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Expert Corporate Governance Service (ECGS)
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RWE - AGM 03 May 2019

Item 2: Management and Supervisory Board are proposing a dividend of EUR 0.70 per ordinary and per preference share. The dividend is covered by free cash flow but is not covered by earnings. Due to the fact that the dividend is not covered by free cash flow or EPS for a fourth consecutive year, we consider a dividend payment inappropriate at this time and therefore recommend to oppose the dividend proposal.

Items 5 and 6: PricewaterhouseCoopers, Essen, is proposed as auditor for the current financial year as well as for the audit-like review of the financial report for the first half of 2019 and of the quarterly reports for 2019 and 2020. While we have no concerns over the ratio of non-audit/audit fees we note that PricewaterhouseCoopers has audited the Company since at least the financial year 1997 (no earlier data available) which exceeds our maximum acceptable term of office of 10 years or 20 years in cases where an audit tender has taken place after the initial engagement period. We therefore recommend opposing the re-election of PricewaterhouseCoopers as auditor for the financial year 2019 (item 5) and as auditor for interim financial statements (item 6).

Items 7 and 8 : The Company proposes to convert its remaining preference shares into ordinary shares and by that follow the "one share - one vote" principle. We are a strong supporter of this principle and recommend  shareholders to support this proposal both at the general meeting of ordinary shareholders and at the special meeting of preference shareholders.

Underlying
RWE AG

RWE is an electricity and gas company. The Conventional Power Generation segment consists of the activities of RWE Power, Essent and RWE npower. The Supply/Distribution Networks Germany segment supplies electricity, gas and heat. The Supply Netherlands/Belgium segment comprises the activities of Essent in the Netherlands. The Supply United Kingdom segment comprises the operations of RWE npower. The Central Eastern and South Eastern European segment contains activities in the Czech Republic, Hungary, Poland, Slovakia, Turkey and Croatia. The Renewables, Upstream Gas & Oil and Trading/Gas Midstream segments include the activities of RWE Innogy, RWE Dea and RWE Supply & Trading, respectively.

Provider
Proxinvest
Proxinvest

Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

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Analysts
Expert Corporate Governance Service (ECGS)

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