2026-2028 Transformation Plan

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. 

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:

• Ensuring the achievement of corporate objectives with the required pace.  

• 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.  

• Strengthening the competitive advantage.  

• 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.

 SEE INFOGRAPHIC: Iberdrola's creation of value [PDF]

Over the last 10 years, it has generated value of €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:  

  • the average total return of the top three US utilities by market capitalisation, 

  • the total return of the European industry index (Euro STOXX Utilities), 

  • the total return of the Spanish market index (IBEX 35).  

 SEE INFOGRAPHIC: Iberdrola boosts total shareholder return [PDF]

• 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. 

Transformational LTIP 2026-2028 

The proposed Transformational LTIP 2026-2028 (Long Term Incentive Plan) is a long-term incentive plan linked to the Company’s performance during the 2026-2028 period, to be settled on a staggered and deferred basis exclusively through the delivery of shares, for which a maximum of 20 million shares will be reserved, representing 0.3% of the share capital. This will not result in any dilution for shareholders, as no new shares will be issued for this purpose.

Compared to the 0.22% corresponding to the 2023 grant, the increase in the number of shares reflects the growth in scale of the Iberdrola Group (among other factors, the Transformational LTIP 2026-2028 additionally includes Avangrid, Inc. External link, it opens in a new window , Neoenergia S.A. External link, it opens in a new window. , Electricity North West Limited External link, it opens in a new window.  and their respective subsidiaries, which had their own long-term variable remuneration plans (LTIPs) during the 2023-2025 period), the expansion in the number of potential participants and the strengthening of the Company’s strategic position since then. Therefore, the maximum number of shares to be delivered to all beneficiaries is proportionally similar to the 2023-2025 Strategic Bonus.

The maximum number of shares to be delivered to the executive directors as a whole will correspond to the number of executive directors existing at any given time and will therefore not be limited to the current two directors.

The maximum number of shares to be delivered during 2026 to the current executive directors will not exceed 15% of the maximum number of shares in aggregate (three million shares).

At the time of the grant, the proposed Transformational LTIP 2026-2028, compared to the 2023-2025 Strategic Bonus, reflects an increase of €6.60 billion in expected profit for the period, implying an increase in market capitalisation of €54.42 billion.

This share-based remuneration plan, the maximum amount of which is granted every three years (rather than annually) and settled on a deferred basis in thirds over a three-year period (i.e. 2029, 2030 and 2031), constitutes a key element of the executive directors’ remuneration package, as it is designed to drive profitable and sustainable long-term growth by linking the vesting of incentives to the commitments undertaken by the Company at its Capital Markets Day held in September 2025.

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.

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: 

• No overlapping long-term incentive plans are granted: long-term variable remuneration plans generally have a duration of six years (three for performance assessment and three for settlement), and are granted every three years rather than annually, thereby ensuring that there are no overlaps.

 SEE INFOGRAPHIC: Strategic bonus and Transformational LTIP [PDF]

• Share delivery plans are not structured through capital increases or similar instruments.
• Settlement is made exclusively in shares, thereby reinforcing long-term alignment with shareholders.
• Deferred payment: any share delivery that may occur under the 2026-2028 Transformation LTIP will be settled on a deferred basis in thirds over a three-year period – i.e. 2029, 2030 and 2031.
• 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. 

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.

Comparison of the world’s leading companies by market capitalisation

Iberdrola’s benchmark group for remuneration purposes

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 to select its peer group 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.

Comparable peers: 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.

• Leaders in reputational excellence and highly rated for operational excellence with leadership in products/services or customer experience. 

• International presence and geographic diversity comparable to that of Iberdrola. ¡

• Financial services and insurance companies excluded. 

• Excluding state-controlled companies. 

Comparable peers: 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 

Comparable peers: INDITEX, Santander and BBVA.

Source: 2025 Iberdrola Annual report on remuneration of Officers and Directors (pages 43 to 45).

As a result, the peer group used by Iberdrola in its market benchmarking analysis is predominantly global in nature, with more than 60% of companies headquartered in the UK and the United States, and fewer than 40% in other European countries. This geographical concentration is also supported by the scale of assets in these markets, with a total of approximately $56 billion in assets in the United States and $50 billion in the UK, which also jointly represent the regions with the highest growth expectations for the 2025-2028 period. In line with the Strategic Plan presented to the markets at Capital Markets Day, EBITDA is expected to reach €18 billion in 2028, representing an increase of €3 billion, 50% of which will come from the UK and the United States.

Remuneration mix for executive directors in their capacity as such at any given time

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 2026-2028, a remuneration plan whose maximum amount is granted every three years (rather than annually), 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.  

 SEE INFOGRAPHIC: Strategic bonus and Transformational LTIP [PDF]

• 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.  

• 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.  

• 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”.

 SEE INFOGRAPHIC: A remuneration mix designed to create value [PDF]