Remuneration Committee

  • The members of the Remuneration Committee are all independent directors
  • Remuneration Committee formulates proposals to the Board for the remuneration of the managing directors and those persons who hold certain offices

Composition

The Board established the "Remuneration Committee", a subcommittee from among its members, charged with fact-finding, advising and recommending functions, in the year 2000.

Going beyond the recommendations of the Self-Regulatory Code45, the members of the Remuneration Committee appointed by the Board of Directors in its meeting on 29 April 2008 (Directors Berardino Libonati, Alberto Bombassei and Giampiero Pesenti) and in its meeting on 29 July 2009 effective from 1 September 2009 (Director Umberto Paolucci) are all independent directors.

As a result, at the Date of the Report, taking into account the death of Prof. Libonati on 30 November 2010, the Remuneration Committee is composed as follows 46:

  • Alberto Bombassei;
  • Giampiero Pesenti
  • Umberto Paolucci.

The Secretary of the Board of Directors, Anna Chiara Svelto, acts as Secretary to the Committee.

Tasks assigned to the Committee

In line with the recommendations of the Self-Regulatory Code, the Board of Directors confirmed the fact-finding and advisory role of the Remuneration Committee. Specifically, the Remuneration Committee:

  • formulates proposals to the Board for the remuneration of the managing directors and those persons who hold certain offices to ensure that their remuneration is aligned with the objective of shareholder value creation in the medium-long term;
  • periodically evaluates the remuneration criteria for the top management of the Company and, as requested by the managing directors, formulates proposals and recommendations, with specific reference to the adoption of possible stock option plans or assignment of shares;
  • monitors application of the decisions made by the competent bodies and company policies regarding remuneration of top management.

Note that the Board of Directors assigned the tasks of the Committee for Transactions with Related Parties as required by the aforesaid procedure to the Remuneration Committee, limited only to "transactions" with related parties in the area of remuneration of directors and executives with strategic responsibilities in the company.

The Procedure for Transactions with Related Parties specifies that the Procedure itself adopted by the company does not apply to deliberations regarding remuneration of directors and managers with strategic responsibilities provided that (i) the Company has adopted a remuneration policy which includes policies for agreements to mutually cease relations; (ii) a committee, made up exclusively of non-executive directors, most of whom independent, was involved in defining such remuneration policy (the Remuneration Committee); (iii) a report setting out the remuneration policy was submitted to the Assembly's advisory vote; (iv) the remuneration granted is consistent with this policy. For more information the reader is referred to the "General Remuneration Policy" appearing at the end of this Report.

47 This circumstance characterises the corporate governance rules adopted by the Company, and offers the whole Board of Statutory Auditors the opportunity to directly oversee Committee activities and perform its control function more effectively.
48 Self-Regulatory Code: Criterion of application 7.C.4.

Operation

The Committee – which may also request the assistance of external consultants in fulfilling its mandate – meets whenever its Chairman deems it appropriate or when a meeting has been requested by another member of the committee or by a Managing Director.

The whole Board of Statutory Auditors47 and, if deemed appropriate and at the invitation of the Committee, other Company and/or Group representatives, as well as representatives of the External Auditors attend the meetings of the Committee. All meetings are attended by the Group General Counsel e by Chief People Officer.

In line with the recommendations of the Self-Regulatory Code48 and with best practice, directors vested with special offices do not attend Remuneration Committee meetings.

The information and documents available and required for informed deliberation of the topics submitted to the committee have always been circulated to members sufficiently in advance.

The meetings of the Remuneration Committee are regularly recorded in minutes by the secretary and transcribed into a specific register49.

The Committee also has the right50 to access company departments and information as necessary for the execution of the tasks assigned to it, making use of the support of the Secretary of the Board of Directors.

The Committee has adequate financial resources for the performance of its duties with independent spending powers.

Activity during the financial year

During 2010 the Remuneration Committee met twice; the meetings lasted on average about one hour; the tables at the end of this Report show members' attendance of Committee meetings during the financial year.

During the financial year the Committee examined - and formulated its proposals to the Board – the fixed and variable pay package of the Chairman, and evaluated those of managers with strategic responsibilities, and specifically of the Tyre General Manager, the Group General Counsel and the Director of General and Corporate Affairs and the Director of Finance, agreeing on the criteria for their determination. The Committee developed its analyses with the aid of leading consulting firms in the field of executive compensation (Towers Watson and Hay Group). The analysis was developed taking data published by Italian and international industrial groups considered comparable in terms of organisational structure and/or industrial sector and/or capitalisation into account.

The Committee examined and approved in advance the "new" long term incentives plan referred to as LTI 2011/2013, adopted to support the 2011/2013 Industrial Plan, subsequently approved by the Board of Directors. The reader is referred to the Report on Remuneration appearing at the end of this Report for more information in this regard.

During 2011, up to the Date of this Report, the Committee has met once, approving the budget for the annual variable remuneration of the Chairman and managers with strategic business responsibilities for the results achieved in the 2010 financial year and approving the General Remuneration Policy, afterwards approved by Board of Directos, put to the vote of the Shareholders' Meeting for approval of the 2010 Financial Reports and shown at the end of this Report.

49 Also in accordance with the recommendations of the Self-Regulatory Code: Criterion of application 5.C.1., lett. d).
50 Also in line with the provisions of the Self-Regulatory Code: Criterion of application 5.C.1., lett. e.