Creating economic, social and environmental value

Good Governance

Milestones 2016 

  • Approval of a Long-Term Incentive Plan for 2016-2018, based on various objectives aligned with Enagás’ Strategic Plan and with the expectations expressed by institutional investors and proxy advisors.
  • Updating of company policies according to best practices of Good Governance and recommendations from investors and proxy advisors.
  • Provide training sessions to the Board on key nancial and non- nancial matters regarding the management of the company.
  • Publication of the company’s objectives and its achievements in the Remuneration Report.
  • Participation in roadshows that target SRI investors. 

Lines of progress 2017 

  • Review of the procedure for the annual external assessment of the functioning of the Board and its Committees and publication of a summary of the results.
  • Continuation of the training sessions to the Board on key nancial and non- nancial matters regarding the management of the company. 
  • Publication of the indicators and set goals linked to variable remuneration (short and long term). 

General Shareholders' Meeting 

The General Shareholders' Meeting is the highest body representing shareholders. 

Quorum in 2016 

quorum

 
 
Board of Directors and Committees
The Board of Directors maintains a 62% ratio of Independent Directors compared to the 49% of the Spanish market (Ibex 35 average)

The composition of the Board of Directors and the Governance Committees is set out below.

Name of the Director

Position on the Board of Directors

Type of Director

Position on the Audit and Compliance Committee

Position on the Appointments, Remuneration and CSR Committee

Antonio Llardén Carratalá

Chairman

Executive

 

 

Marcelino Oreja Arburúa

Chief Executive Officer

Executive

 

 

Martí Parellada Sabata

Director

Independent

Chairman

 

Isabel Tocino Biscarolasaga

Director

Independent

 

Chair

Ana Palacio Vallelersundi

Lead Independent Director

Independent

 

Member

Antonio Hernández Mancha

Director

Independent

 

Member

Luis Javier Navarro Vigil

Director

External

 

Member

Jesús Máximo Pedrosa Ortega (proposed by SEPI - Sociedad Estatal de Participaciones Industriales)

Director

Proprietary

 

Member

Ramón Pérez Simarro

Director

Independent

 

Member

Rosa Rodríguez Díaz

Director

Independent

Member

 

Gonzalo Solana González

Director

Independent

Member

 

Luis Valero Artola

Director

Independent

Member 

 

SEPI - Sociedad Estatal de Participaciones Industriales (represented by Federico Ferrer Delso)

Director

Proprietary

Member

 

Rafael Piqueras Bautista

General Secretary

-

Secretary

Secretary

Enagás has a higher percentage of Independent Directors than the average in the Spanish market and has gradually reduced the number of members of the Board of Directors that now stands at 13. Furthermore, Enagás’ commitment to promote gender diversity on the Board is reflected in the significant increase in the ratio of women, rising from 6% in 2007 to 23% in 2016. In addition, the new Director Selection Policy set out its commitment for that figure to reach 30% in 2020.

Board of Directors

board of directors

Size of the Board of Directors

Size of the Board of Directors

Percentage of female members on the Board of Directors

Percentage of female members on the Board of Directors

Management CommitteeManagement Committee

The Enagás Board of Directors is empowered to adopt resolutions on Director remuneration. The Appointments, Remuneration and CSR Committee proposes the remuneration criteria, within the limits set forth in the Articles of Association and pursuant to the decisions taken at the General Shareholders' Meeting. The Committee also monitors the transparency of remuneration.

Thus, in 2016, the General Shareholders’ Meeting approved the Executive Compensation Plan for 2016-2018 with the following characteristics and following the criteria of independence, involvement of stakeholders (the remuneration report is put to a consultative vote at the General Shareholders' Meeting) and internal and external assessment:

Consulta el Catálogo de servicios e infraestructuras en la web corporativa
See the 'Long-Term Incentive Plan 2016-2018' on the corporate website

Long-Term Incentive Plan 2016-2018 
Eligibility
  •  Members of the Management Committee and the rest of the management team: 43 participants (3% of the workforce)
Type of Plan

 

  •  Plan for delivery of shares and cash linked to the goals of the Strategic Plan. A minimum reference of shares is established for each segment: 100% Executive Directors, 75% Management Committee and 50% Directors
Duration
  • Period of goal measurement and permanence: 3 years
Conditions for receiving
the incentive
  • Fulfilment of the four outlined goals (see the ‘Our project for the future’ section )
  • Permanence in the Group
Achievement
scales

 

  • An achievement scale is established for each goal with:
    • A minimum achievement level, below which no remuneration is paid
    • A 100% achievement level, for which 100% of the initial target remuneration is paid
    • The maximum total remuneration may not exceed 125% of the initial target remuneration
    • Intermediate levels are calculated using linear interpolation
  • The assessment of the Sustainability Plan is carried out by the Appointments, Remuneration and CSR Committee on a discretionary basis and depends on a set of results in this area
Incentive level

 

  •  The incentive is expressed as a percentage of the fixed remuneration for 2016 or a number of times the fixed remuneration amount in a way that allows segmentation by management level. Annual incentive: 50% for Executive Directors, 45% for the Management Committee and 30% for Directors
Clawbacks
 
  • In the event of certain circumstances coinciding, the Board may, if suggested by the Committee, claim part or all of the remuneration paid
Withholding taxes on shares
  •  A 2-year retention period is proposed for Executive Directors, following the delivery of the shares

Remuneration of the Board of Directors in 2016

Directors

Thousands of euros

20152016

D. Antonio Llardén Carratalá (Consejero Ejecutivo)(1)

1.749

1.839

D. Marcelino Oreja Arburúa (Consejero Delegado)(2)

561

693

Sociedad Estatal de Participaciones Industriales (Consejero Dominical)

76

127

Mr. Sultan Hamed Khamis Al Burtamani (3)

11

---

D. Jesús David Álvarez Mezquíriz (Consejero Independiente)(3)

20

---

D. Ramón Pérez Simarro (Consejero Independiente)

76

126

D. Martí Parellada Sabata (Consejero Independiente)

81

142

D. Luis Javier Navarro Vigil (Consejero Externo)

76

126

D. Jesús Máximo Pedrosa Ortega (Consejero Dominical)

76

126

Dª Rosa Rodríguez Diaz (Consejera Independiente)

76

127

Dª Ana Palacio Vallelersundi (Consejera Independiente)

80

133

Dª Isabel Tocino Biscalorasaga (Consejera Independiente)

81

139

D. Antonio Hernández Mancha (Consejero Independiente)

76

126

D. Luis Valero Artola (Consejero Independiente)

76

127

D. Gonzalo Solana González (Consejero Independiente)

76

127

Total

3.191

3.958

(1) The remuneration for the Executive Chairman for the 2016 financial year was approved in detail by the General Shareholders’ Meeting on 18 March 2016, as part of the “Directors’ Remuneration Policy for 2016, 2017 and 2018.” In 2016, the Executive Chairman received a fixed remuneration of €980 thousand and a variable remuneration of €572 thousand; he also received Board meeting attendance fees of €102 thousand, as well as other remuneration in kind amounting to €185 thousand. In total €1,839 thousand. In addition, he was provided with a life insurance policy whose premium for the year came to €109 thousand. The increase in the cost of this insurance is due exclusively to the loss or reduction in this year of the “profit share” shared out by the company with the insurer, without there having been an increase in the premium or an expansion of the above mentioned coverage. This higher cost implies, in turn, an increase in retentions due to the remunerations in kind, although there was not a significant increase in the in-kind remuneration received by the Executive Chairman. The Group has outsourced its pension commitments with its executive directors through a mixed group insurance policy for pension commitments, including benefits in the event of survival, death and employment disability. The Executive Chairman is one of the beneficiaries covered by this policy. The total premium paid during the year in respect of the Executive Chairman was €201 thousand. The Executive Chairman is a beneficiary of the 2016-2018 Long-Term Incentive Plan approved at the General Shareholders’ Meeting held on 18 March 2016. Item 8 of its Agenda states that the Committee assigned him a total of 69,711 performance shares. These shares do not entail an acquisition of the shares until the end of the programme and the final remuneration depends on the level of achievement of the goals of the programme.

(2) The remuneration of the Chief Executive Officer for 2016 was approved in detail by the General Shareholders’ Meeting on 18 March 2016, as part of the “Directors’ Remuneration Policy for 2016, 2017 and 2018.”  In 2016, he received a fixed remuneration of €390 thousand and a variable remuneration of €179 thousand; he also received Board meeting attendance fees of €102 thousand, as well as other items of remuneration in-kind amounting to €22 thousand (variations in in-kind remuneration with respect to prior years are due solely to differences in the value of said remuneration without him having received remuneration in-kind for other reasons). In total €693 thousand. In addition, he was provided with a life insurance policy, with total premiums in the year of €1.5 thousand. The CEO is also covered by the mixed group insurance policy for pension commitments, and the amount of €90 thousand of this premium corresponds to him. The Chief Executive Officer is a beneficiary of the 2016-2018 Long-Term Incentive Plan approved at the General Shareholders’ Meeting held on 18 March, 2016. Item 8 of its Agenda states that the Committee assigned him a total of 27,744 performance shares. These shares do not entail an acquisition of the shares until the end of the programme and the final remuneration depends on the level of achievement of the goals of the programme. 

(3) Both Directors resigned in 2015.

Remuneration for all the Directors for their membership of the Board and its Committees, as well as that of the two Executive Directors for carrying out their duties, was approved in detail at the General Shareholders’ Meeting on 18 March 2016, as part of “The Directors’ Remuneration Policy for 2016, 2017 and 2018”. This followed reports drafted by the independent external consultant, Willis Towers Watson, who analysed the remuneration position of the Directors and Executives of Enagás and its position with regard to comparable companies on the Ibex 35 stock market. According to these reports, and with the amendments to the remuneration policy, the remuneration of Enagás Directors, Executive Directors and Senior Management in 2018 will continue to be below the average for 2014 when compared to similar companies in the sector.

Among its commitments, the Enagás Sustainability and Good Governance policy establishes compliance with national and international recommendations and best practices in the area of good governance, in such aspects as the training and assessment of Directors, among others. 

Every year, a self-assessment of the Board is performed with participation from an independent external expert. This self-assessment is performed objectively and from a best-practice viewpoint by means of questionnaires completed by all members of the Board. The aim of the is self-assessment is to sustain and bolster the performance of the Board.

In the last self-assessment, strengths were identified; among these independence, diversity and a strong commitment by the members of the Board as well as good communication between the Board and the company’s executives stood out. Regarding Board meetings, prior preparation (availability of materials) and a focus on key issues are strengths.

With regard to what can be improved, the following areas need to be looked at and as can be seen by the following table, the company is already working on them:

 

 

Recommendations 

Enagás’ actions

Board independence and succession planning

Approval of the policies of the Director Selection Policy, Conflicts of Interest, the Policy on the Succession of the Chairman and the Chief Executive Officer

Development of specific know-how for the Board

Provide training sessions to the Board on key financial and non-financial matters regarding the management of the company

Improve communication with shareholders regarding Enagás’ commitment to environmental, social and governance spheres

Participation in roadshows that target socially responsible investors (SRI)

Devote more time to auditing activities

Implement the new regulatory framework that assigns new functions to the Audit and Compliance Committee and strengthens the independence of the external auditor

Key issues addressed by the Board of Directors in 2016
Some of the key issues addressed by the Board of Directors in 2016 within the economic, corporate governance, social and environmental spheres are summarised below. When addressing such matters, the members of the Management Committee of the company are invited to attend Board meetings to present issues within their area of responsibility.
 

Issue

Type

Resolution

Strategic thinking regarding Enagás’ long-term 2040 vision 

Economic

Unanimously approved

Approval of the Long-Term Incentive Plan

Economic

Unanimously approved

Approval of the Carbon Footprint reduction goal for the period spanning 2016-2018

Environmental

Unanimously approved

Updating of company policies according to best practices of good governance and recommendations from investors and proxy advisors

Corporate Governance

Unanimously approved

Plan for actions for training Directors

Corporate Governance

Unanimously approved

Monitoring of the Company's contributions to social action and corporate volunteering 

Social

Unanimously approved