Governance Information • Apr 27, 2018
Governance Information
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(approved by the Board of Directors of Poste Italiane S.p.A. on 29 March 2018)
www.posteitaliane.it
(Drawn up in pursuance of Article 123-bis of the Consolidated Law on Finance (TUF) and Article 144-decies of CONSOB's Issuers' Regulations)
| EXECUTIVE SUMMARY | 1 | |
|---|---|---|
| SECTION I: GOVERNANCE AND OWNERSHIP STRUCTURE | 13 | |
| 1. | Introduction - Compliance | 13 |
| 2. | Profile of the Issuer and its Corporate Mission | 13 |
| 3. | Corporate Governance Model - Company Structure | 14 |
| 4. | BancoPosta Ring-fenced Capital (Patrimonio BancoPosta) | 15 |
| 5. | Information on the Ownership Structure (pursuant to Article 123-bis, paragraph 1, TUF) as at the date | |
| of this Report | 16 | |
| 5.1 Share capital structure (pursuant to Art. 123-bis, paragraph 1, letter a), TUF) | 16 | |
| 5.2 Significant shareholdings (pursuant to Art. 123-bis, paragraph 1, letter c), TUF), shareholder | ||
| agreements (pursuant to Art. 123-bis, paragraph 1, letter g), TUF), and management and coordination activities (pursuant to Art. 2497 as amended, Italian Civil Code) |
16 | |
| 5.3 Restrictions on the transfer of securities (pursuant to Art. 123-bis, paragraph 1, letter b), TUF) and | ||
| voting rights (pursuant to Art. 123-bis, paragraph 1, letter f), TUF) | 17 | |
| 5.4 Securities that grant special rights – special rights held by the Italian government (pursuant to Art. | ||
| 123-bis, paragraph 1, letter d), TUF) | 17 | |
| 5.5 Employee shareholdings, procedures for exercising voting rights (pursuant to Art. | 123-bis, | |
| paragraph 1, letter e), TUF) | 18 | |
| 5.6 Appointment and replacement of directors (pursuant to Art. 123-bis, paragraph 1, letter l), TUF) and amendments of the bylaws |
18 | |
| 5.7 Authorizations to increase the share capital and buy back shares (pursuant to Art. 123-bis, | ||
| paragraph 1, letter m), TUF) | 18 | |
| 5.8 Change-of-control clauses (pursuant to Art. 123-bis, paragraph 1, letter h), TUF) | 18 | |
| 5.9 Compensation owed to directors in the event of the early termination of their employment, | ||
| including as a consequence of a takeover bid (pursuant to Art. 123-bis, paragraph 1, letter i), TUF)20 | ||
| SECTION II: IMPLEMENTATION OF THE CORPORATE GOVERNANCE CODE AND ADDITIONAL INFORMATION | 21 | |
| 6. | Board of Directors | 21 |
| 6.1 Current composition and term of office (pursuant to Art. 123-bis, paragraph 2, letter d), TUF) | 21 | |
| 6.2 Appointment and replacement (pursuant to Art. 123-bis, paragraph 1, letter l), TUF) | 21 | |
| 6.3 Role and duties (pursuant to Art. 123-bis, paragraph 2, letter d), TUF) | 24 | |
| 6.4 Board meetings | 26 | |
| 6.5 Chair | 27 | |
| 6.6 Chief Executive Officer | 27 | |
| 6.7 Executive and non-executive directors | 29 | |
| 6.8 Independent directors | 29 | |
| 6.9 Limit on the number of offices held by directors | 31 | |
| 6.10 Evaluation of the functioning of the Board of Directors and its committees | 32 | |
| 6.11 Diversity policies (pursuant to Article 123-bis, paragraph 2, letter d-bis), TUF) | 35 | |
| 6.12 Remuneration | 36 | |
| 7. | Committees (pursuant to 123-bis, paragraph 2, letter d), TUF) | 37 |
| 7.1 Organizational and operational rules | 37 | |
| 7.2 The Control, Risk and Sustainability Committee (formerly Control and Risk Committee) | 39 | |
| 7.3 The Remuneration Committee | 46 | |
| 7.4 The Appointments and Corporate Governance Committee (formerly Appointments Committee) | 50 | |
| 7.5 The Related Parties and Connected Parties Committee | 53 | |
| 8. | Board of Statutory Auditors (pursuant to article 123-bis, paragraph 2, letter d), TUF) | 54 |
| 8.1 Current composition and term of office | 54 |
| 8.2 Appointment and replacement | 55 | |
|---|---|---|
| 8.3 Duties and powers | 56 | |
| 8.4 Meetings | 56 | |
| 8.5 Remuneration | 57 | |
| 9. | Internal Control and Risk Management System | 57 |
| 9.1 Code of Ethics | 60 | |
| 9.2 Organization, management and the control model pursuant to Legislative Decree 231/2001 | 60 | |
| 9.3 The internal infringement reporting system (Whistleblowing) | 62 | |
| 9.4 Sustainability and protection of legality | 63 | |
| 10. The System for Risk Management and the Internal Control of Financial Information | 64 | |
| 10.1 Executive in charge of drawing up corporate accounting documents | 67 | |
| 11. External Controls | 68 | |
| 11.1 Statutory external auditors | 68 | |
| 11.2 Oversight by the Italian Court of Auditors | 69 | |
| 12. Relations with Institutional Investors and Shareholders in General | 69 | |
| 13. Shareholders' Meetings (pursuant to 123-bis, paragraph, letter c), TUF) | 70 | |
| 14. Other Corporate Governance Procedures (pursuant to 123-bis, paragraph, letter a), TUF) | 72 | |
| 14.1 Transactions with related parties | 72 | |
| 14.2 Handling of corporate information and internal dealing | 75 | |
| 15. Remarks on the letter dated 13 December 2017 of the Chairman of the Corporate Governance | ||
| Committee | 76 | |
| ANNEX 1: Biographies of Board Directors | 79 | |
| ANNEX 2: Biographies of Members of the Board of Statutory Auditors | 83 | |
| TABLE 1: Structure of Poste Italiane's Board of Directors and of its Committees | 85 | |
| TABLE 2: Poste Italiane's Board of Statutory Auditors | 88 |
| CHAIR Maria Bianca Farina |
Matteo Del Fante | CHIEF EXECUTIVE OFFICER GENERAL MANAGER |
||
|---|---|---|---|---|
| DIRECTORS | ||||
| Control, Risk and Sustainability Committee |
Remuneration Committee |
Appointment and Corporate Governance Committee |
Related Parties Committee |
|
| Giovanni Azzone |
||||
| Carlo Cerami |
||||
| Antonella Guglielmetti |
||||
| Francesca Isgrò |
||||
| Mimi Kung |
||||
| Roberto Rao |
||||
| Roberto Rossi |
||||
| Chairman | Director |
SECRETARY Michele Scarpelli
CHAIR Mauro Lonardo STANDING AUDITORS Alessia Bastiani Maurizio Bastoni
ALTERNATE AUDITORS Marina Colletta Ermanno Sgaravato Antonio Santi
EXTERNAL AUDITORS PricewaterhouseCoopers S.p.A.
As at 31 December 2017, Poste Italiane's share capital amounted to 1,306,110.000 euros fully paid-up, divided into 1,306,110,000 ordinary shares without any par value. With reference to the share capital and according to entries in Poste Italiane's shareholders' register,
notices received pursuant to Issuers' Regulations and available information, shareholders who own shares above the threshold indicated by CONSOB as at 31 December 2017 are represented in the chart below.
As at the date of this Report, the situation is unchanged. The main shareholders are Cassa Depositi e Prestiti S.p.A. (which owns 35% of the share capital), and the Ministry of the Economy and Finance (29.26% of share capital).
*82.77% of Company shares belong to the Ministry of the Economy and Finance of the Italian Republic, which owns 457,138,500 shares equal to 35% of share capital. ** It owns 382,127,890 shares, equal to 29.26% of share capital.
SIZE OF THE BOARD
1 In the charts below, data for Companies belonging to FTSE MIB, "Italian listed financial companies" and "Italian listed non-financial companies" are taken from report issued by Assonime-Emittenti Titoli S.p.A., Note e Studi 2/2018, "La Corporate Governance in Italia: autodisciplina, remunerazioni e comply-or-explain" (2017).
*The information is up to date as at the date of this Report.
2 Independent pursuant to the Corporate Governance Code.
* Average
| Yes/No | ||
|---|---|---|
| Board assessment | Yes | |
| Independent consultants for assessing theBoard |
Yes | Evaluator: Egon Zehnder |
| Induction Program | Yes | |
| Position regarding the maximum number of officesfor Directors and Statutory Auditors |
Yes |
* Data on the "Related-Parties Committee" at Poste Italiane is not included in the Executive Summary because information about this committee (and about committees with similar competences) is not included in the report by Assonime-Emittenti Titoli S.p.A., which is used for reference (see note 1 on page 3).
| Body/Function | Notes | |
|---|---|---|
| Executive in charge of the Internal Control and Risk Management System |
Chief Executive Officer |
|
| Corporate Affairs function (within which the Group Risk Government Function operates) |
Giuseppe Lasco | Executive in charge of the Corporate Affairs Function at the Company |
| Internal Control Function | Internal to the Company | |
| Executive in charge of the Internal Control Function |
Paolo Casati | |
| Executive in charge of preparing the corporate accounting documents |
Luciano Loiodice | Executive in charge of the Administration and Accounts function (within the Administration, Finance and Control Function) |
| Supervisory Body | Nadia Fontana (Chairman) Giulia Bongiorno* ………Paolo Casati |
External Director External Director Internal Director |
| External auditors | PriceWaterhouse Coopers S.p.A. |
Up until the General Meeting approving financial statements of year ending on 31/12/2019 2019 |
* Resigned in March 2018.
Italian listed non-financial companies
| Elements | Yes/No |
|---|---|
| Availability of a document containing guidelines for the Internal Control and Risk Management System |
Yes |
| Availability of a Mandate for the Internal Control Function approved by the Board of Directors |
Yes |
| Existence of ad hoc organizational structures for performing riskmanagement activities |
Yes |
| Annual evaluation of the compatibility between company risks and company management consistent with strategic objectives |
Yes |
| Preparation of specific compliance programs (Ethics Code, Model 231, open and transparent contracts, Whistleblowing) |
Yes |
Cooperation on the management of emergencies following catastrophic events.
Cooperation on initiatives aimed at reducing injuries and work-related accidents caused by road accidents.
Preventing and combating cybercrime involving critical national cyberinfrastructure.
School-work alternation.
Best social and commercial practices in managing customer-contact services (Call Centers).
Exchange of information on potential cyber threats to critical infrastructure.
Provide in-flight security for passengers and prevent unlawful acts against aircraft that carry cargo and mail.
Research, prevention and combating illicit activities and economic and financial crimes.
A Textbook way of Saving.
Preventing and combating illicit activities against the users of the financial, postal, logistics and insurance services offered by the Poste Italiane Group.
Memorandums of understanding with Prefectures for the prevention of crime in Post Offices.
Task force for the protection of critical national cyberinfrastructure and for sharing information on future scenarios.
National CERT in the financial sector to strengthen cooperation on cyber threats and sectoral regulation between CERTs in the financial sector through the exchange of information.
Prevention and rapid response in emergency management.
SECTION 1: GOVERNANCE AND OWNERSHIP STRUCTURE
This report on Poste Italiane's Corporate Governance and ownership structure (hereinafter, also the "Report") has been conceived to comply with the provisions of article 123-bis of Legislative Decree no. 58 of February 24, 1998 (hereinafter, also "Consolidated Finance Law" or "TUF"), as well as with current legal and regulatory provisions concerning information on compliance with Codes of Conduct, through the provision of regular detailed reports on corporate governance and the ownership structure at Poste Italiane S.p.A. (hereinafter, "Poste Italiane" or the "Company" and, together with its subsidiaries, also the "Poste Italiane Group" or the "Group").
In particular, the information in this Report has been drafted in compliance with the content requirements specified in paragraphs 1 and 2 of the aforesaid article 123-bis of the TUF, and on the basis of the articles of the Corporate Governance Code (hereinafter, also the "Code") – as approved by Borsa Italiana's Corporate Governance Committee, and most recently updated in July 2015 – to which the Company has subscribed.
The text of the Corporate Governance Code is available on the Corporate Governance Committee's website http://www.borsaitaliana.it/borsaitaliana/regolamenti/corporategovernance/codice2015.pdf.
Relevant public disclosures, as mentioned in this Report, are available from the Company's website at www.posteitaliane.it.
In addition to the foregoing, it should be noted that the Company's corporate governance structure complies with the provisions of the Supervisory Regulations issued by the Bank of Italy (hereinafter, also the "Supervisory Regulations") applicable to Poste Italiane as a result of business activities conducted through its segregated capital – established by the Company with effect from May 2, 2011, pursuant to article 2, paragraph 17-octies ff. of Legislative Decree no. 225 of December 29, 2010, converted with amendments into Law no. 10, February 26, 2011, in a resolution by the Shareholder's Meeting in extraordinary session held on April 14, 2011 – earmarked exclusively for the exercise of BancoPosta activities (hereinafter, also referred to as "Patrimonio BancoPosta").
Poste Italiane – with some 138,000 employees – owns Italy's largest infrastructure system. The company operates across the correspondence, logistics, financial and insurance services sectors and in asset management, providing the public, businesses, and Italy's civil service with a broad range of services that are simple, transparent and innovative.
Poste Italiane's 12,800 post offices, 34 million clients and an extraordinary mail and parcel distribution network covering 100% of Italian territory, relying on over 2000 distribution centres and routing more than 3 billion items of correspondence and 100 million parcels each year, are strategic in ensuring the company's leadership in the distribution of financial and insurance products.
The Group is also Italy's number one operator in the payments and digital sector, catering to customers' emerging needs through an integrated approach to physical and digital distribution channels that assures the management of card-based payments worth more than €100 billion per year (2017). Poste Italiane has issued 25 million payment cards, and its apps have been downloaded more than 15 million times.
Poste Italiane is also an SPID service provider (Italy's public digital ID management system), which was set up by the nation's Digital Identity Agency. Citizens and businesses can use the system to easily and securely access online services provided by member PA and private service providers.
Since October 27, 2015, Poste Italiane shares have been listed on the electronic stock exchange organized and managed by Borsa Italiana S.p.A. (Mercato Telematico Azionario, hereinafter also MTA).
The following table presents the Poste Italiane Group's key earnings and financial figures posted in 2017 (stated in millions of euros):
| 2017 | 2016 | Change | |
|---|---|---|---|
| Total revenue | 33,441 | 33,112 | up 1.0% |
| Operating income | 1,123 | 1,041 | up 7.8% |
| Net income | 689 | 622 | up 10.8% |
| 31.12.2017 | 31.12.2016 | ||
| Cumulative direct and indirect funding | 506,240 | 492,707 | up 2.7% |
| Industrial Net Financial Position (Net | (1,029) | (893) | up 15.2% |
| financial surplus) |
The corporate governance system adopted by Poste Italiane complies with the principles enshrined in the Corporate Governance Code. This system is inspired by CONSOB guidelines and, more generally, by international best practices. It is essentially focused on the creation of value for shareholders over a medium-to-long-term, bearing in mind the social significance of the business activities in which the Group is engaged and the consequent need, in the conduct of its business, to appropriately consider all the stakeholders involved.
In keeping with the provisions of Italian legislation on listed companies, the Company is organized as a traditional management and control system with the following salient features:
and accounting system, as well as the reliability of the latter to correctly report relevant financial information; (iii) Monitoring the financial disclosure process, the annual external audit of the standalone and consolidated financial statements, as well as the independence of the audit firm; (iv) Monitoring the overall effectiveness of the risk management and control system; (v) Checking how the corporate governance rules provided for in the Corporate Governance Code are actually implemented; and, lastly, (vi) Monitoring the adequacy of instructions that the Company issues to its subsidiaries, its extraordinary corporate transactions and other significant events, as well as transactions with related and connected parties;
Shareholders' Meetings, convened in ordinary or extraordinary sessions, empowered, inter alia, to resolve on: (i) The appointment and removal of members of the Board of Directors and the Board of Statutory Auditors, as well as determining their remuneration and responsibilities; (ii) Approval of the financial statements and the allocation of net income; (iii) The purchase and sale of the company's own shares; (iv) Stock-based incentive plans; (v) Amendments to the bylaws (other than those that constitute a mere adjustment to comply with statutory provisions); and (vi) The issue of convertible bonds.
Statutory external auditing of the accounts is the responsibility of a specialist firm from the CONSOB Register – specifically, PricewaterhouseCoopers S.p.A., as described in greater detail in part two of this document, (under "External Controls – Statutory external auditors"). The firm was appointed for this purpose by the Shareholders' Meeting, following a reasoned proposal put forward by the Board of Statutory Auditors.
Considering both direct and indirect equity interests, as at December 31, 2017, the Poste Italiane Group encompassed twenty subsidiaries (of which two are currently being liquidated), all of which are Italian; one jointly-controlled company (Italian), and three associated companies (of which one is foreign).
In a resolution passed by the extraordinary Shareholders' Meeting held on April 14, 2011, with effect from May 2, 2011, in implementation of article 2, paragraph 17-octies of Legislative Decree no. 225 of December 29, 2010, converted by Law no. 10 of February 26, 2011, the Company constituted Patrimonio BancoPosta to provide services to BancoPosta, as regulated under Presidential Decree no. 144 of March 14, 2001, as subsequently amended and supplemented.
Having been spun off from Poste Italiane's capital, Patrimonio BancoPosta has its own assets and legal relationships dedicated exclusively to meeting the obligations that arise out of conducting postal banking activities and is the parameter for the application of the Bank of Italy's regulations on the prudential supervision of such activities.
The separation of the capital of Patrimonio BancoPosta from Poste Italiane's remaining capital – with Poste Italiane continuing to remain a unitary entity that has a corporate status whereby responsibilities are incumbent upon the governing bodies of Poste Italiane itself – has effects at legal and equity level, as well as on its organizational, managerial, and control structure. Patrimonio BancoPosta is consequently able to meet the obligations of keeping an appropriate level of capitalization to cover risk, as well as to operate in keeping with relevant regulations, including Supervisory Regulations. The assets and legal relationships transferred to Patrimonio BancoPosta are allocated to the unit exclusively by Poste Italiane, without any contribution by third parties.
The rules for organizing, managing and controlling how Patrimonio BancoPosta operates are contained in the ad hoc "Patrimonio BancoPosta Regulations", which were approved at the same extraordinary Shareholders' Meeting on April 14, 2011. These rules were more recently amended by the Shareholders' Meeting in extraordinary session on July 31, 2015 and may be consulted on the Company's website at (www.posteitaliane.it).
For the sake of completeness, it should further be noted that given the size of Patrimonio BancoPosta's assets, as it conducts business through BancoPosta and for, the purpose of the application of Supervisory Regulations to its Corporate Governance, Poste Italiane is comparable to Italy's largest banks with the most complex operational situations. The company consequently complies with the regulatory provisions that apply to such banks.
Poste Italiane's share capital exclusively consists of ordinary registered and fully paid-up shares with voting rights at both ordinary and extraordinary Shareholders' Meetings. At the end of 2017 (and as at the date of this Report), Poste Italiane's share capital amounted to Euros 1,306,110,000.00, divided into 1,306,110,000 ordinary shares of no par value, which are listed on the MTA stock exchange.
5.2 Significant shareholdings (pursuant to article 123-bis, paragraph 1, letter c), TUF), shareholder agreements (pursuant to article 123-bis, paragraph 1, letter g), TUF), and management and coordination activities (pursuant to article 2497 ff., as amended, Italian Civil Code)
On the basis of the entries in Poste Italiane's shareholders' register, the notices sent to CONSOB and received by the Company, and on other available information, as at the date of this Report, the following shareholders own more than 3% of Poste Italiane's share capital:
| Significant shareholders | % of share capital |
|---|---|
| Cassa depositi e prestiti S.p.A. (hereinafter, also "CDP") | 35.00% |
| Ministry of the Economy and Finance (hereinafter, also "Ministry") | 29.26% |
The TUF does not appear to include any shareholder agreements concerning the Company's shares.
The Company is thus subject to de jure control by the Ministry, which owns a total of 64.26% of its capital, (i) 29.26% directly, and (ii) 35.00% indirectly through CDP, which is also controlled by the Ministry.
The Ministry does not however perform any management or control activity over Poste Italiane, given that the Company adopts its operational decisions in full autonomy and in compliance with the responsibilities vested in its own bodies. This situation is further confirmed by article 6, paragraph 6, Decree Law no. 78/2009 (subsequently converted into Law no. 102/2009), which clarifies that Italian Civil Code rules on the management and coordination of companies do not apply to the Italian government.
In implementing the provisions made within the legal framework for privatized companies, – with the exception of the Italian government, public bodies, and entities subject to their respective control – the Company's bylaws provide that no shareholder may own, directly and/or indirectly, Poste Italiane shares amounting to more than 5% of its share capital.
Voting rights attached to shares owned in excess of the aforesaid 5% limit may not be exercised. If this were the case, the voting rights of each of the parties concerned by the share ownership limit will be proportionately reduced, unless prior joint instructions are received from the shareholders concerned. In the event of a failure to comply with this stipulation, resolutions passed by a Shareholders' Meeting may be challenged in court if it is found that the required majority would not have been reached without the votes cast in excess of the aforesaid limit.
According to the regulations on privatizations as subsequently amended, provisions in corporate bylaws concerning limits on share ownership and restrictions on voting rights lapse if the 5% limit is exceeded following a takeover bid in consequence of which the bidder holds shares amounting to at least 75% of the capital with the right to vote on resolutions regarding the appointment and removal of directors.
The Company has not issued any securities that grant special control rights. Poste Italiane's bylaws do not envisage shares with increased voting rights.
Specifically, in accordance with the provisions of Presidential Decrees nos. 85 and 86 of March 25, 2014, the regulations on the special powers of the government in strategic sectors – as part of Decree Law no. 21 of March 15, 2012, converted with amendments by Law no. 56 of May 11, 2012 – do not apply to Poste Italiane, because Poste Italiane and Group companies do not own any of the assets specified as strategic under the aforesaid Presidential Decrees.
5.5 Employee shareholdings, procedures for exercising voting rights (pursuant to article 123-bis, paragraph 1, letter e), TUF)
The TUF recommends that the bylaws of listed companies include provisions aimed at facilitating employee shareholder proxy voting, so as to foster their involvement in decision-making processes at Shareholders' Meetings.
Poste Italiane's bylaws expressly envisage that, in order to facilitate the collection of proxies from the employees of the Company and its subsidiaries who are shareholders and belong to shareholder associations that comply with legal requirements, space be made available to the legal representatives of such associations for communication and proxy collection, pursuant to terms and procedures to be agreed from time to time.
Rules regulating the appointment and replacement of directors are discussed in section two of this Report (under "Board of Directors – Current composition and term of office" and "Board of Directors – Appointment and replacement").
As far as the rules for amending the bylaws are concerned, extraordinary Shareholders' Meetings resolve on amendments in accordance with the majorities established by law.
As permitted by law, however, the Company's bylaws vest the Board of Directors with the authority to resolve upon:
As at the date of this Report, the Board of Directors does not have a mandate to increase the share capital, nor to issue participating financial instruments or buy back the Company's own shares.
In 2017, on CDP's behalf, Poste Italiane conducted activities associated with the service of collecting postal savings products, using its own organizational means and resources, in particular the entire post office network, pursuant to the terms, conditions and deadlines envisaged under the agreement for collecting postal savings entered into in 2014.
On December 14, 2017, Poste Italiane and CDP entered a new contract for the postal savings collection service to cover the three-year period 2018-2020, subject to the condition precedent of the agreement between the MEF and CDP for managing Bonds from the series transferred to the Ministry of the Economy and Finance ("MEF").
Both the contract signed in 2014 and the contract signed in 2018 include a clause on the good faith renegotiation of the agreements contained therein should changes occur in the controlling shareholder common to both parties (that is to say, the Ministry of the Economy and Finance), so as to adapt the contents of the contract to cater to the new framework of reference.
In order to increase its investments in innovation, develop its IT network, and develop IT applications for the services it provides, in December 2009 Poste Italiane entered into a contract with the European Investment Bank ("EIB") for a loan of up to 200 million euros. This was disbursed in its entirety in 2011 and falls due in April 2018.
Subsequently, in order to increase its investments in information technologies, postal services, and real estate, in March 2012 Poste Italiane entered into a second contract with the EIB for a loan of up to 200 million euros. This was disbursed in its entirety in 2012 and falls due in March 2019.
Finally, in order to increase its investments in the fields of IT, logistics and postal services over the 2017- 2019 period, in December 2016 the Company entered into a third loan agreement with the EIB for a maximum amount of 173 million euros, disbursable in several instalments, with a maximum duration of 7 years from the date of disbursement, to be paid back in a single payment upon maturity of each instalment. As at the date of this Report, Poste Italiane has not drawn upon this credit line, which may be used within 36 months from signature.
These three contracts with the EIB contain a so-called "change-of-control event" clause, pursuant to which, in the event that the Ministry of the Economy and Finance ceases to control Poste Italiane, directly or indirectly, pursuant to article 2359 of the Italian Civil Code., the EIB shall, after consulting Poste Italiane, have the right to cancel the loan and/or request that it be paid back with interest, in addition to all the sums accrued or owing.
C) Committed lines of credit
In November 2016, Poste Italiane obtained the following committed revolving credit lines for a term of 18 months minus one day, originally expiring in April 2018, for a total amount of 1,000 million euros
These credit facilities were cancelled early at Poste Italiane's request on February 2, 2018. No drawdowns were made during the period when they were available.
All of these credit lines contained a change-of-control clause, according to which – in the event that the Ministry of the Economy ceased to control Poste Italiane, directly or indirectly, pursuant to and by effect of article 2359 of the Italian Civil Code, paragraph 1, nos. 1 and 2, or pursuant to and by effect of article 93 of the TUF (although the reference to article 93 of the TUF was not in the agreement with Banca Nazionale del Lavoro) – the following would occur: (i) Banca Nazionale del Lavoro would be able to seek compulsory early repayment; (ii) Intesa Sanpaolo would exercise its power of withdrawal; and (iii) UniCredit would exercise its power of withdrawal.
5.9 Compensation owed to directors in the event of early termination of their employment, including as a consequence of a takeover bid (pursuant to article 123-bis, paragraph 1, letter i), TUF)
Poste Italiane's CEO and General Manager's pay packages envisage compensation in case their employment undergoes early termination.
For more detail on the information required under article 123-bis, paragraph 1, letter i) of the TUF regarding "agreements between the company and its directors... envisaging compensation in the case of resignation or dismissal without just cause or if their employment is terminated following a public takeover bid", please consult the "Annual Report on Remuneration", which is publicly available at the Company's headquarters and on its website (www.posteitaliane.it) pursuant to applicable laws and regulations.
*****
SECTION II: IMPLEMENTATION OF THE CORPORATE GOVERNANCE CODE AND ADDITIONAL INFORMATION
6.1 Current composition and term of office (pursuant to article 123-bis, paragraph 2, letter d), TUF) The Board of Directors in office at the date this Report was drafted, as appointed by the Shareholder's Meeting in ordinary session held on April 27, 2017, consists of the following nine members:
Maria Bianca Farina, Matteo Del Fante, Carlo Cerami, Antonella Guglielmetti, Francesca Isgrò and Roberto Rao were all drawn from the slate presented by shareholder the Ministry of the Economy and Finance, which at that time owned a total of 64.26% of the Company's capital: (i) 29.26% held directly, and (ii) 35% held indirectly via CDP (also under the Ministry's control). This list received votes from the majority of the capital represented at the Shareholders' Meeting (around 85.47% of voting capital). Giovanni Azzone, Mimi Kung and Roberto Rossi were drawn from the list presented by a group of fifteen institutional investors (who at the time owned a total of 1.29% of the Company's capital) and received the votes of a minority of capital represented at the Shareholders' Meeting (around 14.45% of voting capital).
The current Board of Directors' term of office expires when the financial statements for 2019 are approved. Brief professional profiles of the members of the Company's Board of Directors are available in Annex 1 to this Report.
In 2017, Luisa Todini, Francesco Caio, Elisabetta Fabri, Umberto Carlo Maria Nicodano, Chiara Palmieri and Filippo Passerini ceased to hold office as Directors after their term came to an end upon approval of the financial statements for FY 2016.
According to the provisions of the Company's bylaws, the Board of Directors consists of between five and nine members who are appointed by the Shareholders' Meeting in ordinary session (which determines their number within these limits) for a period of no longer than three years. Directors may be re-elected after their term of office expires.
Pursuant to current legislation, all directors must possess the requisites of integrity required of the statutory auditors of listed companies and corporate officers at banks. Furthermore, directors must possess additional strict requisites of integrity envisaged under article 14.3 of the Company's bylaws.
Implementing the provisions of law with regard to privatizations and in accordance with provisions subsequently introduced in the Consolidated Law on Finance, the Company's bylaws also envisage that the appointment of the entire Board of Directors take place through a "slate vote" method. This is designed to ensure that minority shareholders designate a total of one-fourth of incoming Directors. In the event that this number is a fraction, it shall be rounded up to the next integer.
Each slate must include at least two candidates who hold the requisites of independence established by law (that is to say, as envisaged for statutory auditors at listed companies). These candidates must be specifically indicated; one of them must appear as the first name on the slate.
Furthermore, for the first three times a new Board of Directors was appointed after August 12, 2012, slates that present three or more candidates were also to include candidates of both genders, as specifically indicated in the Shareholders' Meeting convocation notice. With regard to the Board of Directors election procedure, the Company's bylaws provide for a special "sliding" mechanism on slates: this comes into force in the event that the election does not produce the gender balance required by law.
Slates must list candidates in numerical order. Slates may be presented by shareholders who, individually or together with other shareholders, own at least 1% of the Company's share capital or an amount as established by CONSOB regulations (tangibly, given Poste Italiane's market capitalization as at the date of this Report, the required minimum is at least 1% of the Company's share capital). Slates must be filed at the Company's registered office by those who are presenting them at least twenty-five days prior to the date of the Shareholders' Meeting that is to resolve upon the appointment of members to the Board of Directors. The Company will then publish these slates on its website (www.posteitaliane.it) and make them available to the public at its registered office at least twenty-one days prior to the date of the aforesaid Shareholders' Meeting, thus ensuring the transparency of the procedure for appointing the Board of Directors.
Disclosures about the candidates' personal and professional qualifications – accompanied by a statement as to whether or not they qualify as independent pursuant to law and/or the Corporate Governance Code – must be filed at the Company's registered office together with the slates, and be promptly published on the Company's website (www.posteitaliane.it).
For the purpose of identifying the directors to be elected, candidates listed on slates that receive a number of votes amounting to less than half the percentage required to present the aforesaid slates shall not be taken into account (i.e. as at the date of this Report, 0.5% of the Company's share capital).
Regarding the appointment of directors who, for whatsoever reason, are not elected through the slate voting system, the Shareholders' Meeting shall make its resolution by the majorities prescribed by law, in such a manner as to ensure in any case:
Replacement of directors is regulated by the provisions of law. In addition to the above, the bylaws provide that:
As for the issue of the succession plans for executive directors, in December 2016, after having heard a proposal from the Appointments Committee pursuant to the recommendations formulated on the basis of the results of the Board review for 2015 (which was conducted at the beginning of 2016), the Board of Directors approved a document entitled "CEO Contingency Succession Plan", which specifies what actions to take in case of imponderable and unforeseeable events that prevent the Chief Executive Officer (Poste Italiane's only executive director, as more specifically outlined in this section of the Report under "6.7 Executive and non-executive directors") from performing his or her duties, in order to assure that the Company is duly managed until a new CEO has been appointed. Subsequently, in March 2018, steps were taken to review the document in question. Now, should the CEO leave his/her post early with respect to the scheduled term of office, the following is envisaged:
drawn. These guidelines shall be subjected to assessment by the Board of Directors autonomously and in its independent judgement for the purpose of co-opting and appointing a new CEO. To this end, should the need arise, the Board of Directors reserves the right to assess the appropriateness of establishing an "ideal" profile of a CEO to submit to the aforementioned shareholders;
In order to assure an appropriately merit-based assessment and a governance process consistent with its corporate values, the Poste Italiane Group has managed its development plans with a view to fostering an approach based on identifying and differentiating the succession profiles of managerial positions.
This process has been designed to ensure adequate organizational oversight by identifying the most strategic positions and, for each such position, drawing up a list of potential successors, alongside the necessary development initiatives to support their managerial advancement, bearing in mind the commitments that the Poste Italiane Group has taken under its strategic plan of reference.
The Company's Board of Directors plays an essential role in corporate governance: it is vested with power over the Company's and Group's strategic and control guidelines. In addition to the powers granted to it by law and the Company bylaws, the Board holds exclusive authority over the most important decisions from an economic and strategic point of view, as well as in terms of their structural influence on management, i.e. functional to monitoring and guiding the Company.
In consideration of its role, the Board of Directors meets regularly, ensuring that it is efficiently organized and works to perform its duties effectively.
In particular, subsequent to resolutions adopted by the Board of Directors on April 28, 2017 and January 25, 2018, as well as pursuant to certain provisions in its bylaws, the Chief Executive Officer is not vested with the powers regarding the kinds of actions listed below, which instead remain the exclusive purview of the Board of Directors in addition to those provided for by the law and the bylaws:
Orders exceeding 50,000,000 euros for provisioning, sub-contracts, and services;
It should be noted that, in line with best practice and recommendations in the Corporate Governance Code, the Board of Directors has taken steps to establish the following general criteria for identifying Transactions of Significant Relevance. These are:
Merger or demerger operations in which the total assets of the company being absorbed or the assets being demerged are equal to or greater than 50,000,000 euros;
Operations that require the Company to make public disclosures drafted in compliance with CONSOB provisions.
Operations put in place exclusively with or between companies controlled by Poste Italiane do not qualify as Transactions of Significant Relevance, without prejudice to the Board of Directors' responsibility for transactions that by law and the Company bylaws fall within its responsibility.
Compatibly with the Group's operational practices, and without prejudice to the managerial autonomy each subsidiary company, the Company's Board of Directors shall undertake to make a prior examination of the Transactions of Significant Relevance of subsidiary companies.
As regards Transactions of Significant Relevance, Poste Italiane's executive bodies provide the Board of Directors with adequate information on Poste Italiane's interest in completing the operation, including through subsidiary companies. This shall include feasibility, economic sustainability and compliance with Poste Italiane's strategic plans.
The Company's executive bodies ensure that subsidiaries' directors are aware of the criteria that identify Transactions of Significant Relevance.
Directors perform their duties with full knowledge of the facts and completely independently. They pursue a primary objective of creating value for the Company's shareholders over the medium-to-long term. They are aware of the duties and responsibilities that come with the office they hold and, as is true of Statutory Auditors, the relevant corporate functions keep them abreast of the most important new legislation and regulations affecting the Company and the performance of their duties. Furthermore, they take part in initiatives aimed at increasing their knowledge about the Company and how it works, in order to perform their role even more effectively.
In particular, following the election of the new Board of Directors in April 2017, the Company decided continue with the practices of the previous Board and held a special induction program aimed at providing directors with appropriate knowledge of the business areas in which the Group operates, the corporate dynamics and their evolution, market trends, and the relevant legal and regulatory framework. Statutory Auditors also attended this programme.
The following table shows the calendar of meetings held by the Board of Directors in 2017.
| J | F | M | A | M | J | J | A | S | O | N | D | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |||
| Total 14 |
|||||||||||||
| Average duration 185 min |
|||||||||||||
| Meetings scheduled for 2018 | 12 (of which 4 already held) |
Directors duly participated. Meetings were also attended by the Board of Statutory Auditors and a magistrate representing the Italian Court of Auditors.
In 2017, the heads of corporate functions in charge of the various items on the agenda were duly invited to attend Board Meetings and, at the request of the Chief Executive Officer, provided in-depth information on the issues under discussion.
In April 2017, the Shareholders' Meeting appointed Maria Bianca Farina as Chair of Poste Italiane's Board of Directors.
In performance of their role as coordinator of Board activities and as a proactive guide who ensures that the Board functions properly, the Chairperson calls Board Meetings, establishes the agenda, presides over meetings, and strives to ensure that – except in cases of urgency and necessity – documentation regarding items on the agenda is made available to Directors and to the Statutory Auditors adequately in advance of the date of each meeting. In this regard, as in preceding years, the practice adopted in 2017 was to distribute documentation along with the notice that an individual meeting was being called, which was sent out generally five days in advance. The notice lead time was generally complied with during 2017. When this was not practicable in the case of fast-evolving extraordinary transactions, the Chairperson in any event ensured that in-depth discussions were held at Board Meetings.
The Chairperson also presides over Shareholders' Meetings and is empowered to be the Company's legal representative.
In addition to the powers envisaged by law and under the Company's bylaws regarding how corporate bodies operate (Shareholders' Meetings and the Board of Directors), and as the Company's legal representation, on April 28, 2017 the Board of Directors resolved to vest the Chairperson with the following powers:
– In agreement and coordination with the Chief Executive Officer, look after institutional relations with the Parliament, the Government, Ministries, institutional bodies and, more in general, with the authorities responsible for supervision and control.
6.6 Chief Executive Officer
On April 28, 2017, the Board of Directors appointed Matteo Del Fante as Chief Executive Officer (and General Manager), vesting him with full powers to manage the Company, with the exception of powers
otherwise entrusted by law, the Company's bylaws, and resolutions taken by the Board of Directors on April 28, 2017 and January 25, 2018. Please consult "6.3 Role and functions" in this section of the Report for a list of the topics reserved for the Board of Directors pursuant to this latter resolution.
By way of example, the Chief Executive Officer:
• Legally represents the Company;
• Makes decisions regarding litigation involving the Company, whether as claimant or respondent, as well as in out-of-court settlements;
• Arranges the preparation of the Company's long-term plan and the annual budget for submittal to the Board of Directors for examination and approval;
• In agreement and coordination with the Chairperson of the Board, looks after institutional relations with the Parliament, the Government, Ministries, institutional bodies and more in general with the authorities responsible for supervision and control;
• Establishes the strategy and content of internal and external communications, as well as the guidelines and key messages to present as the Company's position, including in institutional relations;
• Arranges how the Company is organized and appoints its executive staff;
• Defines general documents on hiring procedures, as well as employees' legal and earnings status;
• Within the scope of his/her authority, determines the powers and roles based on special proxies to assign to executive personnel for the Company's routine management;
• Proposes strategic guidelines and directives for the Group's Companies to the Board of Directors;
• Makes arrangements to set up companies, take on and dispose of equity interests, companies and going concerns with a value of up to 50,000,000 euros;
• Presents proposals to the Board of Directors regarding the exercise of voting rights at extraordinary Shareholders' Meetings of subsidiaries and related companies;
• Designates, replaces and dismisses Directors and Statutory Auditors at investee companies other than those for which the Board of Directors holds responsibility;
• Awards contracts not exceeding 50,000,000 euros for provisioning, subcontracts and services, and complies with related obligations envisaged under in-house and external regulations at every stage of the entire process, from the preliminary to the final stage;
• Enters into agreements for amounts not exceeding 50,000,000 euros (with ministries, local government bodies, etc.);
• Approves real estate sales worth no more than 5,000,000 euros;
• Makes decisions regarding purchases, swaps, and disposals of real estate worth no more than 5,000,000 euros.
The Chief Executive Officer is also empowered as the Executive in charge of the internal control and risk management system in compliance to the Corporate Governance Code. For a detailed description of these
duties, please see the "Guidelines on the Internal Control and Risk Management System", which is available on the Company's website.
In a timely manner, the Chief Executive Officer reports to the Board of Directors and the Board of Statutory Auditors on the Company's operations, its general operational performance, its outlook, and transactions carried out by the Company and its subsidiaries that have the greatest impact on their income statements, cash flow, and balance sheets, on at least a quarterly basis, and in any case during Board meetings.
6.7 Executive and non-executive directors
Executive and non-executive directors sit on the Board of Directors.
In accordance with Corporate Governance Code recommendations, the following personnel are considered to be executive directors:
• The Chief Executive Officer of the Company (or of strategically-significant Group companies), as well as the Chair of the same in the event that he or she is vested with individual managerial powers or plays a specific role in drafting corporate strategies;
• Directors who hold executive positions at the Company, in strategically-significant Group companies or in the controlling entity, if this position also regards the Company.
Directors to whom none of the foregoing categories apply are considered to be non-executive.
Based on an analysis performed by the Board of Directors following the latest appointments to the Board, which took place in April 2017 and subsequently in February 2018, with the exception of the Chief Executive Officer/General Manager, all of the other members of the Board (Maria Bianca Farina, Giovanni Azzone, Carlo Cerami, Antonella Guglielmetti, Francesca Isgrò, Mimi Kung, Roberto Rao, and Roberto Rossi) qualify as non-executive directors.
The number, expertise, authoritativeness and the time availability of non-executive directors are all thus appropriate for ensuring that their judgment may significantly influence the decisions that the Board reaches.
Non-executive directors bring their specific expertise to the Board's discussions, facilitating the examination of issues under debate by offering different perspectives, and consequently fostering the adoption of carefully-considered and well-informed resolutions that meet the Company's interests.
Following the latest appointments to the Board of Directors, which occurred in April 2017 and subsequently in February 2018, based on information provided by those involved or in any event available to the Company, the Board of Directors verified that Giovanni Azzone, Carlo Cerami, Antonella Guglielmetti, Francesca Isgrò, Mimi Kung, Roberto Rao, and Roberto Rossi all qualified as independent pursuant to the definition in the Corporate Governance Code.
In particular, directors are considered independent if they are non-executive and do not have, nor have recently had (even indirectly) relations with the Company or with entities associated with the Company that could currently compromise their independent judgment.
The Board of Directors' procedure for assessing independence began with the examination of a document listing what positions the non-executive directors held and what relations they maintained (deemed to be relations of a commercial, financial and professional nature) with the Group. This was followed by a selfassessment exercise carried out by each non-executive director regarding his/her personal position – formalized in a special declaration by the same – which in turn was followed by a final assessment carried out collectively by the Board; individual members abstained in turn when their position came up for discussion.
In assessing the independence of its non-executive directors, the Board of Directors took into account cases whereby, according to the Corporate Governance Code, the requisites of independence are deemed to be absent, and in this regard applied the principle recommended by the Code that substance should prevail over form. These requirements are specified separately in Table 1, as attached to this Report.
During its assessment, which it carried out in January 2018, the Board of Directors further ascertained that the seven directors indicated above – i.e., Giovanni Azzone, Carlo Cerami, Antonella Guglielmetti, Francesca Isgrò, Mimi Kung, Roberto Rao, and Roberto Rossi – also qualify under the independence requirements envisaged by law (particularly, the Consolidated Law on Finance) for Statutory Auditors at listed companies. These requirements are set out separately in Table 1, as attached to this Report.
Independence of judgment characterizes the work of all Directors, executive or non-executive. However, a sufficient presence (both in numbers and in competences) of directors who qualify as independent according to the foregoing definition and who play a significant role on the Board and its sub-committees is deemed to be a good way to ensure the right balance for pursuing the interests of all shareholders.
In addition to the foregoing, it should be noted that upon the instructions of the Appointments and Corporate Governance Committee, a document is currently being drafted that contains guidelines for defining procedures for conducting regular checks that directors qualify pursuant to these independence requirements.
Pursuant to Corporate Governance Code recommendations, the independent directors met on February 26, 2018, without the other Directors. At this meeting, where they appointed Director Roberto Rao to be Meeting Moderator, they proceeded with an exchange of views on how the Board of Directors has been operating. In particular, they found that they were broadly in agreement about the positive dynamic within the Board, the way in which the Chairperson led proceedings, and how the Chair and the Chief Executive Officer interacted. They commented favourably on the Board's collective approach to decision-making, and the exhaustiveness and quality of information provided to the Board of Directors so that they could make
their decisions in an informed, knowledge-based manner, and expressed their hope that this trend would continue into the future.
The independent directors deemed interaction with the Board of Statutory Auditors to be adequate, reflecting the distinction between their roles, including with regard to additional prerogatives that the law has recently allocated to the control body. Furthermore, they agreed upon the importance of the induction initiatives that had been run thus far, as a way of acquiring thorough knowledge of the specific nature of each of the Group's individual business sectors and their medium-to-long term corporate strategies (particularly with regard to establishing the Poste Italiane Company and Group's new strategic plan). They expressed their hope that these ventures would continue into the future, as they had personally found them highly useful and helpful to directors, particularly with regard to the insurance sector, information technology overall, and human resources.
The independent directors suggested that it would be worthwhile for regular information to be made available – on a quarterly basis – to the Board about the Company and Group's performance against the running budget. Lastly, they commented on the role of Lead Independent Director, a role that they did not consider necessary to fill at that time, given: (i) A lack of the pre-conditions that, pursuant to the Corporate Governance Code, require the appointment of such a figure, bearing in mind that at Poste Italiane the Chairperson of the Board of Directors does not hold the role of lead manager in charge of company operations (Chief Executive Officer), nor does he/she hold a controlling equity stake in the Company; (ii) The high number of independent directors sitting on the Board; and (iii) The frank and constructive dialogue characteristic of Board Meetings.
The independent Directors reserved the right to hold further independent-director only meetings.
Directors accept and maintain their office if they believe that they can dedicate the time necessary to diligently perform their duties, taking into account both the number and the nature of the offices they hold on the Boards of Directors and the Boards of Statutory Auditors at other companies of significant size, as well as efforts required by other professional activities and offices that they hold at associations.
In this regard, it should be noted that in September 2015 the Board of Directors approved a policy – formalized in an ad hoc document – concerning the maximum number of offices that members may hold on Boards of Directors and Boards of Statutory Auditors at other companies of significant size, in order to ensure that the individuals concerned have sufficient time to effectively perform their role within the Poste Italiane Board of Directors.
In accordance with Corporate Governance Code recommendations, the aforesaid policy considers as significant solely offices held on the management and supervisory boards of the following kinds of companies:
a) Companies whose shares are listed on regulated markets in Italy and abroad;
b) Other companies, Italian or international, whose shares are not listed on regulated markets but that have assets exceeding 1000 million euros and/or revenues in excess of 1,700 million euros, based on their latest approved accounts.
In accordance with Corporate Governance Code recommendations, the policy adopted by the Board of Directors establishes the following:
1) For the Poste Italiane CEO: (i) In principle, unless a motivated assessment to the contrary is provided by the Board of Directors, it is not permissible for the company's Chief Executive Officer to hold any position as CEO at the companies indicated under item (a) above; (ii) At most, a maximum of two directorships and/or positions of standing auditor at the companies indicated under item (a) above is permissible, or 5 directorships and/or auditorships at the companies indicated under item (b) above;
2) For Poste Italiane directorships other than the CEO, the number of positions held at corporate or auditing bodies belonging to other companies pursuant to items (a) and b) may not exceed 5.
Calculation of the number of positions held pursuant to items (1) and (2) above does not take into account any position directly and/or indirectly held at subsidiary companies or at companies associated with Poste Italiane, notwithstanding any assessment to the contrary by the Board of Directors, either as a result of the business, size or complexity of the position, or for any other reason, given that fulfilling the role of director requires significant efforts, including but not limitedly to time.
According to the information provided by the Company's directors, in implementation of the aforesaid policy, as well as checks carried out by the Board of Directors in January 2018, the number of offices currently held by each of Poste Italiane's directors on the Boards of Directors or Boards of Statutory Auditors at other companies of significant size is compatible with the limit prescribed under the aforesaid policy.
In early 2018, assisted by Egon Zehnder (a firm specialized in the field, previously commissioned by the company in 2017 for a more limited recruitment-related assignment), the Board of Directors carried out a Board Review: an assessment of the size, composition, and functioning of the Board and its committees, in accordance with the most advanced international corporate governance practices and as recommended in the Corporate Governance Code. The review was also conducted in accordance with Supervisory Regulatory provisions. This board review follows a similar initiative carried out by the Board of Directors in the first half of 2015 – at that time on a voluntary basis, given that the Company was not yet listed – and subsequently in 2016 and 2017.
The self-assessment process commenced in February and ended in March 2018. The consulting company interviewed each individual director and went on to analyse how the Board of Directors had operated during FY 2017.
Specifically, the review focused on the main issues concerning the Board, consisting of: (i) Its structure, composition, role, and responsibilities, including issues associated with director independence and training initiatives (induction); (ii) How the Board of Directors structures its work, conducts its meetings, and related information flows; (iii) Director cohesiveness and interaction, the decision-making processes adopted, and working approaches and procedures; (iv) The composition and functioning of Board of Directors' subcommittees; and (v) An assessment of the adequacy of organizational support provided to the Board and its committees.
It should be noted that to enhance the process of assessing the Board from an additional perspective, the questionnaire and interviews were also sent to members of the Board of Statutory Auditors, in their capacity as observers.
The Board of Directors was significantly renewed in April 2017, at the time the FY 2016 financial statements were approved. The Board has benefitted from the continuation in office of a number of Directors who had served on the previous Board, alongside the experience and skillsets of new, incoming Board members. This combination has made it possible to achieve the current make-up of the Board of Directors which, as a whole, as may be seen from the self-assessment analysis, distinguishes itself for a series of strengths in terms of its make-up and how it functions. In particular:
• The qualitative profile of the corporate body in terms of competences, professionalism and the experience and diversity represented, in the various connotations of the term;
• An optimal balance between independent and non-independent directors, which enables its committees to function efficiently and makes it possible to effectively manage any conflict of interest and safeguard shareholders as a whole;
• The Induction programme, consististing of a number of sessions on topics regarding the sector in which Poste Italiane operates, corporate dynamics, and the regulatory framework of reference. The analysis revealed considerable appreciation of the Company's investment in this form of training. Directors confirmed their interest in committing themselves to further such sessions;
• The atmosphere on the Board of Directors, characterized by qualities such as mutual esteem, faith and motivated directors that result in lively and rich debates on the Board, all make it possible to reach decisions with the broadest possible participation;
• Appreciation was expressed regarding the number of meetings, director attendance and participation, as well as the selection of items on the agenda;
• Definition of the Company's strategy, which proved to be clear and garnered general agreement within the Board, including an effective balance between the short- and medium-term goals, as shown by the recent approval of the business plan;
• The Board of Directors' level of knowledge about how the company is organized and the managers who fill key roles, compounded with the confidence and belief that the structure is adequate to achieving the targets set for it;
• The key role played by the Chair of the Board of Directors in terms of his/her leadership of Board interaction, the effectiveness in managing meetings, and the stimulation of critical and independent debate; further to this, an appreciation of the way in which the Chairperson guarantees effective scheduling of the Board's work;
• A constructive and well-balanced relationship between the Chair of the Board of Directors and the Chief Executive Officer.
• The quality and continuity of relations between directors and the Chair, the Chief Executive Officer and top company managers who, from time to time, are called in to speak during the Board of Directors' proceedings;
• The structure of currently established sub-committees and their make up in terms of the competences and experiences represented; appreciation was further expressed over the substantive, proactive and timely contributions these sub-committees provide;
• The effectiveness and efficiency of the existing system for managing and governing risk, and the assurance of associated internal controls;
• The accuracy of minute taking, which is exhaustive and reliable and reflects how Board proceedings went;
• The contribution offered to the Board of Directors by the Board of Statutory Auditors, both in terms of leadership and the competence of the control body's Chairperson.
Several considerations were made regarding the physiological "running in" of the Board of Directors during its first year in office. In particular, the following was noted:
• While acknowledging that progress has been made in structuring the agenda, hopes were expressed that in the future there would be a more effective balance on the meeting agenda between topics regarding compliance, regulation and handling strategic issues, managing business and human resources, succession plans and leveraging human capital;
• A suggestion was made to further step up sector benchmarking and to monitor trends relevant to the Company;
• Notwithstanding the progress that has been made, a hope was expressed that further improvement might be possible for promptly sending out information;
• It was also hoped that more progress be made in looking closely into the main areas of risk for the various businesses and markets in which the Firm operates.
To conclude, based on the comments received and the comparative analysis conducted, and having carried out a benchmarking exercise against international best practices, for the first year of the Board of Directors' term of office Egon Zehnder expressed a wholly positive opinion on compliance with the guidelines in the Corporate Governance Code.
In February 2018, the Board of Directors adopted a policy regarding diversity on Poste Italiane's administrative and control bodies (hereinafter, also the "Policy"). This policy provides non-binding indications on topics such as, by way of example, Board members' age, gender, geographical provenance, education and career path.
The Policy's purpose is to define criteria that ensure the Board of Directors has a qualitative and quantitative mix that is functional to effectively fulfilling the tasks and responsibilities allocated to the management body, in part through the inclusion of members who provide sufficient diversity in terms of the competences required to effectively understand current business, risks and long-term opportunities associated with company activities.
The Policy was drafted to take into account the nature and complexity of the company's business, the social and environmental context within which the Company operates, the experience the Board has gained from its activities thus far, how the Board and its sub-committees function, and the outcomes of self-assessment reviews conducted over recent years.
The Policy is addressed in particular to individuals involved in the process of selecting and appointing members to the Company's Board of Directors. Specifically:
The Policy highlights the following issues:
With regard to the size of the Board of Directors, it is felt that the current number of directors – set at nine (in other words, the maximum number permissible under current company bylaws) – allows for an adequate balance of the competences and experience required by the Company and reflects the Group's complex nature; the same applies to the Board's sub-committees;
In respect of Board members' professionalism and competences, it was considered that the current Board of Directors features individuals who have skills in the following sectors: (i) Postal services and logistics services; (ii) Banking and finance; (iii) Insurance; (iv) Legal; and (v) Sustainability. The presence of diversified and complementary competencies and experience fosters dialogue and ensures that the Board functions efficiently.
It was further hoped that all directors possess sufficiently adequate knowledge of the English language to ensure that they correctly understand written material and, consequently, are able to make resolutions directly regarding documents written in the English language;
The Policy also refers to members of the control body, specifying that all members of the Board of Statutory Auditors (standing and alternative auditors) must be registered statutory auditors; with respect to gender, in accordance with the current provisions of applicable law and the company's bylaws, one third of the members who sit on the Board of Statutory Auditors must come from the "less represented" gender which, based on past experience, generally corresponds to women.
Members of the Board of Statutory Auditors must also qualify as holding the requisites of integrity and independence envisaged under applicable law, Supervisory Provisions and the Company's bylaws.
Remuneration of members of the Board of Directors is established by Shareholders' Meetings. Having heard a proposal from the Remuneration Committee, the Board itself is responsible for establishing additional remuneration for members of Board sub-committees that are set up to advise and make proposals to the Board. The overall remuneration of the Chairman and the Chief Executive Officer/General Manager is also decided by the Board of Directors, having heard a proposal from the Remuneration Committee, and after consulting the Board of Statutory Auditors.
For a full description of the structure and amount of said remuneration for 2017, please consult the Report on Remuneration, which will be made available to the public at the Company's registered office and on its website (www.posteitaliane.it) by the deadline prescribed by law.
In April 2017, after the Board of Directors was appointed by the Shareholders' Meeting at its April 27, 2017 session, it established the following four committees staffed by Board members (the allocation of responsibilities was, at that time, the same as during the Board's previous term of office):
Subsequently, in February 2018, the Board of Directors took steps to augment the responsibilities of these committees as follows:
At the time of writing this Report, the Board of Directors has the following four sub-committees:
Ad hoc organizational regulations approved by the Board of Directors govern the composition, tasks, and functioning of these committees.
In particular, the organizational rules provide that:
The Control, Risk and Sustainability Committee, the Remuneration Committee and the Appointments and Corporate Governance Committee be composed of non-executive directors, the majority of whom (including the Chair of each committee) be independent;
The Related Parties and Connected Parties Committee solely feature independent directors as members.
Within the limits of the duties assigned to each of them, the aforesaid committees are authorized to access information and corporate functions necessary for carrying out their respective tasks. They may also draw upon external consultants at the Company's expense, within the limits of the overall budget approved for all committees by the Board of Directors. In this regard, it should be noted that, in the event that the Remuneration Committee intends to draw upon the services of a consultant in order to obtain information on market practices regarding remuneration, it must beforehand check that the consultant is not in a situation that could actually compromise their independence of judgment. Similarly, in the event that the Related Parties and Connected Parties Committee wishes to consult with experts of its choosing – who have acknowledged professional qualifications and expertise on topics regarding transactions with related parties submitted to the Committee for examination – the Committee must check that they are independent and are not subject to conflicts of interest.
Each Committee is responsible for appointing a Secretary, chosen from the corporate function responsible for handling corporate affairs, who is assigned the task of helping the Chair of each Committee to organize and hold meetings and draft the minutes of such meetings. The Chairs of each Committee shall report to the Board of Directors on the meetings of their respective Committees on an annual basis, and in any event each time that it is deemed necessary. Additionally, at least once every six months, when the Board approves the annual and half-year financial reports, the Control, Risk and Sustainability Committee shall report to the Board of Directors on the activities carried out by the internal control and risk management system, and its adequacy for the task.
The Board of Statutory Auditors shall attend these meetings.
Upon invitation by the respective Committee Chairs, Committee meetings may also be attended by other members of the Board of Directors, the magistrate representing the Court of Auditors with the mandate to control, representatives of corporate functions, or third parties whose presence may upgrade the Committee's performance of its duties. The Chair of the Board of Directors and the Chief Executive Officer may also attend Committee meetings.
Moreover, meetings by the Control, Risk and Sustainability Committee are normally attended by the head of Poste Italiane's "Audit" function, as well as – for issues regarding Patrimonio BancoPosta's activities – the heads of BancoPosta's control functions. Similarly, for matters regarding Patrimonio BancoPosta, Remuneration Committee meetings are normally attended by the head of BancoPosta's "Risk Management" function. No director may attend Meetings of the Remuneration Committee when proposals for the Board of Directors are discussed regarding their own remuneration, unless such proposals regard the members of Board sub-committees in general.
In 2017, under the Board of Directors' previous mandate (specifically, up to April 27, 2017), Umberto Carlo Maria Nicodano (acting as Chair), Chiara Palmieri, Filippo Passerini and Roberto Rao sat on the Control and Risk Committee. Subsequently, following the renewal of the Board of Directors, the current Risk and Control Committee (which, as noted above, was allocated specific responsibilities over sustainability in February 2018, and at the same time renamed the Control, Risk and Sustainability Committee), was appointed by the Board of Directors on April 28, 2017: Antonella Guglielmetti (acting as Chair), Giovanni Azzone, Francesca Isgrò and Roberto Rossi are its members.
In its current form, all of its members are non-executive directors and hold the requisites of independence. As currently composed, the Committee has the necessary number of members with the specific requisites of professional competence required under both the Supervisory Regulations and the Corporate Governance Code.
The Control, Risk and Sustainability Committee is a body that, through an appropriate preparatory process, is tasked with assisting the Board of Directors in making evaluations and decisions regarding the Company's internal control and risk management system, including approving periodical financial reports.
In particular, the Control, Risk and Sustainability Committee expresses prior opinions on:
please see "7.4 Appointments and Corporate Governance Committee – Duties" in this section of the Report), a Board of Directors' sub-committee, as well as on the remuneration assigned to them in accordance with the Remuneration Committee (for a description of the duties of this committee, please see "7.3 Remuneration Committee – Duties"), and on the adequacy of resources assigned to them for performing their duties.
In addition to the foregoing, the Control, Risk and Sustainability Committee is tasked with the following advisory and proactive duties to assist the Board of Directors:
From February 2018 onwards, the Control, Risk and Sustainability Committee was also given the task of assisting the Board of Directors by providing proactive and advisory preliminary functions in making evaluations and decisions regarding sustainability, in particular:
The Control, Risk and Sustainability Committee may also request that Poste Italiane's "Audit" function to perform checks on specific operating areas, giving notice at such time to the Chair of the Board of Statutory Auditors, the Board of Directors, and the Chief Executive Officer, with the exception of cases where the request specifically regards the actions thereof.
Furthermore, with regard to the business conducted by the Company through Patrimonio BancoPosta, the Control, Risk and Sustainability Committee performs tasks to assist the Board of Directors vis-à-vis internal risks and controls, with particular regard to all activities instrumental and necessary to enabling the Board
to reach a correct and effective determination of the risk appetite framework (hereinafter, "RAF") and policies for governing risks.
Within this framework, the Control, Risk and Sustainability Committee:
In the event that Patrimonio BancoPosta has entirely or partially outsourced important operating tasks or control activities to Poste Italiane, the Committee shall in advance examine the annual report – which must
be approved by the Board of Directors and submitted to the Bank of Italy – in terms of what checks have been carried out on the activities Patrimonio BancoPosta has allocated to Poste Italiane functions, the results thereof, any shortcomings to emerge, and what measures should be adopted to eliminate the identified shortcomings.
Furthermore, with regard to its duties concerning risk control and management activities conducted by the Company through Patrimonio BancoPosta, the Committee shall assist the Board of Directors:
The Committee may request BancoPosta's control functions to perform checks on specific operating areas, concomitantly informing the Chairman of the Board of Statutory Auditors, the Board of Directors, and the Chief Executive Officer, except in cases where the subject of the requested check specifically regards the activity thereof.
Lastly, without prejudice to the powers of the Remuneration Committee, the Control, Risk and Sustainability Committee ascertains that the incentives underlying the Patrimonio BancoPosta's remuneration and incentive system are consistent with the RAF.
Activities conducted by the Control, Risk and Sustainability Committee in 2017
The following chart lists the meetings held by the Control, Risk and Sustainability Committee in 2017 (a financial year during which, as noted previously, the Control and Risk Committee had not yet been allocated responsibility for sustainability).
| J | F | M | A | M | J | J | A | S | O | N | D |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |
| Total | 14 | ||||||||||
| Average duration | 210 min |
At these meetings, which were normally attended by all members (as well as members of the Board of Statutory Auditors, who were kept abreast of the fact that some of these meetings were held jointly with the control body), among other things the Committee members:
management system"), and a summary of activities undertaken in 2016 prepared by the Company's "Internal Control" function and subsequently submitted to the Board of Directors in March 2017;
For the IT environment, assisted by the relevant corporate functions, in 2017 the Committee examined: (i) The update to the ICT Unified Document – 2016 Report on information risks; (ii) The report on ICT cost adequacy; (iii) An analysis of information risks – cybercrime oversight; and (iv) The permanent plan for IT security, regarding aspects associated with monitoring reports and audits.
In addition to the foregoing, working with the Executive in charge of preparing the corporate accounting documents, and after consulting the Board of Statutory Auditors and the external audit firm, the Committee also examined and evaluated:
The Committee also issued favourable opinions on:
All of these were subsequently submitted to the Board of Directors' approval during 2017.
As for the issues falling under the competence of the Committee pursuant to the activities carried out by the Company through Patrimonio BancoPosta, these also included:
Receiving information and examining a number of potential risk scenarios and financial management trends;
Within its purview, examining results-related elements regarding the achievement of the 2016 targets assigned to the Chief Executive Officer and General Manager, and to the head of the BancoPosta Function in order to trigger payment of their variable remuneration component;
In addition to the foregoing, it should be noted that in early 2018 the Committee held further meetings, at which, among other things, it:
Evaluated and expressed a favourable opinion on the Group's Anti-Money-Laundering Guidelines, submitted to the Board of Directors for approval in February 2018;
Evaluated and examined a proposed update to the Organizational Model pursuant to Legislative Decree no. 231/01, and to the relevant new Guidelines for application of Legislative Decree no. 231/01 to the Poste Italiane Group, submitted to the Board of Directors for approval in January 2018;
Additionally, among issues pertaining to Patrimonio BancoPosta:
During 2017, under the Board of Directors' previous mandate (specifically, up to April 27, 2017), Filippo Passerini (acting as Chair), Elisabetta Fabri and Mimi Kung sat on the Remuneration Committee. Subsequently, following the renewal of the Board of Directors, the current Remuneration Committee was appointed by the Board of Directors on April 28, 2017: Carlo Cerami (acting as Chair), Giovanni Azzone, and Roberto Rossi now sit on this Committee.
All of the Committee's current members are non-executive directors and possess the requisites of independence. As currently composed, the Committee has the required number of members with the specific requisites of professional competence required by both the Supervisory Regulations and the Corporate Governance Code.
The Remuneration Committee has the task of providing proactive and advisory preliminary functions to assist the Board of Directors in undertaking assessments and making decisions on remuneration. Specifically, the Remuneration Committee:
In addition to the aforesaid duties, with regard to the business conducted by the Company via Patrimonio BancoPosta, and without prejudice to the powers of Shareholders' Meetings as established under Supervisory Regulations, the Remuneration Committee:
b) Is tasked with advising the Board of Directors on establishing criteria for the remuneration of all "most significant" personnel, identified in accordance with Supervisory Regulation provisions;
c) Directly oversees the correct application of rules on remuneration for the Heads of BancoPosta's control functions, working closely with the Board of Statutory Auditors;
The following table shows the calendar of meetings held by the Remuneration Committee during 2017.
| J | F | M | A | M | J | J | A | S | O | N | D |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | |||
| Total | 12 | ||||||||||
| Average duration | 65 min |
At these meetings, which were normally attended by all of its members – as well as, normally, by the members of the Board of Statutory Auditors – supported by independent external consultants (at the Company's expense), the Remuneration Committee:
Checked that the targets assigned for 2016 to the BancoPosta Function's Chief Executive Officer/General Manager and the Head of BancoPosta's Internal Control Function in order to trigger payment of their variable remuneration had been achieved, as envisaged under their compensation packages, subsequently submitting these proposals to the Board of Directors;
Resolved to put before the Board of Directors the proposal to pay out the deferred portions of the MBO 2015 scheme, regarding the positions of the Chief Executive Officer/General Manager and the Head of the BancoPosta Function;
In addition to the foregoing, it should be noted that in early 2018 the Remuneration Committee held further meetings, during which, among other things, the Committee proceeded to:
In 2017, under the Board of Directors' previous mandate (specifically, up to April 27, 2017), Roberto Rao (acting as Chair), Giovanni Azzone and Chiara Palmieri sat on the Appointments Committee. Subsequently, following the renewal of the Board of Directors, the current Appointments Committee (which, as noted above, was allocated specific responsibilities for corporate governance in February 2018, and at the same time proceeded to be renamed the Appointments and Corporate Governance Committee) was appointed by the Board of Directors on April 28, 2017: Roberto Rao (acting as Chair), Antonella Guglielmetti and Mimi Kung all sit on this Committee, all of whose members are non-executive and possess the requisites of independence.
The Appointments Committee is tasked with assisting the Board of Directors with preliminary work, both proactive and advisory, regarding evaluations and decisions on the size and composition of the Board of Directors.
Within this framework, the Appointments Committee is specifically assigned the following tasks:
a) Expressing opinions to the Board of Directors regarding the size and composition of the Board of Directors, and making recommendations concerning the kind of professionals whose presence on the Board is considered advisable. Specifically, the Appointments Committee acts in an advisory role to the Board of Directors with regard to the self-assessment process – as governed under Supervisory Regulations – and, in particular, with regard to the Board's advance identification of its own optimal quantitative and qualitative make-up, as well as subsequent assessments of the extent to which the quantitative and qualitative composition considered optimal is reflected in the actual Board after the appointment process. To this end, the Appointments Committee prepares the Board Review – on how
the Board of Directors and its sub-committees are working, as well as their size and composition – by suggesting to the Board which firm specialized in this field should be appointed for this task, specifying what issues the review should cover and establishing the Review's procedures and time frame;
The Appointments and Corporate Governance Committee is further tasked with assisting the Board of Directors with preliminary work, both proactive and advisory, regarding evaluations and decisions on the Company and Group's corporate governance. Within this framework, the Committee is specifically assigned the following tasks:
a) Drawing upon a report prepared on a quarterly basis by the corporate function responsible for handling corporate affairs, monitoring developments in corporate governance-related regulations and domestic and international best practices, and taking steps to inform the Board of Directors should significant amendments be introduced;
b) Conducting preliminary examination of the Annual Report on Corporate Governance, for publication at the same time as financial statements-related documentation.
The following chart lists the meetings held by the Appointments and Corporate Governance Committee in 2017 (a financial year during which, as noted previously, the Appointments Committee had not yet been allocated responsibility for corporate governance-related issues).
| J | F | M | A | M | J | J | A | S | O | N | D | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | ||||||||
| Total | ||||||||||||
| Average duration | 60 min |
At these meetings, which were normally attended by all Committee members (as well as, upon invitation, by the Chair of the Committee, the Chair of the Board of Statutory Auditors and/or standing members of that Board delegated by the latter), with the support of external consultants at Company expense, among other things, the Committee did the following:
In addition to the foregoing, it should be noted that in early 2018 the Committee held further meetings, at which the Committee:
The Related Party and Connected Parties Committee was established by the Board of Directors on September 15, 2016 and began operations on October 1, 2016. During the Board of Directors' previous term of office, up to April 28, 2017, Giovanni Azzone (acting as Chair), Mimi Kung and Roberto Rao sat on the committee. The Committee members were renewed on that date, following the appointment of the new Board of Directors resolved by the Shareholders' Meeting on April 27, 2017. At the date this Report was drafted, Francesca Isgrò (acting as Chair), Carlo Cerami, Mimi Kung, and Roberto Rao sat on the Committee. All of the members are non-executive and possess the requisites of independence.
The Related Parties and Connected Parties Committee is tasked with the duties envisaged under rules and regulations issued by CONSOB and the Bank of Italy regarding transactions with Related Parties and Connected Parties, as well as the "Guidelines for the Management of Transactions with Related Parties and Connected Parties" adopted by the Company (hereinafter, for the sake of brevity, the "Guidelines", a description of which is provided in this section of the Report under "14.1 Transactions with related parties"), including in particular expressing required opinions on operations with related parties and connected parties of lesser or greater importance.
b) Where envisaged, formulates preliminarily reasoned opinions on Transactions of Lesser of Greater Importance that do not qualify as exemptions, examining the interests of Poste Italiane – as well as companies directly and/or indirectly controlled by it – in carrying out such transactions directly through Poste Italiane, as well as through BancoPosta, and the advantageousness and essential fairness of the relevant conditions;
c) Is involved from the negotiation and due diligence stage of Transactions of Greater Importance onwards, receiving a complete and timely flow of information, with the power to request information and make remarks to the delegated bodies and to the persons appointed to conduct negotiations and due diligence;
The following table shows the calendar of meetings held by the Related Parties Committee during 2017.
| J | F | M | A | M | J | J | A | S | O | N | D | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | - | - | - | | | | | | | | |
| Total 14 |
||||||||||||
| Average duration 45 min |
At these meetings, which were normally attended by all of its members, as well as, customarily, members of the Board of Statutory Auditors and, among others, the Related Parties Committee did the following:
In addition to the foregoing, it should be noted that during the first few months of 2018, the Related Parties Committee held additional meetings at which it examined several transactions with related parties that had been brought to its attention, expressing opinions thereon that were all favourable and without raising criticism; it also drafted proposals on a number of amendments to its own organizational regulations.
The Board of Statutory Auditors in office as at the date of this Report – appointed by the Annual General Meeting on May 24, 2016 – comprises the following standing members:
Mauro Lonardo, Chair;
Mauro Lonardo was drawn from the slate presented by a group of 14 asset-management companies and other institutional investors (which at the time owned a total of 1.39% of the Company's share capital), and was voted for by a minority of the capital represented at the meeting (approx. 13.66% of the voting capital); Alessia Bastiani and Maurizio Bastoni were drawn from the slate presented by the Ministry of the Economy and Finance (which at the time owned 64.70% of the Company's share capital), and were voted for by the majority of the capital represented at the meeting (approx. 86.37% of the voting capital).
The term of the current Board of Statutory Auditors will conclude upon approval of the financial statements for FY 2018.
Annex 2 to this Report features brief professional profiles of the aforesaid members of the Company's Board of Statutory Auditors.
In accordance with the provisions of law and the Company's bylaws, the Board of Statutory Auditors consists of three standing auditors and three alternates, who are appointed by an ordinary Shareholders' Meeting for a three-year period and may be re-appointed when their term expires.
As envisaged in the Company bylaws for the Board of Directors and in accordance with the Consolidated Finance Law, bylaws prescribe that the entire Board of Statutory Auditors be elected via the slate voting method, with the aim of ensuring the presence on the Board of a standing statutory auditor (who takes the office of Chair) and an alternate statutory auditor (who replaces the Chair in the event that s/he leaves office before the end of the term), designated by minority shareholders.
This electoral system envisages that the slates, which must list candidates in numerical order, may be presented by shareholders who, individually or in concert with other shareholders, own at least 1% of the Company's share capital or an amount as established by CONSOB regulations (tangibly, given Poste Italiane's market capitalization as at the date of this Report, the required minimum is at least 1% of the Company's share capital).
Furthermore, in the first three elections of Boards of Statutory Auditors since August 12, 2012 – in accordance with the provisions of law on gender balance – the slates have had to include candidates of both genders in the first two slots in the section for standing auditors, and the first two slots in the section for alternate auditors.
As with the slates of candidates for the office of Director, slates of candidates for the office of Statutory Auditor must be filed at the Company's registered office by those presenting such lists at least twenty-five days prior to the date of the Shareholders' Meeting called upon to resolve on the appointment of members to the Board of Statutory Auditors. These slates are subsequently published by the Company on its website (www.posteitaliane.it), and made available to the public at the Company's registered office at least twenty-
one days prior to the date of the aforesaid Shareholders' Meeting, accompanied by thorough information on the personal and professional characteristics of the candidates, in order to ensure a transparent procedure for the election of members to the Board of Statutory Auditors.
For the appointment of statutory auditors who, for whatever reason, are not elected through slate voting, the Shareholders' Meeting shall resolve in accordance with the majorities provided for by law, without following the foregoing procedure, but in any event proceeding in such a manner as to ensure that the composition of the Board of Statutory Auditors complies with the regulatory and administrative provisions of law, as well as with the principle of representing minority shareholders and regulations on gender balance.
Pursuant to applicable law, members of the Board of Statutory Auditors must possess the requisites of integrity, professional competence and independence required of the Statutory Auditors of listed companies, supplemented (with regard to the requisites of professional competence) by special provisions in the bylaws, as well as additional requisites specified in Supervisory Regulations. They must also comply with limitations on the number of offices held on Boards of Directors and Boards of Statutory Auditors at Italian companies, as established by CONSOB in a special regulation.
In February 2018, the Board of Statutory Auditors also checked that all of the Standing Auditors in office possess the requisites of independence envisaged by the Corporate Governance Code for directors. In any case, the Statutory Auditors shall act autonomously and independently from the shareholders who elected them.
As part of the duties assigned by law – as specified under "3. Corporate Governance Model" in the first section of this report – and in accordance with guidelines in the Corporate Governance Code, the Board of Statutory Auditors is vested with:
The following table shows the calendar of meetings held by the Board of Statutory Auditors in 2017.
| J | F | M | A | M | J | J | A | S | O | N | D | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
| Total 40 |
||||||||||||
| Average duration | 175 min |
These meetings – some of which were held jointly with the Control, Risk and Sustainability Committee – were duly attended by the standing auditors; the magistrate representing the Court of Auditors attended twelve of the twenty-two meetings held.
In 2017, in compliance with Corporate Governance Code guidelines aimed at ensuring that auditors qualify as independent, inter alia the Board verified that the criteria and procedures for the Board of Directors to carry out controls to evaluate the independence of directors were correctly applied.
Shareholders' Meetings set the remuneration for standing members of the Board of Statutory Auditors, taking into account the commitment required by the office, the importance of the position they hold, and Poste Italiane's size and multi-sector nature. Specifically, in May 2016, an ordinary session of the Annual General Meeting established 80,000 euros as the gross annual remuneration for the Chairperson of the Board of Statutory Auditors, and 70,000 euros as the gross annual remuneration of each of the other standing auditors.
Poste Italiane's Internal Control and Risk Management System ("SCIGR") consists of a set of corporate instruments, organizational entities and rules aimed at ensuring that the Company is managed soundly, with propriety and consistently with its corporate objectives. To be effective, the system of controls must be integrated, which presupposes that its components are coordinated and interdependent, and that the entire system be an integral part of the general organizational, administrative, and accounting structure of the Company, taking into account (among other things) the separation of Patrimonio BancoPosta in terms of its accounting, capital, organization, and control system.
The SCIGR constitutes a significant component of Poste Italiane's corporate governance, because it enables the Company's Board of Directors to pursue its primary objective of ensuring the creation of value over the medium-long term, while also establishing the level of risk compatible with its strategic goals. Specifically, the SCIGR consists of the following three levels of control:
systems, and checking the adequacy of these systems in order to ensure efficient and effective operations, appropriate risk control, the prudent conducting of business, reliable information, and compliance with laws, regulations, and internal procedures;
3) A "third level of control", which is assigned to Poste Italiane's "Internal Control" function – or to BancoPosta's "Internal Audit" function for business conducted through Patrimonio BancoPosta – with the objective of: (i) Providing independent assurance on the adequacy and tangible functionality of first- and second-level controls and, in general, on the SCIGR; as well as (ii) Assessing the completeness, adequacy, functionality, and reliability (in terms of efficiency and effectiveness) of the internal controls system, and identifying breaches of procedures and rules applicable to Poste Italiane.
As a result of this three-level division, second-level control oversight plays a key role for SCIGR integration and overall functioning.
As enabling factors for the integration and rationalization of its SCIGR, Poste Italiane has decided to:
Within the SCIGR, the Chief Executive Officer has the role of "Executive in charge of the Internal Control and Risk Management System", inter alia to make Corporate Governance Code recommendations, which lay down that this task be normally assigned to the CEO.
The Internal Control and Risk Management System functions effectively if there is productive interaction among the company's control functions as they exercise their duties.
An integrated system aims to achieve the following objectives:
Defining forms of coordination and collaboration among corporate control functions enhances the overall effectiveness of the SCIGR and ensures unified, cohesive representation at senior level and among corporate organs regarding the risks to which the Company and its subsidiaries are exposed.
Two main moments of coordination and collaboration between control functions are envisaged:
As a whole, interrelations between governance bodies, control functions and management at Poste Italiane and its subsidiaries are among the key operational mechanisms to ensure that the internal control system functions well. Failure to ensure implementation of this may result in incoherent, incomplete or redundant supervision of the risk. The Company has specifically structured a system of information flows:
For a detailed description of the duties and responsibilities assigned to the main parties involved in the SCIGR, and of procedures coordinating them, please consult the "Guidelines for the Internal Control and Risk Management System", which the Board of Directors approved on July 10, 2015, most recently updated on February 19, 2018 and available on the Company's website (www.posteitaliane.it). For further information on the activities that the Control and Risk Committee (at the date this report was drafted, designated the Control, Risk and Sustainability Committee) conducted in 2017 as part of the SCIGR, please see "7. Committees - 7.2 The Control, Risk and Sustainability Committee (formerly the Risk and Control Committee)" in this section of the document.
The Group's Code of Ethics was inspired by the awareness of the social and environmental impact of the Group's activities, and of the importance of adopting a cooperative approach to stakeholders in addition to the Group's good reputation, both through internal and external relations. The Company's Board of Directors first approved the Code in November 2003; its most recent update was in September 2009.
In 2017, with the aim of integrating the various codes of conduct it has adopted over the years into a single document, Poste Italiane launched a review of its Code of Ethics. The goal is to update and broaden the principles and rules of conduct that should be used in interactions with all stakeholders with whom Poste Italiane is in touch, and especially in its relations with suppliers, partners, the marketplace and its shareholders.
The Company is keen to raise its emphasis on the definition of key principles that inspire the culture and conduct pursued by its directors, control bodies, management, employees and indeed everyone who, permanently or temporarily, works to pursue and achieve the Poste Italiane Group's objectives.
General criteria for conduct that the Company recognizes and endorses in performing its own activities and in relations with stakeholders have been identified. These include specific provisions on conflict of interest, combating corruption, anti-money-laundering and fighting terrorism, as well as protecting health, safety, privacy and the environment.
The principles and rules of conduct enshrined in the Code of Ethics – such as legality, impartiality and equity, respect and valuing people, transparency and completeness, confidentiality and quality, diligence and professionalism – all help foster the Poste Italiane Group's credibility within the civil and economic sphere, translating this acknowledgement of the values that characterize the Company's way of doing business into a competitive advantage. Moreover, the Company is keen to foster the dissemination of ethical principles and social responsibility among parties in the Group's value chain.
In March 2003, the Company adopted an organization, management, and control model pursuant to Legislative Decree no. 231/2001 (the "Organizational Model").
Since it was first adopted, the goals of the Company's Organizational Model have been to:
Foster a corporate culture characterized by legality and the awareness of the Company's express disapproval of any behavior contrary to the law, regulations, internal rules and in particular the provisions contained in the Organizational Model and the Group's Code of Ethics;
Highlight the existence of an effective organizational structure consistent with the operating model adopted with particular regard to the clear attribution of powers, how decisions are reached, their transparency and justification, and controls prior and subsequent to actions and activities, as well as the propriety and truthfulness of internal and external information;
The key points of the Company's Organizational Model may be summarized as follows:
The Organizational Model has been updated several times in order to ensure that it remains topical and effective with respect to the various changes made to the Company's organizational structure and external circumstances, among other things by taking into account the gradual broadening of the category of socalled "predicate offences" pursuant to Legislative Decree 231/2001, as well as the evolution of court decisions in this regard.
The Issuer's Organizational Model consists of:
The Company conducts in-depth, wide-ranging risk assessment in order to identify areas of activity in which it is possible to detect an abstract risk of crimes being committed pursuant to Legislative Decree no. 231/2001 at the functions concerned, taking into account the organizational model adopted and various
operational processes. When conducting this assessment, activities are given extra importance if the risk of committing such crimes may abstractly materialize, along with areas of the external framework within which such activities are undertaken and that may become instrumental to committing such crimes.
The results of this risk assessment are used to build a Matrix for Identifying At-Risk Activities (MIAR). This is updated on a regular basis, working in partnership with the relevant specialist function.
The Board of Directors last updated the Company's Organizational Model in January 2018 to reflect developments in the company's organization and new developments in the regulatory framework of reference.
At that time, the Board of Directors also approved specific Guidelines on application of "Decree no. 231" within Poste Italiane Group, identifying general reference requirements to inspire Group Companies to adopt and update their own 231 Models, appropriately amended to take into account their specific operations and organization.
The Poste Italiane Organizational Model envisages a Company Supervisory Body of a collegiate nature consisting of two members from outside the Company – one of whom acts as Chair of the Supervisory Body – and one in-house member, with a view to ensuring continuity of the Body's activities.1
The Body is tasked with supervising the effectiveness of compliance with the Organizational Model, and ensuring that it its updated to match alterations to the organizational structure or the regulatory framework by making justified proposals to the Chief Executive Officer, who then passes them on to the Board of Directors.
Vested with autonomous powers of initiative and control, the Body also performs its duties on behalf of Patrimonio BancoPosta.
In order to operate effectively, the Body – which, among other things, has a technical staff that includes the Heads of key Functions – examines all auditing reports drafted by the Internal Control function and by other corporate units with control duties relevant to the issues covered under Legislative Decree no. 231/2001.
As part of its Internal Control and risk management system, in line with domestic and international best practices and the legal and regulatory framework of reference, in October 2016 the Company adopted guidelines (available from the Company's website at www.posteitaliane.it) geared towards regulating the company's in-house system for reporting (anonymously or not) acts or deeds that concern:
Breaches of internal and external rules governing Poste Italiane activities, including Patrimonio BancoPosta, and/or the principles and rules of conduct in the Code of Ethics;
1 Poste Italiane's currently-applicable Organizational Model nevertheless retains the option of allocating the functions held by the Supervisory Body to the Company's Board of Statutory Auditors, leveraging the powers acknowledged under article 14, Law no. 183, November 12, 2011.
Criminal or fraudulent conduct perpetrated by employees, members of corporate bodies or third parties (suppliers, consultants, collaborators, financial advisors or group companies) that may directly or indirectly procure economic or financial damage to the Company and/or harm its image.
These guidelines were drafted to reflect legal and regulatory changes on these issues as part of the legal and regulatory framework of reference in July 2015 (in particular, updates to Bank of Italy Circular no. 285/2013 and to the Corporate Governance Code). The reporting system was adopted to foster the dissemination of ethical conduct in the workplace, strengthen compliance with regulations and corporate governance, and protect investors and categories of service-users.
Poste Italiane's internal whistleblowing system ensures that all appropriate investigations are carried out into reports through an audit, through fraud management checks in the case of suspected criminal offences, and requests to the relevant function to launch a management investigation.
The reporting management process is overseen by the Reports Assessment Committee (the "Committee" or "CVS" under its Italian acronym), consisting of representatives from corporate functions. It is coordinated by the Internal Control function. In 2017, the Committee handled all reports received through this channel, ensuring that they were dealt with, investigated and assessed, all the way through to reporting, pursuant to these guidelines.
Furthermore, the Committee ensured the established information flows towards the Control, Risk and Sustainability Committee, the Board of Directors and the Board of Statutory Auditors.
In 2017, with a view to further aligning with best practices in this area, an online portal dedicated to receiving and handling reports was developed and implemented. This information channel will leverage the most appropriate IT tools in order to keep whistleblowers' identities confidential; it may also be used as an alternative channel for relevant reports pursuant to Legislative Decree no. 231/2001, in compliance with new regulatory provisions on whistleblowing introduced under Law no. 179, November 30, 2017.
Given how important sustainability has become to Poste Italiane, the Company drafted its 2017 Sustainability Report, adopting a strategic approach that presupposes and involves the centrality of external stakeholders, who are called upon to play a key role in all processes to draft and implement its sustainability policies.
This stakeholder engagement model was deployed through a discussion forum in which the main stakeholders in the environmental, social, educational and institutional spheres took part, through listening and direct sharing exercises, and through ad hoc online consultations on themes of priority interest. This approach will characterize Poste Italiane's strategy on a structural and ongoing basis; it will also be applied to activities associated with drawing up the corporate sustainability plan.
Giving the Control and Risk Committee ad hoc sustainability-related functions and, at the same time, renaming it the Control, Risk and Sustainability Committee, is vital to fostering greater awareness about the role and contribution that an integrated Corporate Social Responsibility strategy can play in terms of innovating processes, products and services. The Company's approach is also designed to achieve the objectives of upgrading the company's reputational and ethical rating, while enhancing an appropriate, visible, proactive identity-based positioning through the Company's presence on the ground, as part of an approach based on widespread participatory proximity.
Although Poste Italiane is not directly affected by regulations on the prevention of corruption and the transparency envisaged for companies incorporated under private law that are public sector subsidiaries or investees,2 in order to strengthen its culture of legality and transparency, and in accordance with its SCIGR, the Company has established an organic system of regulatory rules and instruments to prevent and combat all possible forms of corruption in the public and private domain.
As part of this approach, the Company has implemented a number of significant initiatives. These include:
Within this framework, Poste Italiane offers this Authority:
The Poste Italiane Group's internal control for financial information system ("SCIIF"), which forms an integral part of the broader corporate internal control and risk management system ("SCIGR"), has been
2 Ref: Ruling no. 8, June 17, 2015, National Anticorruption Authority
3 Poste Italiane voluntarily took this initiative, given that, as a "listed company under public control", the Company is excluded from the scope of application of Legislative Decree no. 33/2013, "Review of regulations regarding the right to civic access and obligations concerning disclosure, transparency and the dissemination of information by government bodies", as redefined under Legislative Decree no. 97, May 25, 2016.
designed to achieve the objectives of trustworthiness, accuracy, reliability, and promptness in its financial statements and all other financial information.
The SCIIF is structured in accordance with the "Internal Controls – Integrated Framework" model, issued by the Committee of Sponsoring Organizations of the Treadway Commission (the so-called COSO Report), and provides for the following components: control environment, risk assessment and control activities, information and communication, and monitoring activities. For the aspects connected to the IT system, the COSO Report is supplemented by a "Control Objectives for Information and related Technology" model (known as "COBIT").
The Executive in charge of preparing Poste Italiane's corporate accounting documents (hereinafter, for the sake of brevity, also "Executive in charge" or "DP" in the Italian acronym) is responsible for implementing and maintaining an appropriate SCIIF. This position has been part of the Company's bylaws since 2007; it became compulsory under article 154-bis of the TUF in 2008, when Poste Italiane was classified as a "listed issuer having Italy as its member State of origin" pursuant to article 1, paragraph 1, letter w)-quater of the TUF, after issuing bonds listed on the Luxembourg stock exchange as part of its Euro Medium-Term Notes (EMTN) Program. After listing its shares on the MTA on October 27, 2015, Poste Italiane has been subject a fortiori to the regulations set out in article 154-bis of the TUF.
The principles and methodologies adopted by the Executive in charge to perform his/her duties, as well as the responsibilities of personnel in various capacities who ensure SCIIF maintenance and monitoring activities, are laid down in the "Guidelines for the System of Internal Control of Financial Information", as approved by the Board of Directors in May 2016.
Where subject to supervisory regulations,4 the DP role is also envisaged at Group subsidiaries of public interest, as well as at some of the Group's larger subsidiaries.5 DPs at such companies report every six months to their Board of Directors and to Poste Italiane's DP on the state of implementation of the SCIIF; together with the Chief Executive Officer of the individual company concerned, and issue certification in a form similar to that adopted by Poste Italiane.
Set-up, maintenance, and evaluation of the SCIIF are ensured through a structured process that consists of the following phases: risk assessment, identification of controls to protect against risk, assessment of these controls, and relative reporting.
Specifically, the process consists of:
4 Poste Vita S.p.A., Poste Assicura S.p.A., and BancoPosta Fondi SGR S.p.A.
5 SDA Express Courier S.p.A., Postel S.p.A.
A brief description of each of these phases is provided below:
a) Poste Italiane's Executive in charge identifies the relevant companies within the internal control system on financial information. The scope of application is determined as part of a top-down, riskbased approach aimed at ensuring appropriate protection of areas most exposed to the risk of significant error or fraud in financial statements.
Specifically, the companies that are deemed significant from a quantitative point of view are those that contribute amounts to the consolidated financial statements at a level equal to or greater than any one of three pre-established materiality thresholds, calculated respectively with regard to the following values: Total Assets, Total Net Revenue, and Net Income before Taxes.
Within the scope of the companies included, significant processes are specified by identifying the items on the company's balance sheet and income statement, starting with the significant accounts in the consolidated financial statements. Processes are deemed to be significant when they contribute large amounts to items in the financial statements, i.e. they exceed the threshold pre-established for selecting the processes themselves, or as a result of qualitative aspects (for example, high-risk processes not associated with significant accounts).
b) The structure of entity-level controls envisages Company-Level Controls (CLC), which are defined as a structured set of processes and controls that operate across an organization, allowing the design and functionality of the overall internal control system to be guided, established, and monitored, albeit at a high level. Poste Italiane's CLC is structured to take into account updates of the reference framework (the COSO Report) and best practices at listed companies.
IT General Control, across the companies' infrastructure and cross-cutting processes and Application Control over the various applications that support corporate business processes, form an integral part of the internal control system.
c) Qualifying processes in support of financial information are mapped and updated on an ongoing basis. The structure of the Process Level Controls provides specific controls for monitoring, namely a set of manual or automated activities geared towards preventing, identifying, and correcting errors or irregularities that may occur when carrying out operations. The Primary Key Controls (PKCs) – which have the greatest impact on correct representation in the Financial Statements – on processes within this scope are selected via a risk-assessment activity.
The segregation of duties (SOD), designed to ensure the separation of incompatible corporate roles and resolve critical issues and conflicts within IT profiles, processes and systems relevant to financial information, plays a significant role among the structural elements that support the correct execution of operating activities and associated oversight.
d) In performing his or her duties, the Executive in charge has access to independent monitoring by Poste Italiane's "Internal Control" function (by "Internal Audit" at BancoPosta or, where applicable, internal audit functions at subsidiaries) and relies on assistance from the other players involved in managing corporate risk through pre-established periodical reporting. In particular, Internal Control and Internal Audit at BancoPosta check that Primary Key Controls have actually been applied in accordance with criteria established in concert with the Executive in charge.
Furthermore, the system also provides for line monitoring through the issuance of certification at least once every six months by the Heads of Poste Italiane's corporate functions and the Chief Executive Officers and Executives in charge (where the role exists) at fully-consolidated companies.
In 2017, the duties of the Executive in charge were performed by the Head of the Company's "Administration and Accounts" function – part of the Company's "Administration, Finance, and Control" function – by Luciano Loiodice, to whom these duties are still attributed.
The executive in question was appointed by the Board of Directors in August 2015, after having consulted the Board of Statutory Auditors. He holds the requisites of professional competence envisaged under the corporate bylaws. For a description of the duties of the Executive in charge, please see the "Guidelines for the Internal Control and Risk Management System".
PricewaterhouseCoopers S.p.A. is appointed to undertake the external audit of Poste Italiane's financial statements and of the Group's consolidated financial statements (hereinafter also referred to as the "Principal External Auditor").
This Prinicipal External Auditor was appointed by the Shareholders' Meeting in ordinary session on April 14, 2011, following a proposal by the Board of Statutory Auditors, for FYs 2011 to 2019, in exchange for an annual consideration of approx. €1 million. Subsequent to this, the Shareholders' Meeting held on May 24, 2016 in ordinary session, once again having heard a proposal from the Board of Statutory Auditors, resolved to update the economic terms of the statutory external auditors' appointment awarded to PricewaterhouseCoopers S.p.A., in particular by establishing a payment to PricewaterhouseCoopers S.p.A. – in acknowledgement of an increase in the operations required of the company as a result, among other things, of the company's shares being listed on the MTA screen-based stock market on October 27, 2015 – with an additional annual fee of approx. €0.1 million for each financial year over the period 2015-2019.
Since 2009, Poste Italiane has followed ad hoc procedures to regulate the allocation of assignments to external auditing firms that do business with the Group.
It should further be noted that in order to align the content of amendments to the reference regulatory framework for statutory external auditing performed during the course of 2016, the above-mentioned procedure was updated by the company's Board of Directors in March 2017, with the objective of: (i) Ensuring the independence requirement of the entity appointed as statutory external auditor; and (ii) Providing guidelines for the assessment process when Poste Italiane and its subsidiaries appoint an auditor or external auditing firm, its network and affiliated parties. Specifically, in accordance with this new procedure, the Main External Auditor is established as the entity to whom, unless prohibited by specific statutory obligations, the Group's subsidiaries are required to turn when making their own appointments of their respective statutory external auditors.
Further to the above, in compliance with applicable regulations, among other things the procedure at hand envisages: (i) Extending the requirement for Poste Italiane's Board of Statutory Auditors to authorize all
statutory external auditor appointments other than legal auditing, including those assigned by subsidiary companies; (ii) From 2020, a requirement to assess the quantitative statutory limitations envisaged for assignments other than statutory auditing; and (iii) Monitoring checks and an ad hoc regular quarterly report to Poste Italiane's Board of Statutory Auditors.
The financial management of Poste Italiane is under the supervision of the Italian Court of Auditors, which conducts this oversight through a magistrate that it appoints. It should be noted that in 2017, said control activities were performed by delegated magistrate Francesco Petronio.
The magistrate delegated by the Court of Auditors attends the meetings of the Board of Directors and, normally, of the Board of Statutory Auditors. In 1998, the Board of Directors resolved to pay the magistrate appointed by the Court of Auditors an attendance allowance, currently amounting to €150 per meeting for every meeting of a corporate body attended.
The Court of Auditors presents an annual report on the results of such oversight to the office of the President of the Italian Senate and to the President of the Italian Chamber of Deputies.
When its shares were listed on the MTA screen-based stock exchange, the Company considered it to be in its specific interest, as well as a duty towards the market, to establish an ongoing dialogue based on a mutual understanding of its respective roles with individual shareholders in general, and with institutional investors; this dialogue is in any event required to proceed in compliance with regulations and procedures that regulate the disclosure of insider information.
Considering, among other things, the size of the Group, the Company deemed that this dialogue would be facilitated by establishing dedicated corporate units.
The Company consequently set up the following in-house offices: (i) An "Investor Relations and Business Insight" function, which is currently part of the "Administration, Finance, and Control" function, tasked with communicating with institutional investors; and (ii) A unit within the "Corporate Affairs" function, in charge of communicating with retail shareholders in general.
In addition, the Company decided to further foster dialogue with investors by creating an appropriate space on its website (www.posteitaliane.it, the Investor Section), which offers access to financial information (financial statements, half-year and quarterly reports, presentations to the financial community, analysts' estimates, and trends in the trading of financial instruments issued by the Company), alongside other sections (Company, Governance, and Media) containing additional data and documents of interest to shareholders in general (press releases, the members of Poste Italiane's Board of Directors and Board of Statutory Auditors, the corporate bylaws and the Shareholders' Meeting regulations, documents on
corporate governance, the Code of Ethics, and the organizational and management model pursuant to Legislative Decree no. 231/2001, as well as a Group organizational chart).
The Corporate Governance Code recommendation to consider Shareholders' Meetings as important opportunities for debate between shareholders and the Board of Directors – even though there are a number of ways in which listed companies can communicate with their shareholders, institutional investors, and the market – was carefully considered and fully accepted by the Company, which deemed it advisable to adopt specific measures geared to appropriately enhancing such meetings. Particular mention should be made of a provision in the corporate bylaws geared to facilitating the collection of proxies from shareholders who are employees of the Company and its subsidiaries, and thus to foster their involvement in decision-making processes at Shareholders' Meetings. This provision is described in greater detail in the first section of this document, under item 5, Information on the ownership structure at the date of this Report (pursuant to article 123-bis, paragraph 1, TUF) - 5.5 Employee shareholdings, procedures for exercising voting rights (pursuant to article 123-bis, paragraph 1, letter e), TUF).
Regulations on how the Shareholders' Meetings of listed companies should operate, found in the Italian Civil Code, the Consolidated Law on Finance, and in the implementation rules issued by CONSOB, have undergone significant changes in recent years, essentially aimed at facilitating the exercise of a number of rights to which the shareholders of listed companies are entitled.
It should be noted that in either ordinary or extraordinary session, Shareholders' Meetings are empowered among other things to resolve on: (i) The appointment and removal of members of the Board of Directors and the Board of Statutory Auditors, as well as determining their remuneration and responsibilities; (ii) Approval of the financial statements and the allocation of net income; (iii) The purchase and sale of the company's own shares; (iv) Stock-based incentive plans; (v) Amendments to the bylaws (other than those constituting a mere adjustment to statutory provisions); and (vi) The issue of convertible bonds.
In accordance with the provisions of Poste Italiane's bylaws, ordinary and extraordinary Shareholders' Meetings are normally held on a single call (it being understood that the Board of Directors may, if it deems it advisable and states so specifically in the meeting notice, establish that the Shareholders' Meeting be held after more than one call). A quorum is reached and resolutions taken with statutorily-required majorities; meetings are held in the municipality where the Company's registered office is located (unless otherwise decided by the Board of Directors, on condition that the venue is nevertheless in Italy).
Ordinary Shareholders' Meetings must be called at least once a year, within 180 days of the end of the accounting period, to approve the financial statements.
The Consolidated Law on Finance envisages that an entitlement to attend and vote at a Shareholders' Meeting must be certified by a notice sent to the issuer by the intermediary on behalf of the person
entitled to vote and issued on the basis of the accounting records at the end of the seventh trading day prior to the date set for the Shareholders' Meeting (known as the record date).
Those entitled to vote may:
In accordance with the provisions of the Consolidated Law on Finance and relative implementing regulations issued by CONSOB, with regard to individual Shareholders' Meetings, Poste Italiane's bylaws empower the Board of Directors to envisage the possibility of participating electronically, having specified the procedures concerned in the meeting notice.
In addition to the law and the bylaws, Shareholders' Meetings are regulated by special rules approved by the Shareholders' Meeting held in ordinary session on 31 July 2015, which reflect the most advanced models established by a number of industry associations (such as Assonime and ABI) for listed companies.
Shareholders' Meetings are chaired by the Chairperson of the Board of Directors or, in the event that he or she is absent or impeded, by the Deputy Chairman if there is one, or, if both are absent, by another person designated by the Board of Directors; failing this, the Meeting shall elect its own Chair. The Chair of a Shareholders' Meeting is assisted by a Secretary designated by the Chair, unless a Notary Public is appointed to draft the minutes. The Chair may also appoint one or more scrutineers.
Among other things, the Chair of a Shareholders' Meeting checks the existence of a quorum, verifies the identity of attendees and their entitlement to vote, runs the meeting, and verifies the voting results.
With regard to the right of each shareholder to speak on the items on the agenda, Shareholders' Meeting regulations provide that, having taken into account the subject and importance of the individual items to be discussed, as well as the number of persons requesting to take the floor and any questions asked by shareholders prior to the Shareholders' Meeting that the Company has not already answered, the Chair
previously sets a time limit for speaking from the floor and for replies (normally no more than ten minutes for the former and five minutes for the latter), so as to ensure that the Meeting completes its proceedings within a single session. All attendees entitled to vote may request to speak on each of the items on the agenda only once to offer comments, request information, and make proposals. Requests to speak may be presented from the time that the declaration is made that a quorum has been reached and – unless the Chair sets a different deadline – until the Chair calls the end to the discussion of a given item. The Chair – and at his or her request, those who assist him – shall reply to attendees who take the floor after all attendees have spoken, or after each individual speech. Speakers are entitled to make a brief reply. Resolutions taken by the Shareholders' Meeting are recorded in minutes signed by the Chair and by the Secretary or Notary Public. The minutes of Shareholders' Meetings in extraordinary session must be drafted
by a Notary Public.
In July 2015, after consulting with its independent Directors and the Board of Statutory Auditors, the Board of Directors approved the "Guidelines for managing transactions with related parties and connected parties" (hereinafter, for the sake of brevity, also the "OPC Guidelines"). These were subsequently amended by the Board in October 2015 and October 2016, in accordance with:
The OPC Guidelines aim to: (i) Establish governance and process for the management of transactions with related parties and affiliated entities carried out directly by Poste Italiane, including in the conduct of BancoPosta activities, or through Group companies; and (ii) Ensure transparency and both substantive and procedural propriety in undertaking transactions in which a potential conflict of interests may arise. It is available on the Company's website (www.posteitaliane.it).
In accordance with the aforementioned OPC Guidelines, transactions with related parties and connected parties are divided into three categories:
Transactions of "major importance", defined as those exceeding a specific quantitative threshold (established at 5%) as applied to: (i) Three significance indices, based on the data reported in the
Group's consolidated financial statements, which take into account the equivalent-value of the transaction, the assets of the transaction's target entity, and the liabilities of the entity acquired in the event of transactions that fall within the scope of application of OPC Regulation; and (ii) Two significance indices, based on data regarding BancoPosta's regulatory capital, which take into account the equivalent-value of the transaction and the assets of the entity that is the target of the transaction, in the event of transactions that fall within the scope of application of Supervisory Provisions for Banks. If such transactions do not by law or under the Company's bylaws fall under the powers attributed to the Shareholders' Meetings, they must necessarily be examined and approved by the Board of Directors;
In order to enable the Related Parties Committee to express an advance reasoned opinion on Poste Italiane's interest in carrying out transactions with related parties and connected parties, as well as on the advantageousness and substantive propriety of the associated conditions, the OPC Guidelines require a specific reporting flow. Specifically:
As far as the effectiveness of the opinion expressed by the Related Parties Committee is concerned, the procedure envisages that:
In the event of transactions of "lesser importance", the Related Parties Committee provides an advanced, reasoned opinion on the Company's interest in carrying out the aforesaid transaction to the body empowered to resolve on the transaction, as well as on the advantageousness and the
substantive propriety of the conditions thereof. In the event of a resolution to carry out a transaction following a negative opinion or one conditional on the remarks made by the body empowered to resolve on the transaction, the body shall provide a detailed explanation of the reasons for which the decision was made anyway and a point by point illustration of the remarks made by the aforementioned committee;
At such time as the above-mentioned opinions are issued, and if required, the members of the Related Parties itself should from time to time be supplemented in order to ensure: (i) In the case of a transaction of greater importance, the presence of three independent Directors not connected with the transaction; or (ii) In the case of transactions of lesser importance, the presence of at least two independent Directors not associated with the transaction. In cases where there is not a sufficient number of Directors who hold the
necessary requirements, the duties shall be undertaken individually by the sole independent Director not associated with the transaction or, jointly, in the case that there are two.
The OPC Guidelines are not applicable to certain kinds of transactions with related parties specified by CONSOB, of which the most important are ordinary transactions carried out on conditions equivalent to market or standard terms, and transactions with or between companies controlled - including jointly - by Poste Italiane, as well as transactions with companies subject to considerable influence by Poste Italiane, provided that in the companies controlled or subject to considerable influence that are the counterparties of the transaction no significant interests (as identified during the procedure) are held by other parties related with Poste Italiane.
Finally, a simplified procedure is envisaged in cases where approval is urgent and execution of a transaction with related parties is not under the purview of a Shareholders' Meeting.
In July 2015, the Board of Directors approved an ad hoc procedure for the internal management and public disclosure of insider information, geared towards preserving the secrecy of confidential information while ensuring that corporate data and information disclosures to the market are correct, full, appropriate, timely and non-selective.
Again in July 2015, the Board of Directors approved an ad hoc procedure for keeping and updating the register of persons who have access to insider information: a Group register of natural and legal persons with access to insider information as a result of their job or professional activity, or tasks that they perform on behalf of the Company or of a Group company. The purpose of this register is to raise awareness among the persons on the register about the value of insider information at their disposal, at the same time facilitating CONSOB's supervisory activities regarding compliance with regulations for protecting the integrity of the market.
In addition to this, from the date that the company's shares began being traded (October 27, 2015), internal dealing rules applied to transactions for the purchase, sale, subscription and exchange of Poste Italiane shares by the company's main shareholders, company officers (directors and standing auditors, as well as other managerial positions with regular access to insider information, with the powers to adopt managerial decisions likely to impact Poste Italiane and the Group's evolution and future prospects) and people closely associated with them. In enacting the measures to implement the regulations concerned, the Board of Directors had considered it advisable to provide for the obligation for "significant persons" other than shareholders possessing at least 10% of the Company's share capital to abstain from carrying out transactions subject to the regulations on internal dealing during four blocking periods preceding Board approval of the draft annual financial statements, the half-year report, and the intermediate financial reports on the first and third quarters.
Subsequently, in June 2017, the Board of Directors revised the procedures mentioned in the paragraph above. Specifically, the Board approved two new procedures ("Guidelines for the Management and Public Disclosure of Insider Information and the establishment and keeping of a register of persons who have access to insider information" and "Guidelines on Internal Dealing"). These went to replace the previous documents, aligning the contents of these documents with the provisions of (i) European legislation on market abuse; and (ii) Regulatory provisions issued by CONSOB incorporating such European legislation.
Specifically, the "Guidelines for the Management and Public Disclosure of Insider Information and the establishment and keeping of a register of persons who have access to insider information" among other things took steps to define the flow of activities and responsibilities regarding the classification of information generated within the Group framework as inside information, as well as ways of managing insider information, with particular reference to: (i) Disclosure of such information to the public and/or the financial community; and (ii) Formalities to observe in the case of delays in triggering market dissemination. These Guidelines regulate how the register of persons with access to insider information is kept, and include a provision that the register contain a "section on permanent access holders", listing solely the names of people who, as a result of their functional position, always have access to all insider information, along with a "Project/Event Section", structured differently, to which new sections shall be added each time a new item of insider information is identified.
Moving on to the "Guidelines on Internal Dealing", these are designed to regulate the obligations held by a small group of company offices (specifically: directors, standing auditors and individuals who are registered in the "section on permanent access holders" in the above-mentioned register), and people closely associated with them, in the case of undertaking transactions concerning the purchase, sale, subscription or exchange of financial instruments issued by the Company. Among other things, these Guidelines establish:
The "Guidelines for the Management and Public Disclosure of Insider Information and the establishment and keeping of a register of persons who have access to insider information" and the "Guidelines on Internal Dealing" may be consulted by the public on the Company's website at (www.posteitaliane.it).
With regard to the recommendations made by the Chairman of the Corporate Governance Committee in a letter dated December 13, 2017, it is the Company's belief that the way its corporate governance is structured and the overall approach that it follows, as set forth in detail in this Report, assure substantive compliance with the recommendations in question.
In particular, the following was noted:
Review, the Board of Directors evaluated the effectiveness of its operations, including in terms of its contribution to establishing the strategic plan and monitoring the management performance and adequacy of the internal control and risk management system (see 6. Board of Directors – 6.10 Assessment of how the Board of Directors and its committees are functioning").
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The professional profiles of the Directors and statutory auditors in office as at the date this report are attached below, together with two charts summarizing highlights from the second section of this document.
Maria Bianca Farina, 76 years old, Chair.
Born in Rome in 1941. Graduated in Economics and Business from the "La Sapienza" University of Rome. Order of Merit for Labour. In June 2017, she became Chair of Poste Vita and Poste Assicura, of which she was Chief Executive Officer from 2007 to 2017. Since December 2017, she has held the office of Chair of the Fondazione Poste Insieme ONLUS. She became Chair of ANIA in 2015 and Chair of the Foundation ANIA in 2016.
Deputy Chair of the FEBAF (Federation of banks, insurance and finance) Board of Governors. She joined the Board of Directors of the Ospedale Bambin Gesù in 2017 and is also a Board member of "Save the Children". Since 2014, she has served on the Board of Governors of the AIF, the Holy See's Financial Information Authority, after being appointed by Pope Francis. A Chartered Accountant, she has served on many Boards of Directors and Boards of Statutory Auditors as Chairperson or member. She speaks regularly at conferences held by major trade associations, companies and industry media on economic, industrial and welfare-related insurance topics. She has written many articles for leading Italian international financial media. She became Chair of the Board of Directors of Poste Italiane in April 2017.
Matteo Del Fante, 50 years old, Chief Executive Officer and General Manager.
Born in Florence in 1967. He is married and has two children. A "Political Economics" graduate from the Luigi Bocconi University of Milan. He did a Masters in international financial markets at the Stern Business School, New York University. He began his career at the JP Morgan Research Department in 1991. After rising through the ranks in Milan and London, he became a Managing Director in 1999. He stayed at JP Morgan until 2003, where he was responsible for public sector clients in the EMEA (Europe-Middle East-Africa) area. In 2004, he joined Cassa depositi e prestiti S.p.A. (CDP) soon after it was privatized as the Head of Finance and M&A. At CDP, he began working in the real estate sector. In 2009, he became Chief Executive of the Group's asset management company (CDP Investimenti SGR S.p.A.), and subsequently became its Chairman until August 2014. From June 2010 until May 2014, he served as General Manager at CDP. He has sat on the Board of Directors at a number of CDP Group investee companies, including STMicroelectronics (both STMicroelectronics N.V. - from 2005 to 2008 - and STMicroelectronics Holding from 2008 to 2011) and on the European Energy Efficiency Fund (EEEF), from 2011 to 2013. From May 2014 to April 2017, he served as Chief Executive Officer and General Manager at Terna S.p.A., a company at which he sat on the Board of Directors and the Control and Risk Committee from April 2008. Between June 2015 and April 2017, he was Deputy Chairman of ENTSO-E, the European Network of Transmission System Operators for Electricity.
He became Chief Executive Officer and General Manager at Poste Italiane in April May 2017, and Chief Executive Officer at Poste Vita in July 2017.
Born in Milan in 1962. Graduated cum laude in Engineering and Industrial Technology with a specialization in economic and organizational affairs from the Polytechnic University of Milan. In 1994 he became a full professor in Economic and Managerial Engineering at the Polytechnic University of Milan, where he also served as Dean from December 2010 to December 2016. He was a Director and Chairman of Arexpo SpA from February 2016 and joined the Board of Directors at Ferrovie dello Stato Italiane SpA in December 2017. From 2014, Chairman of the FUAP-Fondazione Universitaria per la formazione delle Amministrazioni Pubbliche and member of the Swiss Accreditation Council. Member of the AssoConsult-Confindustria Ethics Committee and the SIBAC-Seoul International Business Advisory Council from 2015. Over the years, he has held a number of positions at top Italian and international universities. He has carried out and continues to carry out research on organizational analysis and management control at industrial companies and in government. He has written ten books and research monographs and published more than sixty articles in international reviews and books. He became a Board Director at Poste Italiane in May 2016.
Carlo Cerami, 53 years old, Director.
Born in Verona in 1965. Graduated in Law from the University of Milan. He became a member of the Bar Association at the Court of Milan in 1993, and practices as barrister at the Supreme Court of Cassation since 2006. He is the principal of the Cerami Legal Practice, which operates in Milan. He is a Board member at the Università Vita-Salute San Raffaele. He has sat on the Boards of the following companies: Terna Spa; Investire Sgr (where he held the positions of Deputy Chairman and Chairman); Polaris Real Estate Sgr (as Chairman); Polaris Investment Sgr (also as Chairman); Fondazione Cariplo; Galileo Avionica Spa (now Selex Electronic Systems – Selex ES Spa, Finmeccanica Group, now Leonardo Group). He has been a keynote speaker at many conferences, seminars and Masters courses. He became a Board Director at Poste Italiane in April 2017.
Born in Premosello-Chiovenda (VB) in 1970. Graduated in Business and Economics from the Catholic University of the Sacred Heart in Milan. Certified Public Accountant, Chartered Accountant and Auditor of Local Authorities. She currently holds the following positions: Head of Regulatory Activities at Acqua Novara VCO S.p.A; Sole auditor at Ateco S.r.l.; and Municipal auditor at San Gillio (Turin) and Gravere (Turin). She became a Board Director at Poste Italiane in April 2017.
Francesca Isgrò, 43 years old, Director.
Born in Milazzo (Messina) in 1974. Graduated in Law from the University of Messina. She has practiced as a lawyer since 2003, specializing in administrative and public contract law. She became a barrister qualified to practice before higher courts in 2015. She is a member of the Italian Society of Administrative Lawyers. She is currently a local partner at the Orrick, Herrington & Sutcliffe Legal Practice (Europe) LLP. She served as a Director on the Board of Istituto Poligrafico e Zecca dello Stato (State Mint) from 2016 to April 2017. She was keynote speaker at many conferences, seminars and Masters courses. She became a Board Director at Poste Italiane in April 2017.
Born in Taipei (Taiwan-China) in 1965. She attended Boston University School of Management (1998) and Oxford University (2003). From 1988 to 1990, she worked as Assistant Controller at The Grand Hyatt (Taipei Taiwan Formosa). After this, between 1991 and 1995 she worked for GE Capital (Stamford Connecticut) as a Collateral and Investment Analyst in the Corporate Finance Group. In 1995, she joined American Express, working her way up to the top of the company. In 2015 she became Chief Financial Officer at American Express Europe and, most recently, Senior Vice President, Head of "Card Services Central Europe & International Currency Cards", and Country Manager for Italy. She became a Board Director at Poste Italiane in May 2016.
Roberto Rao, 50 years old, Director.
Born in Rome in 1968. Robert Rao graduated in Law from "La Sapienza" University of Rome. He joined the Italian Association of Journalists in 1991. From 1992 to 1993, he was Head of Communication at A.C.E.A and coordinated the house organ, "Talete". From 1998 to 2001, he was Head of the press office and in charge of communications for parliamentary groups of the Christian Democrat Centre. Between 2001 and 2006, he was Spokesperson for the President of the Chamber of Deputies. He served as the Head of Communications for the UIP – Unione Interparlamentare (2006-2008), and as advisor on communication to the Supervisory Authority on Public Contracts for Works, Services and Provisioning (2007-2008). From March 2008 to February 2013, he was a member of the Chamber of Deputies for the Unione di Centro Party (Party Group Leader at the Justice Committee and at the Bi-cameral Committee for the supervision and general guidelines of radio and television services). From June 2013 to February 2014, he served as advisor to the Minister of Justice, Annamaria Cancellieri. From then until January 2017, he worked as economic and financial advisor to the Minister of Justice, Andrea Orlando. Since January 2017, he has been an advisor to the Ministry of the Environment and the Protection of Territory and the Sea, and from March 2017 to CONI Servizi S.p.A. for political and institutional relations. Formerly the Chairman of the "Appointments Committee" and a member of the "Control and Risk Committee" and the "Related Parties and Connected Parties Committee" at Poste Italiane. He became a Board Director at Poste Italiane in May 2014.
Roberto Rossi, 74 years old, Director.
Born in Piozzo (Cuneo) in 1943. Graduated in Electrical Engineering from the Polytechnic University of Turin with top marks. He currently sits on the Board of Directors at Palletways Italia S.p.A. and is Chair of the Comité Stratégique and Senior Advisor at Industrie 6-24 Holding. Previous positions include: Group Managing Director at TNT Logistics and member of the Board of Directors at TPG NV, subsequently TNT (1999-2003); CEO of the South Europe Division for transport and logistics (1996-1999); Chief Executive Officer of TNT Traco Italia & TNT France and Spain (1992-1996); Chief Executive Officer of TNT Traco Italia (1991-1992); Managing Partner of Operations and Manufacturing Practice Southern Europe, Booz-Allen & Hamilton Italia S.p.A. (1974-1991). He became a Board Director at Poste Italiane in April 2017.
Mauro Lonardo, 48 years old, Chair.
Born in Rome in 1969, he graduated in Economics and Business from the "La Sapienza" University of Rome. He has been a chartered Public Accountants and member of the Register of Auditors since 1999. After working with the Studio Tributario Societario as Head of the Tax Area (1996-2006), Mr Lonardo became Head of accounts auditing and analysis for the Comune di Roma group and its investee companies operating in infrastructure and services (2006-2009). He was a partner at the Studio Internazionale tax practice (2007-2011). From 2011, he has been a partner at the RSM - Palea Lauri Gerla legal and CPA practice, specializing in corporate governance and international taxation. He has held a number of positions on Boards of Statutory Auditors and Supervisory Bodies pursuant to Legislative Decree no. 231/2001 at a number of companies. He has lectured at the training school of the Rome Register for Chartered Public Accountants and sat on the number of committees at the Rome Register of Chartered Public Accountants and on the Steering Committee of the Union of the Young Certified Public Accountants in Rome. He has chaired the Board of Statutory Auditors at Poste Italiane since May 2016.
Born in Florence in 1968, she graduated in Economics and Business. As a Senior Auditor at KPMG S.p.A. she worked with a number of companies, as well as being on the "Bank Team" working with many banks. In 1996, she founded the Bastiani Practice, working as a Certified Public Accountant specializing in corporate affairs, with a special focus on corporate governance and company crisis management. She registered as a statutory auditor in 1999. She has held a number of positions on the Boards of Directors and Boards of Statutory Auditors at a number of companies and entities of public interest, some of which were large. Member of Supervisory Bodies pursuant to Legislative Decree no. 231/2001; advisor on investment and venture capital deals; she has also conducted statutory auditing and worked as the Head of Internal Auditing departments at listed and publicly-owned companies. She sat on the Equal Opportunities Committee at the Council of Chartered Accountants and Commercial Experts in Florence; She was a standing member of the National Committee of "Corporate Finance and Insurance" at the National Council of Chartered Accountants and Commercial Experts; she holds the chair of Corporate Marketing and Strategy at the University of Florence and lectured in a course on company valuation at the Parthenope University of Naples. She is currently a member of the "wealth management" working group. She has served as standing auditor at Poste Italiane since May 2016.
Maurizio Bastoni, 51 years old, standing auditor.
Born in Rome in 1966, he graduated in Economics and Business from "La Sapienza" University of Rome. A Chartered Public Accountant and Statutory Auditor, he also works as a receiver at the Courts of Rome and Civitavecchia. He founded an accounting and tax consultancy firm in 1994. He holds a number of posts as standing auditor and Chairman of the Boards of Statutory Auditors at a number of companies. He was appointed standing auditor at Poste Italiane in September 2015.
| Board of Directors | Control, Risk and Sustainability Committee |
Remuneration Committee |
Appointments and Corporate Governance Committee |
Related Party and Connected Party Committee |
||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Office | Members | Year of birth |
Date of first appoint mentA |
In office since |
In office until |
Slate B |
Exec. | Non Exec. |
Ind. pursua nt to CGC C |
Ind. Pursua nt to TUF D |
Number of other positions E |
* | ** | * | ** | * | ** | * | ** | * |
| Chair | Farina, Maria Bianca | 1941 | 2017 | 4/2017 | 12/2017 | M | X | - | 8/8 | |||||||||||
| CEO/GM ◊ • | Del Fante, Matteo | 1967 | 2017 | 4/2017 | 12/2017 | M | X | - | 8/8 | |||||||||||
| Director | Azzone, Giovanni | 1962 | 2016 | 1/2017 | 12/2017 | m | X | X | X | 1 | 13/14 | M | 9/10 | M | 7/8 | M * |
1/1 | P * |
3/3 | |
| Director | Cerami, Carlo | 1965 | 2017 | 4/2017 | 12/2017 | M | X | X | X | - | 8/8 | P | 8/8 | M | 11/11 | |||||
| Director | Guglielmetti, Antonella |
1970 | 2017 | 4/2017 | 12/2017 | M | X | X | X | 8/8 | P | 10/10 | M | 4/4 | ||||||
| Director | Isgrò, Francesca | 1974 | 2017 | 4/2017 | 12/2017 | M | X | X | X | - | 8/8 | M | 10/10 | P | 11/11 | |||||
| Director | Kung Mimi | 1965 | 2016 | 1/2017 | 12/2017 | m | X | X | X | - | 14/14 | M (****) |
3/4 | M | 4/4 | M | 13/14 | |||
| Director | Rao, Roberto | 1968 | 2014 | 1/2017 | 12/2017 | M | X | X | X | - | 14/14 | M*** | 4/4 | P | 5/5 | M | 14/14 | |||
| Director | Rossi, Roberto | 1943 | 2017 | 4/2017 | 12/2017 | m | X | X | X | - | 8/8 | M | 10/10 | M | 8/8 | |||||
| DIRECTORS WHO LEFT DURING THE FY | ||||||||||||||||||||
| Chair | Todini, Luisa | 1966 | 2014 | 1/2017 | 4/2017 | (F) | X | 2 | 6/6 | |||||||||||
| CEO/GM ◊ • | Caio, Francesco | 1957 | 2014 | 1/2017 | 4/2017 | (F) | X | - | 6/6 | |||||||||||
| Director | Fabri, Elisabetta | 1962 | 2014 | 1/2017 | 4/2017 | (F) (F) |
X | X | X | 1 | 6/6 | M | 4/4 | |||||||
| Director | Nicodano, Umberto Carlo Maria |
1952 | 2015 | 1/2017 | 4/2017 | X | X | X | 1 | 6/6 | P | 4/4 | ||||||||
| Director | Palmieri, Chiara | 1970 | 2015 | 1/2017 | 4/2017 | (G) | X | 1 | 6/6 | M | 4/4 | M | 1/1 | |||||||
| Director | Passerini, Filippo | 1957 | 2015 | 1/2017 | 4/2017 | (H) | X | X | X | 2 | 5/6 | M | 3/4 | P | 4/4 | |||||
| Threshold required to present slates of candidates for the Board of Directors (pursuant to article 147-ter | of the Consolidated | Law on | Finance): 1% of share capital | |||||||||||||||||
| Number of meetings held during FY 2017 | BoD: 14 Control, Risk and Sustainability Committee: 14 |
Remuneration Committee: 12 |
Appointments and Corporate Governance Committee: 5 |
Related Party and Connected Party Committee: 14 |
TABLE 1: Structure of Poste Italiane's Board of Directors and its Committees
6 It should be noted that, in accordance with application criterion 3(C)(2) of the Corporate Governance Code, the following are to be considered "relevant representatives" of a company or an entity (also pursuant to application criterion 3(C)(1)): the Chairperson of the organization, the Chairperson of the Board of Directors, Executive Directors, and key managers of the company or entity concerned who have strategic responsibilities.
7 The comment on article 3 of the Corporate Governance Code states in this regard that "in principle, the following should be considered as not independent: parents, children, not-legallyseparated spouses, common-law spouses, and family members living with a person who may not be considered an independent director".
1) Giovanni Azzone: Director at Ferrovie dello Stato Italiane S.p.A.
TABLE 2: Poste Italiane's Board of Statutory Auditors
| Office | Members | Year of birth | Date of first appointmen t* |
In office since | In office until | List* | Attendance at Board meetings** |
Independence pursuant to the Corporate Governance Code |
Number of offices *** |
||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Chairman | Mauro Lonardo | 1969 | 2016 | 1/2017 | 12/2017 | m | 40/40 | X | 10 | ||||
| Standing Auditor | Alessia Bastiani | 1968 | 2016 | 1/2017 | 12/2017 | M | 40/40 | X | 16 | ||||
| Standing Auditor | Maurizio Bastoni | 1966 | 2015 | 1/2017 | 12/2017 | M | 37/40 | X | 0 | ||||
| Alternate Auditor | Marina Colletta | 1970 | 2016 | 1/2017 | 12/2017 | M | - | - | - | ||||
| Alternate Auditor | Antonio Santi | 1977 | 2017 | 4/2017 | 12/2017 | m * | |||||||
| Alternate Auditor | Ermanno Sgaravato |
1957 | 2016 | 1/2017 | 12/2017 | M | - | - | - | ||||
| Auditors who left during FY 2017 | |||||||||||||
| Alternate Auditor | Andrea Bonechi **** |
1971 | 2015 | 1/2017 | 1/2017 | m | - | - | - | ||||
| Threshold required to present slates of candidates for the Board of Statutory Auditors (pursuant to article 148 of the Consolidated Law on Finance): 1% of share capital |
|||||||||||||
| Number of meetings held during FY 2017:40 |
NOTES
* Date of first appointment means the date on which each auditor was initially appointed to the Board of Statutory Auditors.
* M/m in this column indicates whether the auditor comes from a list voted for by the majority (M) or minority (m) of the share capital represented at the Shareholders' Meeting.
** This column shows the attendance of the auditors at meetings of the Board of Statutory Auditors, specifically the number of meetings attended by the auditor concerned out of the total number of meetings that he or she could have attended. All absences were appropriately justified.
*** This column shows the number of offices the auditor concerned has declared that he or she holds on the Boards of Directors or the Boards of Statutory Auditors of Italian corporations. The complete list of offices is published by CONSOB on its website, pursuant to article 144-quinquiesdecies of the CONSOB Issuer Regulations.
**** Resigned from the position of alternate auditor on 30 January 2017.
***** Appointed by the Shareholders' Meeting held on April 27, 2017, to replace the outgoing alternative auditor Andrea Bonechi (appointed by the Shareholders' Meeting on May 24, 2016 and drawn from the minority shareholders' list represented at the Shareholders' Meeting), following the presentation of a candidacy by a group of institutional investors.
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