Iberdrola S A : The Company delivers the Annual Report on Directors' Remuneration 2020

ANNUAL REPORT ON DIRECTOR REMUNERATION OF LISTED

COMPANIES

ISSUER IDENTIFICATION DETAILS

YEAR-END DATE

31.12.2020

Tax Identification No.

Company name: Company name: IBERDROLA, S.A.

Registered Office: Plaza Euskadi número 5, Bilbao 48009 Biscay, Spain

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ANNUAL REPORT ON DIRECTOR REMUNERATION OF LISTED

COMPANIES

A REMUNERATION POLICY OF THE COMPANY FOR THE CURRENT FINANCIAL YEAR

A.1 Explain the current director remuneration policy applicable to the year in progress. To the extent that it is relevant, certain information may be included in relation to the remuneration policy approved by the General Shareholders' Meeting, provided that these references are clear, specific and concrete.

Such specific determinations for the current year as the board may have made in accordance with the contracts signed with the executive directors and with the remuneration policy approved by the General Shareholders' Meeting must be described, as regards directors' remuneration both in their capacity as such and for executive functions carried out.

In any case, the following aspects must be reported, as a minimum:

• - Description of the procedures and company bodies involved in determining and approving the remuneration policy and its terms and conditions.

• - Indicate and, where applicable, explain whether comparable companies have been taken into account in order to establish the company's remuneration policy.

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Information on whether any external advisors took part in this process and, if so, their identity.

Pursuant to Article 48.1 of the By-Laws, the overall limit to the amounts allocated by

Iberdrola, S.A. ("Iberdrola" or the "Company") to the directors each year as remuneration, including, in the case of executive directors, remuneration payable for performing executive duties, as well as the funding of a reserve to meet the liabilities assumed by the Company in connection with pensions, payment of life and casualty insurance premiums, payment of severance to former and current directors, and the operating expenses of the Board of Directors and of its committees, is a maximum of 2% of the consolidated group's profit for the financial year, after allocations to cover the legal and other mandatory reserves and after declaring a dividend to the shareholders of not less than 4% of the share capital. In 2020, said amount came to 17,000 thousand euros (in financial year 2019, it also came to 17,000 thousand euros).

For the purpose of establishing such limit, the quoted price of shares or options thereon or remuneration indexed to the listing price of the shares shall not be calculated, which remuneration shall in all cases require the approval of the shareholders at a General Shareholders' Meeting.

The Director Remuneration Policy must be submitted by the Board of Directors, upon a proposal of the Remuneration Committee, for the approval of the shareholders at the General Shareholders' Meeting. The current Policy was approved by the shareholders at the General Shareholders' Meeting held on 13 April 2018. The Board of Directors shall propose to the shareholders at the General Shareholders' Meeting to be held in 2021 the approval of a new policy.

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The Policy considers talent, efforts, creativity and leadership to be the main differentiating elements in the energy industry, and thus seeks to retain, attract and reward the most competent professionals. All of the foregoing is in order to maximise the social dividend and shareholder return and to contribute to the achievement of the Company's strategic objectives.

As regards external directors, the Director Remuneration Policy seeks to remunerate the directors appropriately in recognition of their dedication and the responsibility they assume, while also being in line with the market remuneration paid at companies of a similar nature.

As far as executive directors are concerned, the Director Remuneration Policy follows the same standards as those of the Senior Management Remuneration Policy and shares the same principles and guidelines as those of the remuneration policy for all of the Company's professionals. The main principles governing the remuneration of the executive directors are: (i) ensure that the overall structure and amount of their remuneration complies with best practices and is competitive compared to the remuneration paid by comparable entities at the domestic and international levels; (ii) establish remuneration with objective standards in relation to individual performance and achievement of the business objectives; (iii) include a significant annual variable component linked to performance and to the achievement of specific, pre-determined, quantifiable objectives aligned with the company interest and its strategic objectives, taking into account economic/financial, operational/industrial and other parameters relating to the Sustainable Development Goals; (iv) strengthen and incentivise the achievement of the Company's strategic objectives through the use of long-term incentives; and (v) establish suitable limits on variable remuneration and mechanisms for the Company to be able to obtain the reimbursement of the variable components if the payment thereof does not conform to the conditions for payment.

No external advisor has participated in the preparation of the current Director Remuneration Policy.

- Relative importance of variable remuneration items vis-à-vis fixed remuneration

(remuneration mix) and the criteria and objectives taken into consideration in their determination and to ensure an appropriate balance between the fixed and variable components of the remuneration. In particular, indicate the actions taken by the company in relation to the remuneration system to reduce exposure to excessive risks and to align it with the long-term objectives, values and interests of the company, which will include, as the case may be, mention of the measures taken to ensure that the long-term results of the company are taken into account in the remuneration policy, the measures adopted in relation to those categories of personnel whose professional activities have a material impact on the risk profile of the company and measures in place to avoid conflicts of interest.

Furthermore, indicate whether the company has established any period for the accrual or vesting of certain variable remuneration items, in cash, shares or other financial instruments, any deferral period in the payment of amounts or delivery of accrued and vested financial instruments, or whether any clause has been agreed reducing the deferred remuneration not yet vested or obliging the director to return remuneration received, when such remuneration has been based on figures that have since been clearly shown to be inaccurate.

The final structure of the "remuneration mix" of executive directors is based on an evaluation of the performance of said directors by the Board of Directors, upon a proposal of the Remuneration Committee, as well as the change in value of any shares to be delivered in payment of the multi-annual variable remuneration.

Annual and multi-annual variable remuneration is linked to the performance of the executive directors with respect to economic/financial, operational/industrial and other parameters relating to the Sustainable Development Goals. Performance is evaluated by the Board of Directors, upon a proposal of the Remuneration Committee. This Committee is in turn customarily advised by an independent firm that evaluates such performance.

Multi-annual variable remuneration in shares approved by the shareholders at the

General Shareholders' Meeting relates to the performance of the executive directors and of the Company itself over a three-year period, and does not accrue until the Board of Directors performs the corresponding evaluation at the end of said period. Any payment thereof is deferred over the next three years.

Prior to payment, all deferred variable remuneration requires a report from the Remuneration Committee confirming that the rationale supporting such deferred variable remuneration still applies. If there is a circumstance that subsequently requires a correction of the parameters taken into consideration during the initial evaluation, the Board of Directors will decide whether to cancel payment of the deferred variable remuneration in whole or in part (malus clause), and even to demand the total or partial return of amounts already paid (claw-back).

- Amount and nature of fixed components that are due to be accrued during the year by directors in their capacity as such.

For financial year 2021, the Board of Directors, upon a proposal of the Remuneration Committee, has unanimously resolved to maintain the fixed remuneration and the amounts set as attendance fees. These amounts have been frozen since 2008.

Fixed remuneration of the directors for belonging to the Board of Directors and to the committees thereof based on the position held in each case was as follows:

• • Chairman of the Board of Directors: 567 thousand euros.

• • Vice-chair of the Board of Directors and chairs of the consultative committees: 440 thousand euros.

• • Members of the committees: 253 thousand euros.

• • Members of the Board of Directors: 165 thousand euros.

Attendance fees received by the directors for attending the meetings of the Board of Directors and of the committees thereof, based on the position held in each case, were as follows:

• • Chairman and vice-chair of the Board of Directors and chairs of the committees: 4 thousand euros.

• • Members of the Board of Directors and of the committees: 2 thousand euros.