[5.1] Corporate Governance Model

Foundations of Iberdrola’s corporate governance model

A. Corporate Governance System

Iberdrola is a multinational leader in the energy sector committed to ethics, zero tolerance for corruption and crime, transparency, the fight against climate change, and good governance, and which has integrated the Sustainable Development Goals into its strategy.

The purpose of the group, its raison d’être, is none other than “to continue building together each day a healthier, more accessible energy model, based on electricity”.

Position Director Status Date of last appointment Ending date
Chairman & CEO José Ignacio Sánchez Galán
(Salamanca, Spain, 1950)
Executive 29-03-2019 29-03-2023
Vice-chair Inés Macho Stadler
(Bilbao, Spain, 1959)
Other external 08-04-2016 08-04-2020
Director Íñigo Víctor de Oriol Ibarra
(Madrid, Spain, 1962)
Other external 08-04-2016 08-04-2020
Director Samantha Barber
(Dunfermline, Fife, Scotland, United Kingdom, 1969)
Independent 08-04-2016 08-04-2020
Director María Helena Antolín Raybaud
(Toulon, France, 1966)
Independent 29-03-2019 29-03-2023
Director Georgina Kessel Martínez
(Mexico City, Mexico, 1950)
Independent 13-04-2018 13-04-2022
Director Denise Mary Holt
(Viena, Austria, 1949)
Independent 29-03-2019 29-03-2023
Director José W. Fernández
(Cienfuegos, Cuba, 1955)
Independent 29-03-2019 29-03-2023
Director Manuel Moreu Munaiz
(Pontevedra, Spain, 1953)
Independent 29-03-2019 29-03-2023
Director Xabier Sagredo Ormaza
(Portugalete, Spain, 1972)
Independent 29-03-2019 29-03-2023
Lead independent director Juan Manuel González Serna
(Madrid, Spain, 1955)
Independent 31-03-2017 31-03-2021
Director / Business CEO Francisco Martínez Córcoles
(Alicante, Spain, 1956)
Executive 31-03-2017 31-03-2021
Director Anthony L. Gardner
(Washington D.C., U.S.A., 1963)
Independent 13-04-2018 13-04-2022
Director Sara de la Rica Goiricelaya (Bilbao, Spain, 1963) Independent 29-03-2019 29-03-2023

B. Governance model

The model differentiates between the duties of strategy and supervision and those of guidance and effective management. It is based on a system of checks-and-balances that avoids the accumulation of powers:

  • Iberdrola’s Board of Directors, made up of a large majority of independent directors (one of whom is the lead independent director), focuses its activity on the determination, supervision and monitoring of the policies, strategies and general guidelines of the Iberdrola group.
  • The chairman of the Board of Directors & chief executive officer and the rest of the management team are responsible for the organisation and strategic coordination of the group.
  • In the principal countries in which the group operates, organisation and strategic coordination is implemented through country subholding companies, which group together equity stakes in the head of business companies and centralise the provision of common services. Each of these companies has its own CEO.
  • Country subholding companies have boards of directors, including independent directors, and their own audit and compliance committees, internal audit divisions and compliance units or divisions.
    Listed country subholding companies like Avangrid, Inc. and Neoenergia, S.A. have a framework of strengthened autonomy.
  • The head of business companies are in charge of the day-to-day administration and effective management of each business. They also have boards of directors, which include independent directors, and specific management teams.

Corporate and governance structure of Iberdrola, S.A.

Corporate and governance structure of Iberdrola, S.A.

(1) Company listed on the New York Stock Exchange.
(2) Company listed on the New Market segment of BOVESPA (Brazil).

C. Equity structure

Iberdrola has approximately 600,000 shareholders throughout the world, and none of them has a controlling interest.

Status at 31-12-2019.

Investment funds, pension funds and other foreign institutional shareholders account for 69.7% of the capital.

External corporate governance awards/recognitions

Iberdrola, at the forefront of corporate governance

A. Corporate governance strategy

The key elements defining Iberdrola’s corporate governance strategy are:

  • Zero tolerance towards corruption and fraud
  • Shareholder engagement
  • Corporate structure and governance mode
  • Diverse and balanced composition of the Board of Directors
  • Effective system of checks and balances
  • Social dividend and contribution to the Sustainable Development Goals
  • Active listening to the legitimate interests of the Stakeholders
  • Prudent and balanced management of risks

Corporate Governance System

B. Continuous improvement of its corporate governance rules and practices

On corporate governance matters, the Company looks to the Good Governance Code of Listed Companies published by the CNMV and generally accepted practices in the international markets.

71.4% of the directors are independent.

Remuneration policy
Director Remuneration Policy approved by the shareholders at the General Shareholders’ Meeting.
Executive directors’ variable remuneration tied to objectives..
Clause on cancellation and reimbursement of variable remuneration (malus and claw-back clauses).
Operation of the Board
71.4% of the directors are independent.
System of checks and balances, including a lead independent director.
Gender diversity: six women on the Board. A female vice-chair of the Board, and two Committee chairs.
Diversity of skills, experience, nationality and origin.
Annual evaluation of the governance bodies by an independent expert.
Social responsibility and corporate reputation
Sustainable Development Committee.
Sustainable development policies focused on the maximisation of the social dividend, promotion of the SDGs and Stakeholder engagement.
Climate Action Plan and adoption of the recommendations of the Tax Force on Climate-related Financial Disclosures (TCFD).
General Shareholders’ Meeting conceived of and certified as a sustainable event.

Sustainable Development

C. Commitment to shareholders and investors

  • The Iberdrola group has a strong industrial and financial model based on balanced growth, focused on the regulated networks businesses, renewables, and long-term contract assets, focused on the achievement of growing profits and an increase in shareholder remuneration.
  • The Shareholder Engagement Policy is intended to understand the opinions and concerns of the shareholders in the areas of corporate governance and sustainable development, encourage their sense of belonging and align their interests with those of Iberdrola.
  • Boost shareholders’ participation throughout the year, especially at the General Shareholders’ Meeting.

The quorum in attendance at the 2019 General Shareholders’ Meeting was 74.12%.

Commitment to shareholders
and investorsEngagement

All blocks of shareholder resolutions for the 2019 General Shareholders’ Meeting were approved with an affirmative vote above 98%.

D. Remuneration policy

  • The Director Remuneration Policy was approved by the shareholders at the General Shareholders’ Meeting held on 13 April 2018.
  • Director remuneration is aligned with strategic objectives and shareholder return.
Remuneration model for the Board
Type of remuneration External (non-executive) directors Executive directors
Fixed According to their duties and on market terms According to their duties and on market terms.
Short-term variable Not applicable Tied to financial and non-financial targets.
Long-term variable Not applicable Tied to multi-annual targets payable in shares (3-year accrual period and payment deferred over 3 years following accrual).
Parameters to which the annual variable remuneration of executive directors is tied in 2020
Operational / Financial Net Profit.
Shareholder remuneration.
Financial strength.
Efficiency in costs.
Installed capacity
Project portfolio.
Sustainable Development Female presence in management positions.
Presence on relevant sutainability indexes.
Parameters to which the multi-annual variable remuneration of executive directors is tied (2020-2022)1
Net profit.
Financial strength.
Total shareholder return.
Maintenance of financial strength.
Sustainable Development Goals (Fight against Climate Change, Boost Sustainability in the Supply Chain and Commitment to Salary Equality between Men and Women).

(1) Pending approval by the shareholders at the General Shareholders' Meeting to be held in 2020.

Principal activities of the Board of Directors

Keytopics in 2019

Balanced growth Alignment of Outlook 2018-2022 with challenges and trends in the sector
Review of result and level of achievement of Outlook 2018-2022
Approval of the budgets for financial year 2020
Performance and expectations of each of the businesses of the group
IPO of Neoenergia
Potential opportunities for investment in strategic markets
Sustainable remuneration of shareholders Shareholder remuneration in line with Outlook 2018-2022
Implementation of the Iberdrola Flexible Remuneration optional dividend system fro 2019
Renewal of the Iberdrola Flexible Remuneration system for the coming financial year
Social dividend Change in corporate philosophy: definition of Purpose, update of corporate values and update of the General Sustainable Development Policy and of the Human Resources Framework Policy
Supervision of the group’s activities having an impact on Stakeholders, and alignment with the Sustainable Development Goals
Analysis of Talent Management trends and best practices.
Approval of the Statement of Non-Financial Information Sustainability Report 2018
Publication of the Fiscal Transparency Report
Publication of the Gender Equality Report
Climate Action Plan, TCFD recommendations, participation in the UN Climate Action Summit 2019 and in COP25
Financial strength Approval of major financial transactions of the group
Monitoring of the financing policy and principal transactions in the capital markets
Divistments from non-strategic assets
Control of corporate risks Review and update of Risk Policies and approval of guidelines on risk limits for 2019
Monitoring of risk control and management systems and of level of compliance with the Corporate Tax Policy.
Corporate governance and compilance Re-election of the chairman as executive director, CEO and member of the Executive Committee
Appointment, re-election and classification of directors
Evaluation of candidates
Selection and composition of the governance bodies
Appointment of independent directors at the various country subholding companies
Analysis of the latest corporate governance trends
Continuous update of the Corporate Governance System to conform to internal rules, regulations and best practices
Review of corporate governance policies
Contacts between directors and shareholders
Acknowledgement of the Annual Compliance System Effectiveness Report 2018 prepared by the Compliance Unit

The Board of Directors has focused its work on defining strategy, monitoring the implementation and control of risks and advancing best corporate governance practices.

Activities Report of the Board and its Committees