the networks business, with €25,000 million allocated to distribution networks and €12,000 million to the transmission network, aimed at markets with closed regulatory frameworks or in advanced stages of negotiation and offering an average return on equity (ROE) of 9.5%.
A solid base of regulated assets
This will allow for a regulated asset base of €70,000 million (€50,000 million for the distribution network and €20,000 million for the transmission network), such that 75% of EBITDA will not depend on energy prices by 2028.
Investment in renewable energy generation and customers
It is planned to allocate €21,000 million to the renewable generation business and customers (38% to offshore wind; 24% to onshore wind; 10% to storage; and another 10% to solar), with 75% of projects already under construction.
Procurement and supply chain consolidation
Future growth is also assured, with €13,204 million in purchases and the supply chain secured to support future investments.
Increase in EBITDA and operating profit
With this strategy, the aim is to achieve a gross operating income (EBITDA) of €18,000 million in 2028 (€3,000 million more than in 2024), with networks driving growth, as they will contribute 55% to the operating result.
Adjusted net profit target
All of this has led the Company to set an adjusted net profit target of €7,600 million for 2028, representing €2,000 million more than in 2024.
"This plan aims to transform Iberdrola's profile into a more regulated company, with networks as a vector for growth."
Ignacio Galán
Executive Chairman of Iberdrola
In a context in which Iberdrola has again posted record-breaking results (“record after record”) and reached all-time highs in total shareholder return, from 2026 onwards the Company will address the main challenges of the 2026-2028 Transformational Plan, including:
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Ensuring the achievement of corporate objectives with the required pace.
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Securing maximum alignment with the stakeholders and alignment or remuneration with shareholder performance (“pay for performance”), while integrating the “social dividend” in recognition of the broader interests of the stakeholders.
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Strengthening the competitive advantage.
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Retaining profiles with a high strategic impact on the creation of value, backed by repeated international recognition.
Clear and sustained value creation for shareholders
Iberdrola has demonstrated a long and consistent track record of value creation, underpinned by a disciplined pay-for-performance model:
- In the last 10 years, Iberdrola has generated value of approximately €115 billion as a result of having increased its capitalisation by close to €88 billion and distributed dividends of more than €27 billion.
- In the last 10 years, Iberdrola has significantly outperformed in TSR compared to:
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the average total return of the top three US utilities by market capitalisation,
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the total return of the European industry index (Euro STOXX Utilities),
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the total return of the Spanish market index (IBEX 35).
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- In the three preceding LTI plans, the return obtained by Iberdrola’s shareholders in all cases exceeded the return obtained by the Euro STOXX Utilities index by 5 percentage points, thereby achieving the objective in full.
| TSR performance | |||
|---|---|---|---|
| 2017-2019 | 2020-2022 | 2023-2025 | |
| Iberdrola | 64% | 32.85% | 84.53% |
| Euro STOXX Utilities | 59.40% | 13.94% | 62.87% |
| Result | Index + 5.35 p.p. | Index + 18.92 p.p. | Index + 21.66 p.p. |
Data without reinvestment of dividend
Source: 2025 Annual Report on Remuneration of Directors and Officers
Transformational LTIP 2026-2028
The 2026–2028 Transformation Plan aims to maximize total shareholder return for Iberdrola during the 2026–2028 period. To this end, a 2026-2028 Transformation LTIP (Long-Term Incentive Plan) has been established, which serves as a robust and fundamental incentive for long-term value creation, enabling the company to attract and retain the most qualified executives and managers.
The Transformation LTIP also includes Avangrid, Inc.
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Transformational LTIP objectives
The Transformational LTIP, fully aligned with Capital Markets Day commitments, sets more demanding objectives and reflects Iberdrola’s ambition to strengthen its global leadership position with awards tied to demanding performance conditions: 75% financial and 25% sustainability:
- Consolidated net profit of more than €7,600 million by 2028 (+40% vs. the 2023–2025 plan forecasts, and +21% vs. the record 2025 result of €6,285 million). The net profit target has been set taking into account the Company’s announcement at its 2025 Capital Markets Day that no capital increases will be carried out during the Plan period. Otherwise, the target would be recalculated to incorporate the effects of any such transaction.
- Relative TSR: positioning Iberdrola by 2028 among the Top 3 companies within the Euro STOXX Utilities leaders.
- Maintain financial strength measured by Company’s long-term credit rating.
- Strategic sustainability objectives, including reinforcing energy security and autonomy with particular attention to the regulated networks business as a key focus for investment, MW, and SAIDI in the main markets in which Iberdrola operates, and a target of more than 85% of suppliers subject to sustainability policies and standards, ensuring achievement by 2028.
The Transformational LTIP aims for ambitious growth: beyond maintaining profitability, financial strength, and sustainability, the Company seeks to further strengthen its global leadership in energy transition and decarbonisation.
| Objectives | Weighting | 0% | 100% |
|---|---|---|---|
| Parameters relating to financial targets | |||
| Consolidated net profit at the end of 2028 | 40% | < 7,000 | > 7,600 |
| Maximise Total Shareholder Return for Iberdrola during the period 2026–2028, using the performance of the leaders in the EURO STOXX Utilities index as a benchmark | 20% | < Top 5 | ≥ Top 3 |
| Maintaining the Company’s financial strength, as measured by its long-term credit ratings, through to the end of 2028 | 15% | Dos agencias < BBB+ o Baa1 | Dos agencias BBB+ o Baa1 |
| Parameters relating to sustainability targets | |||
| Contribute to improving competitiveness, energy security and self-sufficiency, and sustainability in the main markets in which Iberdrola operates | 12,5% | Non-compliance w/Outlook 2026–2028 | Compliance w/Outlook 2026–2028 |
| Suppliers subject to sustainability policies and standards in line with the investment strategy | 12,5% | < 80% | ≥ 85% |
Excluding corporate transactions.
Source: Proposed resolutions at the Annual General Shareholders’ Meeting on 29 May 2026. Item 12 on the agenda (page 43).
Strong governance safeguards and long-term alignment
The Transformational LTIP incorporates governance features that exceed market standards:
- Enhanced post-vesting holding requirements: following vesting, shares are subject to further holding requirements until shareholding guidelines are met. Historically, executive directors retain a material proportion of their shares, demonstrating long-term conviction in the business.
- Shareholding policy: shares must be retained for up to five years (previously four) unless executives hold at least 500% of fixed remuneration in shares (previously 200%).
- Strict clawback and malus provisions: both short- and long-term variable remuneration is subject to the application of clauses for the cancellation (malus clauses) or reimbursement (clawback clauses) of variable remuneration.
Provisions cover not only standard financial restatement and regulatory sanction triggers, but also extend to misconduct, among the most comprehensive standards in the peer group. -
Equity-only settlement and deferral, reinforcing long-term alignment with shareholders.
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Share delivery plans are not implemented by means of capital increases or similar instruments.
These mechanisms substantially mitigate the risk of misaligned outcomes.
Iberdrola, second utility by marketcap in the World
Iberdrola is the second largest utilities worldwide by market capitalisation, with a significant international footprint and a growth strategy driven by large‑scale global investments, with a focus on the United Kingdom and the United States.
In this context, a broader benchmarking approach that includes global industry peers provides a more accurate and balanced reference for assessing its remuneration framework. The criteria used by Iberdrola to select the group of comparable companies are as follows:
I. Utilities (Global)
- Companies listed on the STOXX Europe 600 and S&P 500 Utilities indices.
- Companies belonging to the European Round Table of Industrialists and Business Round Table.
- Companies with at least 50% of Iberdrola’s turnover in the last financial year, provided that the market capitalisation exceeds €10,000 million. This minimum turnover standard is not applied to companies with a market capitalisation higher than that of Iberdrola.
- Excluding state-controlled companies.
7 companies: NextEra Energy, Duke Energy, The Southern Company, E.ON, Constellation Energy, Exelon Corporation and Veolia Environment.
II. Leaders (Global)
- Companies listed on the FTSE Eurotop 100 and S&P 500 indices (prioritising the inclusion of companies from the industrial and energy sector).
- Companies belonging to the European Round Table of Industrialists and Business Round Table.
- Turnover in the last financial year and market capitalisation between approximately 50% and 200% of Iberdrola’s size. Only the capitalisation criterion will apply in the case of oil & gas companies.
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Leaders in reputational excellence and highly rated for operational excellence with leadership in products/services or customer experience.
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International presence and geographic diversity comparable to that of Iberdrola. ¡
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Financial services and insurance companies excluded.
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Excluding state-controlled companies.
18 companies: 3M, ABB, Astrazeneca, BP, Caterpillar, ConocoPhillips, Cummins, Deere&Company, General Dynamics, Northrop Grumman, GSK, Honeywell, Novo Nordisk, Rio Tinto, Shell, Siemens, Schneider Electric and TotalEnergies.
III. IBEX 35 (Spain)
- Top companies by market capitalisation in the Spanish market
3 companies: INDITEX, Santander and BBVA.
Source: 2025 Iberdrola Annual report on remuneration of Officers and Directors (pages 43 to 45).
Retribution mix for executive directors
Iberdrola has a highly internationalised Board of Directors, with members representing five different nationalities (Brazil, Spain, the United States, the United Kingdom and Italy), reflecting the global scale and international nature of the Group.
In this context, it is particularly relevant to note that the Transformational LTIP has a six-year horizon and given Iberdrola’s size and international profile, it is entirely plausible that during this period the Board may include more than two executive directors, potentially with different nationalities and international market benchmarks.
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The remuneration mix ensures the flexibility required to attract, retain and motivate the most qualified executive directors who act as such at any given time and professionals so that the Company can meet its strategic objectives within an increasingly competitive and globalised framework.
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The remuneration mix maintains the Company’s competitive advantage by establishing a remuneration package that guarantees recruitment, retention and loyalty-building in contexts of economic volatility and geopolitical tensions, for profiles with a high strategic impact on the creation of value for the Company, backed by repeated international recognition.
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These profiles provide the Company with a differential in terms of the combination of experience, skills and abilities, talent, dedication, innovation and a devotion to leadership, and they have been backed by repeated international recognition over time.
For executive directors, the specific features of the Policy that ensure consistency with long-term strategy, interests and sustainability focused on the achievement of long-term results are as follo
- Total remuneration of the executive directors, whether or not directors, is mainly comprised of: (i) fixed remuneration (ii) short-term variable remuneration (annual bonus) and (iii) long-term variable remuneration.
- In considering the Company’s competitive advantage, the remuneration mix and total remuneration are designed in such a way as to recruit and retain the best talent and align their conduct with the interests of the Iberdrola group and the achievement of its business strategy, promoting long-term sustainability, in accordance with best practices.
- An appropriate balance is struck between fixed and variable components of remuneration: the executive directors have a variable remuneration system with risk measures to ensure that no variable remuneration is paid if they do not meet the minimum threshold of achievement. A maximum payment limit that cannot be exceeded is also established.
- The weight of variable remuneration, both short and long term, for the 2026 annual payment, in a scenario of maximum target achievement, is 81% for the executive chairman and 76% for the chief executive officer. The above pay-for-performance percentages are remuneration connected to the achievement of objectives.
- The share delivery plans linked to achieving strategic objectives are designed as a multi-year plan with deferred delivery of shares that seeks to encourage commitment to the long-term strategic objectives, aligning part of the remuneration with the creation of value and shareholder return and the maximisation of its “social dividend”.
