 and the performance of the
Company itself. Such indicators, described in more detail in III.71, seek to bring
the interests of the executive directors closer to the long-term interests of REN
and its shareholders.
Particularly, MTVR has the following characteristics which contribute to the
alignment of the interests of REN executive directors with those of the Company
and shareholders:
- MTVR is set in Remuneratory Units (RU) which refer to every financial year
in the term of office in which each executive director has performed duties;
- Each Remuneratory Unit has a value corresponding to the REN share price
at the date the MTVR is set and this value evolves in a manner equal to that
of the Total Shareholder Return (TSR) for REN shares;
The main aims of the proportionality between the fixed and variable components
and the limits to variable remuneration (i.e. between 20% and 120% of fixed
remuneration, in a gradual manner, without prejudice to the evolution in RU) are
to discourage taking on excessive risk and to stimulate the adoption of a suitable
risk management strategy.
III.71. Reference, if applicable, to the existence of a variable remuneration
component and information on possible impact of performance assessment on
this component
As has already been mentioned, the remuneration structure of the Executive
Committee consists of fixed and variable components, and in accordance with
the remuneration policy approved for the 2012-2014 term of office and described
in the Remuneration Committee declaration approved by the Annual General
Meeting of 2013, the variable component of remuneration for 2013 may include
short and medium-term parcels – STVR and MTVR74.
The awarding of STVR and MTVR is subject to the following common
requirements:
- The awarding of the variable component of remuneration only takes place
after approval of the accounts for each financial year, after the performance
assessment for the year to which the payment refers and only when
predefined objectives have been complied with, measured with individual
and company performance indicators indexed to targets in the REN
strategic plan.
- The degree of achievement of defined goals is measured through an
annual performance assessment, based on a predefined model Therefore,
if compliance with goals falls below 80% (minimum performance level),
no payment of variable remuneration takes place. However, if compliance
with goals lies between 80% and 120% or greater, the corresponding total
variable remuneration will equate to between 20% and 120% of the fixed
remuneration.
The abovementioned annual performance assessment, for purposes of awarding
STVR and MTVR during the term of office, is carried out based on the following
REN Key Performance Indicators (KPI) on a consolidated basis (weighting of
80%) and the individual performance assessment (weighting of 20%), which, if
negative, will result in the non-awarding of short-term variable remuneration:
i) Average cost of debt;
ii) Return on invested capital;
iii) EBITDA abroad;
iv) Earnings per share (compound annual growth rate – CAGR);
v) EBITDA CAGR.
Short-term variable remuneration
a) Short-Term Variable Remuneration (STVR) is paid in cash, depending on
the annual performance assessment, with the sum being paid varying
in accordance with the degree of achievement of goals relating to Key
Performance Indicators.
b) Therefore, if the annual performance assessment falls below 80%
(minimum performance level), no payment of STVR takes place. However, if
the annual performance assessment lies between 80% and 120% or greater,
the corresponding STVR will equate to between 10% and 60% of the fixed
remuneration.
Medium-term variable remuneration
a) M edium-Term Variable Remuneration (MTVR) aims to strengthen the
alignment of the interests of REN executive directors with those of the
Company and shareholders. This payment will vary depending on the
annual performance assessment (already described in the previous point)
and will follow the same model as that for STVR.
III.72. Deferral of the payment of the variable remuneration component, with
mention of the deferral period
The awarding of STVR will correspond to a sum of up to 50% of total variable
remuneration awarded with regard to each financial year in question.
In turn, STVR is set in RU which refer to every financial year of the term of office
and is structured to ensure deferral of payment and is conditioned to continued
positive performance, through the following channels:
- Each RU has a value corresponding to the REN share price at the date the
MTVR is set and this value evolves in a manner equal to that of TSR for
REN shares;
- The entitlement executive directors have to convert their RUs is attained on
a successive basis. The units are broken down into thirds and the first 1/3 is
consolidated at the end of the first financial year while the remaining 2/3
are consolidated at the end of subsequent financial years, provided that the
director performs executive duties in the respective financial year (except if
termination occurs as a result of acquisition of a controlling position in REN);
- RUs will be automatically converted into cash or, should the REN General
Meeting come to deliberate (and in accordance with the terms thereby
established), into REN shares, either partially or totally, when three years have
elapsed since the date on which they were awarded.
Bearing in mind the above, payment of MTVR for 2012 is awarded in 2013 and
deferred for a period of three years.
III.73. Criteria on which the awarding of variable remuneration in shares is
based, as well as on the maintaining, by the executive directors, of these
shares, on possible signing of contracts which refer to the shares, more
specifically hedging contracts or risk transfer contracts, the respective limit,
and their relation to the value of total annual remuneration
At present, no plans to award variable remuneration in shares exist, and as such
REN considers that CMVM recommendation III.6. does not apply.
Therefore, despite the remuneration policy approved by the Remuneration
Committee for the term of office determining that, within the scope of MTVR,
RU can be converted into REN shares, either partially or totally, should the REN
General Meeting so deliberate, this has not as yet taken place. Should the General
Meeting make such a decision, this deliberation shall govern the conditions for
awarding the shares in question, including the potential requirement to maintain
the shares or part of them until the end of the term of office.
Furthermore, bearing in mind the objectives sought through the remuneration
model stipulated herein, executive directors of the Company shall not take out
contracts either with the company or with third parties, designed to mitigate the
risk inherent to the variability of their remuneration.
III.74. Criteria on which the awarding of variable remuneration in options is
based and indication of the deferral period and the price
There are no variable remuneration plans or programmes.
III.75. Main parameters and basis of any system of annual bonuses and any
other non-monetary benefits
In 2013, Executive Directors were entitled to the use of a car and a mobile
telephone, for the performance of their duties, plus health insurance, life
insurance and personal accident insurance. It is estimated that the value of these
benefits is € 20 000/director.
There is no system of annual bonuses or any other non-monetary benefits,
beyond the variable component of remuneration described above and in the
previous paragraph.
III.76. Main characteristics of the complementary pensions or early retirement
schemes for directors and the date on which they were approved at the General
Meeting, in individual terms
There is no system of retirement benefits or pensions for the members of the
management and supervisory bodies.
IV. Disclosure of remuneration
IV.77. Indication of the annual amount of remuneration earned, jointly and
individually, by the members of Company management bodies, paid by the
Company, including fixed and variable remuneration and, with regard to the
latter, mention of the different components
Remuneration paid in 2013 to members of REN’s management body, individually
and collectively, was as follows:
(1) This sum includes €171 005.49 paid by the subsidiary Red Eléctrica Corporácion, S.A., a Company incorporated under Spanish Law,
in which he inherently holds the office of member of the Board of Directors.
STVR paid in 2013, as indicated in the table above, refers to the financial year
of 2012. Members of the Executive Committee were also awarded an additional
remuneration parcel, for MTVR referring to the 2012 financial year, set in RU.
Based on the REN share price on the date MTVR was set (30 May 2013), 2.239
euros, the number of RU to be awarded to each member of the Executive
Committee is as follows:
i) Rui Cartaxo – 44 895.4 RU;
ii) João Faria Conceição – 35 603.7 RU;
iii) Gonçalo Morais Soares – 35 603.7 RU.
IV.78. Sums paid for