Board of Directors’ work and their evaluation

Key issues

• The specific issues examined in financial year 2024 included the following: Update to Strategic Plan for the 2024-2026 period, structuring goals into 5 thematic priorities presented at the “Capital Markets Day” 2024: (i) promoting energy as a clean, stand-alone, local, stable, safe and competitive source of energy; (ii) protecting nature and fostering the efficient use of resources; (iii) sustainable value chain; (iv) strengthening human and social capital; and (v) culture of ethics, transparency and good governance. 
• Corporate transactions and strategic alliances formalised by companies of the Iberdrola Group
• From October onwards, monitoring of impact of the DANA (high-altitude isolated depression) in Valencia and recovery of supply.
• Acknowledgement of compliance with commitments under the shareholding policy established in the new “Director Remuneration Policy”.
• Appointment of independent assurance provider responsible for assurance of the statement of non-financial information - sustainability report for financial year 2024.
• Review and continuous improvement of the Governance and Sustainability System. 

Members of the management team of the Group’s companies appear regularly before the Board of Directors to contribute to better informing the directors and to facilitate their direct and personalised dealings with the management team.

Noteworthy appearances in financial year 2024 came from the Chief Financial Officer and the Head of Corporate Development to monitor various corporate transactions, as well as the Director of Control to explain the information on results.

Priorities for 2025

The Board of Directors has identified the following priorities for financial year 2025:

• Monitoring of the Strategic Plan and the long-term outlook of the Group. Potential updates prior to holding of the “Capital Markets Day” 2025.
• Analysis of the impact of the geopolitical and macroeconomic situation on the Group.
• Top-level institutional relations.
• Analysis of Iberdrola’s creation of value for all its Stakeholders.
• Monitoring of implementation of the various corporate policies.
• Continuous updating of the composition of the Board of Directors.

Evaluation

The evaluation for financial year 2024 ended with a positive assessment of the quality and efficiency of the operation of the Board of Directors and its committees, as well as the performance of the chairman, the chief executive officer and the other directors. The level of achievement was 98.3% in this regard.

In particular:

• The Board of Directors has an appropriate composition, with balance and complementarity of skills and abilities (43% women; 5 nationalities; 86% external directors, with 92% of external directors and 79% of all directors being independent), combining independent directors with advanced experience⁽¹⁾ (36.4% of independent directors), average experience⁽²⁾ (36.4%) and more recent additions⁽³⁾ (27.2%).
• The operation of the Board of Directors and its committees is effective, with adequate planning and documentation for meetings and a complete training plan, with approximately 20 in-person sessions, as well as training through the Company’s directors’ website.
• Both the Board of Directors and the committees use all the powers established in the Governance and Sustainability System to engage in their activity, ensuring the diligent exercise of their responsibilities.
• There is fluid coordination between bodies thanks, among other measures, to the chairs of the committees reporting at Board meetings on each of their activities, as well as to the regular coordination meetings between the secretaries of the committees and the General Secretary and Secretary of the Board of Directors.
• The benchmark analysis reflects the Company’s leadership in terms of governance, highlighting the independence of the Board of Directors that is reinforced with a developed system of checks and balances, with 4 consultative committees having 100% independent or external membership, two independent vice-chairs and a lead independent director with broad powers.
• It also reflects adequate gender balance and plurality, with directors from the key markets (Spain, United States of America, United Kingdom, Brazil and Italy).
• The analysis also notes the high quorum at the General Shareholders’ Meeting, which provides the Board of Directors with massive support and legitimacy, with much higher percentages than the comparables in the approval of proposals.
• Some indicators with differences compared to other international peers concern the longer duration of the term of office (4 years vs. an average of 2.2 for the peers in the evaluation)⁽⁴⁾, gender balance on certain committees, and the fact that not all committees are fully made up of independent directors.

As a result of the evaluation, the independent expert proposed a list of areas for work in the following year, which the Appointments Committee acknowledged and submitted to the Board of Directors.

The action plan has six main lines of action, which can be summarised as follows:

• Topics and agenda for the Board of Directors: continue increasing the time dedicated to monitoring and reflecting on the Company’s strategy and the new second-level governance strategy, through new actions intended to continue involving the Board in this area.
• Composition of the Board of Directors: active monitoring of skills and abilities for the appropriate composition of the Board of Directors, advisory committees and special roles, as well as their independence.
• Lead independent director: assumption of responsibilities by the new lead independent director, ensuring the effectiveness thereof in the position.
• Relationship between committees: develop coordination between the Sustainable Development Committee and the Audit and Risk Supervision Committee on the supervision of sustainability reporting and the effectiveness of the control and management systems for related risks.
• Committees: updating of the skills matrix of the Board of Directors where it concerns the Appointments Committee; and updating and continuous improvement of the “Director Remuneration Policy” and remuneration reporting with respect to the Remuneration Committee.
• Directors: directors to continue making full use of the Board of Directors training plan.

The Board of Directors and its committees have acknowledged the results and incorporated the corresponding priorities for the current financial year into the continuous improvement plan for the governance bodies.

⁽¹⁾ Independent directors with between 7 and 12 years of service.
⁽²⁾ Independent directors with between 5 and 6 years of service.
⁽³⁾ Independent directors with less than 4 years of service.
⁽⁴⁾ Period aligned with Section 529 undecies of the “Companies Act”, which establishes a maximum term of office of 4 years.