Female representation on IBEX-35 company board of directors far off 2020 objective


Spanish Corporate Governance Code sets 30% objective for 2020
Spanish Corporate Governance Code sets 30% objective for 2020

The 2017 shareholder meeting season led to the consolidation of the reforms companies carried out over the last two years to adapt to (i) the Spanish Companies Act of 2014, and (ii) the recommendations under the Spanish Corporate Governance Code of February 2015. Spanish listed companies deserve to be acknowledged for their efforts to align themselves with (i) the international corporate governance practices required by institutional investors, and (ii) proxy advisors’ standards. Ongoing dialog between companies and the stakeholders that have an impact on their shareholder meetings has improved considerably.

These are some of the conclusions reached in the report “Corporate Governance and Institutional Investors,” Cuatrecasas prepared with Georgeson. In the report, we study the 2017 shareholder meetings of the top 40 companies on the Spanish organized stock market and the IBEX-35 companies, and we analyze the boards of directors of IBEX-35 companies. As a new feature, we include a compilation of the main corporate governance trends to help companies meet the challenges of the 2018 shareholder meeting season. 

Three partners from our Capital Markets Practice Francisco Pérez-CrespoJuan Aguayo, and José Luis Rodríguez participated in the report's presentation at our Madrid headquarters. Georgeson was represented by Stefano Marini, CEO Corporate Advisory South Europe & Latin America; Claudia Morante, Corporate Governance Senior Advisor; and Carlos Sáez Gallego, Director & Head of Business Development for Spain & Latam. 

José Luis Rodríguez highlighted that “The main development of the regulation is the acknowledgment of the importance of the shareholders’ long-term commitment and their participation in the decision-making process to ensure the correct operation of listed companies in terms of corporate governance. However, once the shareholders are guaranteed to be able to effectively exercise their rights under corporate and capital markets regulations, and corporate governance codes, it will have to be considered whether this greater level of commitment could be achieved under legislation or whether other factors and incentives should be considered.” 

Stefano Marini, CEO Corporate Advisory South Europe & Latin America, indicated that “the most sensitive areas in relation to issuers and their investors are the same as in previous years: boards of directors, remuneration and, to a lesser extent, capital increases. For 2018, companies must extend on the information regarding their directors’ remuneration, IT and diversity; for investors, matters relating to environmental, social and governance (ESG) criteria are become increasingly important.”  

The report also mentions the efforts of the IBEX-35 companies to renew their boards of directors. The percentage of independent board members was 49.8% in 2017, with a female representation of 21.8%. The latter is far off the 2020 objective of 30% in the Spanish Corporate Governance Code. 

For the upcoming 2018 shareholder meeting season, the three areas in which listed companies must maximize their efforts to adapt to the best market practices required by institutional investors are as follows:

  • Implementation of a compensation plan that is aligned with the company's and the shareholders’ long-term interests.
  • Reinforcement of diversity, in its most ample meaning, on the board of directors.
  • Development and correct communication of the company’s strategic plan. 

The most important aspects extracted from the report regarding the 2017 shareholder meeting season are as follows:

  • The increase in the average attendance quorum in Ibex-35 companies (from 69.46% in 2016 to 71.95% in 2017) and the top 40 companies on the Spanish organized stock market (from 68.94% in 2016 to 69.06% in 2017). 
  • Matters relating to directors’ remuneration raised the most controversy for Ibex-35 companies. Twenty-two of the IBEX-35 companies received opposition from over 10% of the quorum to one of the proposals submitted for the general shareholders meeting's approval. 
  • In IBEX-35 companies, the appointment, re-election and ratification of 36 women was subject to voting. The trends continue as in previous years and, in 2017, seven more women directors were proposed than in 2016. In the top 40 companies on the Spanish organized stock market, the appointment, re-election and ratification of 14 women was subject to voting. This is lower than in 2016, where the figure was 20.