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Fila Remuneration Information 2017

Apr 6, 2017

4343_def-14a_2017-04-06_a4335413-b56c-4e37-bbff-c07c7f1485d7.pdf

Remuneration Information

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F.I.L.A. – FABBRICA!ITALIANA!LAPIS!ED!AFFINI!S.P.A. REMUNERATION!REPORT in#accordance#with#Article#1232ter of#Legislative#Decree#No.#58/1998 at#December#31,#2016

Report#approved#by#the#Board#of#Directors#of#F.I.L.A.#– Fabbrica#Italiana#Lapis#ed#Affini# S.p.A.#at#the#meeting#of#March#21,#2017,#available#on#the#website#www.filagroup.it in# the#"Governance"#section

PRINCIPAL!DEFINITIONS
3
INTRODUCTION6
SECTION!I7
1.1
PROCEDURES!FOR!THE!ADOPTION!AND!IMPLEMENTATION
OF!THE!REMUNERATION!
POLICY7
1.2
INDEPENDENT!
SPECIALISTS!
INVOLVED!
IN!
THE!
PREPARATION!
OF!
REMUNERATION!POLICY9		 THE!
1.3
REMUNERATION!POLICY10
1.3.1
AIMS!AND!PRINCIPLES!OF!THE!REMUNERATION!POLICY10
1.3.2
REMUNERATION!POLICY11
(I)
DIRECTORS12
(A)
NONEEXECUTIVE!DIRECTORS12
(B)
EXECUTIVE!DIRECTORS12
(II)
SENIOR!EXECUTIVES13
(III)
SENIOR!MANAGEMENT
13
(IV)
HONORARY!CHAIRMAN14
1.3.3
LINK!BETWEEN!FIXED!AND!VARIABLE!COMPONENTS!OF!REMUNERATION		 14
(I)
EXECUTIVE!DIRECTORS14
(II)
SENIOR!
EXECUTIVES! AND!
SENIOR!
MANAGEMENT!
E
SHORTETERM! VARIABLE!
COMPONENT 19
(III)
SENIOR!EXECUTIVES!AND!SENIOR!MANAGEMENT!E
MEDIUM/LONG!TERM!VARIABLE!
COMPONENT 21
1.4
2017
EXTRAORDINARY!BONUS22
1.5
POLICY!UPON!NONEMONETARY!BENEFITS!(FRINGE!BENEFITS)
23
1.6
POLICY!UPON!BENEFITS!ON!CONCLUSION!OF!OFFICE
23
1.7
INSURANCE,
SOCIAL!SECURITY!AND!PENSION!COVERAGE 23
SECTION!II25
1.1
FIRST!PART!E
ITEMS!COMPRISING!2016
REMUNERATION 25
1.1.1
Board#of#Directors25
1.1.2
Executive#Directors25
1.1.3
Senior#Executives26
1.1.4
Board#of#Statutory#Auditors
26
1.2
SECOND!PART!E
BREAKDOWN!OF!THE!REMUNERATION!PAID!DURING
THE!YEAR27
1.3
THIRD!PART!E
LIST!OF!INVESTMENTS!HELD32

Contents

PRINCIPAL!DEFINITIONS

The#principal#definitions#utilised#in#the#present#Report#are#illustrated#below.#

Executive!Directors Directors# of# the# Company# assigned# operational# or# managerial# powers# or# to# whom# the# Board# of# Directors# confers# specific# roles.# # At# the# Reporting# date,# the# Executive# Directors# of# the# Company# are# the# Chief# Executive# Officer# Massimo# Candela# and# the#Executive#Director#Luca#Pelosin. 2017!Extraordinary!Bonus! the# extraordinary# bonus# concerning# the# free# assignment#of#a#tantum#of#shares#of#the#Company#in# favour# of# some# managers# of# the# Company,# which# the# Board# of# Directors# of# March# 21,# 2017,# on# the# proposal# of# the# Remuneration# Committee# of# the# Company# and# with# the# prior# favourable# opinion# of# the#Related#Parties#Committee,# resolved#to# present for# approval# of the# Shareholders'# Meeting# of# April# 27,#2017. Borsa!Italiana Borsa#Italiana#S.p.A. SelfEGovernance!Code the# Self2Governance# Code# of# listed# companies# approved#in#July#2015#by#the#Corporate#Governance# Committee# and# promoted# by# Borsa# Italiana,# ABI,# Ania,# Assogestioni,# Assonime# and# Confindustria,# available# on# the# website www.borsaitaliana.itin# the# section# "Borsa# Italiana# 2 Regulation# 2 Corporate# Governance". TRP!Committee the# committee# for# transactions# with# the# related# parties# of# FILA,# appointed# in# accordance# with# the# Consob# TRP# Regulation# and# the# Related# Parties# Procedure. Consob Consob2Commissione#Nazionale#per#le#Società#e#la# Borsa#(Italian#financial#market#oversight#authority). Senior!Executives! those# persons# having# authority# and# responsibility,# directly# or# indirectly,# for# planning,# directing# and# controlling#the#activities#of#the#Group. EBITDA indicates,#in#relation#to#the#FILA#Group#consolidated# financial#statements,#the#difference#between: 1)# total# core# business# revenue# and# other# revenue# and#incomea#and# 2)# total# operating# costs# (including# costs# for# raw# materials,# ancillary,# consumables# and# goods,# the# change#in#inventories#of#raw#materials,#semi2finished# and#finished# products,# services# and# rent,# lease# and# similar# costs,# other# operating# costs# and# labour#

costs). Relevant! Events and,# individually,#a#Relevant Event acquisitions# (of# companies,# businesses# and/or# business# units),# disposals# (of# companies,# businesses# and/or# business# units),# mergers,# spin2 offs,# share# capital# increases,# conferments,# legislative# or# regulatory# amendments,# changes# to# the# accounting# standards# adopted# for# the# preparation# of# the# financial# statements# or# other# exceptional# events# with# significant# impact# on# the# Objectives. Senior!Management Group# management# appointed# to# drive# the# growth# and# sustainability# of# the# Group# business,# beneficiaries#of#the#201722018#Performance#Shares# Plan.# Group FILA# and# the# companies# over# which# it# exercises,# directly# or# indirectly,# control# according# to# the# applicable#IFRS#accounting#standards. NFP indicates,# in# relation# to# the# consolidated# financial# statements#of#the#FILA#Group,#the#sum#of: 1)# liquidity# (cash,# other# cash# equivalents,# securities# held2for2trading)a 2)#current#financial#receivablesa 3)# current# financial# debt# (current# bank# payables,# current# portion# of# non2current# debt,# other# current# financial#payables) 4)# non2current# financial# debt# (non2current# bank# payables,# bonds# issued,# other# non2current# payables)a 5)#loans#issued#to#third#parties. 2016E2018!Plan! the# three2year# business# plan# of# the# Company,# approved# by# the# Board# of# Directors# on# March# 22,# 2016. 2017E2019! Performance! Shares!Plan the#plan#concerning#the#free#assignment#of#shares#of# the#Company,#which#the#Board#of#Directors#of#March# 21, 2017,# on# the# proposal# of# the# Remuneration# Committee# and# with# the# prior# favourable# opinion# of# the#Related#Parties#Committee,# resolved#to# present for# approval# of# the# Shareholders'# Meeting# of# April# 27,#2017. Honorary!Chairman the# individual# selected#from# among# persons# of# high# standing# and# who# have# contributed# to# the# establishment# and/or# growth# of# the# Company,# in# accordance#with#Article#12.5#of#the#By2Laws.#At#the# date# of#the# present#Report,#the#Honorary#Chairman#

of#FILA#is#Alberto#Candela.
Related!Parties!Procedure the# procedure# for# transactions# with# related# parties#
adopted# by# the# Company# in# compliance# with# the#
Consob#TRP#Regulation.
Consob!TRP!Regulation the# regulation# concerning# transactions# with# related#
parties#adopted#by#Consob#with#motion#No.#17221#of#
2010,#as#subsequently#amended#and#supplemented.
Issuers'!Regulation the# regulation# adopted# by# Consob# with# motion# No.#
11971# of# 1999,# as# subsequently# amended# and#
supplemented.
ROI ratio#
between#
consolidated#
EBITDA#
and#
net#
invested# capital,# as# per# the# 201622018# Plan# (see#
pages#90#and#91).#
ByELaws the#By2Laws#of#FILA,#currently#in#force.#
CFA Legislative#Decree#No.#58#of#1998,#as#subsequently#
amended#and#supplemented.

INTRODUCTION

The#present#report#(the#Report)#is#divided#into#two#sections:

  • section# I:# the# Remuneration# Policy.# This# section# is# submitted# annually# for# the# consultative# vote# of# FILA's# Shareholders'# Meeting# (the# Shareholders'! Meeting)a
  • section#II:#the#2016#Report,#which#provides#detailed#disclosure#on#remuneration# paid# in# the# year# to# directors# and# members# of# the# Board# of# Statutory# Auditors# (the#Board!of!Statutory!Auditors)#of#FILA.

The#Report,#approved#by#the#Board#of#Directors#of#FILA# (the#Board! of! Directors)#on# March#21,#2017,#on#the#proposal#of#the#Remuneration#Committee#(the#Remuneration! Committee),#is#prepared#in#accordance#with#the#applicable#rules#and#regulations.###

The#Remuneration#Policy#is#established#in#line#with#the# recommendations#of#the#Self2 Governance#Code,#which#the#Company#adopted#on#March#15,#2016.#

The# Remuneration# Policy# was# adopted# by# the# Company# in# accordance# with# the# Consob#TRP#Regulation,#as#incorporated#into#the#Related#Parties#Procedure#available# on#the#Company#website#www.filagroup.it in#the#"Governance"#section.

For#the#establishment#of#the#Remuneration#Policy,#the#company#appointed#Mercer#Italia# S.r.l.,#leading#consultancy#firm#in#human#capital#development#and#organisation#through# its#Career#and#Wealth#business#division,#and#as#benchmark,#utilised#the#remuneration# policies#of#comparable#companies#2mainly#listed#2 to#the#Company#and#the#Group.#

The#present#Report#was#sent#to#Borsa#Italiana#and#made#available#to#the#public#at#the# registered# office# of# the# company# (via# XXV# Aprile# n.# 5,# Pero,# Milan)# and# on# the# Company#website#www.filagroup.it in#the#"Governance"#section,#within#twenty2one#days# before#the#date#of#the#Shareholders'#Meeting.#

SECTION I

The#Remuneration#Policy#defines#the#principles#and#guidelines#adopted#by#FILA#for#the# remuneration#of#the#members#of#the#Board#of Directors#and#Senior#Executives.#

1.1 PROCEDURES! FOR! THE! ADOPTION! AND! IMPLEMENTATION! OF! THE! REMUNERATION! POLICY!

1.1.1 Parties! involved! in! the! preparation,! approval! and! implementation! of! the! Remuneration!Policy

The# principal# parties# and# bodies# involved# in# the# preparation# and# approval# of# the# Remuneration# Policy# are# the# Shareholders'# Meeting,# the# Board# of# Directors,# the# Remuneration#Committee#and#the#Board#of#Statutory#Auditors.#The#Board#of#Directors,# the#Board#of#Statutory#Auditors#and#the#Remuneration#Committee#are#also#responsible# for# the# correct# implementation# of# the# Remuneration# policy# and# oversee# its# correct# implementation.# A# brief# description# of# the# duties,# which# in# accordance# with# the# applicable#regulation#are#required#of#these#Boards#with#regards#to#the#remuneration#of# the#directors,#is#provided#below.

Shareholders'\$Meeting

The#Shareholders'#Meeting:

  • (i) establishes# the# remuneration# of# the# members# of# the# Board# of# Directors# in# accordance# with# Article# 2364,# paragraph# 1,# No.# 3)# of# the# Civil# Code,# also# in# accordance# with#Article# 2389,# paragraph# 3# of#the# Civil# Code# and#Article# 15# of# the#By2Lawsa
  • (ii) in#accordance#with#Article#1232ter,#paragraph#6#of#the#CFA,#decides#in#favour#or# against#section#I#of#the#Report#(in#accordance#with#the#above2stated#regulationa# this#Shareholders'#Meeting#decision#is#not#binding)a
  • (iii) establishes# any# remuneration# plans# based# on# shares# or# other# financial# instruments#for#directors,#employees#or#consultants,#including#key#management# personnel,#where#existing,#in#accordance#with#Article#1142bis of#the#CFA.

Board\$of\$Directors

The\$Board\$of\$Directors:

  • (i) establishes#internally#a#Remuneration#Committeea#
  • (ii) establishes#the# remuneration#of#the#Executive#Directors#on#the#proposal#of#the# Remuneration#Committee#(and,#where#established,#of#the#TRP#Committee),#with# prior# opinion# from# the# Board# of# Statutory# Auditors,# within# any# remuneration# established# by# the# Shareholders'# Meeting# in# accordance# with# Article# 2389,# paragraph#3#of#the#Civil#Code#and#breaks#down#the#fixed#annual# remuneration# for# execution# of# office,# established# in#totality# by#the#Shareholders'#Meeting#for# Non2Executive#Directors,#as#set#out#by#Article#15#of#the#By2Lawsa##

  • (iii) defines,# on# the# proposal# of# the# Remuneration# Committee,# the# Remuneration# Policya

  • (iv) approves# the# Report# in# accordance# with# Articles# 1232ter of# the# CFA# and# 842 quater of#the#Issuers'#Regulationa

  • (v) prepares# any# remuneration# plans# based# on# shares# or# other# financial# instruments# for# directors,# employees# and# consultants,# including# key# management#personnel,#where#existing,#submitting#such#for#the#approval#of#the# Shareholders'# Meeting# in# accordance# with# Article# 1142bis of# the# CFA# and# oversees#their#implementation.

Remuneration\$Committee

The# Remuneration# Committee# is# a# body# with# consulting# and# proposal#functions,# with# the# principal# duty# to# draw# up# for# the# Board# of# Directors# proposals# upon# the# Remuneration#Policy,#including#any#stock#option#plans#or#assignment#of#shares,#of#the# Chief# Executive# Officer# and# the# other# Executive# Directors,# in# addition# to,# on# the# indication# of# the# Chief# Executive# Officer,# the# establishment# of# the# criteria# for# the# remuneration#of#key#management#personnel,#where#in#place.#

This#committee#guarantees#the#broadest#scope#of#information#and#transparency#on#the# remuneration# of# the# Executive# Directors,# as# well# as# the# manner# for# determining# their# remuneration.# In# any# case,# as# per# Article# 2389,# paragraph# 3# of# the# Civil# Code,# the# Remuneration# Committee# has# solely# the# function# of# presenting# proposals,# while# the# power#of#determining#the# remuneration#of#Executive#Directors# remains#with#the#Board# of#Directors,#having#consulted#with#the#Board#of#Statutory#Auditors.

With# regard#to#the# role,# composition#and#functioning#of#the#Remuneration#Committee,# reference#should#be#made#to#Paragraph#1.1.2#below.

Board\$of\$Statutory\$Auditors

The# Board# of# Statutory# Auditors# expresses# an# opinion# upon# the# remuneration# proposals#of#the#Executive#Directors,#in#accordance#with#Article#2389,#paragraph#3#of# the#Civil#Code,#verifying#the#consistency#of#such#with#the#Remuneration#Policy#adopted# by#the#Company.

1.1.2 Remuneration!Committee

The#Remuneration#Committee#was#established#by#Board#of#Directors#motion#of#July#22,# 2015#and#comprises#three#non2executive#directors,#the#majority#of#whom#independent,# in#the#persons#of:#

  • Francesca#Prandstraller#(Chairperson)#2 non2executive#independent#directora
  • Sergio#Ravagli#2 non2executive#independent#directora
  • Annalisa#Barbera#2 non2executive#director.

On#appointment,#the#Board#of#Directors#positively#assessed#the#meeting#of,#by#the#non2 executive# director# Annalisa# Barbera,# the# knowledge# and# competence# requirements# concerning#financial#matters#and#remuneration#policies.#

The# composition,# duties# and# operating# rules# of# the# Remuneration# Committee# are# governed# by# the# Self2Governance# Code# and# the# regulation# adopted# by# the# Remuneration# Committee# from# October# 7,# 2015# (available# on# the# Company# website# www.filagroup.it in#the "Governance"#section).##

The# meetings# of# the# Remuneration# Committee# are# held# as# a# collective# and# are# appropriately#minuted.

Directors# do# not# take# part# in# meetings# of# the# Remuneration# Committee# in# which# proposals#upon#their#specific#remuneration#to#the#Board#of#Directors#are#drawn#up.##

On#invitation,#representatives#of#company#departments#and#independent#experts#and/or# other# parties,# whose# participation# is# considered# beneficial# for# the# discussion# of# the# matters#at#issue,#may#attend#meetings#of#the#Remuneration#Committee.##

Where# considered# necessary# and# beneficial# for# the# execution# of# its# duties,# the# Remuneration#Committee#may#utilise#outside#remuneration#policy#consultants.

In# relation#to#the# activities# of#the#Remuneration#Committee# in# 2016,# reference# should# be#made#to#the#2016# corporate governance#and#ownership# structure# report,#available# on#the#Company#website#www.filagroup.it in#the#"Governance"#section.

At#the#meetings#between#January#and#March#2017,#the#Remuneration#Committee:

  • (i) established#the#Remuneration#Policy#for Executive#Directors#for#the#year#2017a
  • (ii) established# the# Remuneration# Policy# for# Senior# Executives# and# Senior# Management#for#the#years#201722019a##
  • (iii) prepared#the#present#Reporta#
  • (iii) verified#the#achievement#of#the#2016#annual#objectives#by#the#Chief#Executive# Officer#Massimo#Candela#and#the#Executive#Director#Luca#Pelosina
  • (v) presented# proposals# to# the# Board# of# Directors# for# the# variable# remuneration# component#of#the#Executive#Directors#for#the#year#2016a#
  • (vi) presented#a#proposal#for#additional# remuneration#to#the#members#of#the#Board# Committees#of#the#Company.#

For#2017,#the#Remuneration#Committee#scheduled#the#additional#main#activities#of:

  • presentation# of# the# Report# to# the# Shareholders'# Meeting# (scheduled# for# April# 2017)a
  • assessment#of#the#adequacy,#consistency#and#application#of#the#Remuneration# Policy#(scheduled#for#November#2017)a
  • setting# out#the# activities#for#the#first# quarter# of# 2018# (scheduled#for# November# 2017).

1.2 INDEPENDENT!SPECIALISTS!INVOLVED!IN! THE!PREPARATION!OF! THE!REMUNERATION! POLICY

The# Company# utilised# the# services# of# the# independent# specialist# consultancy# firm# Mercer# Italia# S.r.l..# in# the# preparation# of# the# Remuneration# Policy.# In# particular,# this# specialist firm# carried# out# an# analysis# of# the# remuneration# packages# of# companies,# primarily#listed,#comparable#with#the#Company.

1.3 REMUNERATION!POLICY

1.3.1 AIMS!AND!PRINCIPLES!OF!THE!REMUNERATION!POLICY

The# Remuneration# Policy# is# drawn# up# so# as# to# ensure# an# overall# remuneration# structure# which# recognises# the# managerial# value# of# the# beneficiaries# and# the# contribution# provided# to# the# growth# of# the# company# in# terms# of# their# respective# competences.# This# policy# seeks# to# attract,# maintain# and# motivate# individuals# of# high# professional# standing,#with#particular# regard#to# key#positions#for#the#development#and# management#of#the#business,#in#addition#to#awarding#the#achievement#of#the#individual# and#company#performance#objectives#on#the#basis#of#the#company#economic2financial# growth#indicators#and#as#a#principal#aim#seeks#to#align#the#interests#of#the#management# of#the#Company#with#the#achievement#of#the#core#objective#of#the#creation#of#value#for# the#shareholders#of#FILA#over#the#medium/long2term.#

The#Remuneration#Policy, in#line#with#the#general#aims#outlined#above,#is#based#on#the# following#key#principles#and#is#defined#according#to#the#following#criteria:

  • (i) appropriate# balance# between# the# fixed# and# variable# components# according# to# the#strategic#objectives#and#the#risk management#policy#of#the#Company,#taking# account# of# the# sector# in# which# the# FILA# Group# operates# and# the# operations# executed,# in# order# to# avoid# conduct# which# does# not# serve# the# creation# of# sustainable#value#over#the#short#and#medium/long2term#period.
  • (ii) setting#of#limits#for#the#variable#componentsa
  • (iii) pre2setting#and#measurability#of#the#performance#objectives#for#the#issue#of#the# variable#componentsa#
  • (iv) creation# of# a# direct# link# between# remuneration# and# performance,# through# mechanisms#which#provide#for#the#issue#of#differing#levels#of#bonuses#linked#to# the#partial#or#total#achievement#of#the#objectivesa
  • (iii) establishment# of# overall# remuneration# levels# which# recognise# the# professional# value# of# individuals# and# their# contribution# to# the# creation# of# sustainable# value# over#the#short#and#medium/long2term#period.

In# line# with# the# principles# outlined# above,# the# company# will# propose# to# the# Shareholders'#Meeting#of#April#27,#2017:

  • the# adoption# of# the# 201722019# Performance# Shares# Plan,# to# which# reference# should#be#made#to#Paragraph#0a
  • the# 2017# Extraordinary# Bonus,# to# which# reference# should# be# made# to# Paragraph#1.4.

These#plans#wish#to#encourage#the#retention#and#incentivise#management,#enhancing# the#value#of#the#Company#and#of#the#Group,#with#primary#focus#on#value#creation#in#all# strategic#and#operating#decisions.#

The# Company# may# stipulate# contractual# conditions# which# would# allow# for# the# restitution,#in#full#or#in#part,#of#the#variable#remuneration#components#paid#(or#withhold# any# sums# subject#to# deferred# payment),# on#the# basis# of# data# which# is## subsequently# clearly# erroneous# in# accordance# with# Application# Criterion# 6.C.1,# letter# f)# of# the# Self2 Governance#Code#(so2called#claw2back).#

There# is# no# obligation# to# retain# the# shares# assigned# to# the# beneficiaries# of# the# 2017# Extraordinary# Bonus# and# the# 201722019# Performance# Shares# Plan# as# the# company# considers# that# the# creation# of# value# over# the# medium/long2term# period# may# be# guaranteed#also#in#the#absence#of#this#commitment.

1.3.2 REMUNERATION!POLICY

The#Remuneration#Policy#provides#that#the#fixed#and#variable#components#(this#latter#in# turn# split# between# short# and# medium/long2term)# are# established# on# the# basis# of# principles#and#processes#according#to#the#beneficiary#category.

In#fact#on#March#21,#2017,#the#Board#of#Directors#of#the#company,#on#the#proposal#of# the#Remuneration#Committee,#identified#2 in#view#of#the#positions#and#respective#roles# within# the# Group# 2 Senior# Executives,# Senior# Management# and# an# Employee# of# the# Group as beneficiaries#of#the#2017#Extraordinary#Bonus,#as#well#as#Senior#Executives# and#Senior#Management#as#beneficiaries#of#the#201722019#Performance Shares#Plan.##

The# company# therefore# considered# it# appropriate# to# distinguish# the# remuneration# structure# in# relation# to# the# competences# and# executive/managerial# responsibilities# recognised# to# the# persons# concerned# and# consequently# autonomously# define# the# remuneration#criteria#of:

  • (i) directors,#and#in#particular
  • (a) Non2Executive#Directorsa#and
  • (b) Executive#Directorsa
  • (ii) Senior#Executivesa#
  • (iii) Senior#Managementa
  • (iv) Honorary#Chairman.

(i) DIRECTORS

The#remuneration#of#directors#seeks#to#attract#and#motivate#the#best#professional#talent# for#the#exercise#of#their#duties#and#the#achievement#of#the#goals#of#the#Remuneration# Policy.#

All# directors# receive# a# fixed# remuneration# component# in# order# to# ensure# adequate# remuneration#for#the#activities#and#commitments#undertaken#by#the#directors#on#behalf# of#the#Company.#

The# Board# of# Directors# meeting# of# March# 21,# 2017,# on# the# proposal# of# the# Remuneration# Committee# and# with# prior# favourable# opinion# of# the# Related Parties# Committee,#established#the#following#additional#remuneration#for#the#participation#of#the# directors# on#Board# Committees:#Euro# 10,000.00#for#the# Chairman# of#the# Committees# and#Euro#5,000.00#for#each#member#of#the#Committees.#

(a) NONBEXECUTIVE\$DIRECTORS

Non2executive# directors# (whether# independent# directors# or# not)# are# recognised# a# remuneration#established#by#the#Shareholders'#Meeting#in#accordance#with#Article#2389# of#the#Civil#Code,#in#addition#to#the#reimbursement#of#expenses#incurred.##

The#remuneration# of# these# directors# is# not# linked# to# the# economic# results# or# specific# objectives#of#the#Company.

(b) EXECUTIVE\$DIRECTORS

The#remuneration#of#Executive#Directors#is#adequately calibrated#to#ensure#the#correct# balance#between#development#objectives in#the#short#term#and#sustainable#creation#of# value#for#shareholders#over#the#medium/long2term#period.#

In#particular,#the#remuneration#of#the#Executive#Directors#comprises:

  • a# fixed\$ component: this# component takes# account# of# the# extent# and# strategic# importance#of#the#role,#its#subjective#distinctive#characteristics#and#the#strategic# competences#of#the#respective#directors.#The#amount#is#sufficient#to#remunerate# the#service#also#in#the#case#of#the#non2reaching#of#the#performance#objectives# upon# which# the# variable# remuneration# component# is# based,# and# therefore# 2 among# other# issues# 2 discourages# the# undertaking# of# conduct# not# consistent# with#the# risk# propensity of#the# company.##In# particular,#the#fixed# component# is# based#on#the#size#of#the#business#managed#and the#capacity#for#contribution#to# the#consolidated#results#of#the#FILA#Groupa
  • a shortBterm\$variable\$component: this# component#seeks#to#incentivise#directors# to#work#towards#reaching#the#annual#objectives,#in#order#to#maximise#the#value# of#the#FILA#Group,#in#line#with#the#interests#of#shareholders.#This#component#is# achieved#only#with#the#reaching#of#the#minimum#annual#performance#objectives# established# by# the# Board# of# Directors,# on# the# proposal# of# the# Remuneration# Committee.
  • a# medium/longBterm variable\$ component: this# component# seeks# to# incentivise# Executive#Directors#to#maximise#the# value# of#the#FILA#Group# and#to# align the# interests#of#such#directors#with#those#of#the#shareholders.#The#payment#of#this# remuneration#may#be#deferred#to#the#conclusion#of#a#three2year#timeframea

• fringe\$benefit:!fringe#benefits#provide#for#the provisions#of#goods#and/or#services# in#line#with#market#practice#and#applicable#regulations.##

For# the# description# of# the# short2term# variable# component# and# the# medium/long2term# component#of#the#Executive#Directors#reference#should#be#made#to#Paragraph 1.3.3(i).

(ii) SENIOR!EXECUTIVES!

The#remuneration#of#Senior#Executives#aims#to#concentrate#greater#management#focus# on#the#long2term#results#of#the#company#and#on#the#creation#of#value.##

The#company#therefore#adopted#a#policy#to#achieve#these#objectives#also#through#the# implementation#of#a#variable# remuneration#system,#with#a#strong# retention#function,#in# line# with# the# need# for# growth# and# internal# development# within# the# Company# and# the# Group.##

The#remuneration#of#Senior#Executives#is#composed#of:

  • a#fixed\$componentM
  • a#shortBterm\$variable\$componentM
  • a#medium/longBterm\$variable\$component1 a
  • fringe\$benefits.

For# the# description# of# the# short2term# variable# component# of# Senior# Executives# reference#should#be#made#to#Paragraph#1.3.3(ii).

For#the#description#of#the#medium/long2term#variable#component#of#Senior#Executives,# represented#by#the 201722019#Performance#Shares#Plan,#reference#should#be#made#to# Paragraph#0.

(iii) SENIOR!MANAGEMENT

Senior#Management# remuneration#policy#is#based#on#the#position#and#responsibilities held# in# the# Group# in# order# to# achieve# sustainable# earnings# and# the# creation# of# medium/long#term#value#for#the#shareholders.###

The#remuneration#of#Senior#Management#is composed#of:

  • a#fixed\$componentM
  • a#shortBterm\$variable\$componentM
  • a#medium/longBterm\$variable\$componenta
  • fringe\$benefits.
##################################

For# the# description# of# the# short2term# variable# component# of# Senior# Management# reference#should#be#made#to#Paragraph#1.3.3(ii).

For# the# description# of# the# medium/long2term# variable# component# of# Senior# Management,# represented# by# the 201722019# Performance# Shares# Plan,# reference# should#be#made#to#Paragraph#1.3.3(iii).

1 With#the#exception#of#1#Senior#Executive,#in#which#the#present#remuneration#policy#is#not#applicable.##

(iv) HONORARY!CHAIRMAN

The# Honorary# Chairman# receives# an# annual# remuneration# set# by# the# Board# of# Directors,#in#addition#to#the#reimbursement#of#expenses#incurred.#

1.3.3 LINK!BETWEEN!FIXED!AND!VARIABLE!COMPONENTS!OF!REMUNERATION!

(i) EXECUTIVE!DIRECTORS

The#gross#annual#overall#remuneration#of#the#Chief#Executive#Officer#is#established#as# follows.

REMUNERATION!COMPONENT DESCRIPTION!OF!THE!GROUP!OBJECTIVES!AND!APPLICABLE!
CLAUSES!
Fixed!component Annual#fixed#component#(the#CEO!Annual!Fixed!Component)!
ShortEterm!variable!component Short2term# variable# component# of# a# maximum# amount# of# approx.#
120%# of# the# CEO# Annual# Fixed# Component# (the# CEO ShortEterm!
Variable! Component! A)# linked# to# the# reaching# of# the# quantitative#
objectives#and#qualitative#objectives#described#below.
2
Quantitative! objectives: 70%# of# the# CEO# Short2term# Variable#
Component#A#is#issuable#on#the#meeting#of#the#EBITDA#and#NFP#
objectives#established#by#the#201622018#Plan.#In#particular:
70%#linked#to#the# reaching#of#the# consolidated#EBITDA#
o
objectives# on# the# basis# of# a# performance# scale# with# a#
variable# range# from# a# minimum# 80%# to# a# maximum# of#
105%# (corresponding# to# the# issue# of# a# short2term#
variable#remuneration#respectively#from#34.3%#to#58.8%#
of#the#CEO#Annual#Fixed#Component). Within#this#range,#
the#amount#of#the#variable component#linked#to#EBITDA#
will#be#based#according#to#the#pre2set#bracketsa#and
30%# linked# to# the# reaching# of# the# consolidated# NFP#
o
objectives# on# the# basis# of# a# performance# scale# with# a#
variable# range# from# a# minimum# of# Euro# 40# million# to# a#
maximum#of#Euro#40#million#(corresponding#to#the#issue#
of# a# variable# remuneration# respectively# from# 14.7%# to#
31.5%#of#the#CEO#Annual#Fixed#Component).#Within#this#
range,# the# amount# of# the# variable# component# linked# to#
NFP#will#be#based#according#to#the#pre2set#brackets#
2
Qualitative! objectives: 30%# of# the# CEO# Short2term# Variable#
Component# A# (the# CEO! Qualitative! Component)# is# issuable#
subject#to#the#reaching#of#the#following#qualitative#objectives#
constant#improvement#of#the#governance#with#particular#
o
reference#of#the#functioning#of#the#Strategic#Committeea
constant#presence#in#the#meetings#with#the#investors,
o
(collectively,#the#ShortEterm!CEO!Qualitative!Objectives).
2
Issue:
following# approval# of# the# 2017# consolidated# financial#
statements,# with# the# passing# of# a# motion# by# the# Board# of#
Directors,#having#consulted#the#Remuneration#Committee#and#the#
Board#of#Statutory#Auditors.
The#Chief#Executive#Officer,#at#least#one#month#in#advance#of#the#
date# set# for# the# approval# of# the# 2017# consolidated# financial#
statements,# should#present#to#the#Remuneration#Committee#and#
the#Board#of#Directors#a#report#on#the#state#of#implementation#of#
the# activities# whose# completion# constitutes# a# condition# for# the#
issue# of# the# CEO# Qualitative# Component.# On# the# basis# of# this#
report,#
the#
Board#
of#
Directors,#
having#
consulted#
the#
Remuneration# Committee# and# the# Board# of# Statutory# Auditors,#
will# verify# the# reaching# of# the# Short2term# CEO# Qualitative#
Objectives,# deciding# upon# the# allocation# of# the# CEO# Qualitative#
Component.
2
Compliance!with! the! financial!covenants: the#Chief#Executive#
Officer#shall#not#receive#any#variable#remuneration#where#one#or#
more# of# the# financial# covenants# set# out# in# the# loan# contracts#
undertaken#by#the#Company#have#not#been#met.##
2
ClawEback!clause: obligation#for#the#repayment#to#the#Company#
of#the#variable# remuneration#components#in#the#case#of#material#
violation# of# company# or# legal# rules,# or# harmful# or# seriously#
damaging# conduct# such as# to# alter# the# data# utilised# for# the#
achievement#of#the#objectives.
Medium/longEterm!
variable!
component!		 Variable# medium/long2term# component# of# a# maximum,# aggregated#
over# a#three2year# period,# of# approx.# 141%# of#the#CEO#Annual#Fixed#
Component# (the# CEO! Medium/LongEterm! Variable! Component)#
linked#to#the#reaching#of#the#quantitative#objectives#and#the#qualitative#
objectives#described#below.##
2
Quantitative! objective:
70%# of# the# CEO# Medium/Long2term#
Variable#Component#A#is#issuable#on#condition#that,#in#the#20162
2018#three2year#period,#the#ROI#objectives#are#met.
2
Qualitative! objective:
30%# of# the# CEO# Medium/Long2term#
Variable#
Component#
A#
(the#
CEO!
Medium/LongEterm!
Qualitative!Variable!Component)#is#issuable#on#condition#that#in#
the#201622018#three2year#period#the#following#objectives#are#met:
by#December#31,#2018,#presentation#to,#and#favourable#
o
reception#by,#the#Board#of#Directors#of#a#succession#plan#
for#the#current#top#management#of#the#FILA#Groupa#
by# January# 31,# 2018,# roll2out# of# the# ERP# system,# with#
o
review#of#all#first2line#software#systemsa
strategic# integration# of# Daler2Rowney# into# the# FILA#
o
Group,
(collectively,#
the#
CEO!
Medium/LongEterm!
Qualitative!
Objectives).
2
Issue:
following# approval# of# the# 2018# consolidated# financial#
statements,# with# the# passing# of# a# motion# by# the# Board# of#
Directors,#having#consulted#the#Remuneration#Committee#and#the#
Board#of#Statutory#Auditors.
The#Chief#Executive#Officer,#at#least#one#month#in#advance#of#the#
date# set# for# the# approval# of# the# 2018# consolidated# financial#
statements,# should#present#to#the#Remuneration#Committee#and#
the#Board#of#Directors#a#report#on#the#state#of#implementation#of#
the# activities# whose# completion# constitutes# a# condition# for# the#
issue#of#the#CEO#Medium/Long2term#Qualitative#Component.#On#
the#basis#of#this# report,#the#Board#of#Directors,#having#consulted#
the# Remuneration# Committee# and# the# Board# of# Statutory#
Auditors,# will# verify# the# reaching# of# the# Medium/Long2term# CEO#
Qualitative# Objectives,# deciding# upon# the# allocation# of# the#
Medium/Long2term#CEO#Qualitative#Component.
2
ClawEback!clause: obligation#for#the#repayment#to#the#Company#
of#the#variable# remuneration#components#in#the#case#of#material#
violation# of# company# or# legal# rules,# or# harmful# or# seriously#
damaging# conduct# such# as# to# alter# the# data# utilised# for# the#
achievement#of#the#objectives.

Executive\$Director\$Luca\$Pelosin

The# gross# annual# overall# remuneration# of# the# Executive# Director# Luca# Pelosin# is# established#as follows.

REMUNERATION!COMPONENT DESCRIPTION!OF!THE!GROUP!OBJECTIVES!AND!APPLICABLE!
CLAUSES!
Fixed!component! Fixed#annual#component#(the#ED!Fixed!Annual!Component).
ShortEterm!variable!component! Short2term# variable# component# of# a# maximum# amount# of# approx.#
120%# of# the# ED# Annual# Fixed# Component# (the
ED! ShortEterm!
Variable! Component! A)# linked# to# the# reaching# of# the# quantitative#
objectives#and#qualitative#objectives#described#below.
2
Quantitative! objectives: 70%# of# the# ED# Short2term# Variable#
Component A#is#issuable#on#the#meeting#of#the#EBITDA#and#NFP#
objectives#established#by#the#201622018#Plan.#In#particular:
70%#linked#to#the# reaching#of#the# consolidated#EBITDA#
o
objectives# on# the# basis# of# a# performance# scale# with# a#
variable# range# from# a# minimum# 80%# to# a# maximum# of#
105%# (corresponding# to# the# issue# of# a# short2term#
variable#remuneration#respectively#from#34.3%#to#58.8%#
of#the#CEO#Annual#Fixed#Component). Within#this#range,#
the#amount#of#the#variable#component#linked#to#EBITDA#
will#be#based#according#to#the#pre2set#bracketsa#and
30%# linked# to# the# reaching# of# the# consolidated# NFP#
o
objectives# on# the# basis# of# a# performance# scale# with# a#
variable# range# from# a# minimum# of# Euro# 40# million# to# a#
maximum#of#Euro#40#million#(corresponding#to#the#issue#
of# a# variable# remuneration# respectively# from# 14.7%# to#
31.5%#of#the#CEO#Annual#Fixed#Component).#Within#this#
range,# the# amount# of# the# variable# component# linked# to#
NFP#will#be#based#according#to#the#pre2set#brackets
2
Qualitative! objectives:
30%# of# the# ED# Short2term# Variable#
Component# A# (the# ED! Qualitative! Component)# is# issuable#
subject#to#the#reaching#of#the#following#qualitative#objectives:
•
upgrade# the# organisational# structures# of# the# subsidiaries# to#
the#Group#modela
•
progress# in# the# programme# for# the# governance,# business#
processes# and# Group# organisation# and# IT# systems# in#
accordance# with# the# time2table# presented# to# the# Board# of#
Directors,##
(collectively,#the#ED!ShortEterm!Qualitative!Objectives)
2
Issue:
following# approval# of# the# 2017# consolidated# financial#
statements,# with# the# passing# of# a# motion# by# the# Board# of#
Directors,#having#consulted#the#Remuneration#Committee#and#the#
Board#of#Statutory#Auditors.
The#Executive#Director,#at#least#one#month#in#advance#of#the#date#
set#
for#
the#
approval#
of#
the#
2017#
consolidated#
financial#
statements,# should#present#to#the#Remuneration#Committee#and#
the#Board#of#Directors#a#report#on#the#state#of#implementation#of#
the# activities# whose# completion# constitutes# a# condition# for the#
issue# of# the# ED# Qualitative# Component.# On# the# basis# of# this#
report,#
the#
Board#
of#
Directors,#
having#
consulted#
the#
Remuneration# Committee# and# the# Board# of# Statutory# Auditors,#
will# verify# the# reaching# of# the# Short2term# ED# Qualitative#
Objectives,# deciding upon# the# allocation# of# the# ED# Qualitative#
Component.
2
Compliance! with! the! financial! covenants:
the# Executive#
Director#shall#not#receive#any#variable#remuneration#where#one#or#
more# of# the# financial# covenants# set# out# in# the# loan# contracts#
undertaken#by#the#Company#have#not#been#met.
2
ClawEback!clause: obligation#for#the#repayment#to#the#Company#
of#the#variable# remuneration#components#in#the#case#of#material#
violation# of# company# or# legal# rules,# or# harmful# or# seriously#
damaging# conduct# such# as# to# alter# the data# utilised# for# the#
achievement#of#the#objectives.
Medium/longEterm!
variable!
component!		 Variable# medium/long2term# component# of# a# maximum,# aggregated#
over# a# three2year# period,# of# approx.# 167%# of# the# ED# Annual# Fixed#
Component# (the# ED! Medium/LongEterm! Variable! Component)#
linked#to#the#reaching#of#the#quantitative#objectives#and#the#qualitative#
objectives#described#below.##
2
Quantitative! objective:
70%# of# the# ED# Medium/Long2term#
Variable#Component#A#is#issuable#on#condition#that,#in#the#20162
2018#three2year#period,#the#ROI#objectives#are#met.
2
Qualitative! objective:
30%# of# the# ED# Medium/Long2term#
Variable#Component#A# (the#ED! Medium/LongEterm!Qualitative!
Variable! Component)#is#issuable#on# condition#that#in#the#20162
2018#three2year#period#the#following#objectives#are#met:
three2year#retentiona
o
by# December# 31,# 2018,# presentation# to# the# Board# of#
o
Directors#of#a#succession#plana#
by# January# 31,# 2018,# roll2out# of# the# ERP# system,# with#
o
review#of#all#first2line#software#systemsa
(collectively,#
the#
ED!
Medium/LongEterm!
Qualitative!
Objectives).
2
Issue:
following# approval# of# the# 2018# consolidated# financial#
statements,# with# the# passing# of# a# motion# by# the# Board# of#
Directors,#having#consulted#the#Remuneration#Committee#and#the#
Board#of#Statutory#Auditors#(the#Issue!Date).
The#Executive#Director,#at#least#one#month#in#advance#of#the#date#set#
for#the#approval#of#the#2018#consolidated#financial#statements,#should#
present#to#the#Remuneration#Committee#and#the#Board#of#Directors#a#
report# on# the# state# of# implementation# of# the# activities# whose#
completion# constitutes# a# condition# for# the# issue# of# the# ED#
Medium/Long2term# Qualitative# Component.# On# the# basis# of# this#
report,# the# Board# of# Directors,# having# consulted# the# Remuneration#
Committee# and# the# Board# of# Statutory# Auditors,# will# verify# the#
reaching# of# the# Medium/Long2term# ED# Qualitative# Objectives,#
deciding#upon#the#allocation#of#the#ED#Medium/Long2term#Qualitative#
Component
2
ClawEback!clause: obligation#for#the#repayment#to#the#Company#
of#the#variable# remuneration#components#in#the#case#of#material#
violation# of# company# or# legal# rules,# or# harmful# or# seriously#
damaging# conduct# such# as# to# alter# the# data# utilised# for# the#
achievement#of#the#objectives.
2
Retention!clause:
•
obligation#to#repay#to#the#Company#50%#of#the#net#amount#of#
the#ED#Medium/Long2term#Variable#Component#matured#and#
received# (the PayEOut)# in# the# case# of# voluntary# resignation#
without# just# cause# or# revocation/dismissal# for# just# cause#
(Bad!Leaver!Cases),#communicated#by#the#first#anniversary#
of#the#Issue#Datea
•
repayment#of#25%#of#the#Pay2Out#in#the#Bad#Leaver#Cases#
communicated#by#the#second#anniversary#of#the#Issue#Date,
subject#to#the#fact#that#in#the#case#of#dismissal#from#(or#however#
conclusion# of# office)# the# Board# of# Directors# in# circumstances#
other# than# Bad# Leaver# Cases,# the# Executive# Director# Luca#
Pelosin#will#receive#the#pro2rata#amount#of#the#remuneration#until#
the matured#date.

Common!application!provisions!

The#criteria#for#the#normalisation#of#EBITDA#and#the#NFP#are#described#at#Annex#A#of# the# present# Report.## The# calculation# of#the#EBITDA# and#the# NFP# will# be# based# on# a# like2for2like# consolidation# scope# (without# including# therefore# the# EBITDA# and# NFP# of# the#companies#acquired#and/or#disposed#of#and/or#merged#and/or#incorporated#and#not# considered# in#the# 201622018#Plan),# normalising# (i)# in#the# calculation# of#the# NFP# also# the#acquisition# costs#and# (ii)#in#the# calculation#of#the#EBITDA#the# value#of#the#bonus,# both# in# the# budget# and# actual# figures,# for# the# verification# of# the# achievement# of# the# quantitative# objectives# of# this# component# of# the# Executive# Directors# as# well# as# the# Senior#Executives#and#Senior#Management.

Where#one#or#more#of#the#Relevant#Events#occurs,#the#Board#of#Directors#2 also#on#the# proposal# on# the# Remuneration# Committee# 2 shall# make# the# amendments# and# supplementations#considered#necessary#and#appropriate#to#neutralise#the#effects#of#the# Relevant#Events#to#the#objectives#and/or#governance#of#the#remuneration#plans#of#the# executive#directors,#and#maintain#therefore#as#far#as#possible#the#substantial#content#of# the#plan#and#the#concrete#opportunity#to#achieve#the#bonuses#therein#unchanged.

The#Remuneration#Committee#may#also,#on#the#indication#of#its#Chairman,#propose#to# the# Board# of# Directors# the# payment# of# any# exceptional# bonuses# in# favour# of# the# Executive# Directors# in# relation# to# extraordinary# events# of# such# significance# to# substantially#positively#impact#the#value#and#the#volume#of#business#operations#of#the# Company#and/or#the#relative#income,#so#as#to#justify#such#an#additional#disbursement.# In#such#cases,#adequate#disclosure#concerning#the#amount,#reasons#and#establishment# criteria#of#any#extraordinary#bonuses#should#be#provided#in#the#first#remuneration#report# subsequent#to#the#issue.

(ii) SENIOR! EXECUTIVES! AND! SENIOR! MANAGEMENT! E SHORTETERM! VARIABLE! COMPONENT!

The#variable#remuneration#of#Senior#Executives2 is#composed#of#a#short2term#variable# component#and#a#medium/long#term#variable#component.#

The# short2term# variable# component# is# based# on# different# principles# concerning# the# various#persons#qualifying#as#Senior#Executives.##In#particular,#in#the#establishment#of# the#short2term#variable#component,#Senior#Executives#are#distinguished#between:#

• the#Country#CEOa

##################################
  • the#CFOa
  • Senior#Managers#with#Global/Regional/Local#responsibilities.

The# principles# and# procedures# for# the# establishment# of# the# short2term# variable# component#of#Senior#Executives#is#shown#below.

2 See note#1.##

Country!CEO CFO!and!Senior!
Managers!with!global!
responsibility		 Managers!with!
Regional!or!Local!
responsibility
ShortEterm!
variable!
component		 Short2term#
variable#
component# of# a# maximum#
amount# of# # between# 20%#
and#
50%#
of#
the#
CEO*#
Annual#
Fixed#
Component#
(the
CEO!
ShortEterm!
Variable!
Component!
A)#
linked#to the# reaching#of#the#
quantitative# objectives# and#
qualitative#
objectives#
described#below.		 Short2term#
variable#
component# of# a# maximum#
amount# of# # between# 20%#
and# 50%**# of# the# CFO#
Annual# Fixed# Component#
(the CFO! and! SM! ShortE
term!
Variable!
Component! A)# linked# to#
the#
reaching#
of#
the#
quantitative# objectives# and#
qualitative#
objectives#
described#below.		 Short2term#
variable#
component#
of#
a#
maximum#
amount#
of##
between#20%#and#50%#of#
the#MRLR*#Annual# Fixed#
Component# (the
MRLR!
ShortEterm!
Variable!
Component! A)# linked# to#
the#
reaching#
of#
the#
quantitative#
objectives#
and# qualitative# objectives#
described#below.
Quantitative!
objectives		 70%# of# the# CEO# Short2term#
Variable# Component# A# is#
issuable# on# the# meeting# of#
the#
EBITDA#
and#
NFP#
objectives.
In#particular:
•
70%#
linked#
to#
the#
reaching# of# the# regional#
EBITDA#
objectives#
on#
the#
basis#
of#
a#
performance#scale#with#a#
variable#rangea#and#
•
30%#
linked#
to#
the#
reaching# of# the# regional#
NFP# objectives# on# the#
basis# of# a# performance#
scale#
with#
a#
variable#
range.#		 50%# of# the# CFO# and# SM#
Short2term#
Variable#
Component# A# is# issuable#
on#
the#
meeting#
of#
the#
EBITDA#
and#
NFP#
objectives.
In#particular:
•
70%#
linked#
to#
the#
reaching#
of#
the#
consolidated#
EBITDA#
objectives# on# the# basis#
of# a# performance# scale#
with# a# variable# rangea#
and#
•
30%#
linked#
to#
the#
reaching#
of#
the#
consolidated#
NFP#
objectives# on# the# basis#
of# a# performance# scale#
with#a#variable#range.#		 50%# of#the#MRLR#Short2
term#Variable#Component#
A#
is#
issuable#
on#
the#
meeting# of# the# EBITDA#
and#NFP#objectives.
In#particular:
•
70%#
linked#
to
the#
reaching#
of#
the#
regional#
EBITDA#
objectives#
on#
the#
basis#
of#
a#
performance#
scale#
with# a# variable# rangea#
and#
•
30%#
linked#
to#
the#
reaching# of# the# NFP#
objectives#
on#
the#
basis#
of#
a#
performance#
scale#
with#a#variable#range.#
The# performance# curve# is# defined#between# a#minimum# of#
The#performance#curve#is#
80%# and# a#maximum# of# 100%# of#the#EBITDA# and#with# a#
differentiated#by#country.
NFP# range# between# a#minimum# negative# change# of#Euro#
40#million#and#a#maximum#of#100%.
PayEout!
curve		 EBITDA# and# NFP:# between#
70%#of#the# relative#bonus# (if#
minimum#level#reached)#and#
100%# of# the# relative# bonus#
(if#maximum#level#reached).#		 EBITDA:#
between#
70%#
and# 100%# of# the# target#
bonus#
related#
to#
the#
EBITDA.
NFP:# between# 70%# and#
100%# of# the# target# bonus#
related#to#NFP.		 EBITDA#
and#
NFP:#
between#
70%#
of#
the#
relative#
bonus#
(if#
minimum# level# reached)#
and# 100%# of# the# relative#
bonus# (if# maximum# level#
reached).#
Qualitative!
objectives		 Between# 30%# and# 50%# of# the# variable# component# (the#Qualitative! Component),# is#
issuable# subject# to# the# reaching# of# the# qualitative# objectives# which# depend# on# the#
specific#characteristics#of#the#role.##
Compliance
with
financial
covenants		 The Senior Executives and Senior Managers shall not receive any variable
remuneration where one or more of the financial covenants set out in the loan contracts
undertaken by the Company have not been met.
Caw-back
clause		 Obligation for the repayment to the Company of the variable remuneration components
in the case of material violation of company or legal rules, or harmful or seriously
damaging conduct such as to alter the data utilised for the achievement of the
objectives.

*#This\$interval\$does\$not\$consider\$the\$opportunity\$bonus\$of\$the\$North\$American\$CEO,\$linked\$to\$the\$specifics\$ of\$the\$role\$and\$the\$market.\$

**#With\$the\$exception\$of\$the\$new\$Group\$CIO,\$for\$which\$the\$percentage\$is\$15%\$for\$the\$first\$year.

(iii) SENIOR! EXECUTIVES! AND! SENIOR! MANAGEMENT! E MEDIUM/LONG! TERM! VARIABLE! COMPONENT!

The#Remuneration#Policy#of#the#company#provides#that#the#medium/long2term#variable# component# for# Senior# Executives 3 and Senior# Management# is# established# in# accordance#with#the#objectives#and#principles#outlined#in#the#201722019#Performance# Shares#Plan.##

The# 201722019# Performance# Shares# Plan# represents# a# new# medium/long2term# incentive#plan#based#on#the#free#assignment#of#shares#of#the#company#and#subject#to# the#performance#of#the#company#and,#in#particular,#the#achievement#of#the#objectives#of# the Industrial#Plan#for#the#three2year# period# 201722019.# The# 201722019#Performance# Shares# Plan# was# approved# by# the# Board# of# Directors# on# March# 21,# 2017, on# the# proposal#of#the#Remuneration#Committee#and#with#the#prior#favourable#opinion#of#the# Related# Parties# Committee, and# will# be# presented# for# approval# to the# Shareholders'# Meeting#of#April#27,#2017.

The#201722019#Performance#Shares#Plan#was#implemented#in#order#to:

  • link# remuneration# with# the# medium/long2term# enterprise# performance,# in# order# to# further# align# managerial# prospects# with# the# interests# of# the# shareholders,# ensuring# conduct# based# on# the# sustainability# of# the# performance# and# the# achievement#of#the#industrial#and#business#objectives#defineda
  • increase#the#level#of#motivation#and#engagement#of#managementa
  • increase#the#potential#to#attract#talent#and a# strong# retention#policy#through#its# Remuneration#Policy.#

The#guidelines#of#the#201722019#Performance#Shares#Plan#are#outlined#below.#

2017-2019 Performance Shares Plan
Beneficiaries Senior Executives (5) and Senior Management (14).

3 Cfr. note#1.##

##################################
2. Quantitative!
objective!		 Achievement# of# the# average# ROI# in# the# 201722019# three2year# period.# # The#
shares# to# be# allocated# to# each# beneficiary# on# the# achievement# of# the#
quantitative#objectives#are#as#follows:
•
performance#less#than#95%:#no#issuancea
•
performance between#95%# (included) and 97.5%:#issuance#of#50%#
of#the#shares#assigned#in#relation#to#the#quantitative#objectivea#
•
performance#between#97.5%#(included) and 100%:#issuance#of#75%#
of#the#shares#assigned#in#relation#to#the#quantitative#objectivea#
•
performance#equal#to#or#greater#than#100%:#issuance#of#100%#of#the#
shares#assigned#in#relation#to#the#quantitative#objective.
3 Qualitative!
objective!		 Achievement#of#the#individual#or#group#strategic#objectives.#
The#achievement#of#this#objective#will#result#in#the#issuance#of#the#shares#in#
accordance#with#the#weighting#and#the#number#assigned#for#this#objective.##
4 Vesting!
period!
of!
the!results		 January#1,#2017#2 December#31,#2019.##
5 Conditions! for! the!
assignment! of! the!
shares		 •
Maintenance#of#the#relationship#of#the#beneficiary#with#the#company#
or#with#the#companies#of#the#Group#on#the#issuance#of#the#bonusa
•
achievement#of#the#objectives#as#per#points#2#and#3.
6 Assignment! of! the!
shares		 In#a#single#tranche,#subsequent#to#the#vesting#period#as#per#point#4.#
7 CawEback!clause Obligation# for# the# repayment# to# the# Company# of# the# variable# remuneration#
components# in# the# case# of# material# violation# of# company# or# legal# rules,# or#
harmful# or#seriously# damaging# conduct# such# as#to# alter#the# data# utilised#for#
the#achievement#of#the#objectives.

For#further# information# on#the# 201722019#Performance#Shares#Plan# reference# should# be#made#to#the#Information#Document#prepared#in#accordance#with#Article#842bis and# Statement#7#of#Attachment#3A#of#the#Issuers'#Regulations#and#of#the#relative#Illustrative# Report# prepared# in# accordance# with# Articles# 1142bis and# 1252ter of# the# CFA# made# available# to# the# public# in# accordance# with# the# terms# and# conditions# required# by# applicable#legislation.

1.4 2017 EXTRAORDINARY!BONUS

The# Board# of# Directors# of# the# company# on# March# 21,# 2017,# on# the# proposal# of# the# Remuneration#Committee#and#with#the#prior#favourable#opinion#of#the#Related#Parties# Committee,# resolved#to#present#for#approval#of#the#Shareholders'#Meeting#of#April#27,# 2017# the# issuance# in# favour# of# an# Executive# Director,# Senior# Executives# and# Senior# Management#the#2017#Extraordinary#Bonus.#

The# 2017# Extraordinary# Bonus# provides# for# the# free# assignment# of# shares# of# the# company#and#wishes#to#reward#the#highly#professional#commitment#of#the#management# of#the#Group#holding#key#roles#in#the#expansion#of#the#Group.##

Specifically#the#2017#Extraordinary#Bonus#will#be#assigned#during#2017#to#the#following# persons:

  • Executive#Director#Luca#Pelosin#(Executive#Director)a
  • 2#Senior#Executivesa#
  • 6#Senior#Managementa#and
  • 1#employee#of#a#company#of#the#Group,#

for#a#total#of#10#beneficiaries.#

For#further#information#on#the#2017#Extraordinary#Bonus#reference#should#be#made#to# the# Information# Document# prepared# in# accordance# with Article# 842bis and# the# Statement# 7# of# Attachment# 3A# of# the# Issuers'# Regulation# and# the# relative# Illustrative# Report# prepared# in# accordance# with# Articles# 1142bis and# 1252ter of# the# CFA# made# available# to# the# public# in# accordance# with# the# terms# and# provisions# required# by# applicable#legislation.#

1.5 POLICY!UPON!NONEMONETARY!BENEFITS!(FRINGE!BENEFITS)

The# non2executive# directors# are# not# assigned# non2monetary# benefits,# with# the# exception#of#insurance#coverage#for#liability#arising#from#the#exercise#of#office.#

The remuneration#package#of#the#Honorary#Chairman# comprises,#with# regard#to#non2 monetary# benefits,# insurance# coverage#for# liability# arising#from#the# exercise# of# office,# insurance# coverage# in# the# case# of# death# or# accident,# a# health# policy# and# the# assignment#of a#company#car#for#general#use.

The# remuneration# package# of# the# Executive# Directors# comprises,# with# regard# to# the# non2monetary# benefits,# D&O# insurance# coverage,# insurance# coverage# in# the# case# of# death# or# accident,# a# health# policy# and# the# assignment# of# a# company# car# for# general# use.#

The# recognition# of# non2monetary# benefits# to# Senior# Executives# and# Senior# Management#is#in#line#with#market#practice#and#applicable#regulations.

1.6 POLICY!UPON!BENEFITS!ON!CONCLUSION!OF!OFFICE

Subject# to# that# outlined# in# the# previous# Paragraph in# relation# to# the# payment# of# the# medium/long2term#variable#component,#no#severance#payments#are#provided#for.

The# company# may# stipulate# non2competitive# clauses# with# Senior# Executives# and# Senior#Management.###

No# agreements# have# been# undertaken# between# the# Company# and# directors# which# provide#for#post2employment#benefits#following#a#public#purchase#offer.

1.7 INSURANCE, SOCIAL!SECURITY!AND!PENSION!COVERAGE

See#Paragraph#1.5.

SECTION II

In#the#first#part#of#Section#II#of#the#present#Report,#an#adequate#outline#of#each#of#the# items# comprising# the# remuneration# paid# to# directors# and# to# statutory# auditors# of# the# Company#is#provided.

1.1 FIRST!PART!E ITEMS!COMPRISING!2016 REMUNERATION!

1.1.1 Board!of!Directors

On# July# 22,# 2015,# the# Shareholders'# Meeting# of# FILA# approved# (i)# a# gross# annual# remuneration#of#Euro#15,000.00#for#each#non2executive#directora#and#(ii)#a#gross#annual# remuneration#of#Euro#90,000.00#for#the#Chairman#of#the#Board#of#Directors.

Also#on#July#22,#2015,#the#Board#of#Directors#of#the#Company,#with#the#approval#of#the# Related# Parties# Committee# and# the# Board# of# Statutory# Auditors,# allocated# a# gross# annual remuneration#of#Euro#80,000.00#until#December#31,#2015#and,#from#January#1,# 2016,#a#gross#annual#remuneration#of#Euro#150,000.00,#to#the#Honorary#Chairman.

1.1.2 Executive!Directors

On# March# 21,# 2016,# with# the# approval# of# the# Board# of# Statutory# Auditors# and# the# Related# Parties# Committee,# the# Board# of# Directors# allocated# the# remuneration# to# the# Chief#Executive#Officer#Massimo#Candela#and#the#Executive#Director#Luca#Pelosin.

  • Chief\$Executive\$Officer\$Massimo\$Candela
  • ! fixed#annual#remuneration#for#2016#of#Euro#850,000.00a
  • ! short2term#quantitative#variable#remuneration#equal#to#Euro#678,300.00a
  • ! short2term#qualitative#variable#remuneration#equal#to#Euro#255,000.00a
  • ! D&O# insurance# coverage,# insurance# coverage# in# the# case# of# death# or# accident,# a# health# policy# and# the# assignment# of# a# company# car# for# general#use.

• Executive\$Director\$Luca\$Pelosin

  • ! fixed#annual#remuneration#for#2016#of#Euro#300,000.00a
  • ! short2term#quantitative#variable#remuneration#equal#to#Euro#239,400.00a
  • ! short2term#qualitative#variable#remuneration#equal#to#Euro#90,000.00a
  • ! D&O# insurance# coverage,# insurance# coverage# in# the# case# of# death# or# accident,# a# health# policy# and# the# assignment# of# a# company# car# for# general#use.

Summary!of!Executive!Director!remuneration!for!2016

(Euro) 2016! Fixed!
remunerati
on!		 2016!
quantitative!
variable!
remuneration!		 2016!
qualitative!
variable!
remunerati
on!
Chief!Executive!Officer!Massimo!Candela! 850,000.00 678,300.00 255,000.00
Executive!Director!Luca!Pelosin 300,000.00 239,400.00 90,000.00
TOTAL 2,412,700.00

1.1.3 Senior!Executives!

Senior# Executives# were# identified# by# the# Board# of# Directors# of# the# company# during# 2016,#in#addition#to#two#Executive#Directors#of#the#company.

The#remuneration#policy#described#in#the#present#Report#for#Senior#Executives#will#be# applicable#from January#1,#2017.

1.1.4 Board!of!Statutory!Auditors

The#Shareholders'#Meeting#of#July#22,#2015#approved#a#gross#annual#remuneration#for# each#statutory#auditor#of#Euro#22,000.00#and#of#Euro#29,000.00#for#the#Chairman#of#the# Board#of#Statutory#Auditors.

1.2 SECOND!PART!/ BREAKDOWN!OF!THE!REMUNERATION!PAID!DURING THE!YEAR

Table!1

The\$following\$table\$ reports\$the\$ remuneration\$4 including\$ social\$ security\$ charges\$4 recognised\$ in\$any\$ capacity\$and\$ in\$any\$form\$to\$the\$members\$of\$the\$Board\$of\$ Directors\$and\$the\$Board\$of\$Statutory\$Auditors.\$\$

Name Office!held Period!of!office Concl.!of!
office		 Fixed!
Remun.		 Remuneration!
for!committee!
participation		 Variable!Remuneration
non!equity		 Non/
monetary!
benefits		 Other!
Remun.		 Total Fair!Value!
of!equity!
remun.		 Post/
employment!
benefits
Bonuses!and!
other!incentives		 Profit!
sharing
Gianni\$Mion Chairman\$of\$the\$
Board\$of\$
Directors\$		 01/01/2016
–
31/12/2016		 2017 90,000.00
Massimo\$
Candela		 Chief\$Executive\$
Officer		 01/01/2016
–
31/12/2016		 2017 850,000.00 933,300.00 8,261.00 1,791,561.00
Luca\$Pelosin Executive\$
Director		 01/01/2016
–
31/12/2016		 2017 300,000.00 329,400.00 6,975.20 2,500.00
550.00		 639,425.20
Name Office!held Period!of!office Concl.!of!
office		 Fixed!
Remun.		 Remuneration!
for!committee!
participation		 Variable!Remuneration
non!equity		 Non/
monetary!
benefits		 Other!
Remun.		 Total Fair!Value!
of!equity!
remun.		 Post/
employment!
benefits
Bonuses!and!
other!incentives		 Profit!
sharing
Alberto\$
Candela		 Director\$4
Honorary\$
Chairman		 01/01/2016
–		 2017 150,000.00 9,568.40 2,500.00
550.00		 178,618.40
Annalisa\$ 31/12/2016
01/01/2016		 16,000.00
Barbera Director –
31/12/2016		 2017 15,000.00
Fabio\$
Zucchetti		 Director 01/01/2016
–
31/12/2016		 2017 15,000.00 1,100.00
16,000.00		 17,200.00
Sergio\$
Ravagli		 Director 01/01/2016
–
31/12/2016		 2017 15,000.00
Francesca\$
Prandstraller		 Director 01/01/2016
–
31/12/2016		 2017 15,000.00
Name Office!held Period!of!office Concl.!of!
office		 Fixed!
Remun.		 Remuneration!
for!committee!
participation		 Variable!Remuneration
non!equity		 Non/
monetary!
benefits		 Other!
Remun.		 Total Fair!Value!
of!equity!
remun.		 Post/
employment!
benefits
Bonuses!and!
other!incentives		 Profit!
sharing
Gerolamo\$ 01/01/2016
Caccia\$
Dominioni		 Director – 2017 15,000.00
31/12/2016
Chair.\$Board\$of\$ 01/01/2016
Claudia\$
Mezzabotta		 Statutory\$
Auditors		 – 2017 29,000.00
31/12/2016
01/01/2016
Rosalba\$
Casiraghi		 Statutory\$Auditor – 2017 22,000.00
31/12/2016
01/01/2016
Stefano\$
Amoroso		 Statutory\$Auditor – 2017 22,000.00 6,500.00
31/12/2016
01/01/2016
Pietro\$Villa Alternate\$Auditor – 2017
31/12/2016
Name Office!held Period!of!office Concl.!of!
office		 Fixed!
Remun.		 Remuneration!
for!committee!
participation		 Variable!Remuneration
non!equity		 Non/
monetary!
benefits		 Other!
Remun.		 Total Fair!Value!
of!equity!
remun.		 Post/
employment!
benefits
Bonuses!and!
other!incentives		 Profit!
sharing
01/01/2016
Sonia\$
Ferrero		 Alternate\$Auditor – 2017
31/12/2016

Remuneration!from!Company!2,752,504.60

Remuneration!from!subsidiaries!and!associates!45,700.00

Total!2,795,704.60

Table!3!B

The\$following\$table\$reports\$the\$monetary\$incentive\$plans\$in\$favour\$of\$the\$member\$of\$the\$Board\$of\$Directors\$and\$Board\$of\$Statutory\$Auditors.

Bonus!for!the!year Prior!year!bonuses
Name Office Plan Issuable/Issued Deferred Period!of!
deferment!		 No!longer!
issuable		 Issuable/Issued Still!
deferred		 Other!Bonuses
Massimo\$Candela Chief\$Executive\$
Officer		 Variable\$
Remuneration\$
BoD\$
Motion\$
March\$
21,\$
2017		 933,300.00
Luca\$Pelosin Executive\$
Director		 Variable\$
Remuneration\$
BoD\$
Motion\$
March\$
21,\$
2017\$		 329,400.00
Remuneration!from!Company! 1,262,700.00
Remuneration!from!subsidiaries!and!associates 4
Total:! 1,262,700.00

1.3 THIRD!PART!/ LIST!OF!INVESTMENTS!HELD

Table!1

The\$following\$table\$reports\$the\$investments\$held\$by\$members\$of\$the\$Board\$of\$Directors\$and\$Board\$of\$Statutory\$Auditors.

Name Company Manner!of!
holding
(direct!/!indirect)		 Number!of!shares!held!
at!31/12/2015		 Number!of!shares!
purchased		 Number!of!shares!
sold		 Number!of!shares!held!at!31/12/2016
Gianni\$Mion F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.		 Indirect 6,566,508\$Class\$B\$Shares
13,133,032\$ordinary\$
shares		 6,566,508\$Class\$B\$Shares
13,133,032\$ordinary\$shares\$
Omyacolor\$S.A.\$ Direct\$ 2 2 4
Fila\$Hispania\$S.L. Direct 500 500
Massimo\$Candela Lycin\$Ltda\$(Brazil) Direct 1 1
Dixon\$SA Direct 445 445
Servidix\$(Mexico) Direct 1 1
Dixon\$
comercializadora\$
(Mexico)		 Direct 4 4
Name Company Manner!of!
holding
(direct!/!indirect)		 Number!of!shares!held!
at!31/12/2015		 Number!of!shares!
purchased		 Number!of!shares!
sold		 Number!of!shares!held!at!31/12/2016
Dixon\$
Ticonderoga\$
(Mexico)		 Direct 1 1
Luca\$Pelosin F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Omyacolor\$S.A. Direct 1 1
Alberto\$Candela F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Omyacolor\$S.A. Direct 1 1
Annalisa\$Barbera F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.		 Direct\$ 1,635\$ordinary\$shares\$ 1,635\$ordinary\$shares
Fabio\$Zucchetti F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Sergio\$Ravagli F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Name Company Manner!of!
holding
(direct!/!indirect)		 Number!of!shares!held!
at!31/12/2015		 Number!of!shares!
purchased		 Number!of!shares!
sold		 Number!of!shares!held!at!31/12/2016
Francesca\$Prandstraller F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Gerolamo\$Caccia\$Dominioni F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Claudia\$Mezzabotta F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Rosalba\$Casiraghi F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Stefano\$Amoroso F.I.L.A.\$
–
Fabbrica\$
Italiana
Lapis\$ed\$Affini\$
S.p.A.
Pietro\$Villa F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.
Sonia\$Ferrero F.I.L.A.\$
–
Fabbrica\$
Italiana\$Lapis\$ed\$Affini\$
S.p.A.

ATTACHMENT!A

The! Actual! EBITDA! and! the! Actual! NFP! are! normalised! through! precise! formulae! which!take!into!account!the!economic!and!financial!elements!to!be!considered!and!to! be!excluded!from!the!normalisation!scope.

More!specifically,!the!Actual!EBITDA!and!the!Actual!NFP!are!calculated!beginning!with! the!reported!EBITDA/NFP!as!per!the!consolidated!financial!statements!and!normalised! through! neutralisation! of! all! costs/charges! and! revenue/income! (and! relative!financial! movements)! outside! of!the! ordinary! operations! of!the! company! and! not! envisaged! in! the!2016L2018!Plan!(both!conditions!should!be!present).

For! example:! extra! direct! and! indirect! costs! concerning! goodwill,! the! transfer! and! closure!of!commercial!or!industrial!operationsO!restructuring!charges!for!the!portion!not! capitalised,!such!as!for!example,!leaving!and!mobility!incentives,!bonusesO!consultancy! charges!incurred!by!the! companies!of!the!FILA!Group!in! relation!to!market! research,! regulatory!adjustments,!the!acquisition!of!new!companies,!the!listing!of!securities!of!the! Company! on! regulated! markets! and! any! other! extraordinary! corporate! operationsO! commissions!and!consultancy!charges!concerning!financing!operations!or!the!issue!of! debt! securities! deriving! from! changes! to! the! accounting! standards! during! the! yearO! indemnities,! penalties,! bonuses! or! similar! cash! amounts! received! or! recognised! as! compensation!in!relation!to!any!disputes!concerning!nonLrecurring!events.

Milan,!March!30,!2017

F.I.L.A.!– Fabbrica!Italiana!Lapis!ed!Affini!S.p.A.!

****

For!the!Board!of!Directors!

Gianni!Mion Chairman

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