Governance Information • Apr 5, 2019
Governance Information
Open in ViewerOpens in native device viewer
This Report ("the Report") aims to illustrate the model of corporate governance that CIR S.p.A. (the "Company") adopted during the year 2018.
The Report, which was approved by the Board of Directors Meeting held on March 11 2019, is being made available to the Shareholders following the procedures prescribed by law together with the documentation relating to the Financial Statements for the year ended December 31 2018 for the Annual General Meeting of the Shareholders being called to approve the same financial statements and can also be consulted on the website of the authorized storage mechanism: and - together with other documents of interest to the market - on the Company's website www.cirgroup.it in the section "Governance".
The description of the main duties and functions of the administrative bodies and of the system of internal control and risk management of the Company is contained in the "Code of Conduct of CIR S.p.A.", approved by the Board of Directors on March 11 2013. The document (available on the Company's website) is attached to this Report (Annex B).
The subscribed and fully paid up share capital amounts to Euro 397,146,183.50, comprising 794,292,367 ordinary shares, listed on the MTA, Italian Equities Market, of the Milan Stock Exchange – FTSE Italia Mid Cap index.
All of the ordinary shares have the same rights and obligations. CIR shares – as stipulated in Art. 5 of the Company Bylaws – are indivisible. In the event of joint ownership of one or more shares, the rights of the joint owners towards the Company, in accordance with Article 2347 of the Civil Code, shall be exercised by a joint representative.
During prior periods the Company approved share capital increases to service Stock Option Plans: it should be noted the information document prepared in compliance with Art. 84-bis of Consob Regulation 11971/99, relating to the said Plans, is available on the Company's website in the section "Governance".
The shares of the Company are freely transferable, with the exception of certain restrictions applicable to given categories of persons for limited periods of time on the basis of the Code of Conduct on the subject of Internal Dealing published on the website of the Company in the section "Governance".
Stock Grant Plan 2018 includes a minimum holding requirement for the shares assigned to the beneficiaries who have the irrevocable commitment to keep at least 10% of the shares assigned to them continuously until the fifth anniversary of the grant date. During this period the shares cannot therefore be sold or transferred unless the Board of Directors should decide otherwise.
Below is a list of the names of Shareholders of last resort who, at December 31 2018, were holding either directly and/or indirectly percentages of ownership of over 3% of the capital with voting rights, in accordance with the terms of Consob resolution 11971/99:
F.lli De Benedetti S.p.A. (through COFIDE – Gruppo De Benedetti S.p.A.): 45.798%
Bestinver Gestion SA SGIIC (through Bestinver Internacional FI, Bestinfond FI and other funds): 9.966%
There are no shares that give their holders any special controlling rights.
There are no special mechanisms for the exercise of voting rights by employees who have shareholdings.
There are no restrictions on voting rights.
The Company is not aware of the existence of any agreements between Shareholders as per the terms of Art. 122 of the T.U.F.
As far as the listed companies GEDI S.p.A. and SOGEFI S.p.A. are concerned, reference should be made to their respective Reports on Corporate Governance.
As for KOS S.p.A. and its subsidiaries, it should be noted that change of control clauses were signed for all of the bank loans and for the two bond issues, giving creditors the option of requesting prepayment of the loans.
Lastly, for CIR S.p.A. there are no agreements that include such a clause except for the contract with the Chief Executive Officer and information on this is given in the Compensation Report.
No compensation is envisaged for Directors in the event of resignation, dismissal without just cause or termination of the directorship following a takeover bid (OPA), except for what is stipulated in the contract with the Chief Executive Officer on which information is given in the Compensation Report.
For the election and replacement of Directors reference should be made to what is illustrated in point 5) of the attached Code of Conduct of CIR S.p.A. on the appointment of Directors. The Company Bylaws do not contain any other requirements of independence and integrity/professionalism than those required by the rules of law. For amendments to the Bylaws, legal regulations apply.
For a period of five years starting from the date on which the resolution approved by the Extraordinary General Meeting of the Shareholders on June 30 2014 is recorded in the Register of Companies, the Board of Directors has the right to increase the share capital either once or more than once by a maximum of Euro 500,000,000 nominal value through the issuance of shares with or without a share premium. These shares will be offered in subscription or will service warrants or the conversion of bond issues including issues made by third parties, both in Italy and abroad, or else they will be assigned free of charge to holders of option rights by allocating to share capital available reserves or provisions on the basis of the latest financial statements approved.
For a period of five years starting from the date on which the resolution approved by the Extraordinary General Meeting of the Shareholders on June 30 2014 is recorded in the Register of Companies, the Board of Directors also has the right to increase the share capital either once or more than once by a maximum of Euro 20,000,000 of nominal value through the issuance of shares to be reserved for subscription by employees of the Company and its subsidiaries and parent companies in accordance with Article 2441, V and last paragraph, of the Civil Code. The same Board shall have the right to fix the price of issuance, which may not be lower than the nominal value of the shares, the requirements for subscription and the limits of the availability of the same shares, as well as the general terms and procedures for the said subscription.
For a period of five years starting from the date on which the resolution approved by the Extraordinary General Meeting of the Shareholders on June 30 2014 is recorded in the Register of Companies, the Board of Directors has the right to issue, once or more than once, even without the option right, and in that case in favour of institutional investors, convertible bonds or bonds with warrants attached, which may also be in a foreign currency, if permitted by law, with a corresponding increase in share capital – with a limit of ten per cent of the share capital existing in the event of the option right not being included – for a maximum amount of Euro 500,000,000. More in general the Board also has the right to define the procedures, terms and conditions of the bond issuance and the rules governing such issuance.
The Annual General Meeting of the Shareholders held on April 27 2018 authorized the buy-back of CIR stock in accordance with and as an effect of Art. 2357 of the Civil Code for a period of eighteen months from the day after that of the AGM resolution, as follows:
A maximum of 20,000,000 shares each with a nominal value of euro 0.5 can be bought back, bearing in mind that, including in the calculation the own shares already held even through the subsidiaries, the nominal value of the shares bought back may not in any case exceed one fifth of the share capital of CIR S.p.A.;
The unit price of each single buyback of shares may not be more than 10% higher or lower than the benchmark price recorded by the Company's shares in the Stock Exchange trading session preceding each single purchase transaction or the date on which the price is fixed and in any case, when the buybacks are made in regulated markets, for a price no higher than the higher of the price of the last independent deal and of the current independent bid price in the same market;
As of December 31 2018 150,113,881 own shares were being held as treasury stock.
It should be noted that – on the basis of the AGM resolution of April 27 2018 authorizing the buyback of own shares – as of March 11 2019 153,102,850 own shares had been bought back.
The Company complies with the Code of Conduct of Borsa Italiana S.p.A. prepared by the Committee for the Corporate Governance of Listed Companies and promoted by Borsa Italiana S.p.A., which is available on the website of the Corporate Governance Committee http://www.borsaitaliana.it/comitato-corporategovernance/codice/2015 clean.pdf.
CIR S.p.A. and its strategically important subsidiaries are not subject to any non-Italian rules of law that affect the structure of the corporate governance of the Issuer.
Reference should be made to what is described in point 7) of the Report and in Art. 7 of the attached Code of Conduct of CIR S.p.A. on the System of Internal control and risk management.
Reference should be made to what is described in point 10) of the Report on Shareholders' Meetings and to Art. 9 of the attached Code of Conduct of CIR S.p.A. entitled "Relations with the Shareholders".
Reference should be made to what is described in the sections of the Report that deal with: the Board of Directors (point 2), the Statutory Auditors (point 8) and the Committees (points 4-5 and 7) and also to the attached Code of Conduct of CIR S.p.A. in Articles 2, 3 and 5 for the Board of Directors, Article 8 for the Statutory Auditors, and Articles 4, 5, 6 and 7 for the Committees.
Following the entry into force of D.Lgs no. 254/16, which introduced Art. 123-bis of the TUF (letter d-bis of paragraph 2), the Report on Corporate Governance must now "contain a description of policies on the subject of diversity applied in relation to the composition of the administrative, management and control bodies regarding aspects such as age, gender mix and training and professional experience, together with a description of the objectives, methods of implementation and results of such policies. If no such policy is in place, the company must give a clear and structured rationale for its decision".
The Board of Directors of the Company at the meeting held on March 12 2018 confirmed its strategy of not adopting any further policies on the subject of diversity in the composition of boards of directors and boards of statutory auditors, as set out in Art. 123-bis, paragraph 2, letter d-bis of the TUF, given that, without prejudice to the requisites of integrity, professionalism and independence as well as the situations of incompatibility and/or lapses of position laid down by law and by the Company Bylaws:
implementing the content of the Code of Conduct, gives a clear indication of the composition of the Board, the competences and professionalism of the Directors and the way in which the duties of the position should be carried out;
While reserving the right to reconsider its position in the future, the Board considered the above factors to be sufficient for the time being to guarantee an adequate structure in terms of diversity in the composition of the Board of Directors, an opinion that is confirmed by the current composition of the Board in the light of the various aspects considered, i.e.: age, gender, experience, seniority, professional competences, training, culture and international dimension. The outcome of the Board Review process for the year 2018 again confirmed the adequacy of the composition of the current Board in terms of diversity (latu sensu) and the fact that the same Board as a whole has a balanced mix of experience and competences that are adequate and in line with the future needs of the Company.
***
For the information of a general nature regarding the Role of the Board of Directors, reference should be made to what is indicated in Art. 1 of the "Code of Conduct of CIR S.p.A."
As of the date of this Report the Board of Directors has carried out, among other things, the following activities:
On the basis of the internal procedures approved by the Board of Directors on October 29 2012, it examined and approved the strategic and financial plans of the Company and also examined the consolidated strategic, business and financial plans of the subsidiaries at the head of the groups in the various business sectors as presented by their respective Chief Executive Officers, assessing whether these plans were consistent with those of the issuer and periodically monitoring their implementation;
Defined the nature and level of risk compatible with the strategic objectives of the Company;
Evaluated the adequacy of the organizational, administrative and accounting structure of the Company, with particular reference to the system of internal control and risk management;
Defined how often, generally every three months, the Chief Executive Officer must refer back to the Board on the activity carried out in the exercise of the powers assigned to him or her;
Assessed the performance of operations specifically taking into account the information received from the Chief Executive Officer of the Company and from the Chief Executives of the main subsidiaries, analysing the businesses and the evolution of the economic and patrimonial situation of the Company and of the Group;
Examined and gave prior approval to transactions put in place by the Company and examined those of the subsidiaries that have significant strategic importance. To this end at the Board of Directors Meeting of October 29 2012 the Company defined its parameters for measuring significance, adopting a special procedure;
Carried out an assessment of the size, composition and functioning of the Board of Directors and of its committees, taking into account elements such as the professional characteristics, experience, even managerial experience, and the gender of its members as well as how long they have held their positions. The assessment process was carried out following a practice already adopted by the Company, which involves the Directors filling out a questionnaire for 2018 that was prepared in house. The questionnaire consists of specific questions regarding among other things: the adequacy of the number of Board members and how the Board and the Committees are made up, the type of professional profiles present on the Board, how Board and Committee meetings take place and also the relative flows of information and documents and the decision-making procedures followed.
The results of the self-assessment were illustrated to the Board of Directors by the Lead Independent Director, after they had been examined by the Control and Risk Committee, and the outcome was a positive evaluation overall;
Examined the results of the self-assessment process regarding the size and composition of the Board, noting that the parameters were considered adequate with regard to the needs of the Company and that the Board members' varied professional knowledge and the level of their competence from the managerial viewpoint was entirely satisfactory. New appointments are made with a view to maintaining overall continuity both in terms of size and of professionalism;
Ensured the management internally and the disclosure externally of documents and information regarding the Company, with particular reference to privileged information, in accordance with the terms of the procedure adopted by the Board of Directors.
Regarding the other activities of the Board of Directors on the subject of the "Control and risk system", reference should be made to paragraph 7) "System of internal control and risk management."
Article 1 of the Code of Conduct of CIR S.p.A., annexed to this document, gives guidelines on the subject of the maximum number of positions of Director or Statutory Auditor approved by the Board of Directors on October 29 2012, specifying certain limits as to the number of positions that can be held by executive and non-executive Directors of CIR in Significant Companies, as defined by the same Board.
On April 28 2017 the Board of Directors appointed Mr Rodolfo De Benedetti as Chairman of the Company and Ms Monica Mondardini as Chief Executive Officer.
The Chairman, in addition to representing the Company externally with third parties, whether public or private entities, with the power to sign any document, deed, legal document or correspondence in the name of and on behalf of the Company and with the right to appoint others to take his place with more limited powers, and in addition to the duties prescribed for this position by the Company Bylaws and by the provisions of the Code of Conduct of the Company (e.g. duties on the subject of providing information before Board Meetings, induction programs, collaborating with the Lead Independent Director) and without prejudice to the powers reserved exclusively to the Board of Directors and to the Chief Executive Officer, is assigned competence for the following:
Definition of proposals to put before the Board of Directors regarding the strategic guidelines of the Group and supervision of the implementation of the same; for this purpose the discussion by the Board of Directors will take place once a year, for example when the budget for the year or the multiyear business plan is discussed.
Adopting resolutions on the following extraordinary transactions:
Investments and/or disinvestments in companies/businesses/business arms up to a maximum amount of Euro 75 million provided that these do not involve the loss of control of the strategic investees of the Group (currently Media, Utilities, Automotive Components and Healthcare); transactions for an amount higher than this are the exclusive competence of the Board of Directors; it should be noted that for such transactions, the Chief Executive Officer shall have competence for unit values of up to Euro 25 million;
Financial investments and/or disinvestments for trading and/or for the short-term investment of liquidity up to a unit value of Euro 150 million; transactions over this amount are the exclusive competence of the Board of Directors; it should be noted that for these transactions the Chief Executive Officer shall also have competence for unit values of up to Euro 75 million;
Managing activities pertaining to external relations and communication of the Company and of the Group and to institutional relations with investors, authorities, public sector entities, companies and organizations and private sector entities, companies and organizations.
The Chief Executive Officer is responsible for the execution of the resolutions of the Board of Directors and/or the Chairman for areas of his competence, and is the main person responsible for managing the business. The Chief Executive Officer (CEO) is responsible, among other things, for the following:
Managing the Company CIR S.p.A. in relation to its typical business as a holding company of equity investments, including:
the use of financial resources within the sphere of the powers assigned (i) investments and/or disinvestments in companies/businesses/business arms up to a maximum amount of Euro 25 million, provided that these do not involve the loss of control of the strategic investees of the Group (currently Media, Utilities, Automotive Components and Healthcare); (ii) financial investments and/or disinvestments for trading and/or the short-term investment of liquidity up to a unit value of Euro 75 million;
the analysis and evaluation of extraordinary transactions the approval of which is the responsibility of the Chairman or of the Board of Directors
defining the organizational structure of the Company;
designating the executive structure and setting executive compensation (without prejudice to the competence of the Appointments and Compensation Committee).
Setting guidelines, coordinating and checking the investee companies, for which the Chief Executive Officer is exclusively responsible, including the task of evaluating their strategic plans and budgets, organization structures and the appointment/evaluation of their top management structures. Consequently:
The Chief Executive Officer has the exclusive power to represent CIR S.p.A. as shareholder at General Meetings of the investee companies and to exercise any consequent rights, including the right to vote, with the power to have others replace her;
The Chief Executive Officer will keep the Chairman regularly informed, even in the role of representative of the Shareholders, on the performance of the operations of the CIR Group and this will be through a monthly meeting to illustrate the management accounts of CIR S.p.A. and its strategic subsidiaries and any other significant operating facts and weekly updates, and will refer back at least once every three months to the Board of Directors.
The Chief Executive Officer is assigned all the powers of the Board of Directors that are not reserved to the exclusive competence of the same Board of Directors or its Chairman by the law, the Company Bylaws or the Code of Conduct or those that reside with the General Manager.
Consequently, on April 28 2017 the Board of Directors of the Company assigned the following powers:
The Chief Executive Officer, Ms Monica Mondardini, is assigned the following powers:
(i) powers for the following categories of transactions:
The Board of Directors Meeting held on June 30 2014 also gave Ms Monica Mondardini, in her role as General Manager, powers of ordinary administration to be exercised with her sole signature.
For the rules of a general nature regarding the composition and functioning of the Board of Directors, reference should be made to what is indicated in Art. 2 of the Code of Conduct of CIR S.p.A., attached to this document, as well as to what is stated in Art. 1 of the same regarding the functions carried out by the Chairman. It should be remembered that the mandate of the Board of Directors currently in office will end with the approval of the Financial Statements for the year ended December 31 2019.
At the time of their appointment all the Directors filed declarations in which they attested that there were no reasons why they should not be elected, that there were no incompatibilities as per the law and that they possessed the requisites of integrity and professionalism required by current law and by the Company Bylaws.
The Board therefore consists of eleven Directors, two of whom have executive status (the Chairman and the Chief Executive Officer), while nine are non-executive.
In consideration of their number and their authority, the non-executive Directors provide a guarantee that their judgment shall have significant weight in the resolutions adopted by the Board; they each bring their own individual expertise to Board debates and contribute to the adoption of decisions in the interest of the Company. The "Independent Directors" make up the majority of the Board.
The composition of the Board of Directors of the Company is therefore appropriate to guarantee sufficient conditions of operational independence, aimed at maximizing the economic and financial objectives of the Company.
The chart below shows the composition of the Board of Directors:
| Name | Position | Year of birth |
In office since |
In office until |
List | Exec. | Non exec |
Indep C.C. |
Indep TUF |
% CD A |
Other position s |
Date first appointed |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| De Benedetti | Chairman | 1961 | 28.4.2017 | 31.12.2019 | M | X | 100 | 6 | 30.4.1988 | |||
| Rodolfo | ||||||||||||
| Mondardini | C.E.O. | 1960 | 28.4.2017 | 31.12.2019 | M | X | 88 | 6 | 29.4.2013 | |||
| Monica | ||||||||||||
| Bertherat | Director | 1960 | 28.4.2017 | 31.12.2019 | M | X | X | X | 88 | -- | 28.4.2017 | |
| Philippe | ||||||||||||
| Botticini | Director | 1966 | 28.4.2017 | 31.12.2019 | M | X | X | X | 100 | -- | 29.4.2011 | |
| Maristella | ||||||||||||
| De Benedetti | Director | 1964 | 28.4.2017 | 31.12.2019 | M | X | 88 | 1 | 30.6.2014 | |||
| Edoardo | ||||||||||||
| Debenedetti | Director | 1933 | 28.4.2017 | 31.12.2019 | M | X | 88 | -- | 28.7.1978 | |||
| Franco | ||||||||||||
| De Benedetti | Director | 1962 | 28.4.2017 | 31.12.2019 | M | X | 100 | 4 | 30.6.2014 | |||
| Marco | ||||||||||||
| Giannini | Director | 1952 | 28.4.2017 | 31.12.2019 | M | X | X | X | 100 | -- | 29.4.2011 | |
| Silvia | ||||||||||||
| Pasinelli | Director | 1960 | 04.6.2018 | 31.12.2019 | M | X | X | X | 100 | 3 | 04.6.2018 | |
| Francesca | ||||||||||||
| Recchi | Director | 1955 | 28.4.2017 | 31.12.2019 | M | X | X | X | 88 | 4 | 07.1.1982 | |
| Claudio | ||||||||||||
| Tabellini | Director | 1956 | 28.4.2017 | 31.12.2019 | M | X | X | X | 75 | 1 | 30.4.2004 | |
| Guido | ||||||||||||
| Number of meetings of the Board of Directors: 8 |
List: M/m: according to whether the Director was elected from the majority list or from a minority list.
Independent (Code of Conduct of Borsa Italiana S.p.A. and T.U.F.): indicates whether a Director can be qualified as independent.
% CDA: shows the Director's attendance, in percentage terms, at the Board Meetings held during the year. Other positions: shows the total number of positions held in other listed companies, financial companies, banks, insurance companies or other companies of a significant size.
The Board of Directors checks and publishes annually the positions of Director or Statutory Auditor held by Directors in other listed companies, financial companies, banks, insurance companies or in other non-listed companies of a significant size (Attachment A). It should be noted that the personal and professional profiles of each Director can be found in the document attached to this report.
During 2018 the Board of Directors met eight times. On average, the meetings lasted for approximately two hours. For the year 2019, six meetings have been scheduled. The Executive responsible for the preparation of the financial statements and corporate documents, Mr Giuseppe Gianoglio, and Mr Michele Cavigioli, Central Finance and Investor Relations Director, regularly attend Board of Directors Meetings.
On the subject of passing information to the Board, in accordance with what is set out in the Code of Conduct of Borsa Italiana S.p.A., the Chief Executive Officer reports back regularly (at least every three months) to the Board and at the same time to the Board of Statutory Auditors on the action taken in the exercise of the powers assigned to him or her.
The Chief Executive Officer also provides adequate information (at least every three months) on any atypical or unusual transactions, to the Board of Directors and the Board of Statutory Auditors.
The following chart shows the composition of the Committees set up by the Board: the Appointments and Compensation Committee, the Control and Risk Committee and the Committee for Related Party Transactions, the members of which are the same as those of the Control and Risk Committee.
| Name | Appointments and Compensation Committee |
% A.C.C. | Control and Risk Committee |
% C.R.C. | Committee for Related Party Transactions (a) |
% CRPT |
|---|---|---|---|---|---|---|
| Botticini Maristella | X | 100% | X | 100% | ||
| Bertherat Philippe | X | 100% | -- | |||
| Giannini Silvia | X | 100% | X | 100% | ||
| Grieco Patrizia (until April 28 2018) |
X | 33% | ||||
| Pasinelli Francesca | X | 100% | 100% | |||
| Recchi Claudio | X | 100% | X | 80% | X | -- |
| Tabellini Guido | X | 100% | ||||
| Number of Committee meetings: | 4 | 5 | 1 |
Key:
% ACC: shows the Director's attendance in percentage terms at the meetings of the Appointments and Compensation Committee held during the year.
% ICC: shows the Director's attendance in percentage terms at the meetings of the Control and Risk Committee held during the year.
% CRPT: shows the Director's attendance in percentage terms at the meetings of the Committee for Related Party Transactions held during the year.
(a) The members of the Committee for Related Party Transactions are the same as those of the Control and Risk Committee.
In accordance with the terms of the Code of Conduct of Borsa Italiana S.p.A., on April 28 2017 the Board of Directors appointed as Lead Independent Director Mr Guido Tabellini to whom all the non-executive directors can refer (especially the independent ones) to enable them to make a better contribution to the activity and the running of the Board.
The Lead Independent Director collaborates with the Chairman to guarantee that the Directors receive full information flows on a timely basis. Among other things the Lead Independent Director, either independently or at the request of other directors, also has the right to call a meeting of just the independent directors to discuss topics considered of interest to the running of the Board of Directors or the management of the Company.
Regarding induction programmes, two information sessions were organized for Directors and Statutory Auditors in the months of June and November.
At the June session, the Chief Executive Officer of the subsidiary Sogefi S.p.A. presented analyses of the strategies of the Group; while the November session was on the subject of the "Sustainability Report for sustainable companies" and was organized with the assistance of external consultants. The induction sessions were organized by sending out invitations in plenty of time so that as many people as possible were able to attend. The proceedings occupied most of the day and were followed by a lively debate, which was an opportunity to examine the individual aspects of the matters dealt with in greater detail.
Art. 3 of the attached Code of Conduct of CIR S.p.A. gives the requisites on the basis of which the Company – in accordance with what is recommended by the Code of Conduct of Borsa Italiana S.p.A. and what is stipulated in Art. 147-ter paragraph 4 of the T.U.F. – considers Directors independent.
The Board of Directors Meeting held at the end of the Shareholders' Meeting on April 27 2018 checked the existence of the requisites of independence set out in the Code. Furthermore, and in waiver of the terms set out in the Code of Conduct for Listed Companies (See Application criterion 3.C.1, letter e), it also gave a positive opinion on the independence of Directors Claudio Recchi and Guido Tabellini, in spite of the fact that they have been Directors of the Company for more than nine of the last twelve years, given that they have always demonstrated full independence of judgement and have appreciated the work of management freely.
In 2018 the Board of Statutory Auditors verified that the criteria and checking procedures adopted by the Board of Directors to assess the independence of its members were being applied correctly.
During 2018 the Independent Directors met – without the other Directors – on January 29 2018 to assess the quality of management and the transparency of the information given to the Board of Directors and to examine the results of the selfassessment of the Board prepared by the Control and Risk Committee.
The principles underpinning the institution and functioning of the internal committees set up by the Board of Directors are given in Art. 4 of the attached Code of Conduct of CIR S.p.A.
As permitted by the Code of Conduct of Borsa Italiana S.p.A., the Company has merged the functions of the Appointments Committee and of the Compensation Committee into one single committee, whose members include profiles with adequate competence in finance or compensation policy and which is known as the Appointments and Compensation Committee. The Internal Control Committee set up by the Board of Directors on May 4 2000 has taken the name of Control and Risk Committee and at least one of its members has adequate experience in accounting and finance or risk management. This Committee also carries out the functions of the Committee for related-party Transactions in compliance with the Rules for related-party Transaction. The Appointments and Compensation Committee and the Control and Risk Committee operate according to the respective rules that they have adopted.
As stated in letter e) of the section of the Report entitled "Information on the ownership structure for the appointment of Directors", reference should be made to the information given in Art. 5 of the attached Code of Conduct of CIR S.p.A. and to the articles of the Company Bylaws reproduced therein.
The Appointments and Compensation Committee consists of Independent Directors: Mr Philippe Bertherat, Mr Claudio Recchi and Mr Guido Tabellini (Chairman of the Committee).
On the subject of the appointment of Directors, the Appointments and Compensation Committee carries out the functions detailed in Article 6 of the attached Code of Conduct of CIR S.p.A.
The guidelines of the Company's compensation policy are described in Art. 6 of the attached Code of Conduct of CIR S.p.A.: specifically, the compensation policy is determined following criteria that are appropriate for attracting, retaining and motivating people with adequate professional qualities to manage the Group effectively. The compensation assigned to the Chairman of the Board of Directors, as an Executive Director, and to the non-executive Directors for being on one or more committees, is determined as a fixed fee based on the commitment required of each of them. The Appointments and Compensation Committee carries out the functions on this subject as specified in detail in the above-cited Art. 6 of the Code of Conduct of CIR S.p.A.
The compensation paid in 2018 to the Directors and Executives with strategic responsibilities is shown in the charts attached to the "Compensation Report prepared in compliance with Art. 84-quarter of Consob Resolution 11971/99, approved by the Board of Directors on March 11 2019 and made available to the Annual General Meeting of the Shareholders convened to approve the Financial Statements for the year ended December 31 2018.
The Committee met four times in 2018 and minutes of the meetings were taken as is standard practice. The meetings lasted on average for approximately one hour.
For the year 2018 the Shareholders' Meeting held on April 27 2018 approved the assignation of Stock Grant Plans (respecting the terms and conditions described in the Information Document, prepared in compliance with Consob Regulation no. 11971/99) in accordance with principles which substantially reflect the provisions of Article 6 of the Code of Conduct, particularly in relation to the following:
An average vesting period of 3 years
Vesting of part of the shares assigned linked to the achievement of certain performances (trend of the stock)
The Information Document can be consulted on the Company's website in the section "Governance".
The system of internal control is the body of rules, procedures and organizational structures that enable the main risks to be identified, measured, managed and monitored.
The aims of the Control and Risk System, and the bodies and functions responsible are detailed in Art. 7 of the attached Code of Conduct of CIR S.p.A.
Within the sphere of the Control and Risk System, during the year 2018 the Board of Directors:
a) Identified the nature and level of risk compatible with the strategic objectives;
b) Evaluated the adequacy, effectiveness and efficiency of the System of Control and Risk in relation to the business and the risk profile assumed, taking also into account the assessments made by the Director Responsible and by the Control and Risk Committee;
c) Approved, at the proposal of the Control and Risk Committee, the Audit Plan, after hearing the opinion of the Board of Statutory Auditors and the Director Responsible;
On the basis of the resolution adopted by the Board of Directors on March 20 2001, the Chief Executive Officer is the executive director responsible for ensuring that the internal control system works effectively and that it is adequate. He or she does this partly by defining procedures that will guarantee sound and efficient management and also by identifying, pre-empting and managing, as far as possible, any financial and operational risk and any fraud against the Company, availing himself of the assistance of the Control and Risk Committee.
The Board of Directors with its resolution adopted on May 4 2000 set up the Internal Control Committee (now the Control and Risk Committee), which was given the function of preparing proposals and acting in a consulting capacity and which acts along the lines set out in the Code of Conduct.
The Chairman of the Board of Statutory Auditors or another Statutory Auditor designated by the Chairman attends the Committee meetings.
The Members of the Control and Risk and Committee are Independent Directors: Maristella Botticini, Silvia Giannini (Chairman of the Committee) and Claudio Recchi. It should be noted that the Board of Directors on January 28 2013 appointed Mr Giuseppe Gianoglio as the Executive responsible for the preparation of the financial statements and corporate documents. On March 12 2018 the Board of Directors assigned the Internal Audit and Risk Management function to the company Operari S.r.l. in the person of Mr Vittorio Gennaro (Chief Executive of the company), who replaces Mr Andrea Bergalio who resigned in February 2018. The Company decided to outsource this activity because it considered it to be a more effective and functional solution for a holding of industrial interests such as CIR S.p.A.
During 2018 the Committee held five meetings which lasted for an average of about two hours. Minutes of the meetings were taken regularly.
The appointment of the Statutory Auditors and the functioning of the Board of Statutory Auditors are regulated by Art. 19 of the Company Bylaws which is reproduced in Art. 8 of the Code of Conduct of CIR S.p.A.
The Statutory Auditors are selected from persons who can be qualified as independent following the criteria applied to the Directors. During 2017 the Board of Statutory Auditors checked that the above criteria were being complied with, ensuring that the results of this check were shown in this report.
In waiver of what is established by the Code of Conduct for Listed Companies (see Application criterion 3.C.1, letter e), the Board of Statutory Auditors rated the independence of its members positively, even considering the length of time that they have been in office. Judging substance as more important than form, it assessed from a practical viewpoint the actual relations in place between the members and the Company and the way in which the former have carried out their duties. They have in fact always been fully independent and able to judge and appreciate the work of management freely, on the basis of the experience they have gained in the ongoing relationship with the Company.
The Board of Statutory Auditors currently in office will terminate its mandate with the approval of the Financial Statements as of December 31 2019 and is made up as follows:
| Name | Position | Year of birth |
In office since |
In office until |
List | Independent as per Code of Conduct |
% attendance at meetings of B. of S.A. |
Other positions |
Date first appointed |
|---|---|---|---|---|---|---|---|---|---|
| Manzonetto Pietro | Chairman | 1944 | 28.4.2017 | 31.12.2019 | M | X | 100 | 1 | 24.4.2002 |
| Allievi Anna Maria | In office | 1965 | 28.4.2017 | 31.12.2019 | M | X | 100 | 4 | 30.6.2014 |
| Zingales Riccardo | In office | 1960 | 28.4.2017 | 31.12.2019 | M | X | 100 | 2 | 30.4.1999 |
| Macchiorlatti Vignat Luigi | Alternate | 1963 | 28.4.2017 | 31.12.2019 | M | X | -- | 2 | 27.4.2005 |
| Valdameri Luca | Alternate | 1968 | 28.4.2017 | 31.12.2019 | M | X | -- | 2 | 29.4.2011 |
| Zambon Paola | Alternate | 1969 | 28.4.2017 | 31.12.2019 | M | X | -- | 1 | 29.4.2013 |
Key:
- List: "M/m" according to whether the Statutory Auditor was elected from the list voted for by the majority or from one voted by the minority.
- Independent: indicates that the Statutory Auditor is qualified as independent.
- % attendance: shows the attendance in percentage terms of the Statutory Auditor at the meetings of the Board of Statutory Auditors.
Other positions: shows the number of positions of director or statutory auditor held by the individual in other Italian listed companies. The full list of these positions is given in an attachment to this document (Attachment A).
During the year 2018 the Board of Statutory Auditors met nine times and the meetings lasted on average two hours.
At the time of their appointment all the Statutory Auditors filed declarations in which they attested that there were no reasons why they should not be elected, that there were no incompatibilities as per the law and that they possessed the requisites of integrity and professionalism required by current law and by the Company Bylaws.
The Company has always endeavoured to establish and maintain an effective dialogue with its Shareholders and with the market, using various forms of communication including, for example, the following: presenting the results of the Company and the Group during Shareholders' Meetings using slides, meeting with financial analysts and institutional investors in Italy and abroad, informing the public by making the corporate governance documents required by law, press releases and presentations available on the website of the Company.
The Company also adheres to the principles of the Guide for Disclosing Information to the Market.
To this end, the Chief Executive Officer appointed the Central Finance Director, Mr Michele Cavigioli, to be in charge of the Investor Relations function, to manage the flow of information to Shareholders, financial analysts and institutional investors, in compliance with the rules established for the disclosure of the Company's information and documents.
It has always been the policy of the Company to use the Shareholders' Meeting as an opportunity to give the Shareholders information about the Company and the Group and their prospects for the future, while complying with the procedure concerning price-sensitive information.
All the Directors and Statutory Auditors endeavour to be present at Shareholders' Meetings as far as possible but particularly those Directors who can make a positive contribution to the debate in view of the positions that they hold.
The procedures and timing for calling Shareholders' Meetings are regulated by Art. 15 of the Company Bylaws, which is reproduced in the attached Code of Conduct of CIR S.p.A.
The Shareholders' Meeting held on April 27 2001, in accordance with the terms of the Code of Conduct of Borsa Italiana S.p.A., approved and subsequently updated a set of Regulations for conducting Shareholders' Meetings, which can be consulted on the internet website of the Company in the section "Governance".
The Board of Directors makes available to the Shareholders a booklet containing the items on the Agenda of the Shareholders' Meeting within the time frame laid down by law.
On March 7 2003 the Board of Directors approved the CODE OF ETHICS OF THE CIR GROUP, with the aim of defining in a clear and transparent way the code of values underpinning the action of the Group in the pursuit of its objectives and establishing principles of conduct which are binding for directors, employees and other individuals who maintain relations with the Group.
The text of the CODE OF ETHICS can be consulted on the Company's website in the section "Governance".
The Sustainability Report of the CIR group for the year 2018 was prepared in accordance with the "G4 Sustainability Reporting Guidelines" published in May 2013 by the GRI (Global Reporting Initiative). The Sustainability Report is the main instrument for reporting the performance obtained by the group in the economic, social and environmental sphere and for highlighting its commitment to conducting its business with the aim of creating value not only for the organization but also for its stakeholders.
The process of collecting data and information for the purpose of the preparation of the Report was managed collaboratively with the various departments of the companies that make up the CIR group, with the aim of giving a clear and precise indication of the information considered significant for the stakeholders according to the principles of balance, comparability, accuracy, timeliness, clarity and reliability, as expressed in the GRI guidelines.
Legislative Decree no. 231/2001 containing the "Discipline regulating the administrative liability of legal entities, companies and associations without legal status, pursuant to Article 11 of Law no. 300 of September 29 2000" and subsequent amendments and additions, introduced the criminal liability of entities for any fraudulent acts committed by people with a special functional relationship with the Company, where the alleged misdeed was carried out in the interest or to the advantage of the same Company; this liability was, among other things, extended by D.Lgs no. 61/2002 to cover corporate offences too.
The decree provides that exemption for the company from such liability is possible provided that it can be demonstrated that the company had adopted and effectively put in place organizational models for the prevention of criminal offences and that it had given the task of monitoring the correct functioning of such models and making sure that they are fully updated to a controlling body equipped with independent powers to take the initiative and to carry out a control function.
To this end, after approving the Code of Ethics, the Board of Directors then set up the Supervisory Body on April 30 2003. On September 5 2003 the Board of Directors also approved the "Organizational Model", which was subsequently supplemented following the broadening of the scope of the law contained in D.Lgs. 231/2001 and can be found on the Company's website in the section "Governance".
The members of the Supervisory Body are external lawyers Giuseppe Bianchi, Andrea Gottardo, and Vittorio Gennaro (of the company Operari S.r.l.), who was appointed by the Board of Directors on March 12 2018 in replacement of Andrea Bergalio who resigned in February 2018.
During 2018 the Supervisory Body met four times and minutes were taken in line with standard practice.
The Supervisory Body of CIR S.p.A. monitored the functioning and observance of the Organization, Management and Control Model adopted by the Company, checking its effectiveness and evaluating any possible proposals for updating it.
The AGM held on April 29 2016 resolved to give the legal audit mandate for the years 2017-2025 to the firm of auditors KPMG S.p.A.
The Company is subject to management and coordination by its controlling company COFIDE S.p.A., as per the terms of Art. 2497 and following articles of the Civil Code.
| De Benedetti Rodolfo | Chairman of Cofide S.p.A. Director of GEDI Gruppo Editoriale S.p.A. Director of Sogefi S.p.A. * Director of Decalia Asset Management S.A. Vice President of Decalia Asset Management SIM S.p.A. Director of AON Italia |
|---|---|
| Mondardini Monica | Deputy Chairman of GEDI Gruppo Editoriale S.p.A. Director of KOS S.p.A. Chairman of Sogefi S.p.A.* Director of Crédit Agricole S.A. Director of Atlantia S.p.A. Director of Trevi Finanziaria Industriale S.p.A. |
| Bertherat Philippe | -- |
| Botticini Maristella | -- |
| De Benedetti Edoardo | Director of Cofide S.p.A. * |
| Debenedetti Franco | -- |
| De Benedetti Marco | Director of Cofide S.p.A. Chairman of GEDI Gruppo Editoriale S.p.A. Director of Moncler S.p.A. Chairman of Comdata S.p.A. |
| Giannini Silvia | -- |
| Pasinelli Francesca | Director of Anima Holding S.p.A. Director of Anima Sgr S.p.A. Director of Dompé S.p.A. |
| Recchi Claudio | Chairman and Chief Executive of Recchi Ingegneria e Partecipazioni S.p.A. Director of AON Italia S.p.A. Director of IPI S.p.A. Director of Sator Immobiliare SGR |
|---|---|
| Tabellini Guido | Director of CNH Industrial |
| Manzonetto Pietro | Chairman of the Board Statutory of APE SGR S.p.A. Statutory Auditor of ITASMUTUA S.p.A. |
|---|---|
| Allievi Anna Maria | Chairman of the Board of Statutory Auditors of Credito Emiliano S.p.A. Chairman of the Board of Statutory Auditors of IGD SIIQ S.p.A. Alternate Auditor of Sogefi S.p.A. * Alternate Auditor of SEA S.p.A. |
| Zingales Riccardo | Chairman of the Board of Statutory Auditors of Cofide S.p.A. * Statutory Auditors of Sogefi S.p.A. * |
| Macchiorlatti Vignat Luigi | Alternate Auditor of Cofide S.p.A * Alternate Auditor of Sogefi S.p.A. * |
| Valdameri Luca | Statutory Auditor of I Grandi Viaggi S.p.A. Chairman of the Board of Statutory Auditors of Wiit S.p.A. |
| Zambon Paola | Alternate Auditor of Cofide S.p.A * |
* companies of the Group
The Code of Conduct of CIR S.p.A. (hereinafter "CIR" or the "Company") contains a description of the main duties and functions of the corporate bodies of the Company and of the internal control and risk management structure of the Company.
The description of these duties and functions is carried out in a structured way in a single document in which it is possible even to find not only content but also specific reference to the applicable regulatory environment: the provisions of the law and of regulations, the terms of the Company Bylaws, and the principles of the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. with which the Company complies.
On this subject at the Board of Directors Meeting held on October 29 2012, following the new rules of the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. introduced in December 2011, the Company updated its own corporate governance and approved internal procedures as indicated in the Code. In order to incorporate the changes introduced in the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. in July 2014 and July 2015, the Board of Directors has subsequently updated the Code of Conduct of the Company.
Below are the provisions of the Company Bylaws on the subject of the role of the Board of Directors
of the company financial statements, who must have adequate experience on the subject of accounting and finance.
The Directors must report back to the Board of Directors and to the Board of Statutory Auditors on activities carried out and on anything else required by law at regular intervals at least once every three months when Board Meetings are held or whenever particular timing needs make it desirable. This report shall be made directly, in writing, or verbally and/or by telephone
Given the specific characteristics of the sectors that the CIR investee companies belong to, in application of the terms of Art. 1 of the CODE OF CONDUCT OF BORSA ITALIANA S.P.A., the Board of Directors:
and of the Group;
The Directors act and adopt resolutions independently on the basis on their knowledge and good judgment and they accept the position when they consider that they can dedicate the necessary time to carrying out their duties, bearing in mind also their commitment in relation to their work and professional activities, the number of directorships or positions of statutory auditor that they hold in other companies listed on regulated markets (even foreign ones), finance companies, banks, or insurance companies or companies of a significant size. They are also required to inform the Board of Directors of any other activities they may have in competition with the Company and of any significant changes that occur in the positions they hold in other companies.
Still in application of the terms of Art. 1 of the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. the Board of Directors has approved the following:
Guidance regarding the maximum number of positions as director or statutory auditor in other companies listed on regulated markets, including foreign markets, in financial companies, banks, insurance companies or companies of a significant size ("Significant Companies"):
The general criteria described above can always be waived in relation to one or more directors with a resolution taken by the Board of Directors giving the reasons for the waiver. In deciding on the waiver the Board of Directors may also take into account the director's attendance record at CIR board meetings and committee meetings.
It should also be noted that the Board of Directors assesses the independence of its Directors at least once a year, taking into account the information that the individuals involved are required to produce. While the terms of Art. 147-ter, paragraph 4, of the Finance Consolidation Act (T.U.F.) remain applicable, the Company intends to introduce the obligation for any Director who has lost the qualification of independence as per the terms of the Code of Conduct (Criterion 3.C.1) to resign his or her position, without prejudice for the right of the Board of Directors to evaluate each specific case possibly allowing waivers to the rules.
Information will be given of any waivers of the above approved by the Board of Directors in the Annual Report on Corporate Governance.
Below is what the Company Bylaws stipulate on the subject of the Chairman of the Board of Directors
The Chairman of the Board of Directors is the legal representative of the Company. Legal representation is also entrusted to the Deputy Chairmen, to the Managing Directors/Chief Executive Officers and to the General Managers and to anyone else designated by the Board of Directors, severally within the limits of the powers assigned to them individually, or otherwise jointly with another individual also having joint powers.
In application of what is stated in Art. 1 of the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. the Chairman of the Board of Directors:
The Board of Directors is made up of executive and non-executive Directors who have adequate competence and professionalism.
The non-executive Directors bring their specific competences to the Board discussions, contributing to the adoption of judicious decisions and paying particular attention to the areas in which conflicts of interest can emerge.
The composition of the Board of Directors of the Company – even in relation to number, competence, authoritativeness and availability of time that the nonexecutive Directors have – must be suitable to guarantee conditions of managerial autonomy, directed towards the maximization of the economic and financial objectives of CIR. The composition of the Board of Directors also respects the balance between the genders prescribed by current legislation and by Art. 8 of the Company Bylaws reproduced further on.
The Company complies with the so called ban on interlocking directorates, which was introduced by Art. 2.C.5 of the Code of Conduct of Borsa Italiana S.p.A., i.e. the principle that the chief executive officer of an issuer cannot take a position as director of another issuer not belonging to the same group, in which a director of the issuer is chief executive officer. The Directors are expected to know their duties and the responsibilities inherent in the position.
The Chairman makes sure that the Directors and Statutory Auditors, following their appointment and during their mandate, can take part in initiatives in the most appropriate formats, aimed at giving them an adequate knowledge of the business sector in which the Company operates, of the Company dynamics and the evolution thereof, of the principles of correct risk management, as well as of the regulatory environment and the internal rules on the subject. As far as information on the business sectors is concerned, each executive Director gives a briefing on the performance of the business at the meetings of the Board of Directors on an ongoing basis and in a more extended form at least once a year.
In relation to the regulatory environment, special information sessions may be organized for the Directors with the support of professional training experts when the Board of Directors is renewed and, subsequently, any time that changes in the regulatory framework make an update on the subject appropriate
The Board of Directors designates a lead independent director. The Lead Independent Director is a point of reference who coordinates the requests and the contributions of the non-executive Directors, particularly the independent Directors. He or she collaborates with the Chairman to guarantee that the Directors receive full information flows on a timely basis. Among other things the Lead Independent Director, either independently or at the request of other Directors, also has the right to call a meeting of just the independent Directors to discuss topics considered of interest to the running of the Board of Directors or the management of the Company. Regarding the possibility that issuers adopt mechanisms ensuring different maturities of all or some of the members of the administrative body (a staggered board), the Company did not deem it necessary to adopt this measure as it is not appropriate given the ownership structure of CIR.
In compliance with the Markets Regulations adopted by Consob, the Independent Directors make up the majority of the members of the Board of Directors.
In accordance with what is recommended by the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. "Independent Directors" are considered as those directors:
a) who do not either directly or indirectly, even through subsidiaries, fiduciaries or any third persons, control the Company, and who are not able to exert a significant influence on it, and who have not entered into a shareholder pact through which one or more persons may exercise control or a significant influence on the company;
or who are not, or have not been in the previous three years, employees of one of the above entities;
Should any of the situations listed in the Code of CONDUCT OF BORSA ITALIANA S.P.A. as conditions for the non-independence of non-executive Directors exist, the Board of Directors shall examine on a case-by-case basis whether or not the individual has the necessary requisites to be qualified as an Independent Director.
On the basis of paragraph 4, Art. 147-ter of the T.U.F., at least one member of the Board of Directors, or two if the Board of Directors has more than seven members, must have the requisites of independence established for statutory auditors and therefore in accordance with the terms of paragraph 3, Art. 148 of the T.U.F., the following individuals cannot be considered as independent:
a) the spouse, relations and relatives up to the fourth degree of kinship of the Directors of the Company, the Directors, the spouse, relations and relatives up to the fourth degree of Directors of the companies controlled by the former and of the companies which control it and those subject to joint control;
b) those who are linked to the Company or to the subsidiaries of the Company or to companies which control it or to companies subject to joint control or those linked to the Directors of the company and to the individuals mentioned in the previous point through a working relationship, be it of regular employment or of a freelance nature, or by any economic or professional relationship which could compromise their independence.
The independence of the Directors is assessed by the Board of Directors when they are appointed and then once a year. The Board gives the outcome of its assessment in the Report on Corporate Governance.
The Board of Directors sets up from among its members one or more committees, the function of which is to make proposals and give advice, defining their duties.
The committees consist of no less than three members all of whom are independent and who are coordinated by a chairperson. Minutes are taken of each committee meeting and the Chairman of each committee reports back on the same at the first Board of Directors Meeting. The chairperson can, if he or she feels it is necessary, invite any other individuals not on the committees whose presence could be useful for the proceedings of the meeting.
For organizational reasons the functions of the Appointments Committee and those of the Compensation Committee are combined in a single committee, called the Appointments and Compensation Committee, whose members must include profiles with adequate competence in finance or compensation policy.
The Appointments and Compensation Committee and the Control and Risk Committee function according to what is set out in their respective Rules.
The Control and Risk Committee, of which at least one member must have adequate experience in accounting and finance or risk management, as well as advising, making proposals and monitoring the Control and Risk System, also carries out the function of Committee for Related Party Transactions in accordance with the Rules for Related Party Transactions.
The duties assigned to the individual Committees of the Board of Directors are illustrated in the following articles.
Below are the terms of the Company Bylaws on the subject of the appointment of Directors
also be submitted with the personal and professional details of the candidate and details of any other positions of director or auditor held in other companies and whether he or her has the necessary requisites to be an independent Director in accordance with the terms of the law and regulations.
a) From the list which obtains most votes at the Shareholders' Meeting all of the board members shall be drawn except for one and this shall be on the basis of the order in which the names appear on the list;
b) The other director will be the first name on the list which obtains the second most votes and which is not linked in any way, not even indirectly, to the Shareholders who presented and voted for the first list which received the most votes.
When application of the procedure described in a) and b) above does not give the gender balance required by current legislation, the last director elected from the list that obtained the most votes belonging to the most represented gender shall lapse and shall be replaced by the first candidate not elected from the same list belonging to the least represented gender, in compliance with the requirements of the law. Otherwise, the Shareholders' Meeting shall make up the number of the administrative body with the majorities required by law, ensuring compliance with the terms of the law.
All the Directors elected must possess the requisites of integrity and professionalism required by current regulations. If they do not have these their appointment shall lapse.
In application of what is stipulated in Art. 5 of the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. and in the Rules of the Appointments and Compensation Committee approved by the Board of Directors, in relation to the appointment of the Directors, the Committee carries out the following functions:
The Succession Plan for Executive Directors is approved by the Board of Directors on the basis of the investigatory activity carried out by the Appointments and Compensation Committee. The Plan should give a clear definition of the objectives, instruments and timing of the process, should have the involvement of the Board of Directors and a clear allocation of competences, even with regard to the preliminary stage of the procedure.
Compensation policies aim to guarantee competitiveness in the labour market in line with the objectives of developing and rewarding the loyalty of human resources, as well as using different compensation tools according to individual professionalism and competence.
The Company keeps its compensation in line with market benchmarks, applying rewarding criteria when situations of particular merit arise.
The remuneration of non-executive Directors on the basis of the commitment required of each of them is established by the Shareholders' Meeting; the Board of Directors also determines the fee for the position of Chairman and the fees for directors holding special positions.
The Board of Directors at the proposal of the Appointments and Compensation Committee, defines a policy for compensating Directors and Executives with strategic responsibilities.
In application of principle 6.P.5. of the CODE OF CONDUCT OF BORSA ITALIANA S.p.A., when the position of an executive director or a general manager is terminated, the Company after following internal processes leading to the assignment or recognition of compensation and/or other benefits, gives full details of this in a press release to the market.
The remuneration of Directors holding special positions is, in accordance with the Bylaws, established by the Board of Directors at the proposal of the Appointments and Compensation Committee after hearing the opinion of the Board of Statutory Auditors, and is based on the guidelines established in the compensation policy.
In the preparation of any share-based compensation plans, the Board of Directors ensures that the criteria stipulated in the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. are observed.
In application of what is stated in Art. 6 of the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. and in the Rules of the Appointments and Compensation Committee approved by the Board of Directors, in relation to compensation, the Committee carries out the following functions:
The Board of Directors approves the general principles of the internal control and risk management system. More specifically, the Board of Directors Meeting held on October 29 2012 adopted, with effect as from January 1 2013, its Guidelines on the subject of the System of Internal Control and Risk Management:
Control and Risk System
The Control and Risk System is the collection of rules, procedures and organizational structures that aim to make it possible, through an adequate process of identification, measurement, management and monitoring of the main risks, to conduct a healthy and correct company that is consistent with its established objectives and to foster judicious decision making. The Control and Risk System contributes towards guaranteeing that the Company's capital is safeguarded and ensuring the efficiency and effectiveness of company processes, the reliability of disclosures made to the company bodies and to the market, and compliance with the law and regulations as well as with the Company Bylaws and internal procedures. The Control and Risk System helps reduce and limit errors, fraudulent infringement of control systems and unexpected events although it cannot eliminate the possibility of wrong decisions.
Apart from these guidelines, the Control and Risk System includes internal rules contained in the Bylaws and in Regulations on the subject of the division of competences and the delegation of responsibilities, including the Organization Model as per the terms of D.Lgs. 231/2001, the objectives and methods of evaluating risks and instructions on the subject of the administrative, accounting and financial system.
(the "Director Responsible");
h) the other corporate bodies and functions with competence on the subject of internal control and risk management.
All employees, within the sphere of their duties in the Company organization, contribute to the effective functioning of the Control and Risk System, carrying out their responsibilities with the necessary knowledge and understanding of the activity, the organization of the market in which the company operates and how it functions and of the risks and operational objectives of the Company.
The bodies and functions listed above operate each in accordance with its duties and competences and following the indications given in these Guidelines and in the rules of law, regulations and internal rules applicable.
The Board of Directors
The Board of Directors has ultimate responsibility for the Control and Risk System and defines its strategies in line with strategic objectives and the risk profile of the Company. Within the sphere of the Control and Risk System the Board of Directors:
a) Defines the policies of the Control and Risk System, making sure they are suitably amended and updated;
b) Identifies the nature and level of risk compatible with the strategic objectives of the Company, reassessing them whenever circumstances make it necessary;
c) On an annual basis assesses the adequacy, effectiveness and efficiency of the Control and Risk System in relation to the business of the company and the risk profile it wishes to have, taking into account the opinions on the subject of the Director Responsible and of the Control and Risk Committee;
d) Approves, at the proposal of the Control and Risk Committee on an annual basis in conjunction with the approval of the Annual Report and Financial Statements, the audit plan after hearing the Board of Statutory Auditors and the Director Responsible;
e) Evaluates, after hearing the Board of Statutory Auditors, the results set out by the legal audit firm in any letter containing suggestions that they may produce and in the report on the fundamental issues that emerged from the legal audit;
f) Appoints the Director Responsible;
g) Appoints from within its number a Control and Risk Committee and designates the Chairman thereof;
h) Approves the rules of the Control and Risk Committee and any amendments and updates to the same;
i) Appoints and revokes the appointment of the Head of Internal Audit, establishing his/her compensation in line with company policy, at the proposal of the Director Responsible and after obtaining a favourable opinion from the Control and Risk Committee and the Appointments and Compensation Committee and hearing the Board of Statutory Auditors;
j) Ensures that the Head of the Internal Audit function has adequate resources for carrying out his/her duties.
Director Responsible
The Director Responsible is responsible for ensuring that the internal control system works well and is adequate. As a rule the Director Responsible coincides with the Chief Executive Officer.
The Director Responsible:
a) Deals with the identification of the main company risks and submits them periodically to examination by the Board of Directors;
b) Sees to the design, implementation and management of the Control and Risk System, setting up a process of coordination between the various bodies and the departments affected in order to maximize efficiency and reduce duplication;
c) Constantly verifies, partly on the basis of the reports presented by the Head of Internal Audit and at the indication of the Control and Risk Committee, the adequacy, effectiveness and efficiency of the Control and Risk System, proposing suitable amendments and updates to the Board of Directors;
d) Can ask the Head of Internal Audit to carry out checks in specific operating areas and on compliance with internal rules and procedures in the execution of company transactions, giving feedback on the same to the Chairman of the Board of Directors, the Chairman of the Control and Risk Committee and the Chairman of the Board of Statutory Auditors;
e) Refers back as soon as possible to the Board of Directors on any problems or critical areas that emerged in the execution of his/her duties and which have somehow come to his/her notice so that the Board of Directors can take appropriate action;
f) In carrying out his/her duties, can use the consulting services of the Control and Risk Committee.
The Control and Risk Committee
The Control and Risk Committee carries out a consulting role, makes proposals and monitors the Control and Risk System.
The Control and Risk Committee:
a) Together with the executive responsible for the preparation of the company's financial statements and having heard the legal audit firm and the Board of Statutory Auditors, evaluates that the correct accounting standards are being used and that they are consistent for the purposes of the preparation of the statutory and consolidated financial statements for the year and presents the results of its evaluation to the Board of Directors as stated in letter f) below;
b) Expresses opinions on specific aspects regarding the identification of the Company's main risks, and in particular on the identification, measurement, management and monitoring of the Company's main risks;
c) Examines the reports on the assessment of the Control and Risk System prepared by the Internal Audit function and refers back to the Board of Directors with its own evaluation on the subject as required by letter f) below;
d) Monitors the independence, the adequacy, the effectiveness and the efficiency of the Internal Audit function and proposes any corrective action needed to the Board of Directors;
e) Can ask the Internal Audit department to carry out checks on specific operating areas, at the same time notifying the Chairman of the Board of Statutory Auditors, the Chairman of the Board of Directors and the Director Responsible;
f) Refers back to the Board at least once every six months, on the occasion of the approval of the Annual Report and Financial Statements and the Semi-annual Interim Financial Report, on its activities and on the adequacy of the Control and Risk System;
g) Supports the assessments and decisions of the Board of Directors regarding the management of risks resulting from prejudicial events that have come to the notice of the Board of Directors, with an appropriate investigation;
h) Carries out the functions of a committee for transactions with related parties as per the terms of the procedure for transactions with the related parties of the Company;
i) Evaluates the governance structure of the Company referring back periodically and, when considered necessary in the light of critical issues, promptly on the same to the Board of Directors; it also carries out other functions which may from time to time be assigned to it by the Board of Directors in relation to specific critical issues on the subject of the system of internal control and risk management of the Company and of the group.
The Control and Risk Committee is made up of at least 3 independent directors, of whom at least one has adequate experience in accounting and finance or risk management, and operates in accordance with the provisions of the internal rules approved by the Board of Directors, which describe the procedures for its appointment, its duties, how it functions, its powers and its expense budget.
The Chairman of the Board of Statutory Auditors or another Statutory Auditor designated by the same Chairman takes part in the works of the Control and Risk Committee (and the other Statutory Auditors can in any case also participate).
Within the sphere of the Control and Risk System, the Head of the Internal Audit department:
a) Prepares the audit plan submitting it to the Control and Risk Committee so that it can be put before the Board of Directors for adoption; b) Checks both on an ongoing basis and in relation to specific necessities that the Control and Risk System is functioning well and is suitable for the task through the audit plan which is approved by the Board of Directors;
c) Prepares half-yearly reports on its activities, the procedures used to conduct risk management, compliance with the plans defined for containing the risk and the suitability of the Control and Risk System. He/she then sends a copy to the meeting of the Control and Risk Committee which precedes the Board of Directors Meetings that approve the Annual and Semi-Annual financial statements;
d) Prepares timely reports on events of particular significance, sending a copy of the same to the Chairmen of the Board of Directors, the Control and Risk Committee and the Board of Statutory Auditors as well as to the Director Responsible;
e) As part of the audit plan he/she checks the reliability of the IT systems, including the accounting system.
Hierarchically the Head of the Internal Audit department reports on a general basis to the Board of Directors, to the Chairman of the Board of Directors, and has direct access to any information useful to carry out his/her role.
Risk manager
The description of the activities and functions of the Risk Manager is given below.
The Board of Statutory Auditors monitors the effectiveness of the Control and Risk System. In carrying out its functions the Board of Statutory Auditors can ask the Head of the Internal Audit department to carry out checks on specific operating areas or company transactions, advising the Chairman of the Board of Directors. The Board of Statutory Auditors and the Control and Risk Committee exchange the information they need to carry out their duties on a timely basis.
The Supervisory Body set up as per the terms of D.L.gs 231/2001 carries out the duties assigned to it by the Company's Organization Model and collaborates and exchanges information regularly with the Control and Risk Committee, the Board of Statutory Auditors and the Director Responsible.
The other bodies and departments of the Company with competence in the area of internal control and risk management include the Officer Responsible for the preparation of the financial statements and all of the procedures and bodies that make up the structure of the Company.
The risk management system is organized with the following three levels of control:
a) The operating functions within the Company note the risks and establish any action to be taken to manage them;
b) The risk management functions carry out a constant analysis and monitoring activity;
c) The Internal Audit department controls the functioning of the System and gives its own independent assessments.
Definition of the nature and level of risk compatible with the strategic objectives of CIR
At least once a year when the budget is prepared, CIR carries out an overall assessment of its risks, quantifying them and evaluating their possible impact both of the achievement of results and in general on the management of its portfolio of equity investments.
The analysis is carried out with the methodological support of the document "Risk analysis and evaluation" given as an attachment (Annex a), which forms an integral part of this document. The outcome of this activity is a document that describes in full the level of risk for each business area and defines the action planned to mitigate the risks. The general content of the information produced is given in the document (Annex b) and must be discussed by the Risk Manager with the company management and with the Control and Risk Committee. The Control and Risk Committee can request clarification and/or additional information to be given in the document so that it can report back exhaustively to the Board of Directors. The Board of Directors must be put in the condition to be able to then easily assess whether the level of risk compatible with the strategic objectives of the Company is acceptable as it is set out in the document prepared by management and discussed with the Control and Risk Committee. The Board of Directors must give its opinion on the mitigation action proposed and on the amount of any residual risk.
The examination, discussion and definition by the Board of Directors of the nature and level of risk compatible with the Company's objectives is carried out through a critical analysis of the Control and Risk Committee's evaluation of the probability/impact of the risk and takes into consideration parameters relating to the operating result, shareholders' equity and the net financial position of the Company.
Operating steps
The above activity must be subjected to a complete review and ongoing monitoring during the year by the Risk Manager in close conjunction with those responsible for the process and with the Head of the Internal Audit department.
In practical terms the activity of the Risk Manager in conjunction with those responsible for the process consists of taking the following actions: a) Mapping out the company processes and updating them whenever necessary;
b) Recording both internal and external risks for the individual processes on an annual basis;
c) Measuring the risks in terms of probability / impact and assessing their effect on the business plans and on the budget;
d) Analysing factors that can mitigate the risk;
e) Presenting the results of the activity to the Control and Risk Committee for examination and a preliminary discussion with a view to presenting the same to the Board of Directors.
The above activity is carried out following the methodological guidelines contained in the document "Analysis and assessment of risks" attached to this document, which are inspired by the framework "ERM - enterprise risk management" prepared by the "Committee of Sponsoring Organizations of the Treadway Commission" (COSO report).
The Risk Manager carries out a constant monitoring activity of the possible consequences of strategic, operating, compliance and reporting risks. He/she defines a series of information flows from the operating functions in order to continually monitor the level of risk. He/she reports back every three months to the Control and Risk Committee and coordinates the work of the risk managers of the subsidiaries, where they exist, in the preparation of a document for assessing and monitoring risk. For the 100% controlled subsidiaries, the analysis and assessment of their risk are managed directly by the Risk Manager of CIR.
By October 31 the Risk Manager meets with the Control and Risk Committee to illustrate the annual risk analysis and assessment of the Company. The Control and Risk Committee analyses the document and goes into more depth where necessary during the following months of November and December to then put the final document before the Board of Directors when they meet to approve the budget in January. .
At the Board of Directors Meeting held on October 29 2012, the Company also adopted Guidelines for implementing the internal control and risk management System of the companies of the Group.
Below are the terms of the Company Bylaws on the subject of Statutory Auditors
and who can be reappointed. Minority Shareholders can elect one Statutory Auditor and one Alternate Auditor.
The election of the members of the Board of Statutory Auditors will take place as follows:
Two members and two alternate members will be drawn from the list which obtains most votes at the Shareholders' Meeting on the basis of the numerical order in which the names appear on the list;
a) That participants are able to view, receive or transmit all the necessary documentation;
b) That they can take part in real time in the discussion respecting the methodology of their function (the collegio method).
The meetings are held in the place where the Chairman is or, in his absence, where the oldest Statutory Auditor in terms of age is located.
The Board of Statutory Auditors can, provided that the Chairman is notified, call a Shareholders' Meeting, a Board of Directors Meeting or an Executive Committee Meeting. The power to call a Board of Directors Meeting or an Executive Committee Meeting can be exercised individually by any member of the Board of Statutory Auditors; the right to call a Shareholders' Meeting must be exercised by at least two members of the Board of Statutory Auditors.
The Statutory Auditors are selected from persons who, as well as having the requisites required by law, can be qualified as independent even according to the criteria set out in the CODE OF CONDUCT OF BORSA ITALIANA S.P.A. for Directors, as recommended by the same CODE OF CONDUCT OF BORSA ITALIANA S.P.A.
The Board of Statutory Auditors checks that the said criteria have been complied with after their appointment and then once a year.
The Statutory Auditors accept the position when they feel that they can devote the necessary amount of time to carrying out their duties in a diligent fashion.
The compensation of the Statutory Auditors is commensurate with the commitment required of them, with the importance of the role they hold and with the characteristics of the Company in terms of size and business sector.
The supervisory activity of the Board of Statutory Auditors on the effectiveness of the Control and Risk Committee is described in Art. 7 above.
The Company endeavours to establish and maintain an effective dialogue with its Shareholders and with the market, using various forms of communication such as: presenting the results of the Company and the Group during Shareholders' Meetings using slide projections, meeting with financial analysts and institutional investors in Italy and abroad, informing the public by making the corporate governance documents required by law, press releases and presentations available on the website of the Company.
The Company also adheres to the principles of the Guide for Disclosing Information to the Market.
The Company appoints an officer responsible for the Investor Relations function to manage the flow of information to Shareholders, financial analysts and institutional investors, in compliance with the rules established for the disclosure of the Company's information and documents.
In its relations with its listed subsidiaries, the Company adopts the practice of announcing to the public any proposals that it intends to put before the Shareholders' Meeting well in advance on topics where there is no specific proposal made by the Directors.
Below are the terms of the Company Bylaws on the subject of the terms and procedures for calling Shareholders' Meetings.
The Board of Directors provides the Shareholders with a file containing the proposals on the Agenda for the Annual General Meeting. This is made available on the Company's website within the time limits laid down by current legislation.
The Rules for Shareholders' Meetings, which can be found on the Company's website, ensure that Shareholders' Meetings take place in an ordered and functional manner.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.