Annual Report - EDP

: corporate governance :II.28. Positions heldin other companiesby members ofthe General andSupervisory BoardThe positions held by the members of the Generaland Supervisory Board in other companies,belonging to the EDP Group or not, are set out inAnnex II.II.29. Remunerationpolicy for directorsother than membersof the General andSupervisory Boardand Executive Boardof DirectorsConsidering Article 248-B (3) of the SecuritiesCode, there are not directors at EDP other thanthe members of the corporate bodies. In additionto the members of these bodies, there is no othermanager who has regular access to privilegedinformation or participated in decisions on thecompany’s management and business strategy.SECTION IV –REMUNERATIONPursuant to the Articles of Association,the remuneration of the members of thecorporate bodies are fixed by a RemunerationCommittee appointed by the General Meetingof Shareholders, with the exception of theremuneration of the members of the ExecutiveBoard of Directors, which is fixed by aRemuneration Committee appointed by theGeneral and Supervisory Board.In keeping with the interests thatRecommendation II.1.5.2 of the CMVM CorporateGovernance Code for Listed Companiesseeks to protect, in fixing the remunerationto be paid to the members of the General andSupervisory Board and the Statutory Auditor,the Remuneration Committee of the GeneralMeeting of Shareholders takes into considerationtheir fixed nature as well as the mandatory ruleson determination of remuneration, in particularArticle 440 (2) of the Company Code, whichdefines the criteria for payment of the Generaland Supervisory Board, Article 374-A of theCompany Code on the remuneration of membersof the Officers of the General Meeting and Article60 of Decree-Law 224/2008 of 20 November onthe remuneration of the Statutory Auditor.II.30. Remunerationpolicy for theExecutive Boardof Directors andGeneral andSupervisory BoardEXECUTIVE BOARDOF DIRECTORSThe remuneration policy for the members of theExecutive Board is defined by the RemunerationCommittee appointed by the General andSupervisory Board. The committee has definedthe payment to be made to the members ofthe Executive Board of Directors to reflect theperformance of each board member in each yearof office (annual variable remuneration) and theirperformance for the duration of their term ofEDP - Annual Report 2012office by fixing a variable component designedto maximise EDP’s long-term performance(multi-annual variable remuneration).This recommendation uses an undeterminedconcept whose filling in depends on concretecircumstances of the issued company and, mainly,on the understanding that its shareholders haveregarding what is reasonable in face of thesecircumstances. In addition, the interpretation onthe relative weight of the variable remunerationin comparison with the fixed one must take intoaccount the remaining elements included inthe recommendation, specially the orientationconcerning the alignment of the remunerationstructure with shareholders long-terminterests. Such a principle has, necessarily,as consequence, the increase of the variablecomponent weight, in order to create the correctincentives so that the executive management ofthe company promotes a sustainable growth.The relative weight of the variable remunerationagainst the fixed remuneration dependsparticularly on the alignment of the remunerationstructure with the shareholders’ long-terminterests. The weight of the variable componenttherefore increases to create appropriateincentives for the company management topromote its sustainable growth.The remuneration policy, approved by theshareholders, states that the total variablecomponent may be as much as double the fixedcomponent during a term of office and setsa maximum of two-thirds of the remunerationdependent on fulfilment of strict companyperformance goals. The variable remunerationdepends on whether the executive managementcan achieve a performance of 90% of thebusiness plan and only if it achieves 110% will thedirectors receive the maximum amounts allowedby the company’s remuneration policy.Variable remuneration is divided into an annualamount that may be no more than 80% of thefixed remuneration and a multi-annual amountthat may reach 120% of the fixed remuneration.The multi-annual variable remuneration is onlypayable if the predefined goals are achieved andis paid the year after the end of the term of officeto which it applies.If the remuneration goals are fully achieved duringa term, 60% of the directors’ variable remunerationis deferred for no less than three years.If we compare this percentage to that set outfor credit institutions and financial companiespursuant to Directive 2010/76/EU of the EuropeanParliament and of the Council of 24 November, asthey are a benchmark that underwent an in-depthanalysis and debate in Europe, we find that EDP’spolicy on variable remuneration is equivalent tothe strictest policy followed by these entities.According to the remuneration policy for themembers of the Executive Board of Directorsproposed by the Remuneration Committee of theGeneral and Supervisory Board, a significant partof the variable remuneration representing multiannualvariable remuneration may be a maximumof 120% of the gross annual remuneration.A period of three years is considered fordetermining this component.The statement on remuneration policy for2012/2014 approved by the General Meetingof Shareholders on 17 April 2012 sets outthe following:º º Fixed Remuneration –the remuneration of theChairman of the Executive Board of Directorsis EUR 600,000 (gross) per annum. Theremaining members of the Executive Boardof Directors receive 80% of this sum.º º Annual Variable Remuneration – for each129