Iberdrola faces the most tense shareholders' meeting of the 'Galan era'

Iberdrola, like the majority of Ibex 35 companies, has been accustomed for years to its general shareholders’ meetings being little less than a triumphal parade: the theses of the management —and, by extension, of the board of directors— prevail with ease and resistance is residual among their owners. Few believe that this situation is going to take a 180 degree turn in the conclave that the largest Spanish electricity company will hold this Friday in Bilbao, but the succession of events in recent months – the accusation of its president, Ignacio Sánchez Galán, for the Villarejo case; the No provisional received by the New Mexico regulator for the purchase of PNM Resources, indirectly alluding to the case of the retired former commissioner; and the resounding skid at the beginning of May, when the chief executive called the users of the regulated market “fools”—have tensed the atmosphere, adding a touch of spice to a forum that, under normal conditions, would be a pool of oil.

The agenda of the meeting includes twenty proposals, including modifications to the statutes, the traditional approval of the annual accounts, the non-financial information statement, the application of the 2021 result and two new editions of the dividend system. Also the re-election of several independent directors: the former Minister of Agriculture Isabel García Tejerina (PP), the former United States Ambassador to the European Union Anthony L. Gardner and the former Director General of Registries and Notaries of the Ministry of Justice María Ángeles Alcalá Diaz.

Aware that it will need, more than ever, to be supported by retail shareholders, who have a very high propensity to vote in favor of the board’s proposals, Iberdrola’s management has announced an extra dividend of 0.005 euros per share for its 600,000 shareholders if at least 70% of these attend the meeting, an unprecedented movement among the great names of the Spanish parquet. The electric company is the largest listed on the Ibex, ahead of the Galician textile colossus Inditex.

With the accounts in hand, the Board should be anything but stormy: the good performance of its business in the United States and Brazil, two markets that have not stopped gaining specific weight in recent years, have led its chairman to confirm his annual profit forecast, up to nearly 4,000 million euros. In the first quarter, the electricity company recorded a profit of more than 1,000 million, 3% more than in the same period of 2021. And in the whole of last year it earned 3,885 million, 8% more than in 2020. The problem it’s not there. Nor in the strategic direction: no one doubts that the focus on renewables and green hydrogen will pay off. The biggest contestation is, rather, in the reputational field; in the damage of seeing the name associated with controversies and, above all, ongoing court cases. Also in the ballast that this new scenario may entail for future corporate operations: the US refusal to operate PNM, although still reversible, is a good account of this.

The Yes of the large shareholders – the Qatari (8.7%) and Norwegian (3.4%) sovereign wealth funds, and the US giant BlackRock (5.1%) – to the council’s proposals is taken for granted this Friday. The doubt is, rather, in the so-called proxy advisor: the firms that are in charge of advising the direction of the vote of the funds (above all, of pensions) that are in the capital as financial investors and that do not follow the day to day of the company. The American Institutional Shareholder Services (ISS) recommends affirmative suffrage for the proposals. But the Spanish Corporation has dropped its preference for the vote against. “Some investors have realized that the reputational issue is already affecting businesses,” its founder and head, Juan Prieto, told EL PAÍS a month ago, who also calls for a transparent succession plan for Sánchez Galán. The executive from Salamanca will turn 71 in the fall.

He knows in depth all the sides of the coin.

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