Report
Expert Corporate Governance Service (ECGS)
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Siemens Gamesa, March 27 2019

In item 6, shareholders are called to ratify the appointment of the non-executive Chairman Mr. Miguel Ángel López Borrego (former CFO of Siemens Gamesa and executive at Siemens Group companies since 2001). We have serious concerns over the lack of independent representation on the Board (23% as per our guidelines and 38% according to the Company) and the high number of Directors representing Siemens AG (6, or 38%, including the Chairman). In addition, according to the ECGS' guidelines, a former executive should not be appointed as Chairperson without applying a reasonable cooling-off period. Therefore, we recommend opposition.

In item 7, shareholders are called to ratify the appointment of the non-executive Director Mr. Rudolf Krämmer. Independent according to the Company, he is not independent according to our guidelines, as he was a partner of the auditor of Siemens AG from 2002 to 2016, and less than 5 years passed from the end of his business relationship with the Group. Therefore, we recommend opposition.

In item 12, the Board of Directors proposes to approve a new remuneration policy for the 2019-2021 period (binding vote). We regret that the Board proposes to increase the maximum annual cash bonus payable to the CEO from 130% to 200%, which is above the ECGS' voting policy limit of 150%. However, the CEO's fixed remuneration is reasonable (€ 700'000, which is approximately 28% lower than the medians at European utilities and large Spanish non-financial companies), and the aggregate variable remuneration is in line with the ECGS' voting policy limit of 400% of the base salary. The quality of disclosure has significantly improved, and an additional cap has been introduced on the value of shares to be delivered on the vesting date of the long-term incentive (1.7 times the sum of fixed remuneration, annual bonus and target incentive). Also taking into account that termination payments (2 years of base salary, including the compensation under a 1-year non-competition agreement) are in line with our guidelines and best practices in the Spanish market, we recommend approval.

Underlying
Siemens Gamesa Renewable Energy SA

Siemens Gamesa Renewable Energy is a holding company. Through its subsidiaries, Co. is engaged in the business of renewable energy sources, primarily wind power but also including solar energy where its acts as a supplier and manufacturer of technological products, installations and services. Co. is organized along the lines of: promotion, construction and sale of wind farms, engineering, design, manufacture and sale of wind turbines, manufacture of thermic and photovoltaic solar components, promotion and sale of photovoltaic solar farms. Co. also participates in both Spanish and European working groups aimed at establishing priorities for its sector's research & development work.

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Proxinvest

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Expert Corporate Governance Service (ECGS)

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