Report
Expert Corporate Governance Service (ECGS)
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Endesa, April 12, 2019

In item 7, the Board proposes to appoint Mr. Juan Sánchez-Calero Guilarte as non-executive Chairman of the Board of Directors. We welcome the separation of the roles of management and control, and Mr.  Sánchez-Calero Guilarte is independent as per our guidelines. Also taking into account his professional background and aggregate time commitments, we recommend approval.

In item 8, we recommend that shareholders oppose the re-appointment of Ms. Helena Revoredo Delvecchio. Even though the Company considers her independent, she is not according to ECGS guidelines, since she is also controlling shareholder of Prosegur, a service provider of Endesa. Although the Board and the Audit Committee approved agreements with Prosegur without her participation, concerns may arise over potential conflicts of interest.We also recommend opposing the re-appointment of Mr. Garralda Ruiz de Velasco (item 9). He is independent according to our guidelines, but we have concerns over his aggregate time commitments (one executive and more than one non-executive positions at companies of significant size).

As we have concerns over the lack of independent representation (55% according to the Company but 45% as per our guidelines), we also recommend that shareholders oppose the re-appointment of Mr. Alberto De Paoli as proprietary Director in item 11.

In item 12, shareholders are called to a binding vote on the Annual Remuneration Report. We welcome that Endesa voluntarily submitted the Remuneration Report to a binding vote, going beyond the legal requirements. The quality of disclosure is good, and remuneration amounts are reasonable. However, we have concerns over the use of targets that are not challenging enough (almost the maximum bonus was paid despite the decline in 2 out of 5 performance metrics in 2018), and we have serious concerns over the aggregate severance payable to the CEO, which would amount to 24.2 times his base salary in 2019. Therefore, we recommend opposition.

Underlying
Endesa S.A.

Endesa is engaged in the production, transmission, distribution, and supply of electricity, through hydroelectric, fossil fuel, and nuclear generation. Co. is also engaged in the mining of coal for use in its fossil-fuel electric plants; mining research; land restoration, and environmental monitoring and control.

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Proxinvest
Proxinvest

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Expert Corporate Governance Service (ECGS)

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