Governance Information • Apr 5, 2023
Governance Information
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| RATE | 1.0 ISSUER PROFILE | 5 |
|---|---|---|
| 2.0 INFORMATION ON THE OWNERSHIP STRUCTURE | 6 | |
| VANCE | Share Capital Structure а) — |
|
| b) Restrictions on the transfer of securities | ||
| c) Significant equity interests | ||
| d) Shares that confer special rights | ||
| e) Restrictions on voting rights Shareholders agreements f). |
||
| Mandates to increase share capital and authorisations to purchase treasury shares g) |
||
| 3.0 COMPLIANCE | 17 | |
| 4.0 BOARD OF DIRECTORS | 17 | |
| 4.1 Role of the Board of Directors | ||
| 4.2 Appointment and Substitution | ||
| 4.3 Composition | ||
| 4.4 Functioning of the Board of Directors | ||
| 4.5 Role of the Chairman of the Board of Directors | ||
| 4.6 Executive Directors | ||
| 4.7 Independent directors and Lead independent director | ||
| 5.0 MANAGEMENT OF CORPORATE INFORMATION | 34 | |
| 6.0 INTERNAL BOARD COMMITTEES | 35 | |
| 7.0 DIRECTORS' SELF-ASSESSMENT AND SUCCESSION - APPOINTMENTS COMMITTEE | 37 | |
| 7.1 Directors' self-assessment and succession | ||
| 7.2 Appointments Committee 8.0 DIRECTORS' REMUNERATION - REMUNERATION COMMITTEE |
39 | |
| 8.1 Directors' remuneration 8.2 Remuneration Committee |
||
| 9.0 INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROLS AND RISKS | 40 | |
| COMMITTEE | ||
| 9.1 Director in charge of the internal control and risk management system | ||
| 9.2 Controls and Risks Committee | ||
| 9.3 Internal auditing department manager | ||
| 9.4 Organisational model pursuant to Legislative Decree no. 231/2001 9.5 Independent Auditors |
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| 9.6 Appointed Manager in charge of drafting corporate financial reports and other corporate roles | ||
| and functions | ||
| 9.7 Coordination among the subjects involved in the internal control and risk management system | ||
| 10.0 THE INTERESTS OF DIRECTORS AND TRANSACTIONS WITH RELATED PARTIES | 49 | |
| 11.0 BOARD OF STATUTORY AUDITORS | 51 | |
| 11.1 Appointment and Substitution | ||
| 11.2 Composition and functioning | ||
| 12.0 RELATIONS WITH SHAREHOLDERS | 55 | |
| 13.0 MEETINGS | 56 | |
| 14.0 COMMENTS ON THE LETTER FROM THE CHAIRMAN OF THE CORPORATE GOVERNANCE COMMITTEE | 57 | |
| TABLE 1: STRUCTURE OF THE BOARD OF DIRECTORS AT THE END OF THE FINANCIAL YEAR | 59 | |
| TABLE 2: STRUCTURE OF THE BOARD COMMITTEES AT THE END OF THE FINANCIAL YEAR. | 60 | |
| TABLE 3: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS AT THE END OF THE FINANCIAL YEAR | 61. | |
| TABLE 4: POSITIONS THE DIRECTORS HOLD IN OTHER COMPANIES | 62 |
The Hera Group was born in 2002 out of the integration of 11 Emilia-Romagna public service companies, and in the subsequent years continued its geographical growth in order to expand its core business, in particular through the subsequent merger of important companies (Agea Spa, Meta Spa, Sat Spa, Acegas Aps Spa and Amga Azienda Multiservizi Spa), and most recently through its partnership with Ascopiave Spa in the commercial energy sector.
Hera is one of the leading Italian multi-utilities in the environmental services, water, gas and electricity businesses, with more than 9,000 employees, counting both open-ended and fixed-term contracts. The Company, the majority of whose share capital is owned by the state, has been listed on the Mercato Telematico of Borsa Italiana S.p.A. since 26 June 2003 and operates mainly in the Emilia Romagna region in the territories of Bologna, Ravenna, Rimini, Forlì, Cesena, Ferrara, Modena, and Imola as well as the Veneto, Friuli-Venezia Giulia, Marche and Abruzzo Regions. Hera is an Issuer that uses the traditional governance system and its organizational structure is versatile and capable of adapting to an economic, business and regulatory, technological, environmental and human capital context that is increasingly volatile and affected by significant changes.
The Hera Group's entrepreneurial and organizational model, unique in this sector, makes it possible to combine strong territorial roots with the need to grow in size, in order to offer increasingly efficient services while remaining open to new partners. Since its inception, Hera has developed a trajectory of growth both organic and along external lines.
Its development strategy entails actions to support organic growth in the businesses already served, but also consolidation and acquisition operations to expand the current perimeter of operations, maintaining the Group's solid financial structure in the context of a shared industrial vision.
On the internal front, Hera addresses all possible opportunities for developing activities in its businesses, leveraging innovation, efficiency and excellence.
The strategy for external lines of growth is based on three cornerstones:
Over the years, the Hera Group has, however, implemented a plan to rationalise its shareholdings, reducing their number significantly and more effectively merging the various companies by business area and geographical contiguity.
Hera is also committed to acting every day to enhance the experience and develop the skills of its employees, and to promote cooperation and the exchange of knowledge, so that work is a source of satisfaction and pride for everyone involved as well as an important factor for the success of the company.
Hera's goal is to become the best multi-utility in Italy for its customers, workforce and shareholders. It aims to achieve this through further development of an original corporate model capable of innovation and of forging strong links with the areas in which it operates, while respecting the local environment.
As early as 2003, Hera included Corporate Social Responsibility in its strategy, a concept which has since evolved into the broader perspective of shared value, understood as a tool for increasing competitiveness and a key factor for achieving sustainable success, in keeping with the guidelines identified by the United Nations.
During the shareholder's meeting of 28 April 2021, Hera modified article 3 of the Articles of Association, integrating it with the corporate purpose that the Company aims to achieve in carrying out its business activities.
Therefore, by making this aim explicit, the Company has confirmed and outlined its commitment to developing a business model geared towards creating value for its shareholders by creating shared value together with its stakeholders.
In this regard, as more fully detailed in the consolidated non-financial statement pursuant to Articles 3 and 4 of Legislative Decree 254/2016, available on the website www.gruppohera.it in the "Sustainability Section", Hera organizes and carries out its business activities with the aim of fostering social equity and contributing to the achievement of carbon neutrality, the regeneration of resources and the resilience of its system of services managed for the benefit of customers, the local ecosystem and future generations. In compliance with Principle I of the Corporate Governance Code referred to below, therefore, Hera means to reaffirm its commitment to corporate social responsibility and sustainability, principles that have constituted a distinctive factor of the Company's relationship with all its stakeholders since its establishment, with the awareness that the points of intersection between business activities and the local ecosystem represent opportunities for the creation of shared value and, therefore, of lasting prosperity for the Group. In this respect, Hera was the first Italian multi-utility to be included in the Dow Jones Sustainability Index, a global stock market index for assessing social responsibility.
Hera has further strengthened its commitment to the energy transition and circular economy through innovation and digitalization, as well as its engagement in promoting social equity. Hera believes that creating shared value in these areas represents a guarantee for achieving its "Purpose" and for continuing to act as a company capable of "leaving a mark and not a footprint", prioritizing the three parameters of "Planet, People and Prosperity" at the top of its business model as the fundamental rationale behind its development.
The Mission and Values outline the guidelines for corporate behaviour already contained in the Code of Ethics and shape every action taken by and relationship maintained by the Group. Mission, values and shared conduct represent the strategic and cultural framework within which the industrial plan is formulated, results are reported transparently through the consolidated non-financial statement, and economic planning is defined on an annual basis.
Hera grants special attention to dialoguing with its stakeholders and the local area in which it operates, consolidating positive results achieved in terms of creating value and demonstrating the Group's ability to grow despite the current complex economic conditions.
The Board of Directors bases its activities on the pursuit of sustainable success, supported in this direction by the Ethics and Sustainability Committee which has the task, among others, of supervising the sustainability aspects of the company's operations.
According to the classifications of the Corporate Governance Code, Hera Spa falls within the scope of large companies with non-concentrated ownership, having presented a capitalization of more than one billion euros on the last day of the open market for the years 2020, 2021 and 2022.
a) Share capital structure (pursuant to Article 123-bis, paragraph 1, letter a) of the TUF) The share capital is Euro.1,489,538,745, fully subscribed and paid-up, and consists of 1,489,538,745 ordinary shares with a par value of Eur1 each.
| Type of shares |
no. of shares | no. of voting rights |
Listed | Rights and obligations |
|---|---|---|---|---|
| Ordinary shares |
749,725,632 | 749,725,632 | MTA Italian Bourse |
Ordinary shares grant their holders the property and administrative rights stipulated by law |
| Ordinary shares with increased voting rights |
739,813,113 | 1,479,626,226 | MTA Italian Bourse |
Ordinary shares that have been registered for a continuous period of at least 24 months in the special list shall entitle holders to cast two votes for each share held, with regard to the resolutions of the Shareholders' Meetings concerning: i) amendments to articles 6.4 and/or 8 of the Articles of Association, ii) the appointment and/or revocation of the Board of Directors or its members, and iii) the appointment and/or revocation of the Board of Statutory Auditors or its members. |
| Total | 1,489,538,745 | 2,229,351,858 |
Share Capital Structure
Article 7 of Hera's Articles of Association to stipulate that the majority of voting rights in the company be held by Municipalities, Provinces and Consortiums established in accordance with Article 31 of Legislative Decree no. 267/2000, or by other Public Authorities, or consortiums or joint-stock companies including Municipalities, Provinces or Consortiums established in accordance with Article 31 of Legislative Decree no. 267/2000, or other Public Authorities hold, even indirectly, the majority of the share capital. Article 8.1 of the Articles of Association prohibits the holding of more than 5% of the company's share capital by any shareholder other than those indicated above.
The parties that directly or indirectly hold more than 3% of the share capital of the Company represented by shares with voting rights, are as follows, based on communications made pursuant to article 120 of the TUF, as well as any other data in the possession of the Company.
| Declarer | Direct shareholder | % of the share capital | % of the voting share capital |
|---|---|---|---|
| Municipality of Bologna | Municipality of Bologna | 8.402% | 8.402% |
| Municipality of Imola | Con.Ami | 7.293% | 7.293% |
| Municipality of Modena | Municipality of Modena | 6.519% | 6.519% |
| Lazard Asset Management L.L.C. | Lazard Asset Management L.L.C. | 5.043% | 5.043% |
| Municipality of Ravenna | Ravenna Holding Spa | 4.916% | |
| Municipality of Trieste | Municipality of Trieste | 3.731% | 3.731% |
| Municipality of Padua | Municipality of Padua | 3.097% | 3.097% |
d) Shares that confer special rights (pursuant to Article 123-bis, paragraph 1, letter f) of the TUF) The shareholder's meeting of 28 April 2015 authorized, pursuant to the limits established by Article 6 the institute's Articles of Association, an increased vote, whereby individuals who are registered for a continuous period of at least 24 months in the special list established beginning in 1 June 2015, will be entitled, for every share they hold, to two votes in shareholders deliberations regarding: i) the amendment of Articles 6.4 and/or 8 of the Articles of Association, ii) the appointment and / or revocation of the Board or its members, iii) the appointment and / or revocation of the Board of Statutory Auditors or its members. On 13 May 2015, Hera's Board of Directors in order to define the criteria and procedures for keeping the special list, approved the special list regulations for eligibility for increased voting rights, in implementation of the provisions of applicable law and Hera's Articles of Association.
e) Restrictions on voting rights (pursuant to Article 123-bis, paragraph 1, letter f) of the TUF) Article 8.6 of the Articles of Association stipulates that the voting rights of parties other than public authorities who hold more than 5% of the share capital will be limited to an overall maximum of 5%.
In accordance with Article 122 of the TUF, the following Voting Trust and Share Transfer Rules Agreements are in existence:
held in Hera by the adherents, as well as the designation of members of the Board of Directors, entered into on 21 June 2021 and with a duration of three years, from 1 July 2021 to 30 June 2024, as a continuation of the previous agreements, in particular the one entered into on 26 June 2018 effective from 1 July 2018 until 30 June 2021, of which the existing structures and balances expressed in that agreement are maintained unchanged;
▪ Sub-agreement between the municipalities of Padua and Trieste, having as its object the constitution of a consultation and voting syndicate functional for the realization of some provisions regarding the corporate governance of Hera in implementation of the provisions of the first level Shareholders' Agreement, stipulated on 12 July 2021 and with a duration of three years starting from the signing date, in continuation of the previous agreements, in particular that entered into on 26 June 2018, of which the existing structures and balances expressed therein are maintained unchanged.
The main identifying elements of the aforementioned Agreements, which can be found in the "Governance Section/Shareholders' Agreements Disclosures" section of the company's website at www.gruppohera.it, are provided below.
The Agreement concerns 682,744,858 shares granted to the Voting Trust, corresponding to 45.83599% of Hera's share capital, 1,355,078,908 voting rights granted to the Voting Trust, corresponding to 60.78354% of the total voting rights making up the share capital and 571,257,152 blocked shares corresponding to 38.35128% of the share capital.
In order to realize the decisions of the voting trust, the Parties have established a voting trust deliberative body (the Voting Trust Committee) composed as follows: a member designated by the Municipality of Bologna, to whom seven votes are assigned, a member designated by the minor shareholders of the Bologna area, to whom two votes are assigned, a member designated by Ferrara Tua Spa, to whom one vote is assigned, a member designated by Ravenna Holding Spa, to whom five votes are assigned, a member designated by CON.AMI, to whom six votes are assigned, one member designated by Rimini Holding Spa, to whom one vote is assigned, one member designated by the Municipality of Cesena, to whom one vote is assigned, one member designated by the shareholders of Modena, to whom six votes are assigned, one member designated by the Municipality of Padua, to whom three votes are assigned, one member designated by the Municipality of Trieste, to whom three votes are assigned, and one member designated by the Municipality of Udine, to whom two votes are assigned.
For the duration of the Agreement, the number of votes assigned to each principal shareholder through its committee member is allocated on the basis of one vote for each 1% of blocked shares held, rounded down if the surplus was less than 0.50%, or up if the surplus was equal to or greater than 0.50%, of the blocked shares. The percentage of blocked shares is calculated as follows:
number of blocked shares by the main shareholder
% shares blocked = X 100
The number of votes cast by each of the main members was verified at the opening of the first meeting of the Committee and definitively ascertained by the Chairman of the Committee.
The Voting Trust Committee remains in office until the end of the Agreement.
Decisions will be made through a yes-vote by at least 65% of the total votes assigned to the members of the Voting Trust Committee present at that meeting, except for decisions for which the Agreement requires a different majority.
The Voting Trust Committee will meet at least one day prior to:
The Parties undertake to ensure that their vote at the Shareholders' Meeting conforms to the resolutions adopted by the Voting Trust Committee and indicated in this section (i). In the event that a vote in favour of the resolution to be adopted pursuant to this Paragraph (i) is not reached in the Voting Trust Committee, every Party to the Agreement shall express a vote in the Shareholders' Meeting against the adoption of that resolution.
The Voting Trust Committee shall meet: (i) at least once a year, by the date of the Hera Shareholders' Meeting convoked to approve the financial statements, in order to verify any plans for the sale of Hera Shares not subject to the voting trust blocking provided for by each Party; (ii) whenever one or more members of the same make a written request to the Chairman of the Voting Trust Committee. In addition, the Voting Trust Committee will be responsible for:
The Parties undertake and agree, for the entire duration of the Agreement, to not transfer the shares allocated to the Blocking Syndicate (the blocked shares). Under the terms of the Agreement, Transfer or To transfer refers to any legal transaction, even free of charge (including sale, donation, exchange, contribution to a company, forced sale, block sale, merger, demerger) that has the direct or indirect result of transferring to third parties ownership or bare ownership of the shares or investing third parties with real rights (pledge and usufruct) on the Shares in the event that the voting right belongs to the pledgee or usufructuary.
The Parties undertake to maintain on the list established by Hera in accordance with Article 6.4 of the Hera Articles of Association (the Special List) the number of blocked shares determined in each instance pursuant to the Agreement. The Parties may also register in the Special List a greater number of shares than the number of blocked shares.
The Agreement identifies the number of shares blocked for the entire duration of the Agreement with respect to each Party.
The Parties have agreed that, in any event, the total number of blocked shares may not be less than 38% of the share capital of Hera until the expiration of the Agreement. If the total number of blocked shares does not comply with the above mentioned indefectible condition, the Parties, for this purpose, grant the Chairman of the Committee a mandate to adjust, without delay and on the basis of a principle of proportionality, the number of blocked shares. If the above condition is not satisfied due to the nonperformance of a Party, the provisions relating to non-performance and penalties shall apply.
The contracting Parties will be free to transfer blocked shares to public shareholders (Municipalities, Consortiums established in accordance with Article 31 of Legislative Decree 267/2000, or to other Public Authorities, or consortiums or joint-stock companies of which Municipalities or Consortiums established in accordance with Article 31 of Legislative Decree 267/2000 or other Public Bodies or Authorities hold, even indirectly, the majority of their share capital), including the other Parties, or to consortia formed between public bodies or to companies with share capital, also in consortium form, controlled by a Party to the Agreement, also jointly with other Parties to the Agreement, on the condition that the aforesaid company, at the time of the transfer made in its favour, has adhered to the Agreement. The Parties will be free to transfer, even to third parties, the option rights on the blocked shares. Transfers of blocked shares will be permitted only on the condition that the transferring entity, by the date of the Transfer made to it, has entered into the Agreement by accepting it in writing and allocating the transferred shares to the Blocking Syndicate.
Each Party undertakes to inform the Chairman of the Syndicate Committee in writing, in a timely manner and in any case no later than the fifth day following the transfer, of any change in the blocked shares held by that Party.
The non-transferability constraint applies only to blocked shares. In any case, the Parties undertake to sell, in an orderly manner, the shares other than the blocked shares which they intend to transfer in order to allow a smooth negotiation, in particular: a) each Party that intends to make sales on the stock market (without prejudice to the prohibition on selling blocked shares), for a total amount greater than three million shares in each calendar year, undertakes to coordinate in advance with the Committee, and its Chairman on its behalf, during the annual meeting and, where appropriate, also to request further meetings, and to implement a method of sale completed through a single transaction; b) if at the annual meeting: (i) the total number of shares to be offered for sale, even individually, is greater than ten million shares, the sale will proceed in a coordinated way; (ii) the total number of shares to be offered for sale does not exceed ten million shares, each Party may proceed with the sale independently, without prejudice to the provisions outlined under point a) above.
The annual meeting will also be aimed at verifying whether the intentions of each Party to sell shares are lower than the number of shares held by that Party not subject to the Blocking Syndicate. In this case, extra shares not already subject to the Blocking Syndicate may be subjected to the Blocking Syndicate and the shares of other parties to the Agreement that need to be disposed of may be unblocked. Coordination will be carried out by the Committee on the basis of the principle of proportionality. Once shared, changes to the number of shares subjected to the Blocking Syndicate will be incorporated into the Agreement, it being understood that the total number of blocked shares may not be changed except as provided for in the preceding sections.
Each Party has the right to transfer, for any reason whatsoever, its shares to any joint-stock company, even in consortium form, controlled by itself or jointly with other Parties, provided that the aforesaid company, at the time of the transfer made in its favour, has adhered to the Agreement. In this case, all the rights and obligations of the Parties will be placed in the hands of the transferee company, without prejudice to the obligation of the Party to the Agreement that made the transfer to then repurchase a number of shares equal to those transferred, if the company (i) is no longer controlled by the transferor, or (ii) the controlled company is subject to bankruptcy proceedings of any kind, or (iii) in the event of a merger, demerger or any other form of transformation of the controlled company.
For the entire duration of the Contract, the Parties undertake not to set up, directly or indirectly, including through third parties or through subsidiaries and/or connected parties or with third parties acting in concert with them, as defined in article 109 of the TUF, acts and/or facts and/or transactions, including transfers, which involve or may involve the obligation to make a mandatory public offer for the purchase of Hera shares ("OPA"). The defaulting Party shall take all necessary and appropriate actions to remedy the occurrence of OPA and, where possible, benefit from the exemptions provided for by applicable legislation, for example it shall undertake to transfer the shares to unrelated parties, or reduce the excess voting rights within 12 months and not to exercise these rights pursuant to letter e) of Article 49, paragraph 1) of the Issuers' Regulations and/or it must waive the allocation of the increased voting rights pursuant to and within the terms of applicable legislation.
In addition to the Voting Trust Committee, the bodies of the Agreement are the Chairman and Secretary.
The Voting Trust Committee is presided over by the Committee Chairman or, in his/her absence, the oldest individual among its members. The Chairman is assisted by the Secretary. In its first meeting, the Voting Trust Committee will appoint the Chairman, to be the person who, among the members of the Committee, has obtained the highest number of overall votes assigned to the members of the Committee present at that meeting. The Chairman performs the following tasks: a) convenes and chairs the Committee, preparing the agenda; b) carries out all the activities entrusted to him by the Committee and by the Agreement; and c) adjusts the Agreement and its Annexes by removing from the text the names of persons who may not have signed the Pact, and making any further changes that follow from this.
In its first meeting, the Voting Trust Committee will appoint a Secretary, whether or not he/she is a member of the Voting Trust Committee who, unless the position is revoked or resigned, will remain in office for the entire duration of the Agreement. The Secretary is responsible for the following tasks: a) preparing the minutes of the meetings of the Voting Trust Committee; b) keeping the minutes of the meetings of the Voting Trust Committee; c) performing all the operational and executive functions necessary for the proper functioning of the Agreement, in support of the activities of the Voting Trust Committee and the Chairman, entrusted to him/her by the Chairman.
In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.
In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.
The Party that is in breach of certain provisions of the Agreement shall be liable to pay a penalty of (a) 5 million euro or (b) the lesser value to be calculated as follows: number of shares held by the Party that is in breach at the time of the breach, multiplied by three times the value of the share resulting from the arithmetic mean of the official stock exchange prices of the security during the 15 trading days prior to the date of the breach. The amount referred to in this paragraph, point (b), may not be less than 3 million euro and, therefore, if application of the above calculation results in less than this amount, the penalty will be 3 million euro. This is without prejudice to the right of each of the non-defaulting parties to bring a lawsuit for damages. The penalty shall be requested and collected, upon a resolution by the Voting Trust Committee made without the vote of the defaulting party, by the Chairman of the Voting Trust Committee in the name and on behalf of the non-defaulting parties, and shall be paid to the non-defaulting parties in proportion to the shares held by each of them.
If, as a result of breaches of the provisions of the Agreement, one or more Parties, individually or jointly, become obliged to launch a takeover bid, the defaulting party(s) shall indemnify and hold harmless the other Parties from all costs, expenses, charges, liabilities and damages related to or otherwise arising from such conduct, including those relating to the mandatory public tender offer for the Company's shares and related payment obligations. In addition, in such a case, the amount of the applicable penalty referred to in points (a) to (b) shall be applied in duplicate, except in the case of greater damages. This penalty will be applied, for the entire duration of the Agreement, in the event of a breach of the prohibition on the transfer of blocked shares resulting in a reduction in the total number of blocked shares below 38% of the share capital of Hera.
Any Party that does not default may automatically terminate the Agreement in relation to the defaulting Party in accordance with Article 1456 of the Italian Civil Code and with retroactive effect, and, where necessary, request that the Arbitration Board, in accordance with the procedure established therein, pronounce the Agreement terminated by right against the defaulting Party, without prejudice to the application of the rules on penalties for non-performance.
The Pact shall take effect on 1 July 2021 and shall remain in force until 30 June 2024. In view of the expiry of the Agreement, the parties undertake, in accordance with the principles of good faith, to do everything in their power, and in compliance with current legislation, to renegotiate new shareholders' agreements in accordance with the spirit of the Agreement. From the date of effectiveness of this Agreement, any previous shareholders' agreement between the same parties concerning the shares and signed by the same parties will cease to be effective.
The Agreement may be amended with the written agreement of the Parties which together hold at least 65% of the shares subject to the Blocking Syndicate. Changes to the Agreement shall be communicated to all Parties at least 30 days prior to the date such changes come into effect. In this case, the dissenting Parties shall have the right to withdraw immediately by means of a notice sent no later than the fifteenth day prior to the date on which the modifications to the Agreement come into effect.
The Agreement concerns 164,946,856 Hera ordinary shares bound to the Agreement, with a par value of EUR 1.00, equal to 11.07369% of Hera's current share capital, held by a total of 34 public shareholders, and 320,729,560 voting rights, equal to 14.38667% of the total voting rights making up the share capital.
In order to take on the decisions made by the Voting Syndicate, the Parties have established a deliberative body of the Voting Syndicate (the Agreement Assembly) composed of the pro-tempore legal representatives of each Party or their delegates.
The Agreement Assembly meets:
The decisions of the Agreement Assembly are validly made by a majority of those present, provided that a yes vote has been expressed by the Municipality of Bologna and at least eight other Parties.
The Parties to the Agreement undertake to ensure that their vote at the Shareholders' Meeting conforms to the resolutions adopted by the Agreement Assembly.
With reference to the process of drawing up the majority list for appointing the Board of Directors of Hera S.p.A., the Parties themselves undertake to define and approve, as follows, with due regard for the balance between genders, the list containing the names of directors:
▪ a maximum of two components - in accordance with the agreements that may be entered into with the Municipality of Ferrara, also in the interest of the shareholders of the Ferrara area - indicated by the Mayor of the Municipality of Bologna;
▪ one component indicated by the Parties, excluding the Municipality of Bologna, in the Agreement Assembly.
Finally, the Parties undertake to ensure that the Directors appointed by them, at the first meeting of the Board of Directors of Hera Spa, proceed with appointing the office of Chief Executive Officer, it being understood that they will consult each other before the name of the candidate is formalized.
Before the name of the candidate for Chief Executive Officer of the Board of Directors of Hera Spa is formalised, the Mayor of the Municipality of Bologna or a person appointed by him, in the interest of the Parties, will consult with the common representative of the shareholders of the Romagna territorial area and will inform the Chairman of the Voting Trust Committee.
For the duration of the Agreement, the parties to the Agreement undertake not to transfer the Hera Spa shares subject to the Blocking Syndicate (blocked shares) referred to in the first-level Shareholders' Agreement.
The Party that intends to sell Syndicated shares that are not blocked shares, and therefore not subject to the non-transferability restriction, for total amount of less than three million shares during each calendar year, must pre-emptively offer the Shares to be sold in advance to all the other Parties, under the same conditions, in proportion to the shareholding held by each Party in Hera, without prejudice to the right of growth of each Party.
In the event of non-compliance with the above provision, the acts of disposal of the shares shall be null and void and shall be unenforceable in relation to the Parties and Hera Spa.
The Party in breach of the provisions of the Agreement will be required to pay a penalty, for each individual, confirmed violation, of 500 thousand euro, without prejudice to compensation for any potential additional damage.
The Pact shall take effect on 10 February 2022 and shall remain in force until 30 June 2024.
In view of the expiry of the Agreement and if the Voting Trust Agreement is in turn renewed, the parties undertake, in accordance with the principles of good faith, to do everything in their power, and in compliance with current legislation, to renegotiate new shareholders' agreements.
In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.
In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.
The Agreement concerns 226,324,983 Hera ordinary shares bound to the Agreement, with a par value of EUR 1.00, equal to 15.19430% of Hera's current share capital, held by a total of 41 public shareholders, and 452,433,403 voting rights, equal to 20.29139% of the total voting rights making up the share capital.
In order to take on the decisions made by the Voting Syndicate, the Parties have established a deliberative body of the Voting Syndicate (the Agreement Assembly) composed of the pro-tempore legal representatives of each Party or their delegates.
(i) at least eight days prior to the date set for meetings of the Audit Committee concerning the matters identified in article 4.3 of the Voting Trust contract;
The decisions of the Agreement Assembly are validly taken if at least 2/3 of the Syndicated Shares are present and at least 2/3 of the Syndicated Shares present at the Agreement Assembly vote in favour.
The Parties to the Agreement undertake to conform their vote in the Voting Trust Committee for the relevant matters referred to in letters ii and iii) of article 4.3 of the Voting Trust Agreement and at the Shareholders' Meeting with respect to matters other than those relevant to the resolutions adopted.
With reference to the process of drawing up the majority list for appointing the Board of Directors of Hera Spa, the Parties undertake to define and approve at the Agreement Assembly, with due regard for the balance between genders, the list containing the list of the Directors appointed by the Romagna Area Shareholders, which will be made up as follows:
Finally, the Parties undertake to ensure that the Directors appointed by them, at the first feasible meeting of the Board of Directors proceed with appointing the office of Executive Chairman of Hera, it being understood that that the Romagna Area Shareholders and Bologna Shareholders will consult each other before nominating the candidate for the position of Executive Chairman.
For the duration of the Agreement, the parties to the Agreement undertake not to transfer the Hera Spa shares subject to the Blocking Syndicate (blocked shares) referred to in the first-level Shareholders' Agreement.
The Party that fails to comply with the provisions of the Agreement will be required to pay a penalty equal to 2% of the nominal value of the Shares held at the time of the breach. In any case of default, the amount of the penalty may not be less than 5,000 euro or more than 200,000 euro.
The Agreement will take effect on 1 July 2021 and will remain in effect until 30 June 2024.
In view of the expiry of the Agreement and if the Voting Trust Agreement is in turn renewed, the parties undertake, in accordance with the principles of good faith, to do everything in their power, and in compliance with current legislation, to renegotiate new shareholders' agreements.
In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.
In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.
The total number of voting rights conferred on the voting syndicate is 231,421,326 and the relative percentage of the total voting rights that make up the share capital of Hera is approximately 10.38066%.
In order to take on the decisions made by the Voting Syndicate, the Parties have established a deliberative body of the Voting Syndicate (the Shareholders' meeting of the Voting Trust) composed of the pro-tempore legal representatives of each Party or their delegates.
The Shareholders' meeting of the Voting Trust meets:
With reference to the process of drawing up the majority list for appointing the Board of Directors of Hera Spa, if under the Hera Pact:
The Shareholders' Meeting of the Voting Trust shall resolve on the basis of the number of Hera shares blocked under the Hera Pact held by each Party, with reference to the total number of Hera shares blocked under the Hera Pact held by the Parties as a whole: for resolutions to be valid, there must be present a number of Parties holding at least 7/8 of the blocked shares and a yes vote by a number of Parties holding at least 7/8 of the blocked shares in relation to those held by the Parties present.
The Modena agreement does not provide for a specific Blocking Syndicate; rather, it refers to the Hera pact for the regulation of the blocked shares covered by it.
The Modena agreement refers to the Hera pact for the regulation of the transfer of non-blocked shares. It also states that the Parties undertake to define, in advance and jointly, at the Shareholders' Meeting, the number of shares to be transferred.
The Modena Agreement, in effect beginning 1 July 2021, shall remain in force until 30 June 2024. The parties have undertaken to renegotiate the Agreement in good faith, with due respect for the spirit of the Agreement and with a view to its expiry.
In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letters a) and b) of the TUF.
In view of the nature of the Modena Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.
The Party that is in breach of the provisions of the Agreement shall be liable to pay a penalty equal to five per cent of the value of the Hera shares held at the time of the breach, calculated as the arithmetic mean of the official stock market prices of the Hera share during the 15 trading days prior to the date of the breach.
The Agreement concerns 101,696,159 ordinary Hera shares, equal to 6.82736% of the current share capital of Hera, held in total by the two participating municipalities, and 203,392,318 voting rights, equal to 9.11663% of the total voting rights that make up the share capital.
The purpose of the Sub-agreement is to establish a consultation and voting syndicate that will be instrumental to ensuring the realization of certain provisions regarding Hera's corporate governance in implementation of the provisions of the Agreement.
Specifically, the Sub-agreement regulates the procedures for the joint appointment of a member of the Hera Executive Committee, providing that the Parties confirm their mutual commitment to consulting in good faith in order to identify and agree which of the two directors elected to the Company's Board of Directors, upon their appointment, should be the director to be appointed as member of the Hera Executive Committee.
The Parties also acknowledge that the Executive Committee of Hera, the duration of which is scheduled until the date of approval of the financial statements at 31 December 2022, currently includes, as a member, the director designated by the Municipality of Padua, who will remain in office until the natural termination of the body; the Parties also agree that, in the subsequent Executive Committee that will remain in office until the approval of the financial statements at 31 December 2025, it will be up to the Municipality of Trieste to designate the member.
The Sub-agreement has a duration of three years from the date of its signing (12 July 2021).
In view of the expiry of the Sub-agreement, the parties undertake, in accordance with the principles of good faith, to do everything in their power, and in compliance with current legislation, to renegotiate new shareholders' agreements in accordance with the spirit of this Sub-agreement.
In view of the above, it is considered that the Agreement is material pursuant to article 122, paragraph 5, letter a) of the TUF.
In view of the nature of the Agreement and by virtue of its provisions, no person is in a position to exercise control over Hera.
The shareholder's meeting of 28 April 2022 authorised, pursuant to the limits established by Article 2357 of the Italian Civil Code, to purchase, within 18 months of the date of the resolution, on one or more occasions, up to a revolving maximum of 60 million ordinary Hera shares with a par value of 1 euro each, equal to approximately 4.03% of the ordinary shares making up the share capital, in accordance with the following conditions:
It should be noted that the buy-back authorisation only concerns the purchase of ordinary shares, thus excluding the possibility of purchasing derivative financial instruments, and that the number of treasury shares in portfolio at the end of the 2022 financial year was 38,711,380.
Hera, with a resolution by the Board of Directors on 11 November 2020, adopted the provisions of the Corporate Governance Code (hereinafter referred to as the Code), which contains a detailed series of recommendations concerning principles and rules for the management and control of listed companies, in order to increase the clarity and concreteness of persons and roles, particularly with regard to the independent directors and the internal committees of the Board of Directors.
Although adoption of the recommendations contained in the Code is voluntary, the Company, in continuity with its previous adherence to the Self-Regulatory Code, has decided to adhere to the Code's recommendations in order to reassure investors that it has a clear and well-defined organisational model, with adequate allocation of responsibilities and powers and a proper balance between management and control; this model is an effective tool at the disposal of the administrative body for the pursuit of sustainable success.
The full text of the Code currently in force is available to the public on the Committee for Corporate Governance website, at:
https://www.borsaitaliana.it/comitato-corporate-governance/codice/2020.pdf
Hera has an ordinary/traditional system of governance. The following sections describe the role, composition and functioning of the Board of Directors.
The Board of Directors is the central administrative body of the Company. In accordance with the recommendations of the Code, the Board of Directors is responsible for guiding the Company by pursuing its sustainable success (Principle I) and defining its strategies (Principle II), including for the Group in question, in a manner consistent with the pursuit of sustainable success, and for monitoring the implementation of these strategies.
The administrative body also defines the corporate governance system that is most effective for carrying out the company's business and pursuing its strategies (Principle III) and promotes, in the most appropriate manner, dialogue with the shareholders and other relevant stakeholders of the Company (Principle IV).
The Articles of Association require the Board to meet at least quarterly and whenever the Chairman deems it necessary, or when requested by at least 1/3 of its members or by the Board of Statutory Auditors. Furthermore, the Board of Directors shall be vested with the widest powers for the ordinary and extraordinary management of the Company without any limitations, with the power to carry out all the acts deemed necessary or appropriate to achieve the Company's aims, with the sole exception of those which, strictly speaking, are assigned to the competence of the Shareholders' Meeting by law or by the Articles of Association.
In particular, in accordance with the provisions of the Articles of Association, and in addition to the definition of the structure of the Group, deliberations on the following matters fall to the exclusive competence of the Board:
VIII. proposal to place on the agenda of the Shareholders' Meeting the modification of Article 6.4 (shares and shares with increased voting rights) Article 7 (Public majority shareholding), Article 8 (Limits on shareholdings), Article 14 (Validity of Shareholders' Meetings and rights of veto) and Article 17 (Appointment of the Board of Directors) of the Articles of Association;
IX. the acquisition and disposal of equity investments with a value exceeding 500,000 euro;
In particular, the Board is tasked with:
Specifically, the Board of Directors:
With regard to the Board's further powers concerning its composition, functioning, appointment, selfassessment, the remuneration policy, and internal control system and risk management, please refer to the following sections of this report.
The appointment of the Board of Directors is subject to the list voting mechanism, in order to guarantee that the Board of Directors includes Directors designated by minority shareholders, in compliance with current legislation on gender balance.
Specifically, Articles 16 and 17 of the Articles of Association govern the terms and conditions for filing and publishing lists, as well as the related documentation, in compliance with current regulations.
In this regard, it should be noted that the Shareholders' Meeting of 28 April 2022 approved an amendment to the bylaws to bring the number of independent directors in line with the guidelines introduced by the Code.
Taking this development into account, the current Articles of Association specify that the lists presented by shareholders must include at least two candidates satisfying the independence requirements established for the statutory auditors by Article 148, paragraph 3 of Legislative Decree 58/1998 and by the Corporate Governance Code drawn up by the Corporate Governance Committee of Borsa Italiana S.p.A., together with the candidates' CVs, a declaration of the individual candidates stating that they accept the office and certifying the non-existence of any ineligibility and/or incompatibility provided by law and any applicable declaration of satisfaction of the independence requirements established for statutory auditors by Article 148, paragraph 3 of the TUF and those established by the Civil Code. In this regard, it is noted that the Board of Directors currently in office is made up of 13 independent directors out of 15 members.
The lists must be filed, pursuant to article 17.5 of the Articles of Association, at the registered office at least 25 days before the Shareholders' Meeting, and made available to the public at the registered office and on the website www.gruppohera.it at least 21 days before the meeting.
The terms and conditions for the filing of lists are indicated by the Company in the Shareholders' Meeting notice of call. Each shareholder may submit or participate in the submission and voting of only one list. Subscriptions and votes cast in violation of this prohibition shall not be attributed to any list.
The Articles of Association do not allow the outgoing Board of Directors to present a list.
Lists for the appointment of members of the Board of Directors may be submitted by shareholders representing at least 1% of the share capital with voting rights at the Ordinary Shareholders' Meeting, unless otherwise provided for by current legislation, to be indicated in the notice of call.
In this regard, it should be noted that, on the occasion of the last renewal of the administrative body which took place at the Shareholders' Meeting of 29 April 2020, the shareholding required for presenting lists of candidates for the election of the sitting administrative body was identified by Consob (through Resolution 28 of 30 January 2020) in the amount of 1%, equal to the percentage provided for in article 17.4 of the current Articles of Association.
In order to demonstrate ownership of the number of shares necessary for presenting lists, shareholders must file the appropriate certification proving ownership of the number of shares represented at the registered office within the deadline set by the Company for posting the lists.
The rules established by Article 17 of the Articles of Association, as modified by the Extraordinary Shareholders' Meeting of 29 April 2020, in implementation of Law 160 of December 27th 2019, also guarantee compliance with current legislation regarding the balance between genders in the administrative and control bodies of listed companies.
If the list voting system does not ensure the minimum gender quota required by law, the candidate of the most represented gender positioned last on the list of candidates elected from the list with the highest number of votes shall be replaced by the candidate of the less-represented gender who was positioned first among the non-elected candidates on the same list and so on, up to the minimum number of directors belonging to the less-represented gender. If the minimum number of directors belonging to the less represented gender still has not been reached even after applying this criterion, the replacement criterion indicated will be applied to the minority lists, starting from the list that received the highest number of votes.
The members of the Board of Directors are appointed in accordance with current regulations and the provisions of Articles 16 and 17 of the Articles of Association, and therefore:
In accordance with Article 17.10 of the Articles of Association, if one or more directors appointed on the basis of the list voting system should leave office during the course of the financial year, their places will be filled by means of the co-opting, pursuant to Article 2386 of the Italian Civil Code, of the first unelected candidates from the list to which the departing directors belonged who have not yet been members of the Board of Directors, respecting the principles of gender balance set forth by the law. If, for any reason, no candidates are available, the Board, in compliance with the principles of gender balance set forth by the law, and again pursuant to Article 2386 of the Italian Civil Code, will carry out the co-opting, as established by Article 2386 of the Civil Code. The directors thus appointed will remain in office until the next Shareholders' Meeting, which will deliberate in accordance with the procedures established for the appointment.
Refer to "Section 7" for information on the role played by the Board of Directors and Board committees in the processes of self-evaluation, nomination and succession of directors.
In line with the requirements set out in Principle V of the Code, the Board is made up of executive and non-executive directors, all of whom have the professionalism and skills required for the tasks assigned to them.
Principle VI of the Code is also complied with in that all thirteen non-executive Directors are independent and their number and skills are such as to ensure that they have a significant influence on the Board's resolutions and guarantee effective monitoring of management.
The shareholder's meeting held 29 April 2020 appointed for three financial years a Board of Directors, whose mandate lasts from now until the approval of the financial statement for the 2022 financial year, composed of 15 members, including:
This appointment was thus made on the basis of the list voting system, in order to ensures that at least 1/5 of the directors are appointed from the minority list in compliance with the provisions of Article 4 of Legislative Decree-Law 332 of 31 May 1994, converted from Law no. 474 of 30 July 1994.
At the Shareholders' Meeting of 29 April 2020 mentioned above, three lists of candidates were presented, listed below along with an indication of their proposing Shareholders:
List no. 1, presented on 30 March 2020 by the shareholders Municipality of Bologna, Municipality of Casalecchio di Reno, Municipality of Cesena, Municipality of Modena, Municipality of Padova, Municipality of Trieste, Municipality of Udine, Con.Ami, Holding Ferrara Servizi Srl, Ravenna Holding Spa and Rimini Holding Spa, who, together with 107 other public shareholders, were at the time parties to the "Shareholders' Agreement on Voting and Share Transfer Rules" of 26 June 2018, and who together hold 619,396,602 Hera shares, corresponding to 41.58% of the voting shares of Hera S.p.A., a list that obtained 1,310,803,294 voting shares, equal to 69.632048% of the total voting shares present, containing the names, in ranked order, of the following candidates:
List no. 2, submitted on 2 April 2020 by the shareholder Gruppo Società Gas Rimini Spa, holder of 30,771,269 Hera shares, corresponding to 2.065825% of the shares with voting rights of Hera Spa, a list that obtained 167,846,764 voting rights, corresponding to 8.916299% of the total voting shares present, containing the names, in ranked order, of the following candidates:
List no. 3 submitted on 3 April 2020 by Studio Trevisan & Associati on behalf of the shareholders Amundi Luxembourg SA - Amundi European Equity Small Cap; Amundi Asset Management SGR Spa manager of the funds: Amundi Dividendo Italia, Amundi Risparmio Italia, Amundi Sviluppo Italia; APG Asset Management N.V, manager of the funds: Stichting Depositary APG Developed Markets Equity Pool, Stichting Depositary APG Developed Markets Equity Minimum Volatility Pool; ARCA Fondi SGR Spa manager of the fund: Arca Azioni Italia; Etica SGR Spa manager of the funds: Etica Rendita Bilanciato, Etica Obbligazionario Misto, Etica Bilanciato, Etica Azionario; Eurizon Capital SGR Spa manager of the funds: Eurizon Progetto Italia 70, Eurizon Azioni Italia, Eurizon PIR Italia Azioni, Eurizon Progetto Italia 40; Eurizon Capital S.A. manager of the fund Eurizon Fund, section Italian Equity Opportunities; Fideuram Asset Management Ireland manager of the fund Fonditalia Equity Italy; Fideuram Investimenti SGR Spa manager of the funds: Fideuram Italia, Piano Azioni Italia, Piano Bilanciato Italia 50; Interfund Sicav - Interfund Equity Italy; Kairos Partners SGR Spa management company of Kairos International Sicav comparti: Italy, Target Italy Alpha; Legal & General Assurance (Pensions Management) Limited; Mediolanum Gestione Fondi SGR Spa manager of the funds: Mediolanum Flessibile Futuro Italia, Mediolanum Flessibile Sviluppo Italia; Mediolanum International Funds Limited - Challenge Funds - Challenge Italian Equity; Pramerica SGR Spa - Pramerica Sicav comparti Italian Equity and Clean Water, together the holders of 26. 928,425 Hera shares, corresponding to 1.80784% of the Hera Spa shares with voting rights, a list that obtained 394,583,000 voting rights, corresponding to 20.960904% of the total number of voting rights present, containing the names, in ranked order, of the following candidates:
Following the shareholders' meeting vote, as well as the subsequent meeting of the Board of Directors held on the same date for the appointment of Executive Chairman, Chief Executive Officer and Vice President, the administrative body was made up as follows:
The current composition of the Board of Directors is indicated below, please see Table 2 - Structure of the Board of Directors at the end of the financial year - attached to this report for more detailed information on the composition and functioning of the Board of Directors, as well as the specific section on the Company's website where the personal and professional details of each director are outlined.
It is specified that, following the resignation of Stefano Venier from all positions held in the Company with effect 26 April 2022, the Board of Directors resolved on 11 May 2022 to appoint by co-optation as Director and Chief Executive Officer Orazio Iacono, who will remain in office until the natural expiration of the administrative body and therefore until the approval of the financial statements as of 31 December 2022.
| First and Last name | Role | title |
|---|---|---|
| Tomaso Tommasi di Vignano | Executive Chairman | Executive Director |
| Orazio Iacono | Chief Executive Officer | Executive Director |
| Gabriele Giacobazzi | Vice Chairman | Non-executive Independent Director |
| Fabio Bacchilega | Director | Non-executive Independent Director |
| Danilo Manfredi | Director | Non-executive Independent Director |
| Alessandro Melcarne | Director | Non-executive Independent Director |
| Lorenzo Minganti | Director | Non-executive Independent Director |
| Monica Mondardini | Director | Non-executive Independent Director |
| Erwin P.W. Rauhe | Director | Non-executive Independent Director |
| Manuela Cecilia Rescazzi | Director | Non-executive Independent Director |
| Paola Gina Maria Schwizer | Director | Non-executive Independent Director |
| Federica Seganti | Director | Non-executive Independent Director |
| Bruno Tani | Director | Non-executive Independent Director |
| Alice Vatta | Director | Non-executive Independent Director |
| Marina Vignola | Director | Non-executive Independent Director |
The current administrative body is set to expire with the approval of the financial statements at 31.12.2022 and will be renewed at the Shareholders' Meeting scheduled for 27 April 2023.
In compliance with the recommendations of the Corporate Governance Code, the current Board of Directors has decided to express to the shareholders its guidelines regarding the managerial and professional profiles whose presence on the new administrative body is deemed advisable. These guidelines were made available well in advance on the company's website (www.gruppohera.it) and on the authorized storage mechanism ().
Hera has applied diversity criteria, including gender-based criteria, in forming the administrative body, the members of which possess the required skills and professionalism.
The appointment of the Board of Directors took place during the Shareholders' Meeting of 29 April 2020, following the presentation of three lists, one majority and two minority, which guaranteed, in accordance with regulatory provisions currently in force on the balance between genders, that at least 2/5 of the members of the Board of Directors consisted of the least-represented gender (six members of the leastrepresented gender out of a total of 15 directors).
Of the current 15 directors, three are between 30 and 50 years old, six are between 51 and 60 years old and six are over 60 years old, for an average age of approximately 59.
The directors possess proven professional competence in financial, economic, and legal matters and in the fields of sustainability, social and environmental issues.
Furthermore, Hera maintains as a priority the objective of ensuring equal treatment and opportunities between genders, including within the company organization as a whole, on the assumption that:
Already in 2011, in order to further promote the development and dissemination of a company policy on equal opportunities and equality at work, the figure of the Diversity Manager was established with the aim of fostering the implementation of this company policy on equal opportunities and diversity enhancement.
The mission of Diversity Management can be described in the following macro-points:
Spreading a culture of diversity, introducing time-saving projects aimed at achieving an effective balance between everyday life and work, health and wellbeing and fostering empowerment have been central themes in the company's work to date.
In particular, in 2022 Hera continued to focus on activities to raise awareness and promote a culture of diversity, both internally and externally, strengthening networking with stakeholders.
In continuity with the Hera Group's priorities, particular attention is paid to STEM (Science, Technology, Engineering, Mathematics) fields and the gender gap that is often associated with them.
In a resolution dated 10 October 2006, the Board of Directors placed a limit of one on the maximum number of posts of director or statutory auditor in listed companies that can be regarded as compatible with the role of executive director, and a limit of two on the maximum number of posts of director or statutory auditor in listed companies that can be regarded as compatible with the role of non-executive director.
In this regard, the Board of Directors, in its 23 March 2022 meeting, deemed the position of director held by Ms. Mondardini in Hera to be compatible, notwithstanding the fact that she has declared that she holds positions in three listed companies, in consideration of the fact that two of these belong to the same corporate group.
In conformity with the provisions of Article 3 - Recommendation 11 - of the Code, the Company has adopted regulations for the functioning of the administrative body, approved by the Board of Directors on 11 November 2020, as well as regulations concerning the functioning of its internal committees.
The Regulations of the Board of Directors govern, in particular, the functioning of the body, the duties of the Executive Chairman and Secretary, pre-meeting information, and the duties of the Directors with specific reference to the diligence required to carry out their duties, as well as the safeguarding of the confidentiality of the data and information they acquire.
As far as pre-meeting information is concerned, in order to guarantee the timeliness and completeness of this information, the Regulations specify that the resolution proposals and/or the supporting documentation for Board meetings be brought to the attention of each Director and Statutory Auditor via a dedicated information system - accessible by means of confidential user IDs for each member - at least three working days before the date of the Board meeting, except in urgent circumstances in which case the documentation is made available as soon as it is available and in any case, if possible, before the start of the Board meeting.
The Executive Chairman and CEO ensure that the Board of Directors is also informed on the most important changes in legislation and regulations relating to the Company and the corporate bodies.
Following each Board meeting, a draft of the minutes shall be forwarded to all Directors and Auditors for possible comments. The final text of the minutes is then drafted by the Secretary of the Board of Directors and, following the approval by the Chairman, is submitted to the Board of Directors for approval at its next meeting and, subsequently, transcribed into the proper Company register. In cases of urgency - in particular for adopted resolutions requiring the immediate production of documents and/or execution the minutes, or part thereof, may be approved on the spot.
The Board of Directors, in conformity with the provisions of Article 23 of the Articles of Association and Article 150 of Legislative Decree 58/98, reports regularly to the Board of Statutory Auditors, at least every three months, normally during the meetings of the Board of Directors or even directly through a written memorandum sent to the Chairman of the Board of Statutory Auditors, on the activities carried out and on the most important economic, financial and asset-related operations carried out by the Company or its subsidiaries, as well as on the operations in which the directors have an interest, on their own behalf or that of third parties, or which are influenced by the party that exercises the activity of direction and coordination. Each director, pursuant to Article 2391 of the Italian Civil Code, informs the other directors and the Board of Statutory Auditors of any interest which, on his own account or that of third parties, he has in a given operation of the Company, indicating the nature, terms, origin and extent of that interest; if the director concerned is the Group CEO, he must refrain from carrying out the operation and entrust it to the Board.
The Board of Directors met on 11 occasions in 2022: all the directors took part in five of these meetings, while almost all of them took part in the other six; all the statutory auditors took part in nine of the meetings, while almost all of them took part in two. The average length of the meetings of the Board of Directors was approximately two hours and 30 minutes.
Also in fiscal year 2022 as since 2019, the directors again displayed a high level of participation at the meetings of the Board of Directors (equal to approximately 95%), a figure higher than the average level of attendance recorded for FTSE MIB Index companies.
In accordance with Principle XII of the Code, each director has consequently ensured that he or she has adequate time available to diligently perform the duties assigned to him or her.
The Head of Legal and Corporate Affairs, in his capacity as Secretary of the Board of Directors, attended all of the meetings.
When so required, the managers responsible for the various departmental areas participated in the meetings of the Board of Directors to refer on matters falling under their competence that are part of the agenda.
Below are the attendance records of managers invited to attend board meetings:
Regarding the current financial year, two meetings of the Board of Directors have been held as of 21 March 2023: one meeting was attended by all members, while the other meeting was attended by almost all members. As of that date, nine meetings of the Board of Directors had been planned for the remainder of the year.
In line with the provisions of Principle X of the Code, the Chairman receives the requests and contributions of the Company's independent non-executive Directors through the Lead independent director, this latter representing a reference point and hub of coordination.
Furthermore, the Chairman, pursuant to Article 2381 of the Italian Civil Code, convenes the Board of Directors, sets the agenda, coordinates its work and ensures that all Directors are provided with adequate information regarding the items on the agenda, according to the procedures described in art. 7 below.
In particular, the Chairman, as provided for in the Regulations on the functioning of the Board of Directors and in compliance with Recommendation 12 of the Code, with the assistance of the Secretary, is responsible for ensuring that:
e) the self-assessment process conducted by the governing body is effective and transparent.
In terms of induction activities, the Chairman ensures that the members of the governing body participate in initiatives aimed at increasing their own knowledge of Hera's sector of activities, its company dynamics and their developments, as well as the regulatory reference frame.
As in the past, during the last financial year occasions of in-depth analysis were organised in order to ensure that Directors were able to acquire an adequate knowledge of the main issues concerning the Company.
During 2022, induction sessions covered the topic of directors' independence as well as an in-depth look at the energy supply chain (energy sales and production and energy services), waste management supply chain (waste collection and sweeping-regulated activities; recovery and treatment activities regulated by the free market), and network supply chain (gas and electricity distribution, water cycle, and district heating).
During 2022, moreover, priority was given to analysis - at the Board meetings - aimed at providing directors with adequate knowledge of the main characteristics of the company (governance, sustainability, dialogues held with shareholders and bondholders and outreach to other stakeholders), the results the Groups has achieved in recent years, the elements of the business plan and CSV strategy as well as human resources, financial management and risk management, with specific in-depth analyses of the individual sectors and a focus on the other services and activities carried out by the Group in terms of innovation.
On the subject of stakeholders, an overview of the activities of local advisory councils (HeraLABs) was also provided.
Issues related to climate and sustainability, TCFD (Task force on climate-related financial disclosures) recommendations, and SBTi (Science-Based Target initiatives) were examined.
Specifically, with regard to the energy outlook (including as a result of the Russian-Ukrainian conflict), updates were provided on: electricity/gas price variability and trading conditions, markets of last resort, gas storage, performance and actions taken by the Hera Group for the benefit of workers and customers, and the performance of the Hera Share.
On the other hand, as far as the climate change situation is concerned, an update was also provided about the water crisis and its impact in the areas served.
The Hera Group's Quality and Sustainability Policy was also updated, and the Benefit Company model was analysed; the latter was later concretised with the statutory changes made in some of the Group's companies, demonstrating the Hera Group's focus on sustainable development and value creation for the areas and communities it serves.
With reference to the National Recovery and Resilience Plan, project proposals were submitted - funded, in part or in full, by the Plan itself - related to: energy transition (photovoltaic plants, e-mobility, power-togas plant, interconnection of district heating systems), circular economy (recycling of carbon fibres and rigid plastics, efficiency and digitalisation of water networks, bio-drying of sludge), innovation and digitalisation (resilience of the electricity networks: new robotic primary and secondary substations and automation and remote control systems; the resilience of water networks: infrastructure automation/digitalisation systems).
In addition, in-depth coverage was given to risk assessment, cyber security management plan progress and information systems strategy, and financial risk reports as well as investment.
A new protocol was also adopted with reference to the organisational model pursuant to Legislative Decree 231/2001, and the periodic reports of the Risks Committee and the Control Committee were presented.
Subsequently, evaluations were carried out on the recommendations of the Chairman of the Corporate Governance Committee and, consequently: (i) the qualitative-quantitative criteria for assessing a director's independence were defined and (ii) in February 2023 - thus before the renewal of the term of office - the "Guidelines of the Board of Directors of Hera Spa to Shareholders on the Composition of the Board of Directors" were published in order to allow those submitting lists of candidates to be able to take them into account when making up the list.
In 2022 as well, further in-depth analysis was also carried out during strategy day, as a moment of collective reflection on the future of the Company, with the support of management.
In addition, a visit was organised first to the biomethane plant in Sant'Agata Bolognese (Bo) and then to Rimini's Piazzale Kennedy-optimised beach safeguard plan (Psbo).
Induction activities will also continue during 2023, particularly in depth for newly appointed directors and auditors.
The Chairman, with the support of the Secretary of the Board of Directors, reports to the Board of Directors on a six-monthly basis or by the first available meeting, whenever significant events occur, on the development and relevant aspects of the dialogue with shareholders and bondholders, as well as on any contacts with other stakeholders.
During the meetings held on 23 February 2022, 27 July 2022, and 8 February 2023, the Chairman informed the Board of Directors about the meetings held with investors and financial analysts, the road shows carried out and scheduled for 2023 in the main European (Milan, Geneva, London, and Zurich) and American (New York, Chicago, and Boston) marketplaces, as well as about the most significant requests received from other stakeholders.
In compliance with the provisions contained in Recommendation 18 of the Code, the Board resolves upon proposal of the Chairman - regarding the appointment and removal of the Secretary of the administrative body, this latter required to meet the professionalism requirement and provide assistance and advice to the management body in relation to any issue that has to do with the proper functioning of the corporate governance system.
In the event he or she is absent or unable, the duties of Secretary shall be temporarily assigned by the Chairman to a person designated by him or her.
Also pursuant to the provisions of Recommendation 12, the Secretary is responsible for the following duties:
a) coordinating and collecting the documentation to be submitted to the Board of Directors;
b) assisting the Chairman in conducting the meeting;
c) drafting the minutes of the meeting;
d) maintaining the stamped minute books of the meetings and the records of the Board of Directors' meetings;
e) communicating to the relevant departments the resolutions adopted by the Board of Directors relating to their sphere of competence.
There are two executive directors on the Hera Board of Directors, the Chairman and the Chief Executive Officer.
Neither of the two executive directors can be described as the principal supervisor for the management of the company (chief executive officer), given that both receive the reports of different company sectors and are assigned specific management powers pertaining to these sectors.
The Board of Directors, at its meeting of 29 April 2020, passed a resolution to grant the following powers to the Executive Chairman:
the delegated powers, particularly those listed here, in accordance with the said strategies and directives;
transaction - in cases of urgency, the decision concerning amounts exceeding Euro25,000,000.00 (twenty-five million) will be taken in association with the Group CEO, informing the Board of Directors accordingly at its next meeting; in the case of awarding, sign the relevant documents, contracts and commitments, including the issue of guarantees and/or the establishment of guarantee deposits, with the widest powers to negotiate, settle and/or complete all the clauses that he may deem necessary and/or appropriate and/or useful;
In relation to the powers outlined above and in conformity with the provisions of Article 2 - Recommendation 4 of the Code, it is noted that the Board of Directors has granted management authority to the Chairman due to the organisational complexity of the Hera Group and for the purposes of a more efficient achievement of the company's business and strategies. In this regard, according to the organizational structure the President is responsible for Legal and Corporate Central Management, Human Resources and Organization Central Management, External Relations Central Management, Strategy, Regulatory Affairs and Local Authorities Central Management, Corporate Services Central Management and the Investor Relations Department, as well as the businesses related to the activities of the companies Herambiente Spa, Marche Multiservizi Spa and AcegasApsAmga Spa.
The Board of Directors, at its meeting of 11 May 2022, unanimously passed a resolution to grant the following powers to the Group CEO:
a maximum amount of € 250,000,000.00 (250 million euro) per transaction and to operate with companies and factoring institutions by signing all related deeds;
entity concerned and where participation in the same does not involve an outlay of more than € 300,000.00 (three hundred thousand euro) for each operation;
Analogously to that stated for the Chairman, in compliance with the provisions of article 2 - Recommendation 4 of the Code, it is noted that the Board of Directors has granted management authority to the CEO due to the organisational complexity of the Hera Group and for the purposes of a more efficient achievement of the company's business and strategies. To this end, the organisational structure establishes that the Chief Executive Officer oversees the Administration Central Management, Finance and Control, Market Central Department, Innovation Central Department,Networks Central Department, Waste Management and Fleets Central Department, Shared Value and Sustainability Department, Business Development, as well as the businesses linked to the activities of the companies Uniflotte Srl, Inrete Distribuzione Energia Spa, Heratech Srl, Hera Comm Spa, Hera Trading Srl and Acantho Spa. It is also stipulated that projects developed by the Business Development and Subsidiaries Department, which reports directly to the CEO, will be managed jointly with the Executive Chairman.
The Board of Directors, appointed during the Shareholders' Meeting of 29 April 2020 and in office until the natural expiration of the administrative body's term, and therefore until the approval of the financial statements as of 31 December 2022, as provided for by Articles 21.3 (iii) and (iv) and 23.3 of the Articles of Association, at its meeting of 13 May 2020, appointed the Executive Committee consisting of the following members: Tomaso Tommasi di Vignano, Chairman of the Executive Committee; Gabriele Giacobazzi, Vice Chairman of the Executive Committee; and Stefano Venier and Alessandro Melcarne, members.
Subsequently, the Board of Directors, on 11 May 2022, following the resignation of Stefano Venier, with effect from 26 April 2022, from all positions held in the Company, resolved to appoint, in his place, to the position of member of the Executive Committee Orazio Iacono, who will remain in office until the natural expiration of the administrative body and therefore until the approval of the financial statements as of 31 December 2022.
In view of the above, the Executive Committee, its activities coordinated by the Chairman, is made up of the following:
▪ Orazio Iacono member of the Executive Committee
▪ Alessandro Melcarne member of the Executive Committee
With regard to the annual definition of the Group business plan and the budget and to the proposals for the appointment of first level senior executives for each departmental area, the Committee has the task of expressing an opinion prior to presentation to the Board of Directors, and also of deciding:
The Committee is also responsible for:
The Executive Committee met on seven occasions in 2022, and all of the meetings were attended by all members. The average duration of the meetings of the Executive Committee, duly recorded in the minutes, was approximately one hour.
Below are the attendance records of managers invited to attend Executive Committee meetings:
The President shall report half-yearly to the Board of Directors regarding the activities of the Executive Committee during the reporting period.
Regarding the current financial year, two meetings of the Executive Committee have been held as of 21 March 2023: one meeting was attended by all members, while the other meeting was attended by almost all members. As of that date, another four meetings of the Executive Committee had been planned for the remainder of the year.
In conformity with the recommendations of the Code, the delegated bodies report to the Board of Directors and to the Board of Statutory Auditors, at least every three months, on the activities carried out in exercising the powers delegated to them.
With the exception of the Executive Chairman and Chief Executive Officer, there are no additional directors on Hera's Board of Directors who are to be considered executive.
As regards the Directors in addition to the Executive Chairman and CEO who are also members of the company's Executive Committee, it is believed that they should not be considered executive directors since they carry out their duties collectively within the committee.
There are currently 13 independent non-executive members of the Board, Gabriele Giacobazzi, Fabio Bacchilega, Danilo Manfredi, Alessandro Melcarne, Lorenzo Minganti, Monica Mondardini, Erwin P.W. Rauhe, Manuela Cecilia Rescazzi, Paola Gina Maria Schwizer, Federica Seganti, Bruno Tani, Alice Vatta and Marina Vignola, in the sense that they meet the independence requirements set out in the Corporate Governance Code and article 148, paragraph 3 of the TUF.
Specifically, in compliance with recommendation 7 of the Code, the directors indicated above have stated that:
In compliance with Recommendation 5, it is believed that the number and expertise of independent directors is appropriate to the needs of the company and the operation of the Board, as well as the establishment of related committees.
At its 23 February 2022 meeting, the Board of Directors defined the quantitative and qualitative criteria for assessing the significance of the relevant circumstances pursuant to the Code for the purposes of evaluating directors' independence.
Specifically, the Board of Directors established that:
or
(i) it relates to professional appointments or consultancies
and
(ii) it is equal to the fixed remuneration received from Hera Spa in the year in question for holding the office of Director.
In line with the provisions of Recommendations 6 and 10 of the Code, the independence of the aforementioned directors had already been assessed, at the time of their appointment, by the Board of Directors, which announced the result of this assessment by means of a press release circulated to the market.
The following circumstances do not invalidate the requirements of independence of a director: the appointment of the director by the shareholders or group of shareholders controlling the Company; the holding of the office of director of a subsidiary of the Company and receiving the related remuneration; the holding of the office of member of one of the advisory Committees cited below.
During the 21 March 2023 session, in light of the declarations made by each of the non-executive directors and taking into account that the Board of Directors is not aware of any relationships maintained by the current non-executive directors such as to compromise or condition their independent judgment, the Board of Directors confirmed the assessment of its members' independence.
In this regard, it is specified that:
As part of the tasks assigned to it by law, the Board of Statutory Auditors has verified the correct application of the assessment criteria and procedures adopted by the Board of Directors to evaluate the independence of its non-executive members.
During financial year 2022, the independent directors, in compliance with the last paragraph of Recommendation 5 of the Corporate Governance Code, met separately and independently on 27 September 2022.
The meeting was chaired and coordinated by the lead independent director and focused mainly on the topics of (i) the Board of Directors' self-assessment and (ii) how to select top management figures.
Recommendation 13 of Article 3 of the Code provides that, if certain conditions are met, at the request of the majority of the independent directors, the board of directors shall appoint an independent director as lead independent director, so that he or she can be the focal point and coordinator of the requests and contributions coming from the non-executive directors and, in particular, the independent directors, coordinating their meetings.
At a meeting held 16 December 2020, the Board of Directors, on the recommendation of the Vice Chairman on behalf of all the independent directors, appointed as lead independent director of the Company the independent director Erwin Paul Walter Rauhe, and he will hold this position until the natural expiry of the administrative body, i.e. until the date the Shareholders' Meeting of Hera approves the financial statements at 31 December 2022.
As of 2021, the lead independent director is provided with specific regulations approved by the Board of Directors.
For the purposes of governing the communication to the sector Authorities and the public of notices, data and price-sensitive information pertaining to the management and activities carried out, the dissemination of which might have an impact on the processes used for valuing the Company's shares, and consequently, on the levels of demand and supply of those shares, the Board of Directors updated the specific Group procedure by incorporating the legislative innovations effective as of 3 July 2016 introduced by the European legislation on Market abuse regulation (MAR) (EU Regulation 596/2014, Directive 2014/57/EU, EU Implementation Regulations 2016/1055 and 2016/1210), as well as the Consob guidelines on the subject issued in October 2017.
This procedure has the aim of:
The aforementioned procedure is aimed at identifying the corporate functions that support top management in identifying and consequently mapping the relevant information, as well as the subjects who have access to it and the moment in which such information can take on the character of inside information, based on the assessments made by top management itself.
In compliance with the provisions of the Consob Guidelines, a so-called Relevant Information List (RIL) is drawn up that includes the names of the subjects who have access to the relevant information. The RIL stands alongside the already-existing list of people with access to privileged information, the management and storage methods of which were already updated at the time in compliance with the provisions introduced by the MAR (EU Regulation 596/2014, Directive 2014/57 / EU, EU Implementing Regulation 2016/1210), which, in particular, expanded the concept of privileged information, establishing that it is information of a precise nature which has not been made public and which directly or indirectly concerns one or more issuers or one or more financial instruments and which, if made public, could have a significant effect on the prices of such financial instruments or on the prices of related financial derivative instruments, and introducing the concept of inside information that is part of a protracted process.
Furthermore, in applying the internal dealing procedure updated by Hera Spa following the entry into force of the MAR (EU Regulation 596/2014, Directive 2014/57 / EU, EU Implementing Regulations 2016/523 and 2016/522 ) relevant subjects, obliged to communicate to Consob the transactions they carry out on the financial instruments of Hera Spa, are considered to include the members of the Board of Directors, the standing auditors, the general managers, and the holders of an equity investment calculated pursuant to article 118 of the Consob Issuers Regulation as equal to at least 10% of the total voting rights that make up the Company's share capital, as well as persons closely associated with them. This procedure governs the timing and methods of communicating the operations carried out by the relevant subjects. Hera Spa has identified the Legal and Corporate Affairs Department as the entity responsible for receiving, managing and disseminating this type of information to the market.
The responsible entity will utilize the External Relations Central Department to disseminate the information to the market.
The internal committees, set up in compliance with Principle XI and Recommendation 16 of the Code, represent an internal Board of Directors structure with investigative, propositional and advisory functions. Their composition, which is available on the website www.gruppohera.it, evaluated at the time of appointment by the Board, has been formed in line with the provisions of Recommendation 17 to grant priority to the competence and experience of the members, while avoiding an excessive concentration of positions.
The Hera Board of Directors, following its renewal on 29 April 2020, proceeded to redefine the composition of the afore-mentioned committees at its meeting of 13 May 2020.
Concerning the committees envisaged by the regulations, see the specific paragraph of "Section 4.6" that relates to the Executive Committee, and "Section 10" below with reference to the Related Parties Committee.
Moreover, in order to provide the individual committees with specific internal regulations aimed at defining their operating rules, recording and management of the information provided to the Board of Directors, the latter has approved their contents.
It was decided to maintain the Appointments Committee's functions within the Board of Directors, under the coordination of the Chairman.
During its meeting of 12 September 2007, the Board of Directors of Hera S.p.A. established the text of the mission and values and working principles of the Group, and consequently approved the updated version of the Code of Ethics that constitutes a social responsibility tool for the Company in implementing ethical principles inspired by good practices and aimed at the pursuit of the Company's mission.
Therefore, in implementing the aforementioned code, the Board of Directors, in its 8 October 2007 meeting, set up a special Committee made up of three members, at least one of whom is a director of the Company, and two experts on matters of social responsibility and the issues addressed by Legislative Decree 231/01, also highlighting that at least one member must be external.
Subsequently, in its 8 November 2018 meeting, the Hera Board of Directors, in compliance with the provisions of article 4 (Establishment and functioning of the internal committees of the Board of Directors) of the current Corporate Governance Code for listed companies of Borsa Italiana Spa, has deemed it appropriate to assign the Ethics Committee the functions of supervising the sustainability issues connected with exercising company activities and the dynamics of interaction with all stakeholders. It further decided to change the committee's name to the Ethics and Sustainability Committee and to expand its composition, raising the number of members from three to four, including two Directors of Hera Spa.
The Committee, last renewed on 13 May 2020, is therefore composed of two directors of Hera Spa in the persons of Federica Seganti, Chairman, and Alice Vatta, as well as Cristiana Rogate and an executive with expertise in social responsibility.
The committee is provided with specific regulations approved by the Board of Directors and last revised in 2020.
The Board of Directors of Hera Spa, in its 8 February 2023 meeting, resolved to once again update the code, adopting a sixth edition following a participatory process that involved the top management of Hera and Group employees through various corporate communication systems, including the Millennials as well as the Group's social partners.
Specifically, the updating process was based on:
The Code, in its 6th edition, can be defined as "purpose - driven" in that purpose is referred to in all Chapters of the Code.
The Ethics and Sustainability Committee is responsible for monitoring the dissemination and implementation of the code of ethics, for supervising the sustainability aspects of the company's operations and, in accordance with Recommendation 1 of the Code, for supporting the Board in analysing issues that are relevant to the generation of long-term value. In particular, it receives reports of violations of the code and assesses whether or not to initiate proceedings, monitors the implementation of sustainability policies, formulates, at the request of the Board of Directors, opinions about specific sustainability issues, examines corporate procedures on social and environmental issues and, on a preventive basis, reviews the sustainability report to be submitted to the Board of Directors.
Since 2008, when the code of ethics went into effect, a special confidential, direct channel has been activated between the Committee and any stakeholders interested in reporting any conduct in violation of the code and values promoted by the Group.
The Ethics and Sustainability Committee met 8 times in 2022; 6 sessions were attended by all the members, while two sessions were attended by almost all the members. The average duration of the meetings of the Committee was approximately one hour and 25 minutes.
Below are the attendance records of managers invited to attend the Ethics and Sustainability Committee meetings:
In the meetings held during the year, the Committee reviewed the reports received and the resulting investigations carried out, drafted the 2022 annual report to Hera's Board of Directors, previewed the 2021 Sustainability Report, defined the plan for updating the Code of Ethics with periodic reporting on the progress of this work, approved the Committee's semi-annual report, defined the training and awareness-raising plan for the Code of Ethics, met with the Supervisory Body, managed sustainability activities such as the thematic sustainability reports "Energie per il clima", "In buone acque", "Sulle tracce dei rifiuti 2022" and "Costruire insieme il futuro", and the 2022 Sustainability Report project. During the various meetings, in addition to the above topics, the Committee also reflected on the sustainability issues to be monitored, with a focus on the EU Taxonomy, green financing framework, and green bonds; in addition, during a dedicated meeting, the Committee was provided with a briefing on sustainability risk management and Hera's 2030 KPI benchmark was assessed.
Regarding the current financial year, two meetings of the Ethics and Sustainability Committee have been held as of 21 March 2023, attended by all members. An additional committee meeting had been scheduled as of that date, and further meetings will be scheduled thereafter.
In application of the provisions of Principle XIV of the Code, the Board of Directors periodically assesses the effectiveness of its activities and the contribution made by its individual members through formalised procedures the implementation of which it supervises.
More specifically, in line with Recommendation 22 of the Code, the Board of Directors carries out an annual self-assessment of the size, composition and functioning of the Board itself and its committees, with the support of an independent external advisor who is an expert in governance issues and advising management bodies, also taking into account the role the Board has played in defining strategies and monitoring management performance and the effectiveness of the internal audit and risk management system, as set out in Recommendation 21 of the Code.
This assessment was carried out in 2023 with the support of Corsi & Partners and Mercer Italia, in a Temporary Regrouping of Companies (RTI); lastly, the assessment was presented and discussed during the meeting of the Board of Directors on 21 March 2023.
As part of the self-assessment activity, the directors:
The consulting firm's methodology focuses on board roles and composition, decision-making, instructional and operational processes, time management and dynamics, and communication. The focus is on the effectiveness of the Board and the Committees in performing their corporate policy and control functions.
This proposed methodology aims to grant continuity over time to the activities carried out in past years and is based on the following tools:
The interviews are based on a questionnaire, which is sent to directors prior to meetings with consultants Corsi & Partners Srl and Mercer Italia Srl and filled out by them online. This questionnaire covers issues of corporate governance, the functioning of the Board and its Committees, the composition of the Board and its Committees, the exercise of policy and control powers, and the policies adopted to promote dialogue with shareholders and stakeholders.
Each question requires both a quantitative assessment and a qualitative comment on the topic under examination. The directors express the degree to which they agree with the statements contained in the questionnaire, using an internationally recognized scale.
All the analyses and comments are processed in an absolutely anonymous and confidential manner.
Hera's corporate documentation is analysed in order to understand the ways in which directors interact, the actions taken, the issues discussed and their frequency on the agenda.
Interviews with the Directors revealed a very high level of overall appreciation: the percentage of responses expressing agreement with the topics suggested in the questionnaire amounted to 88%.
In particular, the areas the Directors displayed the most agreement in assessing positively include:
The score given to these areas, based on consultants' experience, is higher than that normally found in other boards' self-assessments.
Specifically, the Directors appreciated:
In view of the manner in which the directors were appointed, the expression of the main shareholders and the evaluations attributable to them, the Board of Directors considered its size to be essentially appropriate.
Regarding the composition of the board, which is based on a diverse mix of professional backgrounds, the directors noted that knowledge of the business and the Company has gradually increased over the term of office.
Of the proposals that were identified as part of the Directors' assessments, the following are of note:
(ii) risks (market, rates, reputational, operational) (iii) organisational structure, Group structure, the operations of subsidiaries; (iv) strategy; (v) industry regulations and related developments; (vi) internal control; (vii) ESG; and (viii) specific investments and/or acquisitions;
It should be noted, as already mentioned in "Section 6," that it has been decided as early as 2020 to keep the functions of the Nominations Committee under the coordination of the Chairman, also in view of the fact that appointments of the members of the Board of Directors are carried out by shareholders through list voting at the Shareholders' meeting.
Adequate space shall be devoted in Board of Directors meetings to the performance of the functions typical of this Committee, subject to successful verification that at least half of the members of the Board of Directors can be considered independent directors.
It should also be noted that, in case of early termination of the executive directors' mandate, the procedure will be carried out in compliance with the provisions of the Articles of Association and the Shareholders' Agreement: the Chairman's functions, as legal representative, are immediately taken over by the Vice Chairman; the Board of Directors will have the power to co-opt new directors to replace those who have ceased to hold office and will deliberate the allocation of proxies. The first Shareholders' meeting held shall carry out the subsequent integration of the Board of Directors. With regard to the management of Tier I senior management, the Chairman, in consultation with the Chief Executive Officer, shall submit to the Board of Directors a substantiated proposal for appointment/replacement.
For all information concerning the remuneration policy, the remuneration of executive directors and top management, the remuneration of non-executive directors, the accrual and payment of remuneration and the indemnity of directors in the event of resignation, dismissal or termination following a takeover bid, please refer to the Report on the remuneration policy and the remuneration paid.
The Remuneration Committee, which was set up for the first time at the Board of Directors metting held on 4 November 2002 and whose composition was last renewed on 13 May 2020, is chaired by the Vice-Chairman of the Board of Directors, Gabriele Giacobazzi, and by three further members: Monica Mondardini, Fabio Bacchilega and Alice Vatta.
The work of the Remuneration Committee is coordinated by the Vice-Chairman, who also informs the Board of Directors about the activities carried out. This committee met three times in 2021: two meetings were attended by all Committee members, while one meeting was attended by almost all members. The average length of the meetings of the Committee, duly reported in the minutes, was approximately one hour and thirty minutes.
Below are the attendance records of managers invited to attend Remuneration Committee meetings:
Regarding the current financial year, as of 21 March 2023, a total of one Remuneration Committee meeting had been held, attended by almost all the members. As of that date, one additional meeting of the Remuneration Committee had been scheduled.
During the various meetings of the Committee in 2022, it addressed topics related to the BSC system and executive welfare plan, executive management retention, the 2021 drawing up of a final statement
about 2021 short-term variable compensation (corporate objectives component), the 2021 drawing up of a final statement about the 2021 welfare plan, the 2021 drawing up of a final statement about the longterm management incentive plan for the 2019 - 2021 three year period, the 2022 compensation guidelines and policies for directors and executives, the 2021 drawing up of a final statement about the top management variable remuneration cards, the positioning of the Company with respect to the "General Market of Business Directors 2021," the remuneration benchmarks of top management positions of comparable multi-utility companies, as well as the determination of the remuneration to be awarded to Hera's new CEO and a consideration of adjusting the remuneration for the Executive Chairman. Finally, it should be noted that, as proposed by the Committee, with the renewal of the Board of Directors that took place in 2017, a claw-back clause was introduced that provides for ex post correction mechanisms in the remuneration system for executive directors, as well as a clause which, in the event of resignation, dismissal or termination of the latter, establishes an indemnity in the amount of 18 monthly salaries.
Moreover, in compliance with the provisions of Recommendation 26, the Remuneration Committee, entirely made up of non-executive directors and chaired by the Vice-Chairman of the Board of Directors, includes at least one member with adequate knowledge and experience in financial matters or remuneration policies, as determined by the Board of Directors upon appointment.
The Chairman of the Board of Directors, the Group CEO and representatives of company departments potentially involved may participate in the Committee's activities following an explicit invitation by the Chairman of the Committee.
For additional information, please refer to the Report on remuneration policies and compensation paid pursuant to Article 123-ter of the TUF.
In application of Recommendation 25 of the Code and also based on the provisions of the related Regulation, approved by the Board of Directors on 23 February 2022, the Remuneration Committee has the task of assisting the administrative body with investigative, advisory and propositional functions. In particular, the Committee is tasked with:
In the performance of its functions, the Committee has access to the information and business functions necessary for carrying out its duties.
For additional information, please refer to the Report on remuneration policies and compensation paid pursuant to Article 123-ter of the TUF.
The Internal Control and Risk Management System is integrated into the broader organizational and corporate governance structures adopted by Hera and duly considers the recommendations of the Corporate Governance Code, reference models and best practices at national and international levels.
Risk corporate governance at Hera
In compliance with Principle XVIII of the Code, Hera has adopted an organizational structure designed for optimal management of any risk exposure arising from its business, delineating an integrated approach aimed at maintaining management effectiveness and profitability across the entire value chain. In application of Principle XIX and Recommendation 33, the corporate governance system for risk management (Enterprise risk management), defines the rules, structures and organizational procedures designed to effectively and efficiently identify, measure, manage and monitor the main risks, in order to contribute to Hera's sustainable success, in keeping with its corporate strategies. For a more detailed description, please refer to the Management Report.
The Risks Committee, first established in 2011, is composed of the Executive Chairman, the Vice Chairman and the CEO of Hera Spa, the Central Director of Administration, Finance and Control, the Market Central Director and the Enterprise risk manager. Furthermore, in relation to specific pertaining issues, the Central Director of Legal and Corporate Affairs, the Central Director of Corporate Services, the Central Director of Innovation and the CEO of Hera Trading Srl are also expected to attend.
The significant risks dealt with by the Risks Committee comprise the following areas: strategic, economic, financial, regulatory, competitive, technological, environmental and related to human capital. In 2022, the Risks Committee met four times and provided information on risk management to the Board of Directors in the meetings of 23 February and 27 July 2022.
In the overall design of the risk management process, Hera has adopted a structured approach that mirrors industry best practices, through the introduction of Enterprise risk management (ERM). This stance is aimed at formulating a systematic and coherent approach to the control and management of risks and creating an effective model of direction, monitoring and representation so as to ensure management processes are appropriate and consistent with the objectives set by top management.
For a more detailed description of the fundamental elements of the risk management framework, please refer to the Management Report.
On 20 January 2016, the first ERM report was presented to the Board of Directors with a mapping of the Group's risks, accompanied by the appropriate assessment measures for each individual and consolidated risk (impact, probability, severity, control levels). At that time, the Board of Directors approved the Hera Group risk management policy Guidelines and risk limits for 2016.
On 15 February 2017, the second ERM report was presented to the Board of Directors that extended the perimeter of reference and the set and tyles of risks subject to control. On the same occasion, the limits for 2017 and updating of the Hera Group risk management policy Guidelines were approved.
On 27 September 2017, information was presented to the Board of Directors regarding risk management activities within the Group.
In particular, the following pertinent issues were addressed:
The ERM report has been presented to the Board in subsequent years as well.
On 10 January 2020, the fifth ERM report was presented to the Board of Directors with an expansion of the reference perimeter and the set of risks subject to control and backtesting of the risks relating to the previous ERM analysis. The risk limits for the year 2020 were also approved, as was the update of the Hera Group risk management policy guidelines. On 25 March 2020, the group's crisis management model, the activities carried out and the planned development plan were presented to the Board of Directors.
On 13 January 2021 the sixth ERM report was presented to the Board of Directors; in addition to the previous edition, this report introduced a risk analysis of the Covid-19 pandemic and carried out a comparative analysis of the Group's risks with respect to the proposed reference model of the World Economic Forum's 2020 Global Risk Report, highlighting similarities and specific features.
On 26 January 2022 the seventh ERM report was presented to the Board of Directors, which, in addition to the previous edition, introduced additional time-based parameters for representing risks and mapping them onto the strategic areas of the Business Plan.
The internal control and risk management system specific to financial reporting (SCIIF) is designed to ensure the reliability, accuracy, soundness and timeliness of company information on financial statements and the ability of the relevant business processes to produce such information in accordance with the Group's accounting principles.
Reporting consists of all the financial and non-financial data and information contained in the periodic accounting documents required by law, as well as in any other act or communication to the outside world having accounting content, which are the subject of the attestations provided for in Article 154-bis of the TUF.
The SCIIF model adopted by the Hera Group has been defined in accordance with the provisions of Article 154-bis of the TUF and is methodologically based on the Coso Framework (Internal Control Integrated Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission, an international reference model for establishing, updating, analysing and evaluating internal control systems.
As part of the internal control and risk management system pertaining to the financial information process, the Appointed Manager has set up an administrative and financial control Model - Regulation of the Appointed Manager for drafting corporate financial documents (hereafter also "The Model") approved by the Hera spa Board of Directors, outlining the adopted methodology and associated roles and responsibilities in relation to defining, implementing, monitoring and updating the financialadministrative procedural system over time and in assessing its adequacy and effectiveness.
The design, institution and maintenance of the SCIIF are assured through the following activities:
represents the process of identifying and/or updating the risks connected to the financial statement (risks of unintentional errors or fraud) that might have an effect on the financial statement, and is carried out under the supervision of the Appointed Manager, at least on an annual basis.
This process identifies the set of objectives that the system is intended to achieve in order to ensure a truthful and fair representation of this reporting. Risk Assessments, carried out according to a top-down approach, concentrates on those areas of the financial statement wherein potential effects on financial information have been located in relation to the failure to achieve these control objectives.
As part of the process of Risk Assessment, the following tasks are carried out:
The process for determining the scope of the Companies and relevant processes in terms of their potential impact on the financial statement is aimed at identifying the Subsidiary Companies, the accounts and processes associated with them, and any other financial information considered to be relevant. The evaluations are carried out using both quantitative standards and qualitative parameters.
An identification of the necessary checks for mitigating the risks that were identified in the previous step is carried out taking into consideration the control objectives associated with the financial statement. Based on the above, Hera Spa has established an internal control system under which the directors of corporate departments periodically verify the design and operating effectiveness of control activities, each for the areas under his or her jurisdiction.
The results of periodical updates applied to procedures and associated controls are communicated to the Appointed Manager by the directors of corporate departments. The directors of corporate departments provide for updating/modifying the financial-administrative procedures in relation to the areas under their managerial responsibility on a regular basis.
Step 3: Periodic evaluation of financial-administrative procedures and the controls they contain The identified controls are periodically assessed in terms of their adequacy and actual effectiveness through specific testing activities according to the best practices established for the area in question.
In the course of these activities, the Appointed Manager evaluates at each given time what degree of involvement, of the directors of corporate departments and of contact persons within the Subsidiary Companies, is necessary for carrying out assessment activities.
On a bi-annual basis, the Hera Spa Appointed Manager and CEO receive specific internal statements from Hera Group subsidiary companies and relevant connected companies in reference to the completeness and reliability of information flows for the purposes of financial reporting.
On a bi-annual basis, the Appointed Manager defines a series of reports synthesizing the results of the assessments of controls in relation to the risks previously identified on the basis of the outcomes of the monitoring activities performed.
After having been shared with the CEO, the prepared Executive Summary is communicated to Hera Spa's Board of Statutory Auditors, the Controls and Risks Committee and the Board of Directors.
The internal control and risk management system concerning financial reporting (SCIIF) is governed by the Appointed Manager in charge of drafting corporate financial documents who, in agreement with the CEO, is responsible for planning, implementing, monitoring, and updating the financial and administrative control Model over time.
In performing his or her activities, the Appointed Manager:
Lastly, the Board of Statutory Auditors and Supervisory Board are informed about the adequacy and reliability of the financial-administrative system.
The "Hera Spa Tax Strategy" approved by Hera's Board of Directors on 27 July 2022 as part of the implementation of procedures and safeguards for the management and control of tax risk (referred to as the Tax Control Framework (TCF)), defines the lines of behaviour that Hera intends to pursue in order to achieve and maintain the following objectives:
The adoption of a clear and documented tax strategy is, among other things, one of the requirements for gaining admission to the cooperative tax compliance regime ("cooperative compliance") established by Legislative Decree 5 August 2015, no. 128 which fosters forms of communication and cooperation between the tax authorities and taxpayers. This regime is dedicated to taxpayers who meet the eligibility requirements of the regulations and are equipped with a system for the detection, measurement, management and control of tax risk (TCF), understood as the risk of operating in violation of tax regulations or contrary to the principles or purposes of the tax system.
The main benefits guaranteed by the law, in return for the implementation of this system aimed at establishing a relationship of trust between administration and taxpayer in order to increase the level of certainty on relevant tax issues, are as follows:
The objective is pursued through constant and preventive dialogue between the taxpayer and the tax authorities on the most significant transactions, characterised by tax risks, by reaching an agreement on the positions to be taken.
The process of Hera's joining the collaborative compliance regime was initiated during 2022 and resulted in the submission of the application to the Inland Revenue Office on 30 December 2022. This process is a key step in the accountability pathway, representing Hera and the Group as an entity that maintains a collaborative and transparent relationship with the Tax Authority, perfectly in line with the values expressed in the Group's Code of Ethics.
The Administration, Finance and Control Central Director is responsible for setting up the Tax Control Framework and evaluating it on an annual basis. The outcomes of this evaluation and the main issues surrounding the effective implementation of the Tax Strategy are reported in the annual report sent to the Control and Risks Committee, which reports its findings to the Board of Directors and the Board of Statutory Auditors. The Tax department works closely with the business lines to ensure that possible tax risks are identified and properly managed. Fiscal impacts of one-time transactions are analysed and approved by the appropriate organizational actors.
The implementation of the Tax Control Framework (TCF) will be progressively extended to other Group companies that meet the size requirements and are considered relevant from a risk-based perspective.
Most recently with the resolution of 29 April 2020, the Hera Spa Board of Directors has established that, within the scope and limits of the respective delegations and reporting lines of the various corporate structures, the Chairman and CEO are charged, as far as their authority permits, with establishing and maintaining the Internal Control and Risk Management Systems.
Pursuant to Recommendation 34 of the Code, the Executive Chairman and Chief Executive Officer, in this case as well as far as their authority permits:
The corporate heads may request that the Internal Auditing Manager carry out operations concerning risk assessment on specific operational areas and compliance with internal rules and procedures in carrying out corporate operations.
As established by the Code, the Board of Directors, at its meeting of 4 November 2002, passed a resolution to establish the Internal Controls Committee: Subsequently, during the course of the Company's Board of Directors meeting that took place 17 December 2012, in application of updates to the Code of Self-Discipline, the Internal Control Committee took on the additional function of Risk Management Committee in order to manage the Company's risks and support the administrative body in associated assessments and decisions.
This Committee, whose composition was renewed on 13 May 2020, is made up of independent director Gabriele Giacobazzi as Chairman, Erwin Paul Walter Rauhe, Lorenzo Minganti and Paola Gina Maria Schwizer.
On the occasion of the latest renewal of the Committee, the Board of Directors confirmed that principle 7.P.4 of the Corporate Governance Code in force at the time had been complied with.
In compliance with Recommendation 35 of the Code, the Controls and Risks Committee is chaired by an independent director and composed exclusively of independent non-executive directors.
The Controls and Risks Committee met seven times in 2022; six sessions were attended by all the members, while one session was attended by almost all the members. The average length of the meetings of the Internal Controls Committee, duly recorded in the minutes, was approximately one hour and 20 minutes.
It should be noted that the Director of Internal Auditing attended all meetings of the Controls and Risks Committee.
Regarding the current financial year, two meetings of the Controls and Risks Committee have been held as of 21 March 2023, all of them attended by all members. As of that date, an additional six meetings of the Committee had been planned for the remainder of the year.
In compliance with Recommendations 33 and 35 of the Code, the Control and Risk Committee has the task of supporting, through adequate preliminary activities, the decisions and assessments made by the Board of Directors concerning the internal audit and risk management system.
In carrying out its supportive role in relation to the Board of Directors, the Committee therefore expresses its judgment concerning:
m) communicates to the Board of Directors about the activities performed by and the adequacy of the internal control and risk management system at least on the occasion of the annual and bi-annual approval of the financial statement.
During the course of the meetings held during the 2022 financial year, duly recorded in the minutes, the following measures were carried out:
The Chairman of the Board of Statutory Auditors or another Statutory Auditor designated by the Chairman and, at the express invitation of the Chairman of the Committee, the Chairman of the Board of Directors and the Group CEO, attend the Committee's meetings.
In the performance of its functions, the Controls and Risks Committee had access to the information and business functions necessary for carrying out its duties.
In relation to the 2022 financial year, and following the quarterly reports released by the Controls and Risks Committee, the Board of Directors has approved the adequacy and efficacy of the internal control and risk management system, including in terms of pursuing sustainable success, in relation to the features of the company and the type of risk profile it has undertaken, also considering its subsidiaries with strategic importance.
In compliance with Recommendation 33, on 20 December 2017 the Board of Directors appointed the Internal Auditing Director, effective 1 January 2018.
In compliance with Recommendation 36 of the Code, the head of the Internal Auditing Department is hierarchically independent of the heads of operational divisions, may have direct access to all information necessary for the performance of his or her duties, and reports to the Vice Chairman.
The Internal Auditing Department reports on its activities, whenever it deems it necessary, to the Chief Executive Officer, the Chairman of the Board of Directors, the Controls and Risks Committee and the Board of Statutory Auditors by preparing a suitable risk assessment and three-year audit plan:
Legislative Decree 231/2001 introduced into Italian legislation the administrative responsibility of legal entities, companies and associations. In particular, the law introduced the criminal liability of entities for certain offences committed in the interest or to the advantage of those entities by persons fulfilling roles of representation, administration or management of the entity or of one of its organisational units with financial and operational independence, or by persons who exercise management and control thereof, including on a de facto basis, and lastly, by persons subject to the direction or supervision of one of the above-mentioned parties. Significant offences are those committed against Public Administration and corporate offences committed in the interest of the companies.
However, Articles 6 and 7 of Legislative Decree no. 231/2001 provide for a form of exoneration from liability where (i) the entity proves that it adopted and efficiently implemented, prior to the commission of the act, appropriate organisational, management and control models for preventing the perpetration of the offences considered by the said decree; and (ii) the duty of supervising the functioning of and compliance with the models, as well as providing for their updating, is entrusted to a body of the entity that is vested with autonomous powers of initiative and control.
To this end, on 16 February 2004, the Board of Directors of Hera Spa approved and subsequently updated the organizational model, also in the light of the provisions introduced by Legislative Decree no. 231/2001, with the aim of creating a structured and organic system of control procedures and activities to prevent commission of the offences referred to in the aforementioned decree, by identifying the activities exposed to a risk of offence and implementing suitable procedures for those activities.
The aspects being updated, in line with developments in legislation and jurisprudence, concerned in particular:
▪ the list of 231 offences including the most recently introduced ones, brought into line with the list set out in Legislative Decree no. 231/2001;
The updating of the General Section of the Organisational, Management and Control Model, aimed at incorporating regulatory updates in a continuation of the previous revision of the document, is therefore designed to consolidate and further strengthen the Model's effectiveness in preventing offences and exempting the Company from liability.
The Group is sensitive to the need to ensure conditions of fairness and transparency in conducting business and corporate activities, to guarantee that the needs of the community are met and to protect the Group' s position and image, the expectations of its shareholders and the work of its employees. Moreover, the Group is aware of the importance of an internal control system capable of preventing unlawful conduct by its Directors, employees, external collaborators and business partners in general.
The Model has been adopted in the conviction that - beyond the provisions of Decree 231, which identify it as an optional and not compulsory tool - it constitutes a valid instrument for raising the awareness of all those who work in the name of and on behalf of the Group companies, so that they behave in a correct and straightforward manner in performing their activities, thereby avoiding the risk of committing the crimes envisaged by the Decree.
At present, the organisational, management and control model pursuant to Legislative Decree no. 231/2001, available on the website www.gruppohera.it under the "Governance/Internal-Auditing section", includes 27 protocols, implemented over time and relating to individual sensitive areas, which aim to ensure transparency and a sense of responsibility in internal relations and with the outside world.
For each process at risk, the protocols identify principles, roles and responsibilities to be followed in managing the activities and define the periodic information flows used to control them.
Each protocol ensures that the Supervisory Body engages in constant monitoring of activities at risk. The procedures adopted incorporate the principles of the code of ethics in order to guide Group management according to the values and operating principles defined in the Charter of Values.
Risk factors and critical issues were identified and weighed through risk assessments carried out on the Group's business areas and infrastructure processes. The specific risks inherent in these 231 areas are defined by the Supervisory Body in an annual auditing plan that takes into account risk assessments, the coverage of new processes, regulatory developments and the extension of the scope of activities of Group companies.
The model involves establishing an ongoing legal compliance check, drafting the Audit Report on the effective implementation of the protocols in Group companies falling within the 231 perimeter, providing assistance with drafting re-entry plans in adopting the recommendations outlined in the report, and carrying out specific follow-ups to verify that re-entry plans have been implemented and the critical points highlighted have actually been resolved.
The model entails an informative and training component that targets the subjects involved in sensitive processes in order to raise awareness about prohibited and mandatory behaviours, create awareness of the related ethical behaviours and promote a Group culture for managing corporate risks.
An integral part of the model is the Supervisory Body's bi-annual examination of the information flows concerning activities at risk.
The risk analysis document with its related audit plan is drawn up for the whole Group every three years, the last of which refers to the period 2022-2024.
The organisational, management and control model pursuant to Legislative Decree no. 231/2001 has also been adopted by subsidiaries with strategic importance.
The Board of Directors has also instituted the Supervisory Body, approving its regulations:
This body, renewed most recently on 13 May 2020 and currently, in line with the provisions of Recommendation 33 letter e), made up of an external member with the role of Chairman, the Legal and Corporate Central Director of Hera Spa, and the Internal Auditing Director of Hera Spa, has the specific task of periodically reporting to the corporate bodies of the Parent Company regarding implementation of the organizational model pursuant to Legislative Decree 231/2001 and will remain in office until the date of the Shareholders' Meeting approving the financial statements as of 31 December 2022.
The Supervisory Body met on seven occasions in 2022 and all these meetings were attended by all the members. The average length of the meetings of the Supervisory Body was approximately one hour.
The Supervisory Body approved and updated the 231 protocols that make up the organizational model, examined the system of information flows that allow it to supervise the functioning and observance of the models and examined reports made following audits, as well as consulting legislative developments pursuant to Legislative Decree 231/2001 and planning additional activities.
The Supervisory Body draws on the operational support of the Internal Auditing Department of Hera Spa. In order to carry out the checks and controls, the Supervisory Body drew up a schedule of measures for verifying compliance with the protocols adopted.
Regarding the current financial year, two meetings of the Supervisory Body were held as of 21 March 2023: all meetings were attended by all members. As of that date, an additional five meetings of the Committee had been planned for the remainder of the year.
In the course of 2019, Hera Spa obtained the ISO 37001 certification for corruption prevention, the validity of which was confirmed by the Certifying Body following the maintenance audit carried out in July 2022. The Hera Group has consequently adopted a management system for corruption prevention that is integrated into the organization, management and control model pursuant to Legislative Decree 231/01, the foundations of which are rooted in the principles and values expressed in the code of ethics and in the quality and sustainability policy.
Along these lines, the Group has set up a model for corruption prevention which involves establishing a Compliance Department for the prevention of corruption that coincides with the Supervisory Body, to oversee the management system for preventing corruption.
The main responsibilities/functions of the Corruption Prevention Compliance Department are:
Hera Group top management and management staff are personally committed to respecting the model for corruption prevention, including by carrying out awareness-raising and dissemination activities for the principles of the rules aimed at preventing corrupt acts in their own departments.
The corruption prevention model concerns everyone who works for the Hera Group.
With the December 2021 approval of the revision of the Organizational, Management and Control Model in accordance with Legislative Decree 231/2001, the Hera Group renewed its commitment to combating corruption and all offences relating to 231 and to preventing situations where there is a risk of such offences being committed.
A system is in operation for reporting crimes, misdemeanours, or alleged violations of Model 231 or the Corruption Prevention Model, known as whistleblowing, via a portal (reports.gruppohera.it) or written report, which allows anonymous submissions, in compliance with privacy regulations and current legislation.
The Hera Spa Shareholder's meeting of 23 April 2014 appointed Deloitte & Touche Spa to the role of independent auditor for the 2015-2023 financial years.
In view of the end of Deloitte & Touche Spa's appointment, considering the size and complexity of the Hera Group, the Board of Statutory Auditors of Hera Spa deemed it appropriate to begin the procedure for selecting the new auditing firm for the 2024-2032 financial years one year in advance.
Appointment one year in advance is indeed a common practice among the main listed companies. On the one hand, it makes it possible to align the appointment of the new auditor with that of Group companies and, on the other hand, it allows the new auditors to organize their activities well in advance, thus acquiring greater knowledge of the Group.
Upon completion of the tendering process for the above mentioned position, held under the supervision of the Board of Statutory Auditors - the responsible body under Article 13, paragraph 1, of Legislative Decree 39/2010 – the latter presented the relevant substantiated proposal to the Shareholders' Meeting of 28 April 2022, which resolved to appoint the auditing firm KPMG Spa to audit the accounts of Hera Spa with reference to the financial years 2024 to 2032.
In accordance with the provisions of the TUF and the Company's Articles of Association, the Board of Directors, after obtaining the opinion of the Board of Statutory Auditors, by resolution dated 27 July 2022 and effective as of 1 September 2022, to replace the resigning Luca Moroni, appointed Massimo Vai as the Central Director of Administration, Finance and Control, as well as the Executive in charge of preparing the company's accounting documents, after verifying that he meets the professionalism requirements set forth in Article 29 of the Articles of Association, in compliance with the TUF.
The Appointed Manager is tasked with establishing adequate financial and administrative procedures for the creation of the financial statement and consolidated financial statement as well as any other financial communication. To this end, the Appointed Manager will have access to a dedicated budget approved by the Board of Directors and an adequate organizational structure (in terms of quantity and quality of resources) dedicated to the preparation/updating of financial-administrative procedures and periodical assessment activities concerning the suitability and actual application of financial-administrative rules and procedures. If the internal resources prove to be insufficient for the suitable management of these activities, the Appointed Manager is permitted to exercise the power of expenditure granted to him or her.
The Board of Directors verify that the Appointed Manager has access to adequate powers and means to carry out the tasks entrusted to him or her by Article 154-bis of the TUF, and also to monitor that financial and administrative procedures are being followed.
The Appointed Manager communicates and exchanges information with all the administrative and control bodies of the Company and of the Group's subsidiaries, including but not limited to:
The Issuer has established the following systematic coordination modes for the various subjects involved in the internal control and risk management system:
In particular, the following types of coordination meeting are specified:
At its meeting of 10 October 2006, the Board of Directors of Hera S.p.A. approved, in compliance with Articles 1 and 9 of the then-in force Corporate Governance Code, guidelines for significant transactions, transactions with related parties and transactions in which a director has an interest (Guidelines), in order to ensure that these transactions are conducted transparently and in conformity with the criteria of substantive and procedural correctness.
Subsequently, the Board of Directors of Hera S.p.A. approved the new procedure for transactions with Related Parties (Procedure) in compliance with the provisions of the Consob Regulation adopted by virtue of Resolution no. 17221 of 12 March 2010 and subsequent amendments and integrations thereto ("Consob Regulation"), later updated on 21 December 2015.
This new Procedure cancelled and completely replaced the rules on transactions with Related Parties contained in the Guidelines, but there is no change to the existing rules set out in the Guidelines concerning significant transactions and transactions in which a director has an interest.
In the Procedure, the Board of Directors fully adopted the definitions of Related Parties and Transactions with Related Parties, as well as all the directly associated definitions, contained in the Consob Regulation and its annexes.
The Procedure was last updated on 30 June 2021, in order to adapt it to the amendments - introduced by Consob resolution 21624 of 10 December 2020 - to the Consob Regulation on related party transactions adopted by resolution 17221 of 12 March 2010 and effective beginning 1 July 2021.
In particular, the Procedure identifies:
1) the types of transactions with related parties outlined in the Procedure:
2) the approval process for transactions of major and minor importance, depending on whether they involve:
The Procedure provides that the Committee charged with guaranteeing, by issuing specific opinions, the substantive correctness of dealings with Related Parties, must be in agreement with the control and risks committee.
The Procedure also identifies the cases to which the Procedure does not apply, as well as governing the procedures for communication with the public on the transactions carried out.
Beginning May 2014, a specific Operational Guideline was applied by Hera and its subsidiaries and subsequently updated on 21 May 2016, in order to detail the information reported in the Procedure and outline the rules, roles and responsibilities, as well as operational activities, implemented by the company.
The auditors are appointed by the shareholders' meeting on the basis of the voting list system set forth in Article 26 of the Articles of Association, as modified by the Extraordinary Shareholders' Meeting of 29 April 2020, in implementation of Law 160 of 27 December 2019 and the subsequent Consob Communication 1 of 30 January 2020, in order to ensure that the minority is able to appoint a standing auditor with the function of Chairman as well as an alternate auditor, in compliance with current legislation on gender balance. In accordance with Article 25 of the Articles of Association, the office of statutory auditor is incompatible with the offices of director or alderman in territorial public entities, as well as with that of statutory auditor in more than three listed companies with the exclusion of companies controlled by the Company pursuant to Articles 2359 of the Civil Code and 93 of Legislative Decree 58/98. In the latter case, a Statutory Auditor who subsequently exceeds this limit will automatically forfeit the office of Statutory Auditor of the Company.
Article 26 of the Articles of Association governs the terms and conditions for filing and publishing lists, as well as the related documentation, in compliance with current regulations.
The lists must be delivered to the registered office at least 25 days before the date set for the meeting, together with the curriculum vitae of the candidates and a declaration from each individual candidates stating that he or she accepts the office and certifying that there are no causes of ineligibility, incompatibility or revocation as established by law, and the existence of the requirements of integrity and professionalism required by law for members of the Board of Statutory Auditors.
Article 25 of the Articles of Association establishes that, for the purposes of the provisions of legislation in force concerning the requirements of professionalism for members of the Board of Statutory Auditors of listed companies, business matters and sectors strictly pertaining to the activities performed by the Company means the business matters and sectors associated with or pertaining to the activity performed by the Company and cited in Article 4 of the Articles of Association.
The lists must also be accompanied by a statement certifying that there are no agreements or connections of any kind with other shareholders who have presented other lists, and a list of the administrative and control positions held by the candidates in other companies. These lists must be made available to the public at the registered offices and on the website www.gruppohera.it, no less than 21 days prior to the date of the Shareholders' Meeting.
The terms and conditions for the filing of lists are indicated by the Company in the Shareholders' Meeting notice of call. Each shareholder may submit or participate in the submission of only one list. In the event this rule is violated, the shareholder's vote is not taken into account with respect to any of the lists presented. Each person entitled to vote may vote for only one list.
Shareholders who alone or together with other shareholders represent at least 1% of the share capital with voting rights in the ordinary shareholders' meeting, or the alternative percentage required by current legislation and indicated in the notice of call, may submit lists.
In this regard, it should be noted that, on the occasion of the last renewal of the Board of Statutory Auditors which took place at the Shareholders' Meeting of 29 April 2020, the shareholding required for presenting lists of candidates for the election of the sitting control body was identified by Consob (through Resolution 28 of 30 January 2020) in the amount of 1%, equal to the percentage provided for in article 26.2 of the current Articles of Association.
In particular, (i) municipalities, provinces and consortia constituted pursuant to Article 31 of Legislative Decree no. 267/2000 or other entities or public authorities, as well as consortia or joint-stock companies controlled, directly or indirectly, by these may present a single list and (ii) the shareholders not indicated in (i) may submit lists provided that they represent at least 1% of the shares with voting rights or the percentage established by current regulations and indicated in the notice concerning the meeting.
In order to demonstrate ownership of the number of shares necessary for presenting lists, shareholders must file the appropriate certification proving ownership of the number of shares represented at the registered office within the deadline set by the Company for posting the lists.
The lists contain a number of candidates not exceeding the number of members to be elected, listed by means of progressive numbering. Each candidate may appear on only one list under penalty of ineligibility. Each list must contain a number of candidates belonging to the less- represented gender that ensures compliance with the balance between genders, at least to the minimum extent required by current legislation, including regulations.
The members of the Supervisory Body are appointed in accordance with the provisions of Article 26 of the Articles of Association:
In the event of the replacement of a sitting Statutory Auditor, he or she will be succeeded by the alternate Auditor belonging to the same list as the Auditor to be replaced, respecting the principles of minority representation and gender balance.
The appointment of auditors to round out the Board of Statutory Auditors, pursuant to article 2401 of the Civil Code, will be carried out by the shareholders' meeting with the majorities provided for by the law, from among the names submitted by the same shareholders presenting the list to which the auditor who left the office belonged, in compliance with the principle of necessary representation of minorities and gender balance; where this is not possible, the shareholders' meeting will have to proceed with the replacement with the majorities required by law, in compliance with the gender balance rules set forth by current applicable legislation, including regulations.
The Shareholders' Meeting of 29 April 2020 appointed a Board of Statutory Auditors made up of three standing members and two alternates, currently in office until the approval of the financial statements for the 2022 financial year, the composition of which complies with applicable regulations regarding gender balance.
This appointment was made through the list voting mechanism, in order to guarantee the minority lists the right to appoint a standing auditor, with the function of Chairman, and an alternate auditor.
At the Shareholders' Meeting of 29 April 2020 mentioned above, three lists of candidates were presented, listed below along with an indication of their proposing Shareholders:
List no. 1, presented on 30 March 2020 by the shareholders Municipality of Bologna, Municipality of Casalecchio di Reno, Municipality of Cesena, Municipality of Modena, Municipality of Padova, Municipality of Trieste, Municipality of Udine, Con.Ami, Holding Ferrara Servizi Srl, Ravenna Holding Spa and Rimini Holding Spa, who, together with 107 other public shareholders, were at the time parties to the "Shareholders' Agreement on Voting and Share Transfer Rules" of 26 June 2018, and who together hold 619,396,602 Hera shares, corresponding to 41.58% of the voting shares of Hera S.p.A., a list that obtained 1,261,463,415 voting rights, equal to 67.012602% of the total voting shares present, containing the names, in ranked order, of the following candidates:
List no. 2, submitted on 2 April 2020 by the shareholder Gruppo Società Gas Rimini Spa, holder of 30,771,269 Hera shares, corresponding to 2.065825% of the shares with voting rights of Hera Spa, a list that obtained 167,995,865 voting rights, corresponding to 8.924428% of the total voting shares present, containing the names, in ranked order, of the following candidates:
List no. 3, submitted on 3 April 2020 by Studio Trevisan & Associati on behalf of the shareholders Amundi Luxembourg SA - Amundi European Equity Small Cap; Amundi Asset Management SGR Spa manager of the funds: Amundi Dividendo Italia, Amundi Risparmio Italia, Amundi Sviluppo Italia; APG Asset Management N.V, manager of the funds: Stichting Depositary APG Developed Markets Equity Pool, Stichting Depositary APG Developed Markets Equity Minimum Volatility Pool; ARCA Fondi SGR Spa manager of the fund: Arca Azioni Italia; Etica SGR Spa manager of the funds: Etica Rendita Bilanciato, Etica Obbligazionario Misto, Etica Bilanciato, Etica Azionario; Eurizon Capital SGR Spa manager of the funds: Eurizon Progetto Italia 70, Eurizon Azioni Italia, Eurizon PIR Italia Azioni, Eurizon Progetto Italia 40; Eurizon Capital S.A. manager of the fund Eurizon Fund, section Italian Equity Opportunities; Fideuram Asset Management Ireland manager of the fund Fonditalia Equity Italy; Fideuram Investimenti SGR Spa manager of the funds: Fideuram Italia, Piano Azioni Italia, Piano Bilanciato Italia 50; Interfund Sicav - Interfund Equity Italy; Kairos Partners SGR Spa management company of Kairos International Sicav comparti: Italy, Target Italy Alpha; Legal & General Assurance (Pensions Management) Limited; Mediolanum Gestione Fondi SGR Spa manager of the funds: Mediolanum Flessibile Futuro Italia, Mediolanum Flessibile Sviluppo Italia; Mediolanum International Funds Limited - Challenge Funds - Challenge Italian Equity; Pramerica SGR Spa - Pramerica Sicav comparti Italian Equity and Clean Water, together the holders of 26,928,425 Hera shares, corresponding to 1.80784% of the Hera Spa shares with voting rights, a list that obtained 393,771,370 voting rights, corresponding to 20.918279% of the total number of voting rights present, containing the names, in ranked order, of the following candidates:
Following the shareholders' meeting vote, the Supervisory Body was made up as follows:
From the date of appointment to that of this report, there have been no changes in the composition of the body.
For the composition of the Board of Statutory Auditors at the end of the 2021 financial year, please see the following Table 4, noting that the personal and professional details of each member are available on the website www.gruppohera.it
The Board of Statutory Auditors met 19 times in 2022: 18 of these meetings were attended by all statutory auditors, while one was attended by almost all of them. The average duration of the meetings of the Board of Statutory Auditors was approximately one hour and 20 minutes.
With regard to the current financial year, five meetings of the Board of Statutory Auditors have been held as of 21 March 2023, while a further two meetings have already been scheduled for the remainder of the year.
The appointment of the Board of Statutory Auditors took place during the Shareholders' Meeting of 29 April 2020, following the presentation of three lists, one majority and two minority, which also guaranteed the composition of the board meet regulatory provisions regarding gender balance (three members of the less-represented gender out of a total of five members).
The members of the Board of Statutory Auditors have an average age of about 52 years: one member is between 40 and 50 years old and two members are between 50 and 60 years old.
As part of its self-assessment activities, the Board of Statutory Auditors expressed its favourable opinion with regard to the functioning, composition and characteristics of its members in terms of their meeting the requirements of eligibility, independence, integrity and professionalism set out by current legislation, also considering the issues and business sectors related to or inherent in the Companies' activities, thus ensuring the independence and professionalism of the Board's functioning in compliance with Principle VIII of the Code.
In compliance with Recommendations 9 and 10 of the Code, following the renewal of the Board of Statutory Auditors, the market was informed about the independence of its members on 13 May 2020 by means of a specific press release and subsequently, in the following financial years and, finally, on 6 March 2023, the Board of Statutory Auditors carried out its own self-assessment based on analysing each member's subjective suitability in relation to the requirements of professionalism, expertise, integrity and gender, as required by current legislation, as well as the proper functioning of the body.
For the purposes of the aforementioned self-assessment, the Board carried out information-gathering and evaluations by requesting its members to provide information and data relating to qualitative, quantitative and operational profiles.
Specifically, it:
With regard to overall operations, the Board of Statutory Auditors has assessed the following as satisfactory:
The Board of Statutory Auditors has checked the correct application of the criteria and assessment procedures adopted for ascertaining the independence of its members, including for the purposes of Article 144-novies of the Issuer's Regulation, and went on to communicate this finding to the Board of Directors.
The remuneration paid to the members of the Board of Statutory Auditors is consistent with the skills, professionalism and commitment required by the importance of their role and the size and sector characteristics of Hera.
To enable shareholders to understand the Company more fully, the Company has established a suitable department dedicated to relations with investors, headed by and entrusted to Jens Klint Hansen.
The investor relator can be contacted by telephone on 051 287737 or at the email address [email protected], and the "Investor Section" on the website www.gruppohera.it is dedicated to the activities of the investor relator along with the information provided to shareholders.
On 1 December 2021, the Board of Directors resolved to adopt, following a proposal by the Executive Chairman in agreement with the Chief Executive Officer, a "Policy for Managing Dialogue with General Shareholders and Bondholders" ("Policy"), which is available on the website www.gruppohera.it under the "Governance/Governance System Section".
The aforementioned Policy is aimed at ensuring that the dialogue the Company and Hera Group maintain with Shareholders and Bondholders ("Dialogue") is inspired by the principles detailed in the Policy itself and takes place in compliance with EU and national regulations on market abuse, as well as in line with international best practices.
The Policy describes the purposes, scope of application, general principles to be complied with, topics covered by the Dialogue and the means used to facilitate the Dialogue itself; in particular, it identifies the Investor Relations Department and Central Legal and Corporate Affairs Department as the "Points of Contact" for Shareholders and Bondholders and the Chairman as the "Administrator in Charge" of managing the Dialogue, it being understood that the Board of Directors has the role of directing, supervising and monitoring the application of the Policy itself.
Specifically, the Policy enters into the specifics of (i) the topics of the Dialogue, (ii) the tools used to facilitate the Dialogue, and (iii) the manner in which the Dialogue is conducted (evaluation criteria for accepting/rejecting a Dialogue request, timing, confidentiality guarantees), ensuring that the Dialogue can also be initiated by a Shareholder's or Bondholder's written request made to the "Contact Points".
The Company also promotes active and constructive communication with other stakeholders, including but not limited to: local communities, the public administration, customers, suppliers and employees.
In particular, the contact channels for this communication include:
The Director in charge shall report to the Board of Directors on a six-monthly basis, or by the first available meeting in the event of significant events:
Specifically, as reflected in the semi-annual reports rendered by the Administrator-in-Charge to the Board of Directors during the 2022 fiscal year, dialogue took the form of the following activities:
Hera's Public Shareholders, in particular, requested and obtained information regarding the number of shares held and their placement, the financial statements as of 31 December 2021, how to attend the Shareholders' Meeting on 28 April 2022, the timing of dividend payments, and the half-year financial report as of 30 June 2022.
Financial Investors and Analysts participated in conference calls to present the 2021-2025 business plan, 2021 annual results, and the 2022 fiscal year interim results, subsequently requesting insights into the Group's economic and financial outlook in the current geopolitical environment, the Company's sustainable strategy, and targets on emissions reduction.
In addition, road shows were organised with Investors in the major Stock Exchanges of Europe and North America.
HeraLABs were held in the Imola, Modena, Forlì-Cesena and Rimini areas for projects concerning the target areas, business climate survey activities with employees, meetings with Trade Associations and Consumer Associations mainly on issues related to rising energy and utility bills, as well as waste management services and district heating.
Ordinary and extraordinary shareholders' meetings are called in the circumstances and manner provided for by law; they are held at the registered office or even outside the registered office, as long as the location is in Italy.
The full text of the proposed resolutions, together with the illustrative reports and documents submitted to the Shareholders' Meeting, are made available to the public at the company's registered offices and on the Company's website www.gruppohera.it, as well as on the authorized storage site within the legal deadline for each of the matters under discussion.
The shareholders entitled to participate in the Shareholders' Meeting are those entitled to vote, pursuant to the law, at the end of the accounting day coinciding with the record date and for which the Company has received the relative communication made by the authorized intermediary by the end of the third trading day preceding the date set for the Shareholders' Meeting. However, the legitimate right to participate and vote remains if these communications are received after this deadline, provided that they are received by the beginning of the meeting. Those who become owners of shares only subsequent to this deadline will not have the right to participate in and vote at the Shareholders' Meeting.
Any person entitled to attend may be represented at the Shareholders' Meeting in accordance with the law, exercising the right to use the proxy form available on the Company's website for this purpose, and the methods that interested parties can use to notify the Company of proxies are also available electronically on this site.
At each Shareholders' Meeting, the Company identifies a person to whom the holders of voting rights will be able to confer a proxy with voting instructions covering all or some of the agenda items. The proxy to the aforementioned representative must be conferred by the end of the second open market day prior to the date of the Shareholders' Meeting, in the manner specified on the Company's website and using the specific proxy form provided there.
The proxy to the designated representative has no effect with regard to proposals for which voting instructions have not been given.
Shareholders can ask questions about the items on the agenda even before the Shareholders' Meeting, in the manner indicated on the Company's website.
Shareholders who, even jointly, represent one fortieth of the share capital, can submit a request within ten days of the publication of the notice of convocation asking that items be added to the matters to be discussed, indicating in the request the additional topics proposed, or presenting proposed resolutions on the items already on the agenda. Requests must be submitted in writing in the manner indicated on the Company website.
In accordance with Article 13 of the Articles of Association, the Shareholders' Meeting is chaired by the Chairman of the Board of Directors or, in his/her absence, by a person elected by the Shareholders' Meeting itself through a majority vote by those present. The Chairman of the Shareholders' Meeting appoints a secretary, verifies that it has been constituted properly, ascertains the identity and legitimacy of those present and regulates the Shareholders' Meeting, in compliance with the meeting regulations, ascertaining the results of voting.
In accordance with Article 14 of the Articles of Association, both ordinary and extraordinary shareholders' meetings and their related resolutions are valid if made with the attendance requirements and majorities established by law.
Resolutions by the Extraordinary Shareholders' Meeting concerning amendments to articles 6.4 (shares and increased voting rights), 7 (public majority shareholding), 8 (limits on share ownership), 14 (validity of Shareholders' Meetings and right of veto) and 17 (appointment of the Board of Directors) of the Articles of Association will be valid if made with a yes-vote by at least 3/4 of shareholders with voting rights participating in the Shareholders' Meeting, rounded down if necessary.
The shareholders' meeting of 29 April 2003 approved the text of the meeting regulations, the updated version of which is published under the "Section Governance/Shareholders' Meeting" on the Company website at www.gruppohera.it, which indicate the procedures to be followed in order to permit the orderly and proper functioning of meetings, without prejudice to the right of each shareholder to express his or her opinion on the matters under discussion.
During the year 2022 only one Extraordinary and Ordinary Shareholders' Meeting was held on 28 April, which was attended by 12 members of the Board of Directors and all the members of the Board of Statutory Auditors.
At its meeting of 8 February 2023, the Board of Directors considered the recommendations made in the letter sent on 25 January 2023 to the chairmen of the governing bodies of Italian listed companies by the Chairman of the Corporate Governance Committee. Specifically, the main issues involved in these recommendations for 2023 include:
At the aforementioned meeting, the Board of Directors noted these recommendations and reported on the status of their implementation/reception by the Company.
In particular, the Company confirms its alignment with the recommendations on dialogue with shareholders and other stakeholders, specifying that its "Policy for Managing Dialogue with General Shareholders and Bondholders," adopted by a resolution of the Board of Directors since 1 December 2021, stipulates, among others aspects, pursuant to Article 8.1 a) that the Dialogue may also be initiated by a shareholder or bondholder by specifying how and when it is to take place.
It should also be noted that this report, in addition to describing the policy and the criteria and manner in which the dialogue was fostered, outlines the most relevant issues covered by the dialogue with shareholders and bondholders and other stakeholders.
The Company is also in line with the applicable recommendation regarding the granting of management powers to the Chairman, pointing out that such powers are justified by the organisational complexity of the Group in order to more effectively implement the business and corporate strategies.
Purely with regard to the pre-meeting briefing, the Company believes that it is in line with the recommendations, considering that, as reported in Section 4. 4 of this report, a procedure was already adopted by a resolution of the Board of Directors on 26 July 2017 regarding the definition of the agenda for the meetings of the administrative body of Hera and Group companies, as well as for sending documentation to the directors, and that, on 11 November 2020, the Board of Directors resolved to adopt the "Regulations on the functioning of the Hera Spa Board of Directors," aimed at defining the rules for the functioning of the administrative body and its committees, making explicit, specifically in Article 7, the rules for the pre-consultation briefing.
Also with reference to managers' participation in the meetings of the Board of Directors, the Company is in line, in view of the fact that the above-mentioned "Regulation on the functioning of the Hera Spa Board of Directors" stipulates, in Article 4.1 c), "that the executives of the Company and those of the Group Companies who are in charge of the corporate departments responsible for the areas of competence in question may attend Board meetings to discuss the items within their competence"; it also stipulates for the Internal Committees of the Board of Directors that parties other than the members may be invited, therefore also including the Company's Executives. It should also be noted that information on the actual attendance of executives at board and committee meetings has been provided in detail in the appropriate sections of this report.
With reference to the Board of Directors' guidance on the optimal composition of the administrative body with a view to its renewal, the Board, at its meeting on 8 February this year, expressed its indications so that shareholders who submit lists of candidates may take them into account when deciding who to include. The document in question was made available to the market by publication on the Company's website, as well as on the authorized storage mechanism .
In any case, regarding the composition of the corporate bodies of Hera Spa, reference is made not only to the provisions of the Articles of Association, but also to the Shareholders' Agreement on Voting and Share Transfers between the public shareholders of Hera; the appointment is made through the list voting system so as to ensure that the minority list has the right to appoint at least 1/5 of the directors and to ensure, in accordance with the regulatory provisions on gender balance currently in force, that at least 2/5 of the members of the Board of Directors are of the less represented gender.
As for the criteria for assessing the significance of a relationship that may affect the independence of a Director, the Board of Directors, at its meeting of 23 February 2022, defined the quantitative and qualitative criteria for assessing the significance of applicable circumstances under the Corporate Governance Code for the purpose of assessing the independence of directors; these criteria were also set out in the corporate governance report approved at its meeting of 23 March 2022, and similar information is included in section 4.7 of this report.
Finally, with regard to the remaining recommendations (transparency of remuneration policies regarding the weight of variable components, long-term horizons in remuneration policies, and the use of ESG parameters for directors' remuneration), it should be noted that the Company considers that it is adhering to the specific guidelines on the subject, specifying that information on these issues is detailed in the dedicated sections of the 2022 report on remuneration policies and compensation paid, as already detailed in the reports for previous years.
| Position | Member | Birth year | appointed (*) Date first |
In office since In office until | (presenters) (**) List |
List (M/m) (***) | Exec. | Non-exec. | Code of indep. |
indep. TUF |
positions (****) no. of other |
Participation (*) |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Chairman | Tomaso Tommasi di Vignano | 1947 | 4-Nov -02 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | - | 11/11 | |||
| CEO | Orazio Iacono | 1967 | 11-May -22 | 11-May -22 | shareholders' nex t |
Shareholders | M | X | - | 7/7 | |||
| Vice Chair. | Gabriele Giacobazzi | 1949 | 29-Apr-20 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | - | 11/11 | |
| Director | Fabio Bacchilega | 1963 | 29-Apr-20 | 29-Apr-20 | f.s. approv al | Shareholders | M | X | X | X | - | 11/11 | |
| Director | Danilo Manfredi | 1969 | 23-Apr-14 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | - | 11/11 | |
| Director | Alessandro Melcarne | 1984 | 8-Nov -17 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | - | 10/11 | |
| Director | Lorenzo Minganti | 1973 | 29-Apr-20 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | - | 11/11 | |
| Director | Monica Mondardini | 1960 | 29-Apr-20 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | 4 | 9/11 | |
| Director ○ | Erw in P.W Rauhe | 1955 | 27-Apr-17 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | m | X | X | X | 1 | 11/11 | |
| Director | Manuela Cecilia Rescazzi | 1958 | 29-Apr-20 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | - | 10/11 | |
| Director | Paola Gina Maria Schw izer | 1965 | 29-Apr-20 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | m | X | X | X | 2 | 10/11 | |
| Director | Federica Seganti | 1966 | 27-Apr-17 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | 3 | 10/11 | |
| Director | Bruno Tani | 1949 | 27-Apr-06 | 29-Apr-20 | f.s. approv al 2022 2022 |
Shareholders | m | X | X | X | 1 | 10/11 | |
| Director | Alice Vatta | 1975 | 29-Apr-20 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | m | X | X | X | 1 | 10/11 | |
| Director | Marina Vignola | 1970 | 27-Apr-17 | 29-Apr-20 | f.s. approv al 2022 |
Shareholders | M | X | X | X | - | 10/11 | |
| --------------------------------DIRECTORS LEAVING OFFICE DURING THE FINANCIAL YEAR -------------------------------- | |||||||||||||
| CEO | Stefano Venier | 1963 | 23-Apr-14 | 29-Apr-20 | 26-Apr-22 | Shareholders | M | X | - | 4/4 | |||
| No. of meetings held during the financial year in question: 11 | |||||||||||||
| Association). | Quorum required for minority lists to be submitted for the election of one or more members (pursuant to art. 147-ter of theTUF): at least 1% of the shares with voting rights at the ordinary shareholders' meeting (art. 17.5 Articles of |
Table 1: structure of the Board of Directors at year end
○ this symbol indicates the Lead independent director (LID).
(* ) The date of first appointment of each director refers to the date on which the director was appointed for the first time (ever) to the issuer's BoD.
(**) This column shows the list from which each director was taken, preented by the shareholders (indicating "Shareholders") or the BoD (indicating "BoD").
(***) This column indicates whether the list from which each director was drawn is "majority" (indicating "M"), or "minority" (indicating "m").
(****) This column indicates the number of offices as director or statutory auditor held by the person concerned in other companies listed on regulated markets or large enterprises. The positions are described in full in the report on corporate governance.
(*****) This column shows the Directors' participation in the meetings of the Board of Directors (indicate the number of meetings attended with respect to the total number of meetings which could have been attended; e.g. 6/8; 8/8 etc.).
| Board of Directors | Executive Committee | Controls and risk committee / OPC |
Remuneration committee |
Appointments committee |
sustainability Ethics and committee |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Position | Members | (*) | (**) | (*) | (**) | (*) | (**) | (*) | (**) | (*) | (**) |
| ex ecutiv e - non independent BoD Chairman |
Tomaso Tommasi di Vignano | 7/7 | C | ||||||||
| ex ecutiv e - non independent Chief Ex ectiv e Officer |
Orazio Iacono (since 11-May -22) | 4/4 | M | ||||||||
| non ex ecutiv e - Code and TUF independent Vice Chairman |
Gabriele Giacobazzi | 7/7 | M | 7/7 | P | 3/3 | P | ||||
| non ex ecutiv e - Code and TUF independent Director |
Fabio Bacchilega | 3/3 | M | ||||||||
| non ex ecutiv e - Code and TUF independent Director |
Alessandro Melcarne | 7/7 | M | ||||||||
| non ex ecutiv e - Code and TUF independent Director |
Lorenzo Minganti | 6/7 | M | Not present | |||||||
| non ex ecutiv e - Code and TUF independent Director |
Monica Mondardini | 2/3 | M | ||||||||
| non ex ecutiv e - Code and TUF independent Director |
Erw in P.W Rauhe | 7/7 | M | ||||||||
| non ex ecutiv e - Code and TUF independent Director |
Paola Gina Maria Schw izer | 7/7 | M | ||||||||
| non ex ecutiv e - Code and TUF independent Director |
Federica Seganti | 8/8 | P | ||||||||
| non ex ecutiv e - Code and TUF independent Director |
Alice Vatta | 3/3 | M | 8/8 | M | ||||||
| --------------------------------DIRECTORS LEAVING OFFICE DURING THE FISCAL YEAR -------------------------------- | |||||||||||
| ex ecutiv e - non independent Chief Ex ectiv e Officer |
Stefano Venier (until 26-Apr-22) | 2/2 | M | ||||||||
| ------------- MEMBERS WHO ARE NOT DIRECTORS ------------- | |||||||||||
| Ex ternal professional | Cristiana Rogate | 6/8 | M | ||||||||
| Hera Spa Shared Value and Sustainability Director | Filippo Maria Bocchi | 8/8 | M | ||||||||
| Number of meetings held during the year | 7 meetings | 7 meetings | 3 meetings | 8 meetings | |||||||
NOTES:
(*) This column indicates the degree of participation of the director in meetings of the committees. (**) This column indicates the role played by the director on the Board: "C": Chairman, "M": member.
| Board of Statutory Auditors |
|---|
| Position | Date of first | List (m/M) | Code | Participation in Board | No. other positions | ||||
|---|---|---|---|---|---|---|---|---|---|
| Members | Birth year | appointment(*) | In office since | In office until | (**) | indep. | meetings (***) | (****) | |
| Chairman | My riam Amato | 1974 | 27-Apr-17 | 29-Apr-20 | Appr. F.s. 2022 | m | X | 18/19 | 2 |
| Standing auditor | Girolomini Marianna | 1970 | 23-Apr-14 | 29-Apr-20 | Appr. F.s 2022 | M | X | 19/19 | - |
| Standing auditor | Gaiani Antonio | 1965 | 23-Apr-14 | 29-Apr-20 | Appr. F.s. 2022 | M | X | 19/19 | - |
| Alternate auditor | Gnocchi Stefano | 1974 | 27-Apr-17 | 29-Apr-20 | Appr. F.s. 2022 | m | X | - | 2 |
| Alternate auditor | Bortolotti Valeria | 1950 | 23-Apr-14 | 29-Apr-20 | Appr. F.s. 2022 | M | X | - | - |
| No. of meetings held during the financial year: 19 |
Quorum required for minority lists to be submitted for the election of one or more members (pursuant to art. 148 of the TUF): at least 1% of the shares w ith v oting rights at the Ordinary General Meeting (art. 26.2 Articles of Association).
| First and last name | Position | Other positions (*) |
|---|---|---|
| Tomaso Tommasi di Vignano | Ex ecutiv e Chairman |
|
| Orazio Iacono (since 11-may -22) |
Chief Ex ecutiv e Officer |
|
| Gabriele Giacobazzi | Vice Chairman | |
| Fabio Bacchilega | Director | |
| Danilo Manfredi | Director | |
| Alessandro Melcarne | Director | |
| Lorenzo Minganti | Director | |
| Monica Mondardini | Director | Chief Ex ecutiv e Officer of CIR Spa Chairman of SOGEFI Spa (CIR Group) Director of Edenred SA Director of KOS Spa (CIR Group) |
| Erw in P.W. Rauhe |
Director | Director of di SOL Spa |
| Manuela Cecilia Rescazzi | Director | |
| Paola Gina Maria Schw izer |
Director | Director of Cellularline Spa Director of Ferrov ie dello Stato S.p.A. |
| Federica Seganti | Director | Director of Fincantieri Spa Director of Eurizon Capital SGR Spa BancoPosta Fondi SGR Spa |
| Bruno Tani | Director | CEO Gruppo Società Gas Rimini Spa |
| Alice Vatta | Director | Consigliere Fincantieri Spa (da mag-22) |
| Marina Vignola | Director | |
| --------------------------------DIRECTORS LEAVING OFFICE DURING THE FISCAL YEAR -------------------------------- | ||
| Stefano Venier (untill 26-Apr-22) | Chief Ex ecutiv e Officer |
(*) List of positions of director or statutory auditor held by each Director in other companies listed on regulated markets, including foreign markets or large enterprises.
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