IBEX 35 Companies Corporate Governance Study...Governance Best-Practices Code” established by the...

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IBEX 35 Companies Corporate Governance Study

September 2019Spain


Table of contents

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1 IBEX 35 CORPORATE GOVERNANCE OVERVIEWIBEX 35 Boards at a glance p. 8A snapshot of IBEX 35 Directors’ profiles p. 9IBEX 35 Board members’ professional expertise p. 10Cross-linkages: Directors sitting on several IBEX 35 Boards at the same time p. 11Re-appointment year of IBEX 35 Chairmen & CEOs p. 12Ibex 35 Board Committees p. 13

IBEX 35 DIRECTORS’ ANALYSISIBEX 35 Boards – share of Executive, Proprietary, Independent and External Directors p. 16A spread-out trend to appoint LID even if it is not required by regulation p. 17New Directors: a snapshot of the 74 profiles p. 18

A. Diversity• Presence of women among IBEX 35 Boards p. 20• Women’s representation in IBEX 35 Committees p. 21• Female Directors in IBEX 35 Boards – areas of expertise p. 22

B. Digital • Digital expertise in IBEX 35 Boards p. 24• Digital Committees in IBEX 35 Boards p. 25

C. Internationalization• How many Directors come from abroad? p. 28• Evolution of foreign Directors over time p. 29

IBEX 35 CEO’S ANALYSISOverview of IBEX 35 CEOs profiles p. 32Overview of IBEX 35 CEOs profiles – by nationality and gender p. 33

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Methodology

The following study is based on publicly available biographical data on Board members of IBEX 35 companies collected from their official websites, Boardex, RRA Global Data Base, RRA internal studies and CNMV (Comisión Nacional del Mercado de Valores) between January 2018 and February 2019.

The data analysis was conducted by compiling companies' information and comparing it with the “Listed Companies Governance Best-Practices Code” established by the Spanish regulator, CNMV which provides both guidance and support in the maintenance of an adequate corporate governance.

By identifying Ibex 35 companies' accuracy in the following of CNMV’s recommendations, our goal is to provide a stronger snapshot on their path to incorporate all best-practices in comparison to their similarly sized counterparts.


Key Highlights in Ibex 35 Boards

AGE

• Significant dispersion effect in the age of the Board Members:

• 62 years in average

• Differences between men and female Directors impacted by international or national origin

BACKGROUND

• Statistically significant presence of financial background in the Board seats

• Above 50% of Board Members have CEO and/or Chairman experience in listed or private companies

GOVERNANCE

I. Committees

• 2 boards have established Digital Committees (Innovation/Technology/Cybersecurity).

• Corporate Social Responsibility and Sustainability is being implemented with dedicated committees in several boards (2+6).

II. Lead Independent Director

• Progress in relevance of Lead Independent Directors regardless of Split of Chairman & CEO role (7 with no split and 21 with split)

DIVERSITY

• Mix of women has improved (around 25%) and the pace of growth is not enough to achieve the 2020 target of 30%

• Low presence of female board members in Executive Committees

• Only one Female CEO in Ibex 35 Boards

DIGITAL

• Scarce presence of Digital Board Members (only 7% of Directors)

INTERNATIONAL

• Room to improve international mix in the boards (around 22%)


1. IBEX 35 Corporate Governance Overviewww


IBEX 35 Boards at a glance

Total IBEX 35 Directors: 456 (16% new appointments between 349 107 Jan. 2018 and Feb. 2019)

AVERAGE DATA:

Boards of Directors have the following characteristics:1. 13 members 2. 22% Foreigners3. 23% Women4. 52% Independent Directors

Age: 62 years old

Tenure: 7.2 years

IBEX 35 Committees consist of: 1. An Audit Committee with 4 members2. An Appointments Committee with 4 members3. A Remuneration Committee with 4 members4. An Executive Committee with 3 members5. One or more additional committees dedicated to risks, strategy, technology, corporate social responsibility or sustainability.

(77%) (23%)


A snapshot of IBEX 35 Directors’ profiles

Progressivelly more international

62 years oldDirectors’

Average age

57.3years old

Female Directors Average age

Directors’ average age* – by gender and by nationality

Along 2017, 44 new Directors were appointed of which only 8 were non-Spanish. However, in 2018, 74 new Directors were appointed of which 20 were non-Spanish.

27% of foreigners in 201863.4

years oldMale

Directors Average age

* Average calculated using 92% of IBEX 35 Directors’ age.

18% of foreigners in 2017

56.8years oldSpanishFemale

DirectorsAverage age

59.0years old

ForeignersFemale


63.8years oldSpanish

MaleDirectors

Average age

60.9years old

ForeignersMale


36

54

8

20

2017 2018Spanish Foreigners


IBEX 35 Board members’ professional expertise

1.0%1.0%1.0%1.3%1.3%1.3%1.6%2.3%2.6%2.6%2.9%3.9%4.3%4.3%4.3%4.9%4.9%

6.6%7.3%8.3%8.9%

22.2%

ServicesRetailAudit

RegulatoryInsurance

Hotels/LeisurePrivate Equity

TransportConsultantAcademic

MediaLegal

TelecommunicationsTechnology

ConsumerReal EstateHealthcare

Construction/InfrastuctureIndustry

EnergyPublic Administration

Financial Services

Expertise by main sector background

Function expertise

20%

26%

4%

11%

49%

55%

Academic Experience

Government/Regulatory…

Experience as CIO/CTO

Experience as CFO

Experience as CEO

Experience as Chairman

In terms of expertise by sector, financial services is the most represented one, followed by public and energy sectors.

In terms of function expertise, most of Board members have experience as Chairmen and CEO in a listed or unlisted company.


+5 linkages Between 1 - 4 linkages No linkages1 Board position 2 Board positions

Viscofan

AENA

Banco Sabadell

Amadeus

Cross-linkages: Directors sitting on several IBEX 35 Boards at thesame time

Caixabank

AccionaTelefónica

AcerinoxACS

BancoSantander

Bankia

Bankinter

BBVA

FerrovialEndesa Ence

Enagás

Colonial

CIEAutomotivew

CellnexTelecom

TécnicasReunidas

SiemensGamesa

Repsol

Red Eléctrica

NaturgyEnergy

MerlinProperties

MeliàHoteles

Grifols

IAG

Iberdrola

Inditex

Indra

Mapfre

Mediaset

Arcelormittal

Number of Board members with Cross-linkages per company

9 Acerinox 5 ACS

7 Banco Sabadell 5 Bankia

6 Ence 5 Telefónica

6 Indra

4 Endesa 2 Mapfre

3 Banco Santander 2 Mediaset

3 Red Eléctrica 2 Meliá Hoteles

3 CIE Automotive 1 Viscofan

3 Merlin Properties 1 Acciona

3 Repsol 1 AENA

2 Bankinter 1 Amadeus

2 Caixabank 1 Colonial

2 Grifols 1 Enagás

2 IAG 1 Ferrovial

2 Inditex

0 Arcelormittal 0 Naturgy Energy

0 BBVA 0 Siemens Gamesa

0 Cellnex 0 Técnicas Reunidas

0 Iberdrola

High

Medium

None


Re-appointment year of IBEX 35 Chairmen & CEOs

8 chairmen and 4 CEO’s face a re-appointment of their term office in 2019.

Chairmen CEOs

*

*The Chairman and CEO is the same person.

*


Ibex 35 Board Committees

Apart from the regulatory Committees (Audit, Appointments and Remuneration), overall Boards have as well an Executive Committee. Occasionally, they have additional committees dedicated to risks, strategy, technology, corporate social responsibility or sustainability.

Audit Committees

Appointments Committees*

Remuneration Committees*

Executive Committees

Risk Committees

Sustanaibility Committees

Technology/Innovation/Cybersecurity Committees

Corporate Social Responsibility Committees

Strategy Committees

35

35

35

22

2

2

2

8

6

*These Committees can be found as a single or separated.

# of

Com

mitt

eesi

n Ib

ex 3

5 Bo

ards


2. IBEX 35 Directors’ Analysis


IBEX 35 Boards – share of Executive, Proprietary, Independent and External Directors

For the first time, the average share of Independent Directors exceeds 50% complying with the CNMV’s recommendation, which establishes that between a third and a half of the Board members must be independent.

21%

16%

27%

21%

11%

18%

17%

18%

7%

15%

18%

21%

8%

11%

20%

25%

33%

21%

27%

11%

9%

7%

24%

7%

18%

36%

36%

15%

46%

64%

33%

39%

16%

6%

22%

53%

24%

40%

18%

46%

36%

54%

36%

15%

59%

50%

53%

58%

67%

58%

67%

56%

73%

40%

35%

53%

64%

EndesaEnce

EnagasColonial

CIE AutomotiveCellnex Telecom

CaixabankBBVA

BankinterBankia

Banco SantanderBanco Sabadell

ArcelormittalAmadeus IT

AENAACS

AcerinoxAcciona

20%

6%

29%

13%

8%

9%

8%

14%

15%

17%

20%

12%

14%

15%

13%

8%

8%

17%

9%

23%

33%

23%

11%

14%

17%

23%

12%

20%

29%

7%

46%

20%

25%

50%

17%

36%

38%

20%

23%

33%

8%

21%

40%

53%

50%

39%

54%

59%

42%

66%

46%

31%

47%

54%

56%

72%

83%

54%

50%

ViscofanTelefónica

Técnicas ReunidasSiemens Gamesa

RepsolRed Eléctrica

Naturgy EnergyMerlin Properties

Meliá HotelsMediaset

MapfreIndra

InditexIberdrola

IAGGriolfs

Ferrovial

External Executive Proprietary Independent

8% 16% 24% 52%IBEX 35


A spread-out trend to appoint LID even if it is not required by regulation

CNMV’s Recommendation nº 34 clarifies the Lead Independent role principal functions:

• to preside over the Board of Directors in the absence of the chairman and the vice-chairman• echo the concerns of non-executive Directors• maintain contacts with investors and shareholders • coordinate the chairman's succession plan.

Do not splitChairman & CEO roles

Do splitChairman & CEO roles

Companies that have a Lead Independent Director

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

7

21

28 (Total)

(LID#)

Year ofAppoitmentof the LID


New Directors: a snapshot of the 74 profiles

29 Directors have experience as Chairman

33 Directors have experience as CEO

23 Directors have worked for the Government

7 are Digital Directors

12 Directors have academic experience

9%

39% 45%

31%

5%

5%

5%

7%

12%

15%

19%

Energy

Technology

Telecommunications

Academic

Industry

PublicAdministration

Financial Services

Which sectors do they come from?

16%


A. Diversity


Presence of women among IBEX 35 Boards

CNMV’s best-practices requires for a minimum of 30% of women among Board members.

19.0 19.523.4

2016 2017 2018 2019

24.7

Women presence evolution in IBEX 35 Boards

(average in %)

Spanish Boards with largest women presence

43%

42%

Women presence in European Boards in 2018(average in %)

44.0

33.8

23.4 21.6

9.1

France Italy Spain Portugal Greece

*

*Estimated average as of June 2019.


Women’s representation in IBEX 35 Committees

Taking chairpersonship and committee membership as a measure for influence in Boards, IBEX 35 companies are still very much influenced by men.

15.4%

22 of 143 committee chairpersons are occupied by women

0%

10.0%

11.1%

11.7%

18.1%

19.1%

20.3%

26.9%

36.5%

Strategy

Sustainability

Corporate Social Responsability

Executive

Technology/Digital/Innovation

Remuneration

Appointments

Risk

Audit22.2%

111 of 499 committee positions are occupied by women

Women’s membership representation in committees:


Female Directors in IBEX 35 Boards – areas of expertise

26%of Female Directors have had a corporate position in COMEX

throughout their professional careers

3%

3%

3%

3%

6%

10%

10%

13%

16%

26%

Other

Commercial

Risk

Operations

Digital

Communication & Marketing

Sustainability

Strategy

Legal

Financial Services

Female Directors mayor previous executive roles

4 IBEX 35 companies don’t have

any Women on their COMEX.

Out of 107 Female Directors, only 4 sit on both Board of Directors

and COMEX of the same IBEX 35

company.


B. Digital


Digital expertise in IBEX 35 Boards

48.6%

34.3%

17.1%

None DigitalDirector

Only 1 DigitalDirector

At least 2 DigitalDirectors

Out of 456 Directors, there’re 30 that have Digital expertise, which represents a 7%

% of IBEX 35 Boards that have Digital Directors

40%

60%

Female

7%

We understand a Director has Digital expertise whenever he/she fulfills any of the following: • He/she has led the definition and launching of a digital business.

• He/she has pulled off a digital transformation process either of products or businesses.

• He/she has either cybersecurity or data experience.

• He/she has experience as Chief Technology Officer or Chief Information Officer.

Male

A recent MIT study surveying 40,000 board directors in the US found a material correlation of digital board savviness to financial performance of their organizations: with boards with at least 3 directors with digital backgrounds there was a 17% higher profit margin than those with two or fewer, 38% higher revenue growth, 34% higher return on assets, and 34% higher market cap growth.(1)

(1)Source: Massachusetts Institute of Technology


Digital Committees in IBEX 35 Boards

Currently, only 2 IBEX 35 companies have an innovation/technology/cybersecurity committee.

52% 55%

7,5%

The Innovation and Technology Committee of Banco Santander

consists of 7 Directors:The Technology and Cybersecurity Committee of BBVA consists of 6

Directors:

Companies that have a digital dedicated

committee

Directors’ Title :o 5 independento 2 executive

Nationality:• 5 Spanish• 2 Foreigners

Gender:4 354 5 %3%% 52%

Directors’ Title:o 5 independento 1 executive

Nationality:• 4 Spanish• 2 Foreigners

Gender:4 254 5 %2%%


C. Internationalizationn


How many Directors come from abroad?

22% of Board members are foreigners, most of them being European, followed by a percentage of Americans. However, Directors coming from emerging economies have a limited presence.

3.8%

3%

Spain 77.6%

Europe 12.7%

USA 3.8%

LatAm 2.9%

Rest of the world 3%

77.6%

2.9%

12.7%

Regional ranking


Evolution of foreign Directors over time

After one year of increased foreign presence there is a small but obvious rise in 2018.

Boards with largest foreigners presence

17%20%

22%

2016 2017 2018

Foreigners evolution in IBEX 35 Boards

100%*

75%

67%

58%

*Foreign presence in Arcelormittal Board is explained by Indian origin and ownership of the company.


3. IBEX 35 CEO’s Analysis


Relevant experience and data of IBEX 35 CEOs:

Overview of IBEX 35 CEOs profiles

14 %

58

of CEO’s are alsoChairmen or Vice

Chairmen

57

11 % have experience

in the

public sector

CEOs Average

Age

26%are formers

CFOs

55.9years old


Overview of IBEX 35 CEOs profiles – by nationality and gender

Currently, there is a lack of diversity in IBEX 35 CEO’s positions, out of 35 CEOs there is only one woman and five foreigners.

14%2.9%

Currently, there is only one female CEO among all the IBEX 35

companies

IBEX 35 Female CEO’s

1 Female CEO María Dolores Dancausa

Bankinter

14%of CEOs are non-

Spanish

Where do they come from?

IBEX 35 non-Spanish CEOs


ContactsRussell Reynolds AssociatesMiguel Ángel 11, 7º 28010 MadridAvda. Diagonal 613, 2° 08028 Barcelona

Ramón Gómez de [email protected]

Pedro [email protected]

Diego [email protected]

José Olivé[email protected]

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