1st Apr 2005 09:23
Telefonica SA31 March 2005 ANNUAL REPORT ON CORPORATE GOVERNANCE LISTED COMPANIES DATA IDENTIFYING ISSUER FINANCIAL YEAR 2004 TAX ID CODE: A-28015865 Registered name: TELEFONICA, S.A. Registered offices: GRAN VIA, 28 MADRID MADRID 28013 SPAIN MODEL OF ANNUAL CORPORATE GOVERNANCE REPORT FOR LISTED COMPANIES A SHAREHOLDING STRUCTURE A.1. Fill in the following tables on the company's share capital: Latest date of any change Share Capital (•) Number of shares 10-06-2003 4,955,891,361.00 4,955,891,361.00 If there are different types of shares, indicate in the following table: Type Number of shares Nominal unit valueALL THE SHARES ARE OF THE SAME TYPE. 4,955,891,361.00 1.00 A.2. List the direct and indirect holders of significant shareholdings in your organisation at the end of its financial year, excluding members of its Board of Directors: Name or corporate name of Number of shares held Number of shares held % Total/share capital shareholder directly indirectly (*)CAJA DE AHORROS Y PENSIONES 92,380,486 174,095,736 5.377DE BARCELONA, "LA CAIXA"BANCO BILBAO VIZCAYA 89,027,259 194,997,590 5.731ARGENTARIA, S.A. (*) Through: Name or corporate name of direct shareholder Number of shares held directly %/ Share capitalCAIXA HOLDING, S.A. 155,686,356 3.141CAIXA DE BARCELONA DE SEGUROS DE VIDA, SOCIEDAD 18,409,380 0.371ANONIMA DE SEGUROS Y REASEGUROS, S.A.CONSOLIDAR CIA. 16,100 0.000 DE SEGUROS DE VIDA, S.A.BBVA SEGUROS, S.A. 369,941 0.007CORPORACION INDUSTRIAL Y DE SERVICIOS, S.L. 104,611,549 2.111SOCIEDAD DE ESTUDIOS Y ANALISIS FINANCIEROS, 90,000,000 1.816S.A.Total: 369,093,326 Indicate the most significant movements in the shareholding structure during the financial year: Name or corporate name of shareholder Date of transaction Description of transactionCAJA DE AHORROS Y PENSIONES DE BARCCELONA, "LA 30-03-2004 Exceeding the 5% limit on shareholdingsCAIXA" A.3. Fill in the following tables on company directors holding company shares: Name or corporate name of Date of first Date of last Number of shares Number of shares % Total /share Company Director appointment appointment held directly held indirectly capitalMR. CESAR ALIERTA IZUEL 29-01-1997 12-04-2002 632,012 0 0.013MR. ISIDRO FAINE CASAS 26-01-1994 15-06-2001 7,164 0 0.000MR. JOSE ANTONIO FERNANDEZ 12-04-2002 12-04-2002 115 0 0.000RIVEROMR. FERNANDO DE ALMANSA 26-02-2003 11-04-2003 2,112 0 0.000MORENO-BARREDAMR. JESUS MARIA CADENATO 11-04-2003 11-04-2003 9,906 0 0.000MATIAMR. MAXIMINO CARPIO GARCIA 29-01-1997 12-04-2002 5,836 0 0.000MR. CARLOS COLOMER CASELLAS 28-03-2001 15-06-2001 543 0 0.000MR. ALFONSO FERRARI HERRERO 28-03-2001 15-06-2001 1,811 99,500 0.002MR. JOSE FONOLLOSA GARCIA 11-04-2003 11-04-2003 0 0 0.000MR. GONZALO HINOJOSA 12-04-2002 12-04-2002 37,958 0 0.001FERNANDEZ DE ANGULOMR. MIGUEL HORTA E COSTA 17-03-1998 11-04-2003 354 0 0.000MR. PABLO ISLA ALVAREZ DE 12-04-2002 12-04-2002 386 0 0.000TEJERAMR. LUIS LADA DIAZ 10-08-2000 15-06-2001 30,000 0 0.001MR. ANTONIO MASSANELL 21-04-1995 15-06-2001 2,106 642 0.000LAVILLAMR. ENRIQUE USED AZNAR 12-04-2002 12-04-2002 19,450 17,988 0.001MR. MARIO EDUARDO VAZQUEZ 20-12-2000 15-06-2001 10 0 0.000MR. ANTIONIO VIANA-BAPTISTA 12-01-2000 04-02-2000 21,944 0 0.000MR. GREGORIO VILLALABEITIA 27-02-2002 12-04-2002 53 0 0.000GALLARRAGAMR. ANTONIO J. ALONSO UREBA 28-03-2001 16-06-2001 8,438 0 0.000 (*) Through: Name or corporate name of direct shareholder Number of shares held directlyINVERSIONES SINGLADURA, S.A. 79,500FINALFESA, S.A. 20,000MS.GEMMA MASSANELL BOLET 642REVIEW INVERSIONES SICAV, S.A. 17,988 Total: 118,130 % of total equity held by the Board of Directors 0.018 Fill in the following tables on company directors holding company share options: Name or corporate of Number of options held Number of options held Equivalent number of %Total/share capital Company Director directly indirectly sharesMR. JOSE FONOLLOSA 115 530 645 0.000GARCIA A.4. Where applicable, indicate any family, commercial, contractual or corporate relationships between owners of significant shareholdings, as far as the Company is aware, unless of little relevance or ensuing from ordinary trading or exchange: Name or corporate name of related party Type of relationship Brief description A.5. Where applicable, indicate any commercial, contractual or corporate relationships between owners of significant shareholdings and the company, unless of little relevance or ensuing from ordinary trading or exchange: Name or corporate name of related party Type of relationship Brief descriptionBANCO BILBAO VIZCYA ARGENTARIA, S.A. Corporate JOINT SHAREHOLDING WITH TELEFONICA MOVILES, S.A. IN MOBIPAY ESPANA, S.A. AND IN MOBIPAY INTERNACIONAL, S.A.BANCO BILBAO VIZCYA ARGENTARIA, S.A. Corporate JOINT SHAREHOLDING WITH TELEFONICA DE CONTENIDOS, S.A. IN HISPASAT, S.A.BANCO BILBAO VIZCYA ARGENTARIA, S.A. Corporate JOINT SHAREHOLDING WITH TERRA NETWORKS IN UNO-E BANK, S.A.BANCO BILBAO VIZCYA ARGENTARIA, S.A. Corporate JOINT SHAREHOLDING WITH TELEFONICA, S.A. IN ATENTO, N.V. A.6. Indicate any shareholders agreements that have been reported to the company: Parties to paracorporate agreements % of share capital affected Brief description of the agreement Indicate any concerted actions among company shareholders of which the company is aware: Parties to concerted actions % of share capital affected Brief description of the concerted action Expressly indicate any change in or break-up of said concerted actions or agreements. A.7. Indicate whether any person or organisation exercises or may exercise control over the company pursuant to Article 4 of the Securities Market Law: Name or corporate name Comments A.8. Fill in the following tables on the company's treasury stock: At year end: Number of shares held directly Number of shares held indirectly % Total /share capital 207,245,179 0 4.182 (*) Through: Name or corporate name of direct shareholder Number of shares held directly Total: List any significant variations that have occurred during the financial year, according to Royal Decree 377/1991: Date Number of direct shares Number of indirect shares % Total /share capital 05-05-2004 80,175,320 0 1.618 30-06-2004 131,075,320 0 2.645 04-10-2004 183,447,879 0 3.702 Revenue from treasury stock transactions throughout the 0year (in thousands of euros) A.9. Detail the terms and conditions of any authorisation(s) conferred by the General Shareholders' Meeting to the Board of Directors to purchase and/ or transfer the treasury stock described in section A.8. above. The Ordinary General Shareholders' Meeting of Telefonica, at its session held on April 30th 2004, resolved to renew the authorisation granted by the GSM of April 11th 2003, for the derivative acquisition of treasury stock, either directly or through Group companies, in the terms literally transcribed as follows: "To authorise, as set forth in Articles 75 and next of the current Spanish Corporations Law (Ley de Sociedades Anonimas), the acquisition, at any moment and as many times as considered necessary by Telefonica, S.A. - either directly or through any of the subsidiary companies of which it is the dominant company - of the Company's treasury stock, through a purchase-sale or by any other legal onerous title. The minimum acquisition price or compensation will be equivalent to the nominal value of the treasury stock acquired and the maximum acquisition price or compensation will be equal to the market value of the treasury stock on an official secondary market at the time of the acquisition. Said authorisation is granted for a period of 18 months, reckoned from the date of the current Annual General Shareholders' Meeting, and is expressly subject to the limitation that, at any time, the nominal value of the treasury stock acquired under this authorisation, added to that already held by Telefonica, S.A. and any of the controlled subsidiary companies, may exceed 5 percent of the share capital at the time of the acquisition, respecting the limitations set for the acquisition of treasury stock as imposed by the regulatory authorities of the markets on which Telefonica, S.A. shares are quoted. It is expressly noted that the authorisation granted for the acquisition of treasury stock can be used wholly or partially for the acquisition of these shares of Telefonica, S.A., and that the Company must deliver or transfer to its directors or employees, or to those of the companies in its Group, directly or as a consequence of these having exercised their option rights, all within the framework of the referenced remuneration systems as the market value of the company shares approved in due form. To empower the Board of Directors, in the broadest possible terms, to exercise the authorization derived from this resolution and to execute the remaining items included in this, enabling the Board of Directors to delegate in the Executive Committee, the Executive Chairman of the Board or any other person expressly empowered by the Board to this effect. The unexecuted part of the resolution adopted by the Company's Annual General Shareholders' Meeting of April 11th, 2003, in relation to point IV of the Agenda of this same Meeting, shall remain null and void." A.10. Indicate any restrictions under law or the company articles of association on exercising voting rights and any legal restrictions on the acquisition and/or transfer of company stock: (i) Restrictions on exercising voting rights: In accordance with Article 21 of the Company Articles of Association, no shareholder shall be allowed to cast a number of votes representing more than ten percent of the overall share capital entitled to voting rights existing at any time, regardless of the number of shares he/she actually holds. In ascertaining the maximum number of votes which each shareholder may cast, only those shares owned by each shareholder shall be taken into account, and the shares belonging to other shareholders who have appointed such shareholder as their proxy shall not be included, without prejudice to the aforementioned ten percent limit, which shall apply equally to every represented shareholder. The limit set out in the above paragraph shall likewise apply to the maximum number of votes that may be cast - either jointly or individually - by two or more shareholding companies belonging to the same group of companies, and to the maximum number of votes which may be cast by an individual or a corporate body holding shares in the Company which are directly or indirectly controlled by that individual or corporate body. Taking into account the total share capital of Telefonica, and in view of its current shareholding structure, the aforementioned limit on the number of votes established in the Company Articles of Association is, in practise, not applicable, as at present there are no shareholders with a stake, whether direct or indirect, of over 6 percent of the company share capital. (ii) Limits on the acquisition and/or transfer of company stock: There are no provisions in the Articles of Association restricting or limiting the free transfer of Telefonica stock. The above notwithstanding, in response to the Ruling from the European Court of Justice of 13th May 2003, Law 62/2003, of 30th December on Tax, Administrative and Social Order Measures, has altered the administrative authorisation regime set out in Law 5/1995, of 23rd March, on the Legal Regime for Transfer of Public Stock in certain companies, to which certain commercial transactions and corporate agreements existing in Telefonica and its subsidiary companies, Telefonica Moviles, S.A., Telefonica Moviles de Espana, S.A.U. and Telefonica de Espana, S.A.U. are subject by virtue of Royal Decree 8/1997, of 10th January. Therefore, the direct or indirect or acquisition of shares in Telefonica or Telefonica Moviles, S.A., including through third party trustees or intermediaries, is subject to a regime of administrative notification when it entails the disposal of at least 10 percent of the Company share capital. However, mere financial transactions that are not addressed at taking over control and/or management of such companies, are not included in this regime. B STRUCTURE OF CORPORATE ADMINISTRATION B.1. Board of Directors B.1.1. Detail the maximum and minimum number of directorships established under the articles of association: Maximum number of Directors 20 Minimum number of Directors 5 B.1.2. Fill in the following table with the Board members and their details. Name or corporate Represented by Post Date of first Date of last Election procedure name of director appointment appointmentMR. CESAR ALIERTA CHAIRMAN 29-10-1997 12-04-2002 COOPTION WITHIZUEL SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. ISIDRO FAINE VICE CHAIRMAN 26-01-1994 15.06.2001 COOPTION WITHCASAS SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. JOSE ANTONIO DIRECTOR 12-04-2002 12-04-2002 GENERALFERNANDEZ RIVERO SHAREHOLDERS' MEETINGMR. FERNANDO DE DIRECTOR 26-02-2003 11-04-2003 COOPTION WITHALMANSA SUBSEQUENTMORENO-BARREDA RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. JESUS MARIA DIRECTOR 11-04-2003 11-04-2003 GENERALCADENATO MATIA SHAREHOLDERS' MEETINGMR. MAXIMO CARPIO DIRECTOR 29-01.1997 12-04-2002 COOPTION WITHGARCIA SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. CARLOS COLOMER DIRECTOR 28-03-2001 15-05-2001 COOPTION WITHCASELLAS SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. ALFONSO DIRECTOR 28-03.2001 15.06.2001 COOPTION WITHFERRARI HERRERO SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. JOSE FONOLLOSA DIRECTOR 11-04-2003 11.04.2003 GENERALGARCIA SHAREHOLDERS' MEETINGMR. GONZALO DIRECTOR 12.04.2002 12.04.2002 GENERALHINOJOSA FERNANDEZ SHAREHOLDERS'DE ANGULO MEETINGMR. MIGUEL HORTA E DIRECTOR 17-03-1998 11.04.2003 GENERALCOSTA SHAREHOLDERS' MEETINGMR. PABLO ISLA DIRECTOR 12-04-2002 12-04.2002 GENERALALVAREZ DE TEJERA SHAREHOLDERS' MEETINGMR. LUIS LADA DIAZ DIRECTOR 10-08-2000 15-06-2001 COOPTION WITH SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. ANTONIO DIRECTOR 21-04-1995 15-06-2001 GENERALMASSANELL LAVILLA SHAREHOLDERS' MEETINGMR. ENRIQUE USED DIRECTOR 12.04.2002 12-04-2002 GENERALAZNAR SHAREHOLDERS' MEETINGMR. MARIO EDUARDO DIRECTOR 20-12-2000 15-06-2001 COOPTION WITHVAZQUEZ SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. ANTONIO DIRECTOR 12-01-2000 04-02-2000 COOPTION WITHVIANA-BAPTISTA SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. GREGORIO DIRECTOR 27-02-2002 12-04-2002 COOPTION WITHVILLALABEITIA SUBSEQUENTGALARRAGA RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETINGMR. ANTONIO J. SECRETARY TO BOARD 28-03-2001 15.06.2001 COOPTION WITHALONSO UREBA OF DIRECTORS SUBSEQUENT RATIFICATION BY THE GENERAL SHAREHOLDERS' MEETING Total number of Directors 19 Indicate any members leaving the Board during this period: Name or corporate name of director Date of leaving B.1.3 Fill in the following table on the Board members and their different directorships: EXECUTIVE DIRECTORS Name or corporate name of director Commission proposing appointment Post within the company organisationMR. CESAR ALIERTA IZUEL NOMINATING, COMPENSATION, AND CORPORATE CHAIRMAN GOVERNANCE COMMITTEEMR. LUIS LADA DIAZ NOMINATING, COMPENSATION, AND CORPORATE DIRECTOR GOVERNANCE COMMITTEEMR. MARIO EDUARDO VAZQUEZ NOMINATING, COMPENSATION, AND CORPORATE DIRECTOR GOVERNANCE COMMITTEEMR. ANTONIO VIANA-BAPTISTA NOMINATING, COMPENSATION, AND CORPORATE DIRECTOR GOVERNANCE COMMITTEEMR. ANTONIO J. ALONSO UREBA NOMINATING, COMPENSATION, AND CORPORATE SECRETARY TO THE BOARD OF DIRECTORS GOVERNANCE COMMITTEE EXTERNAL PROPRIETARY DIRECTORS Name or corporate name of director Commission proposing appointment Name or corporate name of the significant shareholder represented or who proposed the appointmentMR. JOSE FONOLLOSA GARCIA NOMINATING, COMPENSATION, AND CORPORATE BANCO BILBAO VIZCAYA ARGENTARIA, S.A. GOVERNANCE COMMITTEEMR. ANTONIO MASSANELL LAVILLA NOMINATING, COMPENSATION, AND CORPORATE LA CAIXA, CAJA DE AHORROS Y PENSIONES GOVERNANCE COMMITTEE DE BARCELONAMR. GREGORIO VILLALABEITIA GALARRAGA NOMINATING, COMPENSATION, AND CORPORATE BANCO BILBAO VIZCAYA ARGENTARIA, S.A. GOVERNANCE COMMITTEEMR. ISIDRO FAINE CASAS NOMINATING, COMPENSATION, AND CORPORATE BANCO BILBAO VIZCAYA ARGENTARIA, S.A. GOVERNANCE COMMITTEEMR. JOSE ANTONIO FERNANDEZ RIVERO NOMINATING, COMPENSATION, AND CORPORATE BANCO BILBAO VIZCAYA ARGENTARIA, S.A. GOVERNANCE COMMITTEEMR. JESUS MARIA CADENATO MATIA NOMINATING, COMPENSATION, AND CORPORATE BANCO BILBAO VIZCAYA ARGENTARIA, S.A. GOVERNANCE COMMITTEE EXTERNAL INDEPENDENT DIRECTORS Name or corporate name of director Commission proposing appointment ProfileMR. FERNANDO DE ALMANSA MORENO-BARREDA NOMINATING, COMPENSATION, AND CORPORATE HOLDER OF LAW DEGREE, ON LEAVE FROM THE GOVERNANCE COMMITTEE DIPLOMATIC CORPS. FORMERLY HEAD OF STAFF AT THE HOME OF HIS MAJESTY KING JUAN CARLOS I.MR. MAXIMO CARPIO GARCIA NOMINATING, COMPENSATION, AND CORPORATE DOCTOR IN ECONOMICS. PROFESSOR OF GOVERNANCE COMMITTEE APPLIED ECONOMICS AT THE UNIVERSIDAD AUTONOMA DE MADRID.MR. CARLOS COLOMER CASELLAS NOMINATING, COMPENSATION, AND CORPORATE HOLDER OF AN ECONOMICS DEGREE. CHAIRMAN GOVERNANCE COMMITTEE OF THE COLOMER GROUP.MR. ALFONSO FERRARI HERRERO NOMINATING, COMPENSATION, AND CORPORATE HOLDER OF ECONOMICS DEGREE. FORMERLY GOVERNANCE COMMITTEE EXECUTIVE CHAIRMAN OF BETA CAPITAL, S.A. AND SENIOR MANAGER AT BANCO URQUIJOMR. GONZALO HINOJOSA FERNANDEZ DE NOMINATING, COMPENSATION, AND CORPORATE INDUSTRIAL ENGINEER. CHAIRMAN ANDANGULO GOVERNANCE COMMITTEE MANAGING DIRECTOR OF CORTEFIEL, S.A.MR. MIGUEL HORTA E COSTA NOMINATING, COMPENSATION, AND CORPORATE HOLDER OF ECONOMICS DEGREE. CHAIRMAN OF GOVERNANCE COMMITTEE PORTUGAL TELECOM, SGPS, S.A.MR. PABLO ISLA ALVAREZ DE TEJERA NOMINATING, COMPENSATION, AND CORPORATE HOLDER OF LAW DEGREE. STATE LAWYER. GOVERNANCE COMMITTEE CHAIRMAN OF ALTADIS, S.A. AND LOGISTA, S.A.MR. ENRIQUE USED AZNAR NOMINATING, COMPENSATION, AND CORPORATE TELECOMMUNICATIONS ENGINEER. CHAIRMAN GOVERNANCE COMMITTEE OF AMPER, S.A. OTHER EXTERNAL DIRECTORS Name or corporate name of director Committee proposing appointment List the reasons why they cannot be considered independent or proprietary: Indicate any variations that have occurred in the type of each director: Name or corporate name of Date of change Previous type Current type director B.1.4. Indicate whether the types of directors set out in the previous point corresponds to the distribution established in the Board Regulations: When considering the present composition of the Board of Directors and the principles governing the same - established in the Board of Directors Regulations - the current composition is fully in line with the aforementioned Regulations and with the established guidelines of Corporate Governance. The Board is comprised of a significant number of independent Directors (eight), and the external Directors (including Proprietary and Independents) are in ample majority over executive Directors (fourteen vs. five). Furthermore, there is a majority of independent Directors over proprietary Directors (eight vs. five) on the Board. B.1.5. Indicate, if the case may be, any powers delegated to the Managing Director(s): Name or corporate name of director Brief descriptionCESAR ALIERTA IZUEL At the date of preparation of the present report, the position of Managing Director does not exist. However, the Executive Chairman has been delegated all the powers of the Board of Directors, except those which may not be delegated by law or under the Articles of Association. B.1.6. Identify any board members in senior management or directive posts in other companies forming part of the listed company: Name or corporate name of director Corporate name of the group company PostMR. JOSE ANTONIO FERNANDEZ RIVERO ADQUIRA ESPANA, S.A. CHAIRMANMR. ANTONIO MASSANELL LAVILLA TELEFONICA MOVILES, S.A. DIRECTORMR. FERNANDO DE ALMANSA MORENO-BARREDA TELEFONICA INTERNACIONAL, S.A. DIRECTORMR. FERNANDO DE ALMANSA MORENO-BARREDA TELEFONICA MOVILES, S.A. DIRECTORMR. FERNANDO DE ALMANSA MORENO-BARREDA TELEFONICA DE PERU, S.A.A. DIRECTORMR. FERNANDO DE ALMANSA MORENO-BARREDA TELEFONICA DE ARGENTINA, S.A. DIRECTORMR. FERNANDO DE ALMANSA MORENO-BARREDA TELECOMINICACOES DE SAO PAULO, S.A. DIRECTORMR. JESUS MARIA CADENATO MATIA UNO E BANK, S.A. DIRECTORMR. MAXIMO CARPIO GARCIA TELEFONICA MOVILES, S.A. DIRECTORMR. ALFONSO FERRARI HERRERO TELEFONICA INTERNACIONAL, S.A. DIRECTORMR. ALFONSO FERRARI HERRERO TELEFONICA CTA CHILE, S.A. DIRECTORMR. ALFONSO FERRARI HERRERO TELEFONICA DE PERU, S.A.A. DIRECTORMR. LUIS LADA DIAZ TELEFONICA MOVILES, S.A. DIRECTORMR. ENRIQUE USED AZNAR TERRA NETWORKS, S.A. DIRECTORMR. ENRIQUE USED AZNAR TELECOMUNICACOES DE SAO PAULO, S.A. DIRECTORMR. ENRIQUE USED AZNAR TELEFONICA DE PERU, S.A.A. DIRECTORMR. ENRIQUE USED AZNAR TELEFONICA INTERNACIONAL, S.A DIRECTORMR. MARIO EDUARDO VAZQUEZ TELEFONICA DE ARGENTINA, S.A. CHAIRMANMR. MARIO EDUARDO VAZQUEZ TELEFONICA HOLDING ARGENTINA, S.A. VICE CHAIRMANMR. MARIO EDUARDO VAZQUEZ COMPANIA INTERNACIONAL DE VICE CHAIRMAN TELECOMUNICACIONES, S.A.MR. MARIO EDUARDO VAZQUEZ TELEFONICA MOVILES ARGENTINA, CHAIRMAN S.A.MR. MARIO EDUARDO VAZQUEZ TELEFONICA COMUNICACIONES CHAIRMAN PERSONALES, S.A.MR. MARIO EDUARDO VAZQUEZ RADIO MOVIL DIGITAL ARGENTINA, S.A. CHAIRMANMR. MARIO EDUARDO VAZQUEZ RADIO SERVICIOS, S.A. CHAIRMANMR. MARIO EDUARDO VAZQUEZ TELINVER, S.A. CHAIRMANMR. MARIO EDUARDO VAZQUEZ TELEFONICA DATA ARGENTINA, S.A. CHAIRMANMR. MARIO EDUARDO VAZQUEZ KATALYX ARGENTINA, S.A. CHAIRMANMR. MARIO EDUARDO VAZQUEZ KATALYX FOOD SERVICES ARGENTINA, S.R.L. MANAGERMR. MARIO EDUARDO VAZQUEZ KATALYX CATALOGUING ARGENTINA, S.R.L. MANAGERMR. MARIO EDUARDO VAZQUEZ KATALYX CONSTRUCTION ARGENTINA, S.R.L. MANAGERMR. MARIO EDUARDO VAZQUEZ KATALYX TRANSPORTATION ARGENTINA, MANAGER S.R.L.MR. MARIO EDUARDO VAZQUEZ TERRA NETWORKS ARGENTINA, S.A. VICE PRESIDENTMR. MARIO EDUARDO VAZQUEZ ADQUIRA ARGENTINA, S.A. CHAIRMANMR. ANTONIO VIANA-BAPTISTA TELEFONICA INTERNACIONAL, S.A.. DIRECTORMR. ANTONIO VIANA-BAPTISTA TELEFONICA MOVILES, S.A. CHAIRMANMR ANTONIO VIANA-BAPTISTA TELEFONICA MOVILES DE ESPANA, DIRECTOR S.A.MR. ANTONIO VIANA-BAPTISTA TELEFONICA DE ESPANA, S.A. DIRECTORMR. ANTONIO VIANA-BAPTISTA TELEFONICA DE ARGENTINA, S.A. DIRECTORMR. GREGORIO VILLALABEITIA GALARRAGA TELEFONICA INTERNACIONAL, S.A. DIRECTOR B.1.7. List any company board members who are also members of the board(s) of directors in other companies listed on official securities markets in Spain, other than your own group, that have been reported to the company: Name or corporate name of director Listed company PostMR. CESAR ALIERTA IZUEL ALTADIS, S.A. DIRECTORMR. ISIDRO FAINES CASAS ABERTIS INFRAESTRUCTURAS, S.A. CHAIRMANMR. JOSE ANTONIO FERNANDEZ RIVERO IBERDROLA, S.A. DIRECTORMR. CARLOS COLOMER CASELLAS INDO INTERNACIONAL, S.A. VICE CHAIRMANMR. CARLOS COLOMER CASELLAS ALTADIS, S.A. DIRECTORMR. CARLOS COLOMER CASELLAS AHORRO BURSATIL, S.A. SICAV CHAIRMANMR. CARLOS COLOMER CASELLAS INVERSIONES INMOBILIARIAS URQUIOLA, CHAIRMAN S.A. SICAVMR. CARLOS COLOMER CASELLAS SANTANDER CENTRAL HISPANO, S.A. DIRECTORMR. GONZALO HINOJOSA FERNANDEZ DE ALTADIS, S.A. DIRECTORANGULOMR. GONZALO HINOJOSA FERNANDEZ DE CORTEFIEL, S.A. CHAIRMANANGULOMR. PABLO ISLA ALVAREZ DE TEJERA ALTAIDS, S.A. CHAIRMANMR. PABLO ISLA ALVAREZ DE TEJERA COMPANIA DE DISTRIBUCION INTEGRAL CHAIRMAN LOGISTA, S.A.MR. PABLO ISLA ALVAREZ DE TEJERA IBERIA LINEAS AEREAS DE ESPANA, S.A. DIRECTORMR. LUIS LADA DIAZ SOGECABLE, S.A. DIRECTORMR. ENRIQUE USED AZNAR AMPER, S.A. CHAIRMANMR. GREGORIO VILLALABEITIA GALARRAGA REPSOL YPF, S.A. DIRECTORMR. GREGORIO VILLALABEITIA GALARRAGA GAS NATURAL, S.A. DIRECTORMR. GREGORIO VILLALABEITIA GALARRAGA IBERIA LINEAS AEREAS DE ESPANA, S.A. DIRECTOR B.1.8. Fill in the following tables regarding the accrued aggregate remuneration of Directors during the year: a) in the company subject to this report: Remuneration from Thousand eurosFixed remuneration 5,035Variable remuneration 2,575Allowances 140Token payments 0Share options and/or other financial instruments 0Others 3 TOTAL: 8,023 Other benefits Thousand eurosAdvances 0Loans granted 0Pension Plans and Funds: Contributions 36Pension Plans and Funds: Obligations contracted 0Life insurance premiums 66Guarantees constituted by the company in favour of 0directors b) for directors belonging to other boards of directors and/or senior management of group companies: Remuneration from Thousand eurosFixed remuneration 1,741Variable remuneration 645Allowances 27Token payments 0Share options and/or other financial instruments 0Others 48 TOTAL: 2,461 Other benefits Thousand eurosAdvances 0Loans granted 0Pension Plans and Funds: Contributions 8Pension Plans and Funds: Obligations contracted 0Life insurance premiums 12Guarantees constituted by the company in favour of 0directors c) total remuneration by type of directorship: Type of director By company By groupExecutive 6,004 1,883External proprietary 982 98External independent 1,037 480Other external 0 0 TOTAL 8,023 2,461 d) regarding the attributable profit of the controlling company: Total directors' remuneration 10,484 Total directors' remuneration / attributable profit of the controlling company 0.360 B.1.9. Identify the members of senior management who are not executive directors and indicate total remuneration accruing to them during the year: Name or corporate name PostMR. SANTIAGO FERNANDEZ VALBUENA GENERAL MANAGER OF FINANCE AND SHARED RESOURCESMR. LUIS ABRIL PEREZ GENERAL MANAGER OF CORPORATE COMMUNICATIONMR. CALIXTO RIOS PEREZ GENERAL MANAGER OF AUDITING AND MANAGEMENT RESOURCESMR. GUILLERMO FERNANDEZ VIDAL GENERAL MANAGER OF COMMERCIAL DEVELOPMENT AND SUBSIDIARIESMR. FRANCISCO DE BERGIA GONZALEZ GENERAL MANAGER OF INSTITUTIONAL RELATIONSMR. JULIO LINARES LOPEZ EXECUTIVE CHAIRMAN OF TELEFONICA DE ESPANA, S.A.U.MR. JOSE MARIA ALVAREZ-PALLETE LOPEZ EXECUTIVE CHAIRMAN OF TELEFONICA INTERNACIONAL, S.A.U. Total remuneration of senior management (thousand euros) 6,912 B.1.10. Identify in aggregate terms any guarantees or "golden parachute" clauses benefiting senior managers (including executive directors) of the company or its group. Indicate whether these contracts must be reported to and/or approved by the governing bodies of the company or its group. Number of beneficiaries 11 Board of Directors General Shareholders' Meeting Body authorising the clauses x YES NO Is the General Shareholders' Meeting informed of these clauses? X B.1.11. Indicate the process for establishing board members' remuneration and any relevant clauses in the Articles of Association regarding such payment. In accordance with Article 28 of the Articles of Association of Telefonica, Directors' remuneration shall be comprised of a fixed monthly allowance plus expenses for attending meetings of the Board of Directors and its management or consultative Committees. Any remuneration the Company may pay its Directors collectively under either of the foregoing headings shall be that set for that purpose by the General Shareholders' Meeting, and shall remain in force until this body resolves that it be changed. The Board of Directors shall determine the exact amount to be paid within that ceiling and how it is divided amongst the various Directors. To this effect, the General Shareholders' Meeting held on April 11th 2003 fixed the maximum gross annual sum for remuneration to the Board of Directors at 6 million euros. Additionally, and apart from such remuneration as is provided for under the previous section, other remuneration systems may be created that may either be indexed to the list value of the shares, or consist of stock or of stock options for the Directors. The application of said remuneration systems must be authorised by the General Shareholders' Meeting, which shall fix the stock value that is to be taken as the term of reference thereof, the number of shares to be given to each Director, the exercise price of the stock options, the term of such remuneration system and such other terms and conditions as deemed appropriate. At present, there is no remuneration system in existence at Telefonica indexed to the list value of shares or that entails the handover of stock or stock options to Directors. The remuneration systems set out in the preceding paragraphs, arising from membership in the Board of Directors, shall be deemed compatible with any and all other professional or work-based compensations to which the Directors may be entitled in consideration for whatever executive or advisory services they may provide for the Company other than such supervisory and decision-making duties as may pertain to their posts as Directors, which shall be subject to the applicable legal provisions. Pursuant to Article 38 of the Regulations of the Board of Directors, Directors shall be entitled to obtain the remuneration set by the Board of Directors according to statutory provisions and following a report issued by the Nominating, Compensation and Corporate Governance Committee. The Board shall ensure that the remuneration of Directors is in keeping with that paid on the market at companies of a similar size and activity. Remuneration of Directors shall be fully transparent. To that end, the Nominating, Compensation and Corporate Governance Committee shall annually examine the policy regarding Directors' remuneration. In addition, and in keeping with the provisions of the Company Articles of Association, the Annual Report clearly sets out the remuneration paid for each post and position on the Board and its Committees (Chairman, Vice Chairman and Member). The remuneration paid to executive Directors for their executive functions in the Company are set out in aggregate form, but broken down into the various remunerative items or concepts. B.1.12. Indicate the identity of any board members who sit on board(s) of directors or hold senior management posts in companies having significant shareholdings in the listed company and/or its group companies: Name or corporate name of director Name or corporate name of the significant Post shareholderMR. ISIDRO FAINE CASAS LA CAIXA, CAJA DE AHORROS Y PENSIONES DE DIRECTOR GENERAL BARCELONAMR. JOSE ANTONIO FERNANDEZ RIVERO BANCO BILBAO VIZCAYA ARGENTARIA, S.A. DIRECTORMR. FERNANDO DE ALMANSA MORENO-BARREDA BANCO BILBAO VIZCAYA ARGENTARIA, S.A. DIRECTOR OF BANCOMER, S.A.MR. FERNANDO DE ALMANSA MORENO-BARREDA BANCO BILBAO VIZCAYA ARGENTARIA, S.A. MANAGING DIRECTOR OF EXTERNAL SERVICES AT APOYO EMPRESARIAL, S.A.MR. JESUS MARIA CADENATO MATIA BANCO BILBAO VIZCAYA ARGENTARIA, S.A. DIRECTOR OF LARGE INDUSTRIAL CORPORATIONSMR. ANTONIO MASSANELL LAVILLA LA CAIXA, CAJA DE AHORROS Y PENSIONES DE DEPUTY EXECUTIVE DIRECTOR GENERAL BARCELONA Detail, if appropriate, any relevant relations other than those indicated in the section above that link members of the board of directors with significant shareholders and/or their group companies: Name or corporate name of director Name or corporate name of significant Relationship shareholderMR. JOSE FONOLLOSA GARCIA BANCO BILBAO VIZCAYA ARGENTARIA, S.A. DIRECTOR GENERAL IN EARLY RETIREMENTMR. GREGORIO VILLALABEITIA GALARRAGA BANCO BILBAO VIZCAYA ARGENTARIA, S.A. DIRECTOR GENERAL IN EARLY RETIREMENT B.1.13. Indicate any changes made in the Board Regulations during this year: On March 31st 2004, the Board of Directors of Telefonica resolved to adapt the Regulations of the Board of Directors in effect at that time to the provisions of Law 26/2003, of 17th July (Transparency Law), and consequently approved a new Redrafted Text of the aforementioned Regulations. The new Redrafted Text of the Regulations of the Board of Directors of Telefonica was reported to the Spanish National Securities Market Commission on April 1st 2004 and to the General Shareholders' Meeting at its session on April 30th 2004, thus complying with the provisions of the Securities Market Law in its new redrafted form. In general, the new Regulations respect and maintain the main parameters, structure, content and drafting of the previous Regulations. The principal amendments introduced are as follows: - Amendments arising from the Aldama Report. The concepts of executive and independent Directors are adapted to the recommendations established in the Aldama Report. - Amendments arising form the Transparency Law. The Regulations are adapted to the said Law with regards to the duties of Directors (rights and duties of Directors and the obligations of loyalty, diligence and confidentiality to be fulfilled by the same), already regulated in the previous version of the Regulations of the Board of Directors. - Amendments arising from the new structure of listed companies in the Telefonica Group. Amongst the new general duties of the Board of Directors, the supervision and control of Telefonica and its subsidiary companies is expressly regulated, establishing that such duties shall be carried out through the suitable and efficient coordination between the Company and the companies in its Group, respecting the decision-making powers of their administrative and management bodies, in keeping with the corporate good of the Company and each of the said subsidiaries. The following amendments are also worthy of note: - The wording of certain articles is amended to adapt them to the current Articles of Association. Thus, Article 24 of the Regulations was adapted to the provisions of Article 31 bis of the Articles of Association, on the Audit and Control Committee, which was approved at the General Shareholders' Meeting held on April 11th 2003 pursuant to Law 44/2002, of 22nd November, on Financial System Reform Measures. Likewise, Article 38 of the Regulations was adapted to the provisions of Article 28 of the Articles of Association, on the system for remuneration to Directors, and its new wording was approved by the General Shareholders' Meeting of April 11th 2003. - Regarding the Board of Directors Committees: * The new version provides the new name of the Nominating, Compensation and Corporate Governance Committee (formerly the Nominating and Compensation Committee) and the Human Resources and Corporate Reputation Committee (formerly, the Human Resources Committee), and * The new version also regulates the Board committees created after the previous version of the Regulations entered into effect: the Service Quality and Customer Service Committee and the International Affairs Committee. - Finally, for the purpose of improving organisation, slight modifications were made to the text and in the order of the articles in the Regulations. B. 1.14. Indicate any procedures for appointment, re-election, assessment and removal of Directors. List the competent bodies, the steps to be followed and the criteria to be applied in each of the procedures. APPOINTMENT Telefonica's Articles of Association establish that the Board of Directors shall be composed of a minimum of five and a maximum of twenty members, who shall be appointed by the General Shareholders' Meeting. The Board of Directors may, in accordance with the provisions set out in the Spanish Corporations Law and in the Company Articles of Association, fill vacant positions temporarily by cooption. To this effect, it is important to note that the appointment of Board members in Telefonica is, as a general rule, submitted for approval by the General Shareholders' Meeting. It is only on certain occasions, when such a measure is essential due to vacancies on the Board arising after the last GSM, that the Board appoints members by cooption, in keeping with the provisions of the Corporations Law, subject to later ratification by the first subsequent GSM held. In all other cases, the proposed appointments must follow the procedure set out in the Regulations of the Board of Directors, and must be preceded by the relevant favourable report from the Nominating, Compensation and Corporate Governance Committee, although such report is not binding. Thus, and in line with the provisions of the Regulations, when exercising its rights of cooption and proposal of appointments to the General Shareholders' Meeting, the Board of Directors shall endeavour to ensure that external or non-executive Directors are in the majority over executive Directors. Likewise, the Board shall ensure that within such majority group of external Directors, there are, on the one hand, Directors proposed by holders of significant, stable stakes in the company share capital (proprietary Directors) and, on the other, professionals of acknowledged prestige who are not linked to the management team nor to the significant shareholders (independent Directors). Similarly, the Board shall endeavour to ensure that the independent Directors comprise a majority over the proprietary Directors. With respect to the selection of external or non-executive Directors, theRelated Shares:
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