ACS Actividades de Construccion y Servicios S.A.

Etude de l'AG du 04/05/2017

In item 3, shareholders are called to an advisory vote on the Annual Remuneration Report, including the remuneration policy and the amounts paid in the last year. The Company has improved the quality of disclosure, including the performance metrics used to calculate the 2017 bonus, but individual weightings are not disclosed and it is not clear whether a percentage of the bonus will depend on a discretionary assessment. In 2016, the Company paid an additional fee of € 1 million to a non-executive Director, for his "dedication and efforts". We strongly regret that extraordinary bonuses are allowed for non-executive Directors, as it risks to undermine their independent judgement. Longterm incentives do not depend on any performance conditions and short-term

performance conditions are not adequately disclosed. We also note that the same bonus amount was paid to the CEO at least in the last 4 years, regardless of the actual performance (the Company does not disclose the level of achievement of short-term targets). Also taking into account the egregious severance payments for the Chairman- CEO (aggregate pension contributions of € 39.7 million plus a severance pay capped at 5 years of total remuneration), we recommend opposition.

In item 6, the Audit Committee proposes to re-appoint Deloitte as the Company's auditor for an additional year. Although the level of non-audit fees does not raise concerns, the number of years in office is above the threshold defined by ECGS guidelines (10 years). We also note that the term of office of Deloitte is not in compliance with the new Spanish Accounting Auditing Law (Law n. 22/2015), prescribing a total maximum period of 10 years for the duration of the contract of listed companies' auditors. Therefore, we recommend opposition.

In item 9, we recommend opposing the authorization to repurchase treasury shares, as the maximum price of the repurchases (120% of the share market price) exceeds our voting policy limit of 110% and treasury shares may be used to cover the Company's stock option plans, which are not linked to any performance conditions.

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Construction & Materials - Spain

Acs Actividades de Construccion y Servicios SA, formerly ACS Actividades de Construccion y Servicios SA, is a Spain-based holding company primarily engaged in the construction and engineering sector, as well as communications. The Company's business is divided into three segments: Construction, which includes civil construction works, residence and non-residential building, concession activity, mining and real estate; Industrial Services, involved in engineering, installation and maintenance of industrial infrastructure in energy, communication and controlling system sectors; and Environment, which comprises such services as street cleaning, waste collection and transportation, waste recycling, commercial and industrial management of water circulation and urban gardening.

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