Name Name Class
MR. JOSÉ IGNACIO BERROETA ECHEVARRIA CHAIRMAN INDEPENDENT
MR. JUAN LUIS ARREGUI CIARSOLO MEMBER INDEPENDENT
MR. VÍCTOR DE URRUTIA VALLEJO MEMBER INDEPENDENT
B.2.2. State whether the Audit Committee has the following duties:
Supervise the process of preparation and the integrity of the financial information relating to the Company and, if applicable, to the Group, monitoring compliance with legal requirements, the proper delimitation of the scope of consolidation, and the correct application of accounting principles.
YES
Periodically review the internal control and risk management systems, in order for the
main risks to be properly identified, managed and made known. YES Ensure the independence and effectiveness of the internal audit area; make proposals
regarding the selection, appointment, re-election and withdrawal of the head of the internal audit area; propose the budget for such area; receive periodic information regarding its activities; and verify that senior management takes into account the conclusions and recommendations contained in its reports.
YES
Establish and supervise a mechanism whereby the employees may give notice, on a confidential basis and, if deemed appropriate, anonymously, of any potentially
significant irregularities, especially of a financial and accounting nature, that they notice at the Company.
YES
Submit to the Board proposals for the selection, appointment, re-election and replacement of the external auditor, as well as the contractual terms under which it should be hired.
YES
Regularly receive from the external auditor information regarding the audit plan and the results of the implementation thereof, and verify that senior management takes its recommendations into account.
YES
Ensure the independence of the external auditor. YES
In the case of groups of companies, favor the auditor of the group as the auditor
responsible for audit work at the companies that form part thereof. YES
B.2.3. Describe the rules of organization and operation of, and the duties assigned to, each of the Board committees.
Name of the committee
EXECUTIVE COMMITTEE
Brief description
Pursuant to Article 43 of the By-Laws, the Executive Committee shall be composed of the number of members decided by the Board of Directors, with a minimum of five Directors and a maximum of eight. In all cases, members of the Executive Committee shall include the Chairman of the Board of Directors, who shall preside over meetings of the Executive Committee, the Vice-Chairman or Vice-Chairmen and the Chief Executive Officer, if any. The Secretary of the Board of Directors or, in the absence thereof, the Assistant Secretary of the Board of Directors or, in the absence of both, the member of the Committee appointed from among the members attending the meeting in question, shall act as Secretary of the Committee.
The Executive Committee shall meet at least two times per month and as many other times as deemed appropriate by the Chairman, who may also suspend one or more of the ordinary meetings when deemed appropriate in the sole judgment of the Chairman.
Resolutions adopted by the Executive Committee shall be reported to the Board of Directors at its next meeting.
Resolutions of the Executive Committee shall be adopted by majority of the Directors sitting on the Committee who are present at the meeting in person or by proxy. In the event of a tie, the Chairman shall have the tie-breaking vote.
The duties of this Committee consist of making proposals or reporting to the Board regarding strategic decisions, investments and divestitures that are significant for the Company or the Group, assessing their conformity to the Budget and the Strategic Plan and analyzing and monitoring business risks as well as supervising the Company’s corporate social responsibility policy.
The provisions of the By-Laws regarding the operation of the Board of Directors will apply to the Executive Committee, to the extent they are not incompatible with the nature thereof.
Name of the committee
AUDIT AND COMPLIANCE COMMITTEE
Brief description
Pursuant to Article 44 of the By-Laws, the Audit and Compliance Committee shall be composed of a minimum of three Directors and a maximum of five, appointed by the Board of Directors from among the external Directors who are not members of the Executive Committee.
The Audit and Compliance Committee shall have a Chairman, who must be an independent Director, and a Secretary appointed by the Board of Directors from among the members of such Committee.
The members of the Audit and Compliance Committee shall carry out their duties for a maximum period of four (4) years, and may be re-elected. The position of Chairman shall be held for a maximum period of four (4) years, after which period such person may not be re-elected until the passage of one year from ceasing to act as such, without prejudice to such person continuing or being re-elected as a member of the Committee.
For purposes of the operation of the Committee, it shall meet as many times as its
The Committee shall validly meet when one-half plus one of its members are present in person or by proxy, and shall adopt its resolutions by majority of the members present in person or by proxy. In the event of a tie, the Chairman shall have the tie-breaking vote.
Finally, this Committee shall submit for approval by the Board of Directors a Report of its activities during the fiscal year, which shall thereafter be made available to shareholders and investors.
It should be noted that, at their meetings of May 20, 2008, the Audit and Compliance Committee and the Board of Directors approved a “Procedure for the management of the channel of communication with the Audit and Compliance Committee,” in line with the provisions of Recommendation 50.1 d) of the Unified Code.
Name of the committee
NOMINATING AND COMPENSATION COMMITTEE
Brief description
Pursuant to Article 45 of the By-Laws, the Nominating and Compensation Committee is an internal informational and consulting body without executive powers, which has the information, advisory and proposal-making powers within its scope of action.
The Nominating and Compensation Committee shall be composed of a minimum of three (3) Directors and a maximum of five (5), appointed by the Board of Directors from among the external Directors. The Board of Directors also appoints the Chairman thereof from among the members of such Committee, as well as its Secretary, who need not be a Director.
Unless otherwise decided by the Board of Directors, the members of the Nominating and Compensation Committee shall hold their positions for so long as they remain Directors of the Company. Renewal and re-election to and removal from office of the members of the Committee shall be governed by resolution of the Board of Directors.
The Nominating and Compensation Committee shall have the power to supervise the procedure for selecting Directors and upper-level management (the latter at the proposal of the Chief Executive Officer, if any) of both the Company and its Group and of those other companies in which the Company is responsible for management, as well as the power to assist the Board of Directors in the determination and supervision of the compensation policy for such persons.
For purposes of operation of the Committee, it shall meet as many times as needed, in the opinion of its Chairman, to fulfill its obligations, and at a minimum once every quarter or when so requested by one-half of its members. The Committee shall be validly convened when one-half plus one of its members are present in person or by proxy, and shall adopt its resolutions by majority vote. In the case of a tie, the Chairman shall have the tie-breaking vote.
B.2.4. Indicate the advisory and consulting powers as well as the delegated powers, if any, of each of the committees:
Name of the committee
EXECUTIVE COMMITTEE
Brief description
There are delegated to it all matters within the power of the Board of Directors which, in the sole judgment of the Committee, should be resolved without further delay, excepting only the drawing-up of the financial statements, the presentation of the balance sheets at the General Shareholders’ Meeting and those powers which are given by the shareholders to the Board of Directors without the power of delegation.
Name of the committee
AUDIT AND COMPLIANCE COMMITTEE
Brief description
(a) Report to the General Shareholders’ Meeting with respect to matters raised therein by shareholders regarding its powers.
(b) Propose appointments of the Company’s auditors to the Board of Directors for submission to the shareholders at the General Shareholders’ Meeting.
(c) Supervise the Management of the Internal Audit Area, which will be functionally controlled by the Chairman of the Audit and Compliance Committee.
(d) Know the process for gathering financial information and associated internal systems for monitoring risks relevant to the Company.
(e) Receive information from the auditors regarding matters that might risk the independence thereof which are related to the auditing procedure and generally regarding any other information provided for in legislation regarding the auditing of financial statements and in the technical auditing regulations in effect at any time.
(f) Report in advance on the Company’s annual corporate governance report and ensure compliance with legal requirements and those of the Codes of Professional Conduct and Good Governance adopted by the Board of Directors.
(g) Inform the Board of Directors in advance regarding (i) all matters within its area of authority and (ii) the financial information that the Company must periodically make public. In this regard, the Committee shall make sure that the interim financial statements are prepared in accordance with the same accounting standards as the annual financial statements and, for such purpose, it shall consider the suitability of limited review by the external auditor.
(h) Report to the Board of Directors, prior to the adoption by it of the corresponding decision, regarding the creation or acquisition of interests in special purpose entities or entities registered in countries or territories regarded as tax havens, as well as any other transactions or operations of a similar nature that, due to the complexity thereof, might detract from the transparency of the Iberdrola Group. By exception, such transactions shall not be subject to a prior report of this Committee when they are carried out by listed companies of the Iberdrola Group which have in place corporate governance rules similar to those of Iberdrola, whereby such transactions are placed within the purview of their own corporate decision-making bodies.
(i) Report on proposed amendments to the Regulations of the Board of Directors and to the Code of Professional Conduct.
(j) Deal with such other matters, if any, as may be assigned to it by the By-Laws, the Regulations of the Board of Directors or by the Board of Directors itself.
Name of the committee
NOMINATING AND COMPENSATION COMMITTEE
Brief description
(a) Report on and review the criteria that should be followed in composing the Board of Directors and in selecting candidates, defining their duties and necessary qualifications and assessing the time and dedication required for the proper performance of their duties.
(b) Prepare, in the case of independent directors, the proposals for appointment thereof, and report, at the request of the Chairman or of any other member of the Board of Directors, on the proposals for appointment of the other Directors to fill a vacancy or, as the case may be, for submission thereof to a decision by the shareholders at the General Shareholders' Meeting. In addition, report on the proposals for re-election or removal of Directors by the shareholders at the General Shareholders' Meeting and, in general, ensure that those who are to hold office as Directors satisfy all the requirements established in the By-Laws and in the Regulations of the Board of Directors.
(c) Report on proposed appointments to internal positions on the Board of Directors and propose to the Board of Directors the members who should make up each of the Committees.
(d) Examine or organize, in such manner as is deemed appropriate, the succession of the Chairman and of the Chief Executive Officer, if any, of the Company and, if applicable, make proposals to the Board.
(e) Ensure that when new vacancies are filled or new Directors are appointed to the Board, the selection procedures are free from any implied bias entailing any kind of discrimination.
(f) Propose to the Board of Directors the system and amount of annual Director compensation, as well as the individual compensation of Executive Directors and other terms and conditions of their contracts, in all cases pursuant to the provisions of the By-Laws.
(g) Provide information to the Board of Directors regarding the appointment and/or removal of senior managers of the Company, as well as regarding the compensation or indemnification, if any, that may be established in the event of removal of such senior managers, all at the proposal of the Chief Executive Officer, if any.
(h) Submit to the Board of Directors, together with the corresponding reports, the proposals brought to it by the Chief Executive Officer, if any, regarding the compensation policy applicable to senior managers and the basic terms and conditions of their contracts.
(i) Provide information regarding incentive plans and pension supplements.
(j) Periodically review the compensation programs, evaluating the adequacy and results thereof.
(k) Ensure compliance with the compensation policy of the Company and, in particular, with the compensation policies for Directors and senior managers, and report on the documents to be approved by the Board of Directors for general dissemination thereof in connection with information on compensation, including the annual corporate governance report and the annual compensation policy report.
(l) Exercise such other powers, if any, as are assigned to it by the By-Laws, the Regulations of the Board of Directors or the Board of Directors.
B.2.5. Indicate, if applicable, the existence of regulations of the Board committees, where such regulations may be consulted and the amendments made during the fiscal year. Also indicate if any annual report of the activities performed by each committee has been voluntarily prepared.
Name of the committee
AUDIT AND COMPLIANCE COMMITTEE
Brief description
The Audit and Compliance Committee has its own Regulations, which may be viewed by interested parties on the Company’s website (www.iberdrola.com).
Such Regulations were amended by a resolution adopted by the Audit and Compliance Committee on January 26, 2009 and endorsed by the Board of Directors by resolution of January 27, 2009. The main amendments introduced were the following:
− Inclusion of some of the powers contemplated in the current Regulations of the Board of Directors (Article 24.3) which, however, were not set forth in the Regulations of the Committee (Article 3.g).
− Inclusion of the Committee’s duty, already contemplated in the current Regulations of the Board of Directors, to submit to the Board, on an annual basis, a report on the prior fiscal year (Article 24.5 of the Regulations of the Board, consistent with Article 21.1 of the Regulations of the Committee).
− Revision of the concept of significant interest (Article 9.b of the Regulations of the Committee), in line with the provisions of Article 10.1 of the Regulations of the Board.
− Inclusion of the power of the Chairman of the Board and of the Chief Executive Officer, if any, to request meetings for the provision of information (Article 14 of the Regulations of the Committee, consistent with Article 24.4 of the Regulations of the Board).
− Coordination between Articles 9.a and 9.d.(v) of the Regulations of the Committee and Articles 4.2 and 40.2.a of the Regulations of the Board, whereby certain powers and duties are assigned to the Committee.
− Last, coordination between Articles 10.1 and 11.1 of the Regulations of the Committee and Article 25.5.c of the Regulations of the Board of Directors, which provides for the power of the Nominating and Compensation Committee to propose to the Board the members who are to sit on each Committee of the Board.
As regards the annual report prepared by the Audit and Compliance Committee, Article 20.2 of its Regulations provides that such Committee shall prepare an annual Report of its activities, which, once approved by the Board of Directors, shall be made available to the shareholders on occasion of the call to the Ordinary General Shareholders’ Meeting.
The Reports prepared by this Committee are available on the Company’s website (www.iberdrola.com).
At its meeting of February 16, 2009, the Board of Directors approved the Report of the Audit and Compliance Committee relating to its activities during fiscal year 2008.
Name of the committee
NOMINATING AND COMPENSATION COMMITTEE
Brief description
The Nominating and Compensation Committee has its own Regulations, which may be viewed by interested parties on the Company’s website (www.iberdrola.com).
At the proposal of the Nominating and Compensation Committee, these Regulations were amended by the Board of Directors by resolution of November 18, 2008. The main amendments introduced were the following:
− Provision was made for some powers relating to the composition of the Board and its Committees, the appointment to positions thereon and the process of selection and appointment of Directors and senior managers (Articles 3, 4 and 16), as well as regarding the compensation policy applicable thereto (Article 5).
− The provisions of the Regulations of the Committee were coordinated with those of the Regulations of the Board of Directors in connection with the composition of the Committee (Article 6) and the powers of the Committee (Article 17).
− Amendments were made in connection with the existence of listed affiliated companies and listed subsidiaries that are part of the Iberdrola Group, thus respecting the purview of such nominating and compensation committees or like bodies as may exist at listed affiliated companies or listed subsidiaries of the
− Amendments were introduced in order to make technical and operating improvements.
− Amendments were made as a result of merely formal statutory changes, whereby references to Section 4 of the Securities Market Law were replaced by references to Article 42 of the Spanish Commercial Code (Article 1.2).
Article 19.2 of the Regulations of the Nominating and Compensation Committee provides that within three (3) months following the close of the Company’s fiscal year, the Committee shall deliver a report to the Board of Directors detailing its work for the fiscal period covered by the report.
At its meeting of February 16, 2009, the Board of Directors approved the Report of the Nominating and Compensation Committee relating to its activities during fiscal year 2008.
B.2.6. Indicate whether the composition of the Executive Committee reflects the participation of the different directors in the Board of Directors based on their category:
YES X NO
If no, explain the composition of your Executive Committee