Services for institutional investors September 2017 INDEX o Reasons - PowerPoint PPT Presentation

Member for Spain & Portugal of the international partnership of local independent proxy advisors Services for institutional investors September 2017

INDEX o Reasons for a Spanish proxy advisor o ECGS and their partners o Proxy advisors o Institutional investors o New responsibilities o Corporate Governance SRD II o Corporance Asesores de Voto o Mission, values and team o Products and services 2

The Spanish Proxy Advisor

First Spanish Proxy Advisor o Origin of proxy advisors: USA and UK o European advisors: ECGS (Proxinvest, Ethos, DSW, Frontis) o Need for a Spanish proxy advisor: • In-depth knowledge of local market and regulation • To introduce international practices for Spanish investors • To contribute to European guidelines harmonisation o From issuer to investor • Revised Shareholders Rights Directive (SRD II) • New responsibilities for investors: participation and engagement • Promote voting: measures for issuers, intermediaries and advisors 4

Expert Corporate Governance Service o European partnership of independent advisors on corporate governance and voting guidelines for institutional investors o Leaders in France, Germany, Switzerland, UK, Italy, Holland o Development and monitoring of European corporate governance guidelines and voting policies o In-depth local expertise analysis and quality control o Cover local issuers and investors o Independence and conflict control o Public Policy & Advocacy 5

ECGS Members • CORPORANCE (Madrid, Spain) • DSW (Düsseldorf, Germany) • Ethos Services (Geneva, Switzerland) • Frontis Governance (Roma, Italy) • Manifest (Witham, United Kingdom) • Proxinvest (Paris, France) Managing Partner • VIRV Solutions (Amsterdam, Netherlands) 6

Leading Independent Partnership 7

Services of Proxy Advisors o Proxy reports with voting recommendations o Definition and monitoring of investors guidelines and policies o Provision of voting platform and processing o Corporate Governance Data and Rating o Engagement services: dialogue, letters, meetings, resolutions o Monitoring of reporting obligations (shareholding thresholds) o Surveys and conferences. Public policy o Legal & regulatory advice on Corporate Law and Governance 8

Institutional Investors

Global Institutional Investors o In major markets, institutional investors carry out their fiduciary duties as responsible owners of the companies o UK Corporate Governance Code (Cadbury, 1992) for issuers and Stewardship Code (2010) for investors, revised together o USA, mutual and pension funds are obliged to vote since 2003 o Institutional investors in the US, UK, Germany or France: • vote responsibly using proxy advisors’ recommendations • publish their voting and engagement policies o In Spain there is an obligation to vote and publish policies for asset managers with +1% in Spanish societies for +1 year. Result: lack of accountability and participation from investors 10

Shareholders Rights Directive o SRD I (2007): improve corporate governance, protect investors and encourage their participation in AGMs o In 2017, SRD II to promote long-term shareholder engagement. EU members have to transpose it (basic deadline 10 June 2019) o More transparency for issuers, intermediaries and proxy advisors o Investors must act like responsible administrators, searching with issuers for sustainable growth, and hence to: • Develop voting policies integrated in investment strategies • Inform about engagement activities and conflict of interests o Opportunities for Spanish institutional investors to get up-to-date and adopt transparency and corporate governance international practices. 11

Contestation in Spanish AGMs 12

Corporate Governance Issues o Board matters: • Composition, term, formation, evaluation and compensation • Independence, diversity, proprietary directors, committees o Remuneration: • Incentives: volume, fixed/variable ratios, targets, period • Compensations, ratios, claw-back clauses o Audit and Risk control o Capital structure: • New issuances, capital increase, stock options plans • Ownership thresholds, anti-takeover provisions, voting restrictions o Financial and corporate information quality o Environmental and socially responsible investment 13

CORPORANCE ASESORES

Corporance Asesores de Voto o Introducing CORPORANCE, the first Spanish proxy advisor o Member of the independent partnership ECGS o A local approach with a global support o Aims: • Coverage of listed Spanish companies for global investors • Support for Spanish institutional investors in engagement and voting • Improve corporate governance for investors and issuers • Market information • International practices • Public Policy • Guarantee full compliance with upcoming EU regulation 15

Our Approach o Offer a customized service for the Spanish institutional investor o Provide voting recommendations with local criteria and practices o Optimise support by a group of expert international analysts o Apply deep knowledge of issuers’ corporate governance o Promote participation and dialogue (constructive approach) o Help investors with their responsibilities and corporate governance o Bring international practices to Spanish investors o Contribute to develop a European proxy advisor and global player 16

Our Values o Professionalism, experience, trust, ethics and independence o Spirit of tailor-made service for institutional investors o Market knowledge: • Corporate governance and responsible investment • Permanent dialogue o Principles-based sound culture, local and international experience • Active in European and global forums: ECB, EC, ESMA, ICGN • Capital and financial markets understanding o Strategic vision of new global tendencies: anticipation 17

Our Management Team Juan Prieto is CORPORANCE’s founder and managing director, with large corporate and financial international experience as executive in Santander and KPMG. Founder of the Spanish Issuers Association and Spanish Good Governance Forum. He has been member of the board at European Issuers and different advisory committees for the ECB, ESMA and ICGN. Ramón Hernández Peñasco , partner and legal director, also founding partner of Legal Field Consultores & Abogados, professor in Instituto de Estudios Bursátiles Legal Council in Banesto and Santander for 30 years. Expert speaker and lecturer on cross-border voting and proxy advisors. Other partners of CORPORANCE contribute with their international finance and corporate experience in many fields with global investors and issuers. We are well supported by the experienced team and structure of ECGS 18

Investor Services

Products and Services o Analysis and voting recommendations o Design and implementation of engagement policies o Support in relationship with issuers o Legal and regulatory advice on corporate governance o Representation of investors’ interests o Up-to-date market statistics and practices 20

Voting Recommendations Detailed study of AGM proposals with complete report on voting recommendations fulfilled by expert analysts with support from the international organisation and the policy committee of ECGS. o Thorough analysis of AGMs’ agendas and resolutions o Detailed and sound report on voting recommendations o Local, international, specialised and expert team o Support from the ECGS structure with annual discussion and publishing of voting guidelines and corporate governance policies o Accessible website with online up-to-date information 21

Design of Engagement Policies Development of an engagement and voting policy, applying local, international and bespoke corporate governance guidelines. o Definition of a personalised, documented and auditable policy o Proven global analytical structure with multiple criteria of corporate governance and proposal options in AGMs o Customised design of voting guidelines and policy development, integrating each investor’s particular criteria o Identification of corporate governance hot topics and trends 22

Relationship with Issuers Implementation of shareholder engagement policy and activities in accordance with regulations and international practices. o Development of the engagement policy with listed companies o Contacts with issuers, visit schedule and topics agenda o Support in meetings and road-shows, permanent dialogue with key issuers and other stakeholders o Organisation and attendance to conferences and market forums o Company and market information, continuous monitoring 23

Shareholder Engagement 24

Legal and Regulatory Advice Legal counselling on corporate governance and responsible investment. Supporting role with media and regulators. o Expert advice on corporate governance regulation o Contact with specialised institutions and publications o Local and international Public Policy o Monitoring of socially responsible investment criteria o Integrating corporate governance criteria in investment policies o Support in investors’ reporting obligations 25

Investors ’ Interests Advocacy Representing investors in AGMs, Boards, committees and forums. Engagement with authorities, media, advisors, issuers and investors. o Attendance and representation in shareholders meetings o Communication management and engagement with the media o Relationship with regulators, institutions and professionals o Interventions in working groups, conferences and forums o Board and committees membership 26