Telefónica establishes the shareholder remuneration policy taking into account the Group’s earnings, cash generation, solvency, liquidity, flexibility to make strategic investments, and shareholders and investors’ expectations.
In the last 10 years, Telefónica has combined different types of remuneration to the shareholders, such as dividend in cash, “scrip dividend”, or share buyback program and amortization of treasury stock, payable in different tranches each year.
As of March 2017, the Board of Directors of Telefónica, S.A. defined the payment period for the annual dividend, so that the dividend payment in the second quarter will take place in June, and the dividend payment in the fourth quarter will take place in December, in both cases on or before the third Friday of the corresponding month.
In February 2020, Telefónica confirmed its compensation policy for 2019, which consists of an amount of €0.40 per share, payable in December 2019 (€0.20 per share) and in June 2020 (€0.20 per share). The 2020 policy was also announced in February 2020, and will consist of a dividend payment of €0.40 per share, payable in December 2020 (€0.20 per share) and in June 2021 (€0.20 per share).
For reasons of financial prudence in this context of the COVID-19 health crisis and in order to grant greater flexibility in regard to cash outflows and different alternatives for the shareholders, it had been deemed appropriate to propose for approval of the Annual General Shareholders Meeting held on June 12, 2020 the implementation of the payment of sums to be made during this fiscal year 2020 through separate scrip dividends (the “Telefónica Flexible Dividend”), which as is known provides all shareholders with the choice of receiving the relevant compensation in shares or in cash, at the shareholder’s discretion.
The Annual General Shareholders Meeting held on June 12, 2020 approved the Proposals of the scrip dividend.
Furthermore, it was announced the dividend policy for 2021 which will consist of a dividend payment of €0.30 per share, payable in December 2021 (€0.15 per share) and in June 2022 (€0.15 per share), both through a voluntary scrip dividend. It is expected that the announcement of the capital increase will be published in the Official Companies Registry Gazette (Boletín Oficial del Registro Mercantil) on November 30, 2021, which would hence be the last trading date for the shares of Telefónica to have the right to participate in the scrip dividend. The period for trading the free allotment rights would begin on December 1, 2021 and the shares would trade ex-date as of such date (*)
On May 2021, the share capital reduction in the amount of 82,896,466 euros by means of the cancellation of 82,896,466 own shares was executed. (those shares represented 1.5% of the share capital on that moment).
On November, 2021, the Board of Directors has agreed to submit for the approval of the General Shareholders Meeting of the Company (the date of which will be announced at the appropriate time) the adoption of the appropriate corporate resolutions to execute a capital reduction by means of a redemption of treasury shares representing approximately 1.65% of the share capital.
(*) The adoption of the corresponding corporate resolutions will be proposed in due course, announcing the specific payment date.