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Expert Corporate Governance Service (ECGS)
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Enagas, March 28 2019

In item 6.1, the Board proposes to ratify the appointment of Mr. Santiago Ferrer Costa as non-executive Director representing the largest shareholder SEPI (5%), which is a holding company controlled by the Spanish State. Concerns may arise on the overrepresentation of SEPI on the Board (15% of Directors with 5% of shares), and we also note that at least 6 other Directors have, or have had, significant relationships with State's institutions. Also taking into account the insufficient independent representation on the Board (38% as per the ECGS' guidelines and 62% according to the Company), we recommend opposition.

In item 6.2, it is proposed to appoint Ms. Eva Patricia Urbez Sanz as independent Director. Ms. Urbez Sanz is not independent according to our guidelines, as she is the Head of Strategic Markets Department of Fujitsu Spain, of which the Spanish General State Administration is one of the key clients. Due to our concerns over the insufficient independent representation on the Board (38% as per our guidelines and 62% according to the Company), we recommend opposition.

In item 7, shareholders are called to a binding vote on the Directors' remuneration policy for the 2019-2021 period. The amounts are reasonable (total variable remuneration is capped at 112.5% of the executives' base salary), and the variable remuneration schemes are adequately structured to align the interests of the executives with those of the shareholders in the long term. Also taking into account the good quality of disclosure, we recommend approval.

In item 8, we also recommend that shareholders approve the 2019-2021 performance share plan: all the terms and performance conditions are disclosed, the maximum incentive amount is reasonable (capped at 62.5% of the executive Directors' base salary and on aggregate 0.2% of the share capital), and in our opinion it is adequately structured to align the interests of the beneficiaries with the creation of sustainable value in the long term.

Underlying
Enagas S.A.

Enagas is a gas transportation company based in Spain. Co. is engaged in the technical distribution and storage of gas through pipelines as well as the provision of regasification services. Co. and subsidiaries are engaged in the ownership, administration, storage, pipeline transportation, distribution flow, and sale of natural gas. As a transport company, Co. also provides gas and manages the gas infrastructures.

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Proxinvest
Proxinvest

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Expert Corporate Governance Service (ECGS)

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