Directors' Remuneration Policy

Transcription

1 English translation for information purposes only. In the event of discrepancies between the English and the Spanish version, the Spanish version shall prevail. Directors' Remuneration Policy 1

2 Introduction As envisaged in articles 529 novodecies section 1 of the Capital Companies Act (henceforth, the Capital Companies Act ) and 57.1 of the Bylaws, it corresponds to the General Shareholders' Meeting to approve the Directors' Remuneration Policy at least every three years, as a separate point on its agenda. The Board of Directors of Ferrovial S.A. (the Company ), at the proposal of the Nominations and Remunerations Committee, has agreed to submit the Directors' Remuneration Policy of the Company (henceforth, the Remuneration Policy ) to the General Shareholders' Meeting, with the content as established by the Capital Companies Act. In accordance with article 529 novodecies of the CCA, this proposed Remunerations Policy is accompanied by a justificatory report by the Nominations and Remunerations Committee. Both documents are available to shareholders on the website of the Company since the convocation of the General Meeting, as is mandated by article 529 novidecies section 2 of the Capital Companies Act. The system of remuneration for the Directors of the Company is envisaged in articles 56 of the Bylaws and 33 of the Regulations of the Board of Directors of the Company. In accordance with section 2 of the latter, the remuneration of the Directors must in any event be reasonable in proportion to the importance of the Company, the financial situation in which it finds itself at each moment and the market standards at comparable businesses. It should be sufficient to attract and retain Directors with the desired profile and compensate the commitment, abilities and responsibility that the post demands, but not so high as to compromise the independence judgment of the Non-Executive Directors. The remuneration system distinguishes between: (i) the remuneration drawn by the Directors in their standing as such; and (ii) the remuneration envisaged for the Directors who perform executive duties. According to article 56.1 of the Bylaws, members of the Board of Directors shall draw a remuneration as determined by those Bylaws for their standing as such, and whose maximum annual amount for the entirety of the Board of Directors shall be determined by the General Meeting and shall be updated according to such indexes or magnitudes as the General Meeting itself may define. The remuneration of the Directors in their standing as such is established taking into account the maximum amount fixed by the General Shareholders' Meeting on the 22nd of October The cited amount is adjusted annually by the interannual rate for the month of December for each financial year of the Consumer Price Index (IPC, General National Index) published by the National Statistical Institute (INE), provided that the General Meeting should not agree to its modification. As provided for in articles 56.1 of the Bylaws and 33.3 of the Regulations of the Board, it shall correspond to the Board of Directors to determine the remuneration of each Director in their standing as such in each financial year, taking into account for these purposes the functions and responsibilities attributed to each Director, membership of Committees of the Board and such other objective circumstances as may be deemed relevant. On the other hand, and as provided for in article 56.2 of the Bylaws, the Executive Directors shall draw, for the conduct of those executive duties delegated or entrusted by the Board of Directors, the remuneration that the Board itself shall determine, and which in any case must be in keeping with the Directors' Remuneration Policy approved by the General Meeting. The system of reward for the Executive Directors is appropriately defined in the corresponding contract signed between each of the Executive Directors and the Company. 2

3 Principles The combination of the talent and engagement of our professionals constitutes one of the pillars of the Company and, to this end, the policy and practices relating to remuneration are so determined as to attract, retain and engage the best professionals and so meet the long-term objectives of the Company. In addition, the economic climate, the results of the Company, the strategy of the Group, statutory requirements and the best market practices are all taken into account to set the remuneration policy. The remuneration policy is founded upon the following principles and criteria: Creation of long-term value, aligning the systems of reward with the strategic plan; Attraction and retention of the best professionals; External competitiveness in settling remuneration, with market references through analysis of comparable sectors and companies; Periodic participation in plans linked to the share price and to certain metrics of profitability; Responsible achievement of targets in accordance with the risk management policy of the Company; Maintenance of a reasonable balance between the different components of fixed (short-term) and variable (annual and long-term) remuneration, reflecting an appropriate assumption of risks combined with attainment of the targets defined; Transparency in the remuneration policy. 3

4 DIRECTORS' REMUNERATION POLICY WHAT WE DO Executive Directors Link the payment of remuneration to the results of the Company (" pay for performance") ). Pay part of the remuneration for Executive Directors in shares. Analysis of the Executive Directors' remuneration. Conservative package of company benefits. Receive external advice. The Executive Directors must possess shares to the value of twice their fixed remuneration. The Executive Directors have contractual clauses governing reimbursement of their variable remuneration. WHAT WE DO NOT DO Executive Directors There are no compensation clauses for the extinction of the relationship with the Chairman. There are no contractual obligations for circumstances of change of control, except for substantial modification to the conditions of provision of service by the CEO. There are no commitments to pensions. No loans or advances are conceded. Directors in their standing as such Do not participate in remuneration formulas consisting in the delivery of shares or share options in the Company, nor in instruments referenced to the value of the share or systems linked to the performance of the Company. 4

5 Policy on Directors' remuneration for their standing as such Below, the key elements in the remuneration policy for Directors in their standing as such are broken down. Fixed emolument Attendance fees Complementary fixed emolument Purpose Appropriate remuneration for the responsibility and dedication demanded by the post, but without reaching levels which compromise the independence of the Director Remuneration for effective attendance at meetings of the Board and its Committees To offer competitive remuneration Implementation Remuneration of the Board of Directors pursuant to the Bylaws, paid on a quarterly basis Paid on a quarterly basis. The amount of the attendance fees corresponding to the Chairmen of those bodies stands at twice the amounts established, in line with the remuneratory principle of reward upon the basis of the level of responsibility and professional background Paid in a single sum once the financial year is over If as a consequence of a number of meetings greater than that initially envisaged, or for some other reason, the amount of the attendance fees, added to that of the fixed components were greater than the total maximum remuneration fixed for membership of the Board for the year in course, the difference shall be deducted from the amount of the complementary fixed emolument, proportionally for each Director, depending on their standing Other remuneration The Directors of the Company, except the Executive Directors, who are in turn members of the administrative bodies of other companies of the Group, may draw the remuneration under the respective bylaws due to them for their membership of those administrative bodies, subject to the provision in article 529 duodecies section 4 b) of the Capital Companies Act The remuneration of the Directors in their standing as such does not contemplate the concession of credits, advances or guarantees. Nor is any participation by Directors envisaged in systems of social provision. Compensation for the termination of their connection to the Company, nor indeed is any additional recompense conceded other than the components indicated above. Finally, and as established by article 41.3 of the Regulations of the Board of Directors, the Director who loses that standing may not provide services to any company in effective competition with the Company and its subsidiaries for a period of two years, whenever those services are of particular transcendence in relation to the activities in question in which the Company and its subsidiaries also engage. Nor may the Director be an administrator of the same for a period of two years after leaving the Board. These prohibitions may be waived by the Board of Directors. 5

6 Policy on Executive Directors' remuneration The principles and main elements of the remuneration policy for the Executive Directors are common to the remuneration policy of the management team of the Company, so achieving coherence throughout the organization, which allows a remuneration policy aligned vertically with the business strategy to be developed. Purpose Limits Implementation Fixed remuneration To reward upon the basis of the level of responsibility and professional background This is determined by taking into account the remit of the executive duties associated to the post and comparative remuneration information for listed companies similar to the Company Variable Annual Remuneration To reward the creation of value by attainment of the targets set for each division, linking remuneration to the attainment of targets envisaged in the strategic plans for the Group Target 125% of fixed remuneration Maximum 225% of fixed remuneration The Nominations and Remunerations Committee holds the power to propose an increase in this percentage should circumstances counseling this arise. Metrics These are linked to individual performance and to the attainment of specific economic-financial, industrial and operational targets, which are predetermined, quantifiable and aligned with the corporate interest as envisaged in the strategic plans of the Company, all of the foregoing without prejudice to the possibility of weighting other targets, in particular, relating to corporate governance and corporate social responsibility, and which may of a quantitative or qualitative nature. The quantitative targets shall have a minimum weight of 50% within the entire incentive. They are made up of metrics which guarantee an appropriate balance between the financial and operational aspects of management of the Company. The qualitative targets shall have a minimum weight of 30% within the entire incentive. These are principally linked to the evaluation of the individual performance of the Executive Directors. Once the year has finished, the Board of Directors, at the proposal of the Nominations and Remunerations Committee, determines the variable remuneration accrued during the financial year upon the basis of the degree of compliance with the quantitative and qualitative targets. For the purpose of guaranteeing that the annual variable remuneration bears a real relationship to the professional performance of the beneficiaries, when it comes to determining the degree of compliance with the targets of a quantitative nature, those extraordinary results which could introduce distortions into the evaluation criteria are excluded, the notional like-for-like result being taken The Variable Annual Remuneration is paid entirely in cash. In the event that Executive Directors of the Company should draw fees for attendance at meetings of the Boards and Committees of other companies of the Group, the sums drawn for this item shall be deducted from the variable annual remuneration of each Director. The Nominations and Remunerations Committee may propose adjustments to the variable remuneration to the Board, under exceptional circumstances due to internal or external factors. The details of these adjustments would be broken down in the corresponding remuneration report. The remuneration related to the results of the Company shall take into account any qualifications recorded in the report of the external auditor which might impair the cited results. Medium and Long-Term Variable Remuneration (LTI) To reward the creation of sustainable value for the shareholder in the long term Maximum The value at the date of concession may reach a maximum of 125% of the Fixed Remuneration Metrics Economic-financial and operational targets in the strategic plan, as well as value creation targets for the shareholders. Some of the metrics may be measured in a relative way with respect to a comparison group made up of competitor companies These plans might include delivery of shares, share options or remunerative entitlements linked to the value of the same, under the condition of compliance with certain metrics linked to the strategic plan, as well as value creation targets for shareholders, so complying with the recommendation to defer a part of the variable components The financial and operational metrics shall have a maximum weight of 80%. The value creation metrics shall have a maximum weight of 30%. 6

7 Purpose Limits Implementation Long-Term Savings Systems Very long-term allegiance Maximum 20% of total remuneration (fixed + annual Variable Remuneration target). This item is only applicable to the CEO. This is extraordinary deferred remuneration, established at the moment of incorporation into Senior Management, which will only be made effective once the relationship with the Company terminates by mutual agreement, upon attainment of a certain age: there are no consolidated entitlements. To cover this, the Company makes annual contributions to a collective savings insurance policy, of which the Company itself is policyholder and beneficiary. Half (50%) of this remuneration shall be conditional upon compliance with the post-contractual non-competition agreement of two years' duration, agreed between the Executive Director and the Company The entitlement to draw the extraordinary remuneration shall be incompatible with receipt of any compensation which they may be entitled to receive as a consequence of the termination of their relationship with the Company as CEO. Remuneration in kind To offer a competitive compensation package Maximum 30% of total remuneration The Company has subscribed life assurance policies to cover the risk of demise Flexible Remuneration Plan: the Executive Directors may opt individually to allocate part of their cash remuneration to a collective life and savings assurance policy linked to retirement. The Executive Directors may participate in the "Plan 12,000", which consists of the possibility of receiving a part of their annual variable remuneration in shares of the Company, with a limit of 12,000 per annum The Executive Directors are eligible for other non-material corporate benefits Remuneration for Board membership and attendance at meetings To reward dedication to the Board and its Committees Maximum Maximum limit set by the General Shareholders' Meeting in 2009, as adjusted according to the evolution of the official inflation rate (IPC) In accordance with the policy on Directors' remuneration for their standing as such Advances, credits and guarantees The policy of the Company does not envisage the concession of credits, advances or any other type of guarantee to Executive Directors. Contractual conditions The contract regulating performance of the functions and responsibilities of the Executive Directors is of a mercantile nature, and includes the clauses which it is usual to incorporate into this kind of contract, so as to attract and retain the best professionals. 7

8 Implementation Duration The contracts of the Executive Directors are of indefinite duration Notice period The Company must notify the CEO of their release three months in advance of the date of the same Should this period not be complied with, the Company must disburse a sum equivalent to the remuneration corresponding to the notice period remaining. Termination Compensation Chairman The extinction of his contract for any reason shall not entitle him to receive compensation of any kind. Termination Compensation CEO The Company has agreed that, in the event of release him from duties by decision or unilateral desistance by the Company (unless this is motivated by a serious breach of their obligations) or for economic, organizational, productive or technological reasons, or released because of substantial modification to the conditions of provision of his services, the Director shall be entitled to draw the greater of the two following sums: i) the obligatory statutory compensation envisaged in general in the Workers' Statute effective upon the date of incorporation to the post of Executive Director, or ii) the sums accumulated in the extraordinary remuneration system referred to in the foregoing section on the Long-Term Savings System. In the event that, due to a significant change in the ownership of the Company which has as effect a renewal of the governing bodies of the Company or in the content and approach to its principal activity, a substantial modification of the conditions for provision of his services should take place, the CEO may decide to extinguish the relationship with the Company during the six months following the advent of these changes, and shall be entitled in such a case to draw the same compensation as would have been due in the event of release by unilateral decision by the Company. Payments for discharge of the contract shall not exceed the equivalent of two years of the total annual remuneration. Exclusivity The contracts held by the Executive Directors include the obligation to provide services exclusively to the Company, the Director not being permitted to sign contracts with other competitor companies of Ferrovial in their own name, nor through intervening persons, whether these are family members are not, which might entail effective competition with the activities of the Company. Non-competition The contracts subscribed with the Executive Directors are of indefinite duration and contain a post-contractual non-competition obligation for a period of two years. In the case of the Chairman, the non-competition clause for 2 years is equivalent to twice his fixed remuneration. In the case of the CEO, 50% of the sum to be drawn in the event of release is subject to compliance with the post-contractual non-competition agreement. Compatibility with other posts The contracts entered into with the Executive Directors declare that their employment relationship is compatible with the remit of other posts of representation, administration or management, and other professional situations, which might be held in other companies of the Group. 8

9 Additional information Remuneration policy for new appointees When determining the compensation package for a new Executive Director, the Nominations and Remunerations Committee shall consider the experience and knowledge of the candidate, their provenance (internal or external to the Company) and their level of remuneration at the moment of appointment. Once the Committee has determined its proposal, this must be approved by the Board of Directors. The remuneration policy for Executive Directors described above defines the elements which would be considered in building the remuneration package for a new Executive Director. To facilitate the contracting of an external candidate, the Nominations and Remunerations Committee may propose a special incentive to compensate for the loss of incentives not accrued at the former company because of their hire by the Company. To determine these special incentives, an equivalence between economic expectation and compliance expectation is established by, for example, considering the same type of vehicle, similar targets in terms of demands or difficulty (and whether it is thought that these would have been fulfilled at the former company) and the period of measurement for the same. For internal promotions, the Nominations and Remunerations Committee may cancel and/or compensate for preexisting incentives and other obligations which may have been in place at the moment of appointment. Share holding policy Following the allocation of shares, share options or other rights on shares derived from the remuneration system, Directors must retain ownership of a number of shares equivalents to twice their annual fixed remuneration, and they may not exercise their share options or other rights on shares, for a period of at least three years after their award. The above condition will not apply to any shares that the Director must dispose of, where applicable, to defray costs related to their acquisition. Reimbursement clauses The contractual agreements of the Executive Directors include a clause which enables the Company to claim reimbursement of variable components of the remuneration if these were paid upon the basis of data whose inaccuracy has been subsequently accredited. Payments for termination of the Executive Directors' contracts From the date of approval of the new Good Governance Code for listed companies by the Spanish Securities Market Commission (CNMV), and as part of the Company's Remuneration Policy, payments for termination of contracts that the Company may sign with its Executive Directors shall not exceed an amount equivalent to two years' total annual remuneration for that Executive Director. The entitlements acquired by current Executive Director as expressed in the present document shall be retained. Validity The present Policy shall remain in force during the three financial years following that in which it has been approved by the General Meeting. 9

10 Annexes Remuneration of the Directors in their standing as such In accordance with article 529 septdecies section 1 of the Capital Companies Act, the maximum annual amount to be drawn by the Directors as a whole in their standing as such is stated hereunder. The Board of Directors, at the proposal of the Nominations and Remunerations Committee, has agreed that the maximum annual amount to be drawn by the Directors as a whole in their standing as such corresponding to the year 2016 shall stand at 1,777, euros. This amount shall be adjusted annually by the interannual rate for the month of December for each financial year of the Consumer Price Index (IPC, General National Index) published by the National Statistical Institute (INE), provided that the General Meeting should not agree to its modification. Remuneration of the Executive Directors Pursuant to article 529 octodecies section 1 of the Capital Companies Act, the amount of the annual fixed remuneration of the Directors for the performance of their executive duties, and its variation during the period of application of this Remuneration Policy, are stated hereunder. The Board of Directors, at the proposal of the Nominations and Remunerations Committee, has agreed that the Executive Directors shall draw the following fixed remuneration in 2016: CHAIRMAN: 1,455,000 euros CEO: 1,200,000 euros To determine the fixed remuneration of the Executive Directors, the Board of Directors has taken into consideration the specific nature of the duties carried out by each Executive Director and their dedication, as well as market information about posts of a similar nature at comparable companies. The foregoing remuneration envisaged for the year 2016 shall remain fixed during the period of validity of the present Policy, unless the Board of Directors should decide to update it on the basis of the specific responsibilities and nature of the duties carried out, and market studies and analyses undertaken by external third parties. Where applicable, such updates shall be included in the Annual Report on Directors' Remuneration which, according to article 541 section 4 of the Capital Companies Act, shall be submitted for consultative voting by the General Shareholders' Meeting. 10