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1. Appointment of external directors
The Regulations of the Board of Directors make special mention of the selection and appointment of external directors, due to their unique
characteristics compared to executive directors.
The Board of Directors and the Appointments and Remuneration Committee have a duty to ensure, within the scope of their respective
competencies, that the election of candidates falls on people with a solid reputation, proven skills and experience, and who are prepared to
dedicate a sufficient part of their time to the Company, taking the utmost care in choosing people who may be selected to be independent
directors.
The basic characteristics of the appointment of the aforementioned external directors are briefly explained below:
1.1 Proprietary Directors
Proprietary Directors are directors that represent or that have a shareholding in the Company that is greater than or equal to what is legally
considered significant, or that may have been appointed due to their status as shareholders even though their shareholding does not reach the
legally established amount.
For the purposes of this definition, it shall be assumed that a director represents a shareholder when:
a) He/she was appointed by virtue of the right to representation.
b) He/she is a director, senior manager, employee or regular service provider of this shareholder, or of companies belonging to its group.
c) The company documentation states that the shareholder accepts that the director has been appointed by it or represents it.
d) He/she is the spouse, or connected by a similar relationship, or related up to the second degree of kinship to a major shareholder.
2.2 Independent Directors
Independent directors are considered to be those directors appointed because of their personal and professional attributes, who can perform
their duties without being influenced by relations with the company, its significant shareholders or its managers.
The following people may not qualify as independent directors under any circumstances:
a) Those that have been employees or executive directors of companies in the group, unless 3 or 5 years have passed, respectively, since the
relationship was terminated.
b) Those that receive any amount or benefit other than the remuneration for being a director, from the company or its group, unless the amount
or benefit is insignificant.
For the purposes of this section, neither the dividends nor supplementary pension that the director receives in relation to his/her former
professional or employment relationship shall be taken into account, provided that such additional payments are not contingent and as a
result, the Company that pays them cannot suspend, modify or revoke their payment without being in breach of its obligations.
c) Those that are, or have been, during the last three years, a partner in the external auditor’s firm or responsible for the audit report, whether
in relation to the audit of the listed company during this period, or of any other company in its group.
d) Those that are executive directors or senior managers of another company in which an executive director or senior manager of the Company
is an external director.
e) Those that maintain, or have maintained during the last year, a significant business relationship with the Company or with any Company in its
group, whether on their own behalf or as a major shareholder, director or senior manager of a company that has or has had this relationship.
Business relations are defined as the supply of goods or services, including financial or advisory services, or consultancy.
f) Those that are major shareholders, executive directors or senior managers of a company that receives, or has received during the last three
years, significant donations from the Company or its group.
People or entities that have solely been patrons of a foundation that receives donations shall not be included in this section.
g) Those that are spouses, persons connected by a similar type of affinity, or relative of up to of the second degree of kinship of an executive
director or senior manager of the Company.
h) Those that have not been proposed, whether for appointment or renewal, by the Appointments Committee.
i) Those that are in any of the situations indicated in points a), e), f) or g) of this article in relation to another significant shareholder or
representative on the Board. In the case of being a relation as indicated in paragraph g), the limitation shall not only apply in connection with
the shareholder, but also with its proprietary directors in the investee company.
C.1.20 Indicate whether the Board of Directors has assessed its own activity in the last year:
YES
If so, explain how far this self-assessment has led to important changes in its internal organisation, and what procedures are applicable to its
activities:
Description of changes
At least once a year, the Board of Directors will assess the quality of its own work, how efficiently it functions, and based on the report sent to it by the
Appointments and Remuneration Committee, how its members perform their duties. It will also evaluate the work of its Commissions or Committee annually,
based on the reports they submit to it.
ANNUAL CORPORATE GOVERNANCE REPORT
