Shareholder Remuneration Policy

Starting in 1998, Telefónica changed its shareholder remuneration policy, replacing cash dividend payments with bonus issues. These operations were charged against free reserves and recognized shareholders' the right to receive, free of charge, one new share for every fifty shares held.

On July 24th 2002, Telefónica S.A. announced its commitment to restate cash dividend distributions as direct remuneration to shareholders. Consequently, approval was given at the General Shareholders' Meeting held on April 11 2003 for the payment of a gross cash dividend of 0.25 euros on all outstanding company shares.

Complementary to the payment of dividends, the company has set the acquisition of its own shares as an alternative formula to remunerate its shareholder base, selectively and depending on the pace of cash flow generation and the market price of the shares.

Since July 2000 the Company has maintain a policy of gradually increasing the dividend, which has been complemented with various share buyback programmes.

Latest announcements

The Board of Directors of TELEFÓNICA, at its meeting held on 14th December 2011, has analysed and positively considered a revision of the shareholder remuneration targets announced in October 2009, which were established considering an economic and operating environment and financial markets conditions that have changed materially since then.

The dividend for the year 2011 is maintained at 1.60 euros per share, having fulfilled already a first payment of 0.77 euros per share in November. The remaining amount (0.83 euros per share) will be distributed in May 2012, though the combination of a cash payment and a payment in-kind, the latter through the distribution of treasury shares of the Company for a maximum amount of 0.30 euros per share, and subject to market conditions.

Total shareholder remuneration for the year 2012 will amount to 1.50 euros per share, including the payment of a cash dividend of 1.30 euros per share and a share buyback for the remaining amount. Treasury shares acquired will be amortized and the share buyback shall be completed by May 2013.

For the year 2013 the minimum total shareholder remuneration per share will be similar to the one for the year 2012 (1.50 euros per share). The remuneration mix (dividend, share buyback or the combination of both) will be decided considering market conditions and investor preferences at that time.

Telefónica held a conference call the same day of the announcement. See here the transcript.