• With the appointment of the executive director, the process of separating the positions of Chairman of the Board and Chief Executive Officer of the Company has begun.
• The proposals received a favourable vote of 99% of shareholders, with a quorum of 58%, higher than that registered in the General Shareholders’ Meeting held in April.

The Board of Directors of Red Eléctrica has today submitted to the General Shareholders' Meeting, in extraordinary session convened exclusively for the purpose, the separation of the positions of Chairman of the Board and Chief Executive Officer (CEO) of the Company as well as the appointment of Juan Lasala as executive director. Both proposals received a favourable vote of 99% of shareholders, with a quorum of 58%, higher than that registered in the the General Shareholders’ Meeting held on 15 April.

The Board of Directors had already put forth, at the first General Shareholders' Meeting chaired by José Folgado, held in April 2012, its commitment to adopt certain measures to counterbalance the powers and responsibilities of the unified position of Chairman/CEO, to ease the way to the final splitting of said positions.

The Chairman explained that this was a timely moment to take this step by referring to two matters: the approval of the 2014-2019 Strategic Plan, which represents, among other challenges, a clear and sustained increase in non-regulated activities, and the internal analysis process regarding the transfer of executive powers and the succession of measures taken in recent years towards establishing counterweights to facilitate the work of control and supervision of the Board of Directors, which shall culminate in the process of the separation of said positions.

Among these measures, noteworthy are the following:

• The Chairman never actually became a member of the Appointments and Remuneration Committee.

• The position of Lead Independent Director was created by the General Shareholders’ Meeting of the Company held in April 2013, with Carmen Gómez de Barreda being named as Lead Independent Director in May 2013.

• The Board of Directors currently consists of a significant majority of independent directors, 64%, which acts as a counterweight and balance of powers in the composition of the Board.

• The procedure for the selection and appointment of board members has been strengthened in recent years by improving gender diversity as well as diversity in experience and knowledge.

• The Board of Directors has voluntarily attributed to itself, within its internal regulations, certain non-delegable duties that cannot be exercised by either the Chief Executive Officer or by the Board Committees.

• The Board also exercises effective immediate control of the ordinary, extraordinary or urgent actions carried out by the Chief Executive Officer, at each regular session.

• The Committees of the Board, currently consisting of 75% independent directors, have broad functions attributed through the Corporate Bylaws and the Regulations of the Board.

• For years now, the Board is subject to an annual self-evaluation, with counsel from independent external professionals, and publishes the conclusions of these processes in its Annual Corporate Governance Reports.

• The Company voluntarily limited, several years ago, the mandate of its board members to 4 years, when the Law set a limit of 6 years.

Mr. Folgado noted that the Board of Directors has been firmly committed to this process, proposed in order to provide the Company with the most appropriate management structure to meet the objectives set in the new strategic plan. This measure also responds to the growing international trend in the field of corporate governance that recommends that companies forming part of the stock markets said separation of positions.

Separation of positions process

A transition period has been established that will culminate at the Annual General Shareholders’ Meeting in 2016 with the full separation of the duties between the Chairman of the Board and the Chief Executive Officer. As of said Meeting, the Chairman of the Board of Directors shall be attributed exclusively the responsibilities inherent to said position.

Until the Annual General Shareholders’ Meeting 2016, the Chairman shall maintain his current executive powers, focusing his efforts on managing, supporting and fostering the transfer of executive powers in favour of the new CEO in order for such transfer to occur in a rational and organised manner during the transition phase. Therefore, the CEO will take on executive duties from the date of his appointment.

Moreover, the figure of the Lead Independent Director created in 2013, will remain as is, along with the responsibilities assigned to said role; an effective corporate governance practice, as has well been recognised by both shareholders and proxy advisors.

Proposal for appointment of Juan Lasala

An external international consultant, specialised in the selection processes of top executives, was consulted in order to study and evaluate the proposal that the Chairman put forth to the Appointments and Remuneration Committee and the Board of Directors. The consultant’s report concluded that Juan Lasala is a very valid person for the position of Chief Executive Officer of Red Eléctrica Corporación.

Juan Lasala joined the Company in 2001 and, since December 2012, has held the position of Corporate Chief Financial Officer. The fact of having been exposed during the past 15 years to various scenarios of Red Eléctrica’s strategy has provided him with a high professional development. He has directly and very actively participated in the strategic design of the Company in recent years as well as in the unfolding of the telecommunications business. Similarly, he is qualifies to carry out the new strategy in the international arena.

As indicated by the Chairman, Mr. Lasala stands out for his effective capacity for communication, knowledge of investors and specific experience in corporate development. "As a manager, he is clearly oriented towards prioritising the design of what really affects efficiency and enables the Company to optimise negotiation with various stakeholder groups. He has already developed and gained great credibility internally and ability to influence and is, without a doubt, a good negotiator with regulators, customers and partners" he added.

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