REPORT ON THE OPERATION OF THE APPOINTMENTS AND REMUNERATION COMMITTEE

Transcription

1 REPORT ON THE OPERATION OF THE APPOINTMENTS AND REMUNERATION COMMITTEE FISCAL YEAR 2017

2 1. INTRODUCTION This report outlines the functions and activities of the Appointments and Remuneration Committee (the Committee ) of Técnicas Reunidas, S.A. (the Company ) during fiscal year The Committee was established in June 2006, the year in which the Company's shares were first traded on the Madrid, Barcelona, Bilbao and Valencia stock exchanges. Article 14 of the Regulations of the Board of Directors sets out the Committee s composition and rules of conduct. Similarly, the Committee s statutory regulation is set out in Article 30 of the current Articles of Association. Finally, Recommendation 6 of the Good Governance Code for Listed Companies issued by the National Securities Market Commission expressly states that listed companies will draw up various reports, on a voluntary or compulsory basis, including a report on the operation of the appointments and remuneration committee. Article 529(9) of Royal Legislative Decree 1/2010 of 2 July, approving the consolidated text of the Companies Act (the 'Companies Act') sets out that the Board of Directors must carry out an annual assessment of the operation of its committees, to which end the Committee has issued this report on its functions and activities. Additionally, it should be mentioned that the current wording of the articles of the corporate governance rules of the Company applicable to the activity of the Committee is set out in Annexes I and II of this report. This report will be made available to shareholders and investors through the website at the time of the General Meeting of Shareholders, in accordance with the applicable regulations. 2. COMPOSITION In accordance with the Articles of Association and the Regulations of the Board of Directors cited above, the Appointments and Remuneration Committee must comprise at least three and no more than five members appointed by the Board of Directors, all of whom must be non-executive directors and at least two of whom must be independent directors. 2

3 During fiscal year 2017, the Board of Directors unanimously agreed to appoint Javier Alarcó Canosa as a member of the Appointments and Remuneration Committee, to replace José Manuel Llado Arburua. On 31 December 2017, therefore, the Committee comprised the following members with the corresponding positions: Fernando de Asúa Álvarez (Chairperson) is an external independent director. He was appointed a member at the General Meeting on 10 May 2006, then re-elected for the statutory five year-term at the General Meeting on 22 June 2011 and re-elected for the statutory four-year term at the General Meeting on 29 June Diego del Alcázar y Silvela (member) is an external independent director and lead independent director. He was co-opted as a member on 25 March 2010 and his appointment was ratified at the General Meeting on 23 June He was re-elected for the statutory five-year term at the General Meeting on 22 June 2011 and re-elected for a further fouryear period at the General Meeting on 29 June Javier Alarcó Canosa (member) is an external independent director. He was appointed a member at the General Meeting on 22 June 2007, then re-elected for the statutory five year-term at the General Meeting on 26 June 2012 and re-elected for the statutory four-year term at the General Meeting on 29 June Francisco Javier Gómez-Navarro Navarrete (member) is an external independent director. He was appointed a member at the General Meeting on 10 May 2006, then re-elected for the statutory five year-term at the General Meeting on 22 June 2011 and re-elected for the statutory four-year term at the General Meeting on 29 June Petra Mateos-Aparicio Morales (member) is an external independent director. She was co-opted as a member on 29 February 2016 and her appointment was ratified at the General Meeting on 29 June 2016, when she was re-elected for the statutory four-year term. The Committee comprises exclusively non-executive directors, since all its members, including the Chairperson, are independent external directors. 3

4 The appointment and removal of members of the Committee (including its Chairperson) is the responsibility of the Board of Directors. Furthermore, in accordance with the Articles of Association and the Regulations of the Board of Directors, the Secretary of the Board provides advice on matters within his or her competence and performs the functions set out in commercial legislation on secretaries of supervisory bodies. 3. ACTIVITIES During fiscal year 2017, the Committee held a total of 5 meetings, in compliance with the statutory provisions and the Regulations of the Board of Directors of the Company. The Human Resources Officer and the Director of Development of the Department of Human Resources attended all these meetings at the request of the Committee s Chairperson. During this year, the Committee has continued to perform its basic assigned functions, which include the following: (a) Assessing the necessary competences, knowledge and experience of the Board of Directors. (b) Reporting on proposals for the appointment and dismissal of the Company s senior executives and the basic terms and conditions of their contracts. (c) Informing the Board of Directors about the systems for and the amount of annual remuneration for directors and the Company s senior management and preparing the information for inclusion in the annual public reporting on directors remuneration. Throughout the year, the Committee continued to perform its functions and fulfil its duties, including proposing the appointment and re-election of the independent directors, issuing the mandatory report on the other members for their re-election, and complying with the broader recommendations on corporate governance, such as promotion of diversity, internationalisation and selection of expert profiles. The Committee also made proposals to the Board nominating the members for each of the committees, taking into account both their knowledge, skills and experience and the responsibilities of each Committee. This led to the appointment of José Manuel Lladó Arburúa as 4

5 member of the Audit and Control Committee and Javier Alarcó Canosa as member of the Appointments and Remuneration Committee. Similarly, the Committee reported to the Board on the distribution of the total remuneration for the Board approved at the General Meeting, so that the Board, in accordance with the corresponding authorisation of the General Meeting, could determine the specific amount for each member. The Committee also organised other tasks such as the Board s self-assessment for fiscal year 2017, carried out by an external consultant, and the sectoral benchmarking of IBEX 35 remuneration. Finally, and as a direct consequence of the Board s self-assessment during fiscal year 2015, the Committee has continued implementing a Training Plan for directors. This Training Plan, which began in October 2016 and came to an end in 2017, includes the following areas: Functional organisation of the TR group Directors risk/compliance Finance, treasury, taxation, auditing Human resources Cost control and risk management Upstream and natural gas/energy Implementation of projects and purchasing procedure Processes IT Legal advice and investor relations. Mention should also be made of the effective coordination between the Committee and the Human Resources Department, which has contributed to the smooth operation of this Committee. As a result of the work performed during fiscal year 2017, the Committee considers that it has fulfilled its assigned functions and indicates its satisfaction with the Company s financial reporting, as well as the effectiveness and solid functioning of the management and control systems for the most significant risks associated with the Company s activities. 5

6 ANNEX I ARTICLES OF ASSOCIATION OF TÉCNICAS REUNIDAS, S.A. Article 29 - APPOINTMENTS AND REMUNERATION COMMITTEE The Board of Directors will set up an Appointments and Remuneration Committee, comprising at least three and no more than five members of the Board, all of whom must be non-executive directors and at least two of whom must be independent directors. The Chairperson of the Appointments and Remuneration Committee will be appointed by the Board of Directors from among its members for a four-year term and may be re-elected one or more times for terms of equal duration. The Chairperson must be an independent director. Without prejudice to any other duties required by legal provisions or those assigned by the Board of Directors, the Appointments and Remuneration Committee s responsibilities will include: (a) Assessing the necessary competences, knowledge and experience of the Board of Directors. For this purpose, the Committee will define the required functions and skills for candidates for each vacant position and assess the time and dedication needed to perform their duties effectively. (b) Establishing a representation target for the under-represented gender on the Board and issuing guidelines on how to reach this target. (c) Submitting proposals to the Board of Directors nominating independent directors for appointment by co-option or submission to the decision of the General Meeting, as well as proposals to the General Meeting for the re-election or dismissal of these directors. (d) Reporting on proposals nominating other directors for their appointment by co-option or submission to the decision of the General Meeting, as well as proposals to the General Meeting for their re-election or dismissal. (e) Reporting on proposals designating natural persons to represent a director that is a legal entity. (f) Reporting on the appointment of the Chairperson and Deputy Chairperson(s) of the Board of Directors. (g) Reporting on the appointment of the Chief Executive Officer. (h) Reporting on the appointment of the Secretary and Vice-Secretary of the Board. 6

7 (i) Proposing members for positions on each of the Committees, taking into account their knowledge, competences and experience and the tasks of each Committee. (j) Reporting on proposals for the appointment and dismissal of the Company s senior executives and the basic terms and conditions of their contracts. (k) Examining and organising the succession of the Chairperson of the Board of Directors and the Chief Executive Officer of the Company and, where appropriate, making proposals to the Board of Directors to ensure the transition is orderly and well-planned. (l) Proposing to the Board of Directors the remuneration policy for the directors and general managers or anyone in senior management who reports directly to the Board, the Executive Committee or the Chief Executive Officer(s), as well as individual remuneration and the remaining contractual conditions of the executive directors, ensuring that these are met. The Appointments and Remuneration Committee will generally meet once a year in order to prepare the information on directors remuneration, which the Board of Directors must approve and include in its annual public reporting. Likewise, it will meet each time that the Board of Directors or its Chairperson requests the issuance of a report or the adoption of proposals within the scope of its competences and, in all cases, provided it is appropriate for the satisfactory fulfilment of its duties. Requests for information from the Appointments and Remuneration Committee will be made by the Board of Directors or its Chairperson. Likewise, the Committee must consider suggestions made by the Chairperson, the members of the Board of Directors, the Company s managers and its shareholders. The Board of Directors may further develop and supplement the above rules in its Regulations, in accordance with the provisions of the Articles of Association and the law. 7

8 ANNEX II REGULATIONS OF THE BOARD OF DIRECTORS OF TÉCNICAS REUNIDAS, S.A. Article 14 - Appointments and Remuneration Committee: composition, powers and functioning 1. The Board of Directors will set up an Appointments and Remuneration Committee, in accordance with the following regulations: (a) The Appointments and Remuneration Committee will consist of a minimum of three (3) and a maximum of five (5) directors appointed by the Board of Directors from among its non-executive directors, at least two of whom must be independent directors. (b) The Chairperson of the Appointments and Remuneration Committee will be appointed by the Board of Directors from among its independent directors for a four-year term and may be re-elected one or more times for terms of equal duration. 2. Without prejudice to any other functions which might be assigned to it by the Board of Directors, the Appointments and Remuneration Committee has the following basic responsibilities: Assessing the necessary competences, knowledge and experience of the Board of Directors. For this purpose, the Committee will define the required functions and skills for candidates for each vacant position and assess the time and dedication needed to perform their duties effectively. Establishing a representation target for the under-represented gender on the Board and issuing guidelines on how to reach this target. Submitting proposals to the Board of Directors nominating independent Directors for appointment by co-option or submission to the decision of the General Meeting, as well as proposals to the General Meeting for the re-election or dismissal of these directors. Reporting on proposals designating natural persons to represent a director that is a legal entity. Reporting on proposals nominating other directors for their appointment by co-option or submission to the decision of the General Meeting, as well as proposals to the General Meeting for their re-election or dismissal. Proposing members for positions on each of the Committees, taking into account their knowledge, competences and experience and the tasks of each Committee. Reporting on proposals for the appointment and dismissal of the Company s senior executives and the basic terms and conditions of their contracts. 8

9 Reporting to the Board of Directors on the appointment of the Board s internal positions (Chairperson, Deputy Chairperson, Chief Executive Officer, where appropriate, and Secretary and Vice- Secretary). Examining and organising the succession of the Chairperson of the Board of Directors and the Chief Executive Officer of the Company and, where appropriate, making proposals to the Board of Directors to ensure the transition is orderly and well-planned. Proposing to the Board of Directors the remuneration policy for the directors and general managers or anyone in senior management who reports directly to the Board, the Executive Committee or the Chief Executive Officers, as well as individual remuneration and the remaining contractual conditions of the executive directors, ensuring that these are met. Formulating and reviewing the criteria governing the composition of the management team of the Company and its subsidiaries and for the selection of candidates, and informing the Board of Directors of the appointment or dismissal of managers reporting directly to the Board of Directors. Submitting proposals to the Board of Directors nominating senior managers reporting directly to the Board, with the aim of their appointment. Analysing, formulating and periodically reviewing proposals for policies on the recruitment, loyalty and dismissal of managers. Analysing, formulating and periodically reviewing proposals for policies on the remuneration of managers, considering their suitability and effectiveness. Reporting annually to the Board of Directors on the performance evaluation of the Company s senior management. Informing the Board of Directors about the systems for and the amount of annual remuneration for directors and senior management and preparing the information for inclusion in the annual public report on directors remuneration. Ensuring transparency on remuneration. Informing the Board of Directors about transactions that involve potential conflicts of interest. Reporting on the appointments and removals of the Company's senior managers, as well as, where appropriate, proposing the basic conditions of the contracts that are entered into with them. 3. The Appointments and Remuneration Committee will generally meet once a year in order to prepare the information on directors remuneration, which the Board of Directors must approve and include in its public reporting. Likewise, it will meet each time it is convened by the Chairperson, which must be done whenever the Board of Directors or the Chairperson of the Board requests the issuance of a report or the adoption of proposals and, in all cases, whenever it is appropriate for the satisfactory fulfilment of its duties. 9

10 4. Requests for information from the Appointments and Remuneration Committee will be made by the Board of Directors or its Chairperson. Likewise, the Appointments and Remuneration Committee must consider suggestions made by members of the Board of Directors, the Company s managers and its shareholders. 10