By Ignacio Galán, Chairman & Chief Executive Officer of Iberdrola
Iberdrola has a long tradition of keeping in contact with its 600,000-plus shareholders, holding hundreds of meetings with them – many face-to-face – every year offering shareholders ample choice to provide feedback beyond the AGM.
And, in 2015, it became the first Spanish company, and one of the world’s first organisations, to formalise and publish a shareholder engagement policy, with the aim of ensuring constructive, ongoing and efficient dialogue between the company and its investors, which are made up of both institutional and minority shareholders. The policy contains the principles and rules covering engagement, as well as a statement of the channels and media through which it will be implemented.
A year on since the initiative’s introduction, Ethical Boardroom caught up with Ignacio Galán, chairman and CEO at Iberdrola, to discuss the policy’s progress and the company’s increased focus on positive interaction with shareholders. According to Galán, it is important to open channels so shareholders can exercise their right to information and participate in the company’s corporate life by putting forward their suggestions. This policy covers particularly well the needs of retail shareholders which control 25 per cent of total stock.
“At Iberdrola, shareholders are an essential part of the company and constitute one of the main foundations upon which we engage in the day-to-day process of building a strong, profitable, sustainable, and long-term enterprise”
“At Iberdrola, shareholders are an essential part of the company and constitute one of the main foundations upon which we engage in the day-to-day process of building a strong, profitable, sustainable, and long-term enterprise,” Galán says.
“The shareholder engagement policy is one of the fundamental pillars of Iberdrola’s corporate governance strategy and was introduced to reflect our vision of creating long-term shareholder value, taking into account the interests of other groups involved in our business activity and institutional role, including employees and communities where our company operates.”
Following on from the policy’s introduction in February 2015, Iberdrola introduced an annual Shareholder Day, with the first held on 27 March 2015 at the Euskalduna Conference Centre and Concert Hall in Bilbao, Spain, which was also the venue for this year’s Shareholder Day on 8 April. During Shareholder Day, various presentations and activities aim to familiarise shareholders with the business, corporate and institutional reality of Iberdrola, while musical performances and interviews with major figures in the scientific, social, and artistic areas representing the geographic environment in which Iberdrola does business.
In 2016 the initiative was extended with the launch of the Shareholder Week (4-8 April) and a wide array of informative activities. At the 2016 Shareholder Day, an Iberdrola Business Forum included presentations on some of Iberdrola’s most impressive projects throughout the world, such as the Wikinger offshore wind farm, the Maine transmission line (connecting Canada and the United States of America) and the Western Link sub-sea interconnection between Scotland and Wales, Iberdrola’s wager on Mexico, and the Avangrid transaction. An Iberdrola Future Forum helped attendees experience an offshore wind farm via virtual reality technology.
But the main event of Shareholder Day is the General Shareholders’ Meeting (GSM), the principal channel for participation of the shareholders within Iberdrola.
“Shareholder Day allows us to enhance our general meeting while fostering shareholder engagement in a natural, unceremonious way,” says Galán. “By offering our shareholders a setting where they can receive information and raise questions beyond the meeting’s agenda, it helps them to easily convey to us their thoughts and opinions regarding the present and future of the company.”
Encouraging GSM attendance
Iberdrola’s desire to encourage and facilitate involvement with the GSM has led to a number of measures, such as ensuring those with reduced mobility or with auditory or visual limitations are supported, and providing childcare and a playground to shareholders with children under seven years old.
The company also pays an attendance bonus to all shareholders participating in the GSM, regardless of whether they attend in person or by proxy through any other person.
The company has developed a system for individual shareholders to be able to grant a proxy or exercise voting rights through the corporate website using personal log-in credentials, with documentation for the GSM published in both Spanish and English on the main Iberdrola website. It publishes its results on a quarterly basis via the National Securities Market Commission, which are followed by presentations through webcast and audio-conference that shareholders and investors can receive free of charge via RSS.
At year-end 2015, a total of 5,130 shareholders had requested their personal identification passwords in order to grant a proxy or exercise the right to vote through the corporate website, while during the last GSM, a total of 4,859 shareholders exercised their voting rights through the system.
“The board of directors is strongly committed to actively promoting attendance and the informed participation of the shareholders at the general meeting,” says Galán. “The new system entails a tremendous advance in the exercise of one of the main rights of the shareholders, resulting in a substantial increase in the number of shareholders exercising their right to vote through the corporate website.”
To demonstrate maximum transparency to the markets, Iberdrola also introduced its Shareholders’ Club, which offers exclusive rewards to all shareholders, such as a direct and personalised hotline, invitations to corporate, cultural, leisure and exclusive events, promotional items and gifts, and the option to take part in surveys to share opinion.
Iberdrola says the main goal of the club is to promote the engagement of shareholders by improving their understanding of Iberdrola through expanded financial information and quarterly results bulletins. The shareholders and investor section on the Iberdrola website offers regularly updated information on the company’s strategy and governance model and includes the On-Line Shareholders system (OLS).
An essential tool in relation to its commitment to transparency and best practices, the OLS enables shareholders to ask questions and obtain a response within 48 hours, observe other shareholders’ questions and answers, and communicate with each other. The OLS had 6,662 registered shareholders at year-end 2015, with almost 45,000 visits and more than 200 questions received last year.
Iberdrola’s website also contains a mix of digital tools to help shareholders, especially retail investors, monitor their holdings and keep up to date with corporate developments, such as calculators to help site visitors work out the value of their dividends or shareholdings, plus audio and video content.
“As a company, we can only move forward with the trust and support of our 600,000 shareholders and we believe in taking care of our shareholders and want to make their relationship with us easier,” says Galán.
About the Author:
Ignacio S. Galán has run leading companies in state-of-the art industrial and technological sectors, where he profoundly changed their profile and applied his far-sighted approach and his ability to anticipate the new needs of the different sectors. The commitment to sound and sustainably projects; the promotion of good corporate governance, efficiency and financial soundness; prudence in balance sheet management; growth with profitability; and the commitment to strong ethical and professional values have characterized Ignacio Galán’s management style throughout his long career. To achieve the strategic objectives, he has always given priority to the setting up of teams that are culturally integrated and focused on a common project.