Remuneration Information • Apr 5, 2017
Remuneration Information
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Approved by the Board of Directors on March 16, 2017
We approach each challenge with innovative, reliable and secure solutions to meet the needs of our clients. Through multicultural working groups we are able to provide sustainable development for our company and for the communities in which we operate.
Innovation; health, safety and environment; multiculturalism; passion; integrity.
Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, France, Italy, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Principality of Monaco, Romania, Spain, Sweden, Switzerland, Turkey, United Kingdom
Argentina, Bolivia, Brazil, Canada, Chile, Colombia, Ecuador, Mexico, Panama, Peru, Suriname, United States, Venezuela
Azerbaijan, Georgia, Kazakhstan, Russia, Turkmenistan, Ukraine
Algeria, Angola, Congo, Egypt, Gabon, Ghana, Ivory Coast, Libya, Morocco, Mozambique, Namibia, Nigeria, Uganda
Australia, China, India, Indonesia, Malaysia, Singapore, South Korea, Taiwan, Thailand
| Letter from the Chairman of the Compensation and Nomination Committee | 2 |
|---|---|
| Foreword | 3 |
| Overview | 4 |
| 2017 Remuneration Policy | 4 |
| 2016 Remuneration Report (Section I) - Results of vote at Shareholders' Meeting | 5 |
| Pay-mix | 6 |
| Section I - 2017 Remuneration Policy | 8 |
| Governance of the remuneration process | 8 |
| Bodies and persons involved | 8 |
| Saipem Compensation and Nomination Committee | 8 |
| 2017 Remuneration Policy approval process | 11 |
| Aims and general principles of the Remuneration Policy | 11 |
| Aims | 11 |
| General principles | 11 |
| 2017 Remuneration Policy Guidelines | 13 |
| Chairman of the Board of Directors and non-executive Directors | 14 |
| CEO | 14 |
| Senior Managers with strategic responsibilities | 18 |
| Section II - Remuneration and other information | 21 |
| Implementation of 2016 remuneration policies | 21 |
| Fixed remuneration | 21 |
| Remuneration for service on Board Committees | 21 |
| Variable incentives | 21 |
| Indemnities for termination of office or termination or employment | 23 |
| Benefits | 23 |
| Payment against the Board of Directors' option for implementation of the non-competition agreement | 23 |
| Remuneration paid in 2016 Table 1 - Compensation paid to Directors, Statutory Auditors and Senior Managers with strategic responsibilities Table 3A - Incentive plans based on financial instruments other than stock options payable to Directors and to Senior Managers with strategic responsibilities |
24 24 26 |
| Table 3B - Monetary Incentive Plan for Directors and Senior Managers with strategic responsibilities Shares held Table 4 - Shares held by Directors and Senior Managers with strategic responsibilities Annex pursuant to Article 84-bis of the Consob Issuers Regulation - Implementation for 2016 of the share-based Long-Term Incentive Plan 2016-2018 Table 1 of scheme 7 from Annex 3A of Regulation No. 11971/1999 |
27 28 28 28 28 |
Maria Elena Cappello
Dear Shareholders,
I am very pleased to present Saipem's Remuneration Report for 2017 also on behalf of the Remuneration and Nomination Committee and the Board of Directors. Saipem's distinctive values are innovation, sustainability, integrity and multiculturalism. These are represented by a team of people who unite passion with work, ensuring fairness and transparency in all spheres of activity, including through a control and monitoring system that embraces the highest international standards and guidelines. The Saipem Remuneration Policy is the fundamental tool to attract, retain and motivate people who reflect these high standards and principles. Here in Saipem, we consider human capital our main competitive value. The Committee proposes to orient its decisions in line with the Company's strategic and operational requirements.
In line with the past year we consider the constant and transparent dialogue with shareholders and investors a key element of our way of working. Through the Remuneration Report, we intend to raise the awareness of our shareholders on the principles of the remuneration policy and the programmes through which it is structured and how these programmes have the ultimate goal of creating sustainable shareholder value over the long term and to promote the company's mission and values.
The results of the shareholders voting on the first section of the 2016 Remuneration Report, fully analysed by the Committee, confirmed a growing appreciation of the planned policies. Pursuing continuous improvement, this Remuneration Report shows greater clarity, synthesis and effective disclosure, including new schematic elements and graphics, oriented towards increased transparency.
During 2016, the Committee discussed and approved the Regulations implementing the general principle of clawback in order to follow the recommendations made in the Corporate Governance Code for listed companies in July 2015 and to define the terms, procedures, roles and corporate functions involved in the application of the clause inserted in the
incentive plans, short and long term, of the entire management.
2016 saw the completion of the activities included in the annual programme and the launch of preliminary investigations aimed at defining the following: the proposed 2017 Remuneration Policy, the voting policies for the main proxy advisors and institutional investors and reference salary benchmarks, the assessments of the implementation of the 2016 Remuneration Policy, as required by the Corporate Governance Code. The constant dialogue with shareholders and investors allows us in fact to improve the effectiveness of our remuneration systems. Additionally, in 2016 the new medium- to long-term incentive system was implemented for the first time and is based on shares approved by the Shareholders April 29, 2016. Proposals for 2017 Remuneration Policy Guidelines, approved by the Board of Directors on March 16, 2017 and described in Section I of this Report, do not show substantial changes compared to the Remuneration Policy implemented in 2016 because we strongly believe that a coherent and consistent remuneration policy ensures business continuity to the Company.
Special thanks to Directors Federico Ferro-Luzzi and Francesco Antonio Ferrucci for their significant contribution to the work of the Committee together with a heartfelt appreciation for the role played by the structures of Saipem and its people. Confident that this Report that I submit gives testimony to the Committee's determination to pursue an effective and transparent dialogue with shareholders and investors, with the goal of receiving guidance and feedback and maximising consensus on policies presented at the annual meeting, I also thank you, on behalf of the other members of the Committee, for the support you will give to policies planned for 2017.
March 16, 2017
The Chairman of the Compensation and Nomination Committee
The Saipem Remuneration Policy was approved by the Board of Directors on March 16, 2017 on the proposal of the Compensation and Nomination Committee, made up entirely of non-executive and independent Directors, and was defined in accordance with the Governance model adopted by the Company and with the guidance on remuneration of the Corporate Governance Code for listed companies promoted by Borsa Italiana (subsequently the 'Corporate Governance Code'), which Saipem complies with, in the latest version approved in July 20151.
In keeping with the guidelines set out in the Company's Strategic Plan, this policy promotes alignment of the interests of management with the priority objective of
value creation for the Company's shareholders in the medium to long term. This Report was prepared, in compliance with current regulatory and legislative obligations2, in consideration of analysis and further research regarding the results of shareholder voting, feedback received from shareholders and the primary proxy advisers on the 2016 Saipem Report, as well as the results of the engagement activities with the proxy advisors and market practices of leading listed companies.
The Compensation and Nomination Committee also took account of the relevant legislative and corporate governance framework, with the aim of assuring the broadest clarity, completeness and usability of the information provided.
(1) For additional information on the terms of Saipem's adoption of the Corporate Governance Code, see the section 'Governance' on the Company website (http://www.saipem.com) and the document 'Corporate Governance and Shareholding Structure Report 2016'. (2) Article 123-ter of Legislative Decree No. 58/1998 and Article 84-quater of the Consob Issuers Regulation (No. 11971 as amended).
This 2017 Remuneration Report defines and illustrates the following:
The two sections of the Report are preceded by a summary of the main information in order to supply the market and investors with an easy-to-read framework for understanding the key elements of the 2017 Policy. Lastly, the Report illustrates the shares held by Saipem Directors, Auditors and Senior Managers with strategic responsibilities and contains information regarding the implementation of the 2016 share-based Long-Term Incentive Plan envisaged in line with current rules4.
The Report was submitted to Borsa Italiana and was made available to the public at the Company's registered office and posted in the 'Governance' section of Saipem's website twenty-one days before the Shareholders' Meeting called to approve the 2016 Financial Statements and to pass a non-binding resolution in favour or against Section I of the Report, in accordance with the applicable legislation5.
Information related to financial instrument-based remuneration plans currently in force is available in the 'Governance' section of Saipem's website6.
The Saipem Remuneration Policy, illustrated in detail in the first section of this Report, has the aim of (i) attracting, motivating and retaining
high profile professional and management personnel; (ii) providing incentives for the achievement of strategic objectives and sustainable growth of the business; (iii) aligning the interests of management with the priority objective of creating sustainable value for shareholders in the long term; and (iv) promoting the company mission and values.
The Saipem Board of Directors was appointed by the Shareholders' Meeting on April 30, 2015, for a term of three years. The Board's term of office thus expires on the date of the Shareholders' Meeting called to approve the financial statements as at and for the year ended December 31, 2017.
The 2017 Remuneration Policy, illustrated in detail in Section I of this Report, prescribes the following:
(4) Article 114-bis of the Consolidated Finance Act and Article 84-bis of the Consob Issuers Regulation.
(5) Article 123-ter, paragraph 6 of Legislative Decree No. 58/1998.
(6) Website: http://www.saipem.com/sites/SAIPEM_it_IT/area/GOVERNANCE-saipem-governance.page
(3) The term 'Senior Managers with strategic responsibilities', as defined in Article 65, paragraph 1-quater of the Consob Issuers Regulation, refers to persons with direct or indirect planning, coordination and control responsibilities. Senior Managers with strategic responsibilities of Saipem, other than Directors and Statutory Auditors, are defined as those Senior Managers serving on the Advisory Committee and, at any rate, who are direct reports of the CEO.
resolution taken by the Board of Directors on June 15, 2015 and June 27, 2016;
The table at the following page ('2017 Remuneration Policy') describes the main elements of the 2017 Guidelines resolved for remuneration of the CEO and Senior Managers with strategic responsibilities (SMSR).
The Shareholders' Meeting of April 29, 2016, according to the provisions of current regulations (Article 123-ter (6) of Legislative Decree No. 58/1998), expressed a consultative vote on Section 1 of the 2016 Remuneration Report, by a favourable vote of 98.6% of participants. There has been a progressive reduction of votes against since 2012.
| Component | Aims and characteristics |
Conditions for implementation | Amount |
|---|---|---|---|
| Fixed remuneration |
Values skills, experience and the contribution demanded by the role assigned. |
Benchmarking of manager compensation consistent to Saipem characteristics and assigned roles. |
CEO: €900,000 per year. SMSR: compensation determined on the basis of the role assigned with possible adjustments in relation to competitive positioning targets (average market values). |
| Annual variable incentives |
Promote the achievement of annual budget objectives. All managerial resources are included in the Plan. |
2017 CEO objectives: Free Cash Flow - weight 35%; Adjusted EBITDA - weight 30%; Fit For the Future - weight 25%' HSE and Sustainability - weight 10%. SMSR objectives: broken down on the basis of objectives assigned to top management, in relation to the area of responsibility for the role covered. Incentives paid based on the results achieved in the previous year and evaluated on a performance scale of 70 to 130 points1 with minimum threshold to receive the incentive set at 85 points for individual performance. |
CEO: target incentive level corresponding to 60% of fixed remuneration (minimum 51% and maximum 78%). SMSR: target incentive levels differentiated based on the role assigned, up to a maximum of 40% of fixed remuneration. |
| Long-Term Incentive shared based (2016-2018 Plan) |
Promote the alignment of management with the interests of shareholders and the sustainability of value creation in the long term. All managerial resources are included in the Plan. |
Award: free allocation of ordinary Saipem SpA shares for the achievement of performance conditions, differentiated by management role. Performance conditions: TSR (weight 50%) measured at the end of the three-year period in terms of positioning in relation to a peer group. Net Financial Position (weight 50%) measured in terms of the three-year period in question. Three-year vesting period + lock-up period of 2 years for the Chief Executive Officer-CEO. Three-year vesting period + Co-investment of a further 2 years for strategic resources only. |
CEO: maximum incentive level equal to 153% of fixed remuneration, unchanged compared to that provided by previous plans. SMSR: maximum differentiated incentive level for the management role up to a maximum of 100% of fixed remuneration, unchanged compared to that provided by previous plans, in addition to a further 25% in equities at the end of the Co-investment period (Share Retention). The maximum value at the end of the vesting period shall not exceed four times the value of the shares at the moment of their allocation. |
| Benefits | These supplement the compensation package in a logic of total reward through benefits in kind, mainly of a health and social security nature. Recipients: all managerial resources. |
Conditions set out in the national collective bargaining contract and in supplementary company agreements applicable to resources with managerial qualifications. |
- Supplementary pension; - Supplementary healthcare; - Supplementary death and disability insurance coverage; - Company car for business and personal use. |
| Severance Payment and Minimum Term Agreement |
Severance pay to protect the company from potential competition risks. Retention and protection tools for the Group's know-how. |
CEO: early termination indemnities: early termination of the current mandate, excluding dismissal for just cause, and resignation not caused by essential reduction of mandates; non-competition agreement: activated at the discretion of the Board through option rights2 , provides a non-compete obligation for the period of one year after termination of the mandate. SMSR: severance pay: agreed to upon consensual termination of employment; severance payment: cases of change of control which result in termination of employment due to resignation or dismissal and/or demotion; non-competition agreements: activated upon termination of the employment relationship. Minimum Term Agreement to protect know-how . |
CEO: early termination indemnities: amounts to €1,800,000; non-competition agreement: amounts to 1,800,000. SMSR: severance pay: established by the collective labour agreement and internal policies. Accessory instruments: severance payment: maximum of two years' fixed remuneration; non-competition agreement: 12 months' pay for every year of the agreement; Minimum Term Agreement: 12 months' pay for every year of the clause. |
(1) Below the minimum threshold (70 points) the performance is considered equal to zero.
(2) Provided for under the non-compete option reserved to the Board of Directors is a sum of €450,000.
The 2017 Remuneration Policy Guidelines set pay-mixes in line with managerial roles, with a greater weight given to the variable component (in particular the long-term component) for positions that have a greater influence on company results, as shown in the pay-mix chart shown below, which was calculated considering minimum and maximum result level payouts for short and long-term incentives.
(*) Pay-mixes shown above do not take in consideration fluctuation of share price.
| Risk mitigation factors | Scheduling | Page |
|---|---|---|
| Adjustments are in line with market references from internationally recognised providers. | Annual adjustments as part of the annual salary review. |
Pages 14-15; 17-18 |
| Forecasts of different performance goals, predetermined, measurable and complementary, indicative of the company's annual performance, which is itself a condition of payout of the individual incentive. Existence of the maximum established incentive levels. Existence of a clawback mechanism that allows for the return of variable components of remuneration in cases of manifestly incorrect or maliciously altered data and violation of laws and regulations, the Code of Ethics or industry regulations. |
Payout in the year in which the annual objective left was attained. |
Pages 15; 17-18 |
| Forecasts of two performance targets, predetermined, measurable ex post at the end of the three years, and complementary, indicative of the company's performance, and the ability of the latter to pursue economic and financial performance in the medium-long term and generate share performance levels, as well as creating value higher than those of major international competitors, providing greater alignment to the interests of shareholders in the medium to long term. Deferral of a significant portion of the shares matured by two years past the date of verification of achievement of the performance target level. Definition of a maximum value of shares definitely assignable: the maximum value at the end of the vesting period shall not exceed four times the value of the shares at the moment of their allocation. Existence of a clawback mechanism that allows the return of definitively allocated shares (or non award of deferral shares) in cases of manifestly incorrect or maliciously altered data and violation of laws and regulations, the Code of Ethics or industry regulations. |
Allocation: annual. Vesting period: three years. Co-investment period/lock-up: additional two years. |
Pages 15, 18 |
| Subject to periodic reviews in cases of role reassignment. |
Pages 17, 20 | |
| Ex-ante determination of the maximum number of months to be paid. Activation of the non-competition agreement for the CEO as a result of evaluation by the Board of Directors. Existence of penalties for violating the non-competition agreement. |
Activated upon termination of the employment relationship. |
Pages 17, 19 |
(*) Pay-mixes shown above do not take in consideration fluctuation of share price.
The Policy on remuneration of members of the Saipem Board of Directors was defined in accordance with the regulatory provisions and the Saipem by-laws and Governance model, according to which the following boards and entities are involved: Shareholders' Meeting, Board of Directors and Compensation and Nomination Committee.
| BODY | ROLE AND DUTIES |
|---|---|
| Shareholders' Meeting | Establishes the remuneration of the members of the Board of Directors when they are appointed, for the whole of their term of o ce. |
| Board of Directors | 1. Establishes the remuneration for Directors assigned special functions (Chairman and CEO) and for service on Board Committees, having consulted the Statutory Auditors. 2. Denes performance targets and approves the results for performance plans used to establish the variable remuneration of the CEO. 3. Approves the general criteria for the remuneration of Senior Managers with strategic responsibilities. 4. Denes the remuneration of the Internal Audit Manager in accordance with the Company's Remuneration policy and having consulted the Audit and Risk Committee and the Board of Statutory Auditors. |
| Compensation and Nomination Committee |
Supports the Board of Directors in a consultative and advisory capacity with regard to remuneration. |
No. meetings in 2016: 16; average duration: 2 hours and 18 minutes; average member attendance: 98%.
The Compensation Committee, which as of February 13, 2012, was renamed the 'Compensation and Nomination Committee', was established for the first time by the Board of Directors in 1999. Committee membership and appointments, its tasks and its operating procedures are regulated by a specific set of rules, which were approved by the Board of Directors and published on the Company website.
In accordance with the recommendations set out in the new version of the Corporate Governance Code, the Committee is composed of three non-executive, independent Directors. In accordance with the Corporate Governance Code (Article 6.P.3), the Regulations also require that at least one member of the Committee has adequate knowledge and experience on financial and remuneration matters evaluated by the Board at the time of appointment.
With effect from April 30, 2015 the Committee has been made up of the following non-executive Directors, all independent according to law and the Corporate Governance Code: Maria Elena Cappello, Federico Ferro-Luzzi, Francesco Antonio Ferrucci. The Executive Vice President of Human Resources, Organisation and Services for Personnel, or, in his/her place, the Senior Vice President of Corporate Human Resources, acts as Secretary of the Committee.
The Committee has the following proposal and consulting functions in relation to the Board of Directors, in compliance with the recommendations contained in the Corporate Governance Code (Article 6.P.4 and Article 6.C.5):
Directors appointed to the Committees formed by the Board;
The Committee meets as often as necessary to perform its duties, normally on the dates scheduled on the yearly calendar of meetings approved by the Committee itself. The Committee is quorate when at least the majority of its members in office are present and decides with the absolute majority of those in attendance. The Chairman of the Committee convenes and presides over the meetings. To fulfil its duties, the Committee has the right to access the necessary Company information
• Monitoring of regulatory framework development and voting policies
• Presentation of the Remuneration Report to the Shareholders' Meeting
and departments and to avail of external advisors who do not find themselves in situations that could compromise the impartiality of their opinion, within the limits of the budget approved by the Board of Directors. On a yearly basis, the Committee drafts a budget that it submits to the Board of Directors simultaneously with the annual report. The Chairman of the Board of Statutory Auditors, or a Statutory Auditor designated by the Chairman, attends Committee meetings. Furthermore, other Statutory Auditors may also participate when the Board is dealing with matters for which the Board of Directors is obliged in its resolution to take account of the opinion of the Board of Statutory Auditors. At the request of the Committee Chairman, other persons may also participate in order to provide information and make assessments within their field of competence in relation to individual agenda items. No executive Director can take part in Committee meetings where proposals are being made to the Board of Directors concerning his/her remuneration.
The Compensation and Nomination Committee carries out its activities according to an annual programme which consists of the following phases:
periodically checking the adequacy, the overall consistency and the implementation of the Policy adopted in the previous year in relation to the results achieved and the compensation/benchmarks supplied by specialised providers;
definition of Policy proposals for the following year and of proposals regarding the performance targets connected with short and long-term incentive plans;
In 2016, the Compensation Committee (in its previous and current mandates) convened on a total of sixteen occasions, with a member attendance of 98%.
As regards the single remuneration issues, the Committee focused its activities on the following topics in particular.
| Month | Subjects |
|---|---|
| January | 1. Formulation of Saipem 2016 indicators for the 2016 Short-Term Incentive Plan. |
| 2. Remuneration Policy: evaluation of 2015 implementation and proposal for 2016. | |
| 3. Definition of the metrics of the New Management Incentive System. | |
| February | 1. New Management Incentive System: new system and Consob Information document. |
| March | 1. Review of Saipem 2015 results and definition of 2016 performance objectives for long term plans. |
| 2. Remuneration package of the CEO. | |
| 3. Analysis of 2016 Remuneration Report (Sections I and II). | |
| April | 1. Preparation of the 2016 Shareholders' Meeting. |
| May | 1. Proposal for amendement of CEO contract. |
| June | 1. Evaluation of the proposal for appointment and remuneration of the Manager responsible for drafting the Company Accounting Reports. |
| 2. Long-Term Incentive Plan - Approval of the 2016 Allocation Rules. | |
| 3. Proposal for amendement of CEO contract. | |
| 4. Clawback clauses - Approval of Implementation Regulations. | |
| July | 1. Review of 2015 results in relation to the Long-Term Monetary Incentive Plan for critical managerial resources. |
| 2. 2016-2018 Long-Term Incentive Plan: 2016 allocation for CEO and calculation of number of shares to be allocated. | |
| 3. Remuneration positioning of the Internal Audit Manager. | |
| September | 1. Evaluation of remuneration proposal of members of Audit & Compliance Committee for Cluster A Companies. |
| 2. Analysis of the voting results of the 2016 Shareholders' Meeting season. | |
| November | 1. Proposed Saipem 2017 indicators for short and long-term incentive plans. |
| 2. Approval of the 2017 Budget of the Compensation and Nomination Committee. |
The Committee plans to hold at least 9 meetings in 2017. At the date of approval of this Report, the first 5 meetings had been held, specifically covering: (i) evaluation of the remuneration policies implemented in 2016 for defining policy proposals for 2017; (ii) review of the 2016 results and definition of 2017 performance objectives associated with variable incentive plans; (iii) variable remuneration of the CEO and Senior Managers with strategic responsibilities; (iv) the 2017 Remuneration Report (Sections I and II).
The Committee reports through its Chairman to the Board of Directors on a half-yearly basis, as well as to the Shareholders' Meeting convened to approve the annual financial statements, on the performance of its duties, in accordance with its own Committee rules, with the recommendations of the Corporate Governance Code and with the aim of establishing a channel for dialogue with shareholders and investors.
In conducting its assigned tasks the Committee defined the structure and content of the Remuneration Policy for the purposes of preparing this Report, specifically at the meetings of February 23 and March 9, 2017, consistently with the more recent recommendations of the Corporate Governance Code.
In reaching its conclusions, the Committee took account of the results of periodical assessment of adequacy, overall consistency and concrete application of the Policy Guidelines for 2016, as well as the resolutions passed by the relevant Company bodies in relation to remuneration.
The Saipem 2017 Remuneration Policy for the CEO and other Senior Managers with strategic responsibilities was approved by the Board of Directors on March 16, 2017 at the proposal of the Compensation and Nomination Committee, together with this Report.
For the purposes of preparing this Report, the Committee used remuneration benchmarks developed by international independent consulting firms for the preliminary investigations aimed at preparing the proposals for the 2017 Remuneration Policy. Implementation of the remuneration policies defined in accordance with the guidelines provided by the Board of Directors is done by the competent company bodies, with the support of the relevant company functions.
The Saipem Remuneration Policy is defined in accordance with the Governance model adopted by the Company and the recommendations included in the Corporate Governance Code, with the aim of attracting and retaining highly skilled professional and managerial resources and aligning the interests of management with the priority objective of value creation for shareholders in the medium to long term.
The Saipem Remuneration Policy contributes to the achievement of the Company's mission and strategies by:
In line with the above aims, the remuneration paid to the Directors and the Senior Managers with strategic responsibilities is defined in accordance with the following principles and criteria.
Remuneration of non-executive Directors commensurate with the commitment required for participating in Board Committees established according to the By-laws, with differentiation between the remuneration prescribed for the Chairman compared to the members of each committee, in consideration of the role of coordination of business and connection with the corporate boards and business functions.
Unless otherwise resolved by the Shareholders' Meeting, non-executive Directors are excluded from variable incentive schemes, including share-based incentive plans.
Remuneration structure for the CEO and the Senior Managers with strategic responsibilities, an adequately balanced mix of a fixed component commensurate with powers and/or responsibilities assigned and a variable component with a maximum limit designed to link remuneration to effectively achieved targets.
Overall consistency of remuneration compared with applicable market benchmarks for similar positions or roles of a similar level of responsibility and complexity within a panel of companies comparable with Saipem, using specific benchmarks created with the support of internationally recognised providers.
Variable remuneration of executive roles strongly influencing Company results, characterised by a significant incidence of long-term incentive components through an adequate differentiation of incentives in a time frame of at least three years, in accordance with the long-term nature of the business pursued.
Objectives associated with variable remuneration which are predetermined, measurable and complementary and also represent the priorities for the Company's performance as a whole, according to the strategic plan and the expectations of shareholders and stakeholders, promoting strong orientation towards the results. These objectives are defined in order to ensure: (i) evaluation of individual and business annual performance, based on a balanced score card defined in relation to specific objectives in the area of responsibility and in line with the objectives assigned; (ii) definition of a long-term incentive plan according to methods which enable evaluation of company performance both in absolute terms, with reference to the capacity to pursue the medium- and long-term economic-financial performance, and in relative terms in relation to a peer group, with reference to the capacity to generate share performance and create value greater than those of the main international competitors, and to guarantee greater alignment with the interests of shareholders in the medium- and long-term.
Incentives linked with variable remuneration paid following a careful verification of results effectively achieved, assessing performance targets assigned net of the effects of exogenous variables, with a view to enhancing the effective business performance deriving from management action.
Benefits (with a preference given to pension and insurance benefits) in line with market remuneration benchmarks and compliant with local regulations to supplement and enhance the remuneration package, reflecting roles and responsibilities assigned.
The adoption, via specific Regulation approved by the Board of Directors, on the proposal of the Compensation and Nomination Committee, of clawback mechanisms which enable previously paid variable remuneration components to be returned, or shares to not be definitively allocated during the vesting period or to require the return of the value of shares already allocated and to withdraw this amount from payments due to the beneficiaries, where they were accrued based on figures subsequently found to be clearly incorrect, or the return of all bonuses (or shares/value) for the year (or years) for which there was wilful alteration of the data used for the review of results for achieving the right to the incentive and/or the commission of severe and intentional violations of laws and/or regulations, the Code of Ethics or company rules which are relevant or have an impact on the employment relationship, affecting the associated relationship of trust, without affecting any permitted legal action to protect the Company's interests.
The Rules prescribe revocation of the assignment of shares or recovery of the monetary value of the stock or variable monetary incentives within the maximum term of 3 years from the associated payout or allocation, where the incentives are found to have been calculated based on figures regarding results achieved and/or performance targets realised, subsequently found to be incorrect.
The Rules also envisage recovery actions to be applied within the maximum term of 5 years from the associated payout or allocation, against individuals who are found to be responsible for altering, through malice or gross misconduct, the figures used for the review of the results in relation to targets assigned for the achievement of the right to the incentive, and/or for violations of laws and/or regulations, the Code of Ethics or company rules which are relevant or have an
impact on the employment relationship, and are such as to diminish the associated relationship of trust.
In such cases, following verifications performed by the company boards and functions of vigilance and control, where there are found to be errors that have an impact on the final results, the company may, following adjustment of the figures, order the competent boards and company functions to recalculate the incentives, with potential total or partial recovery of incentives due based on results effectively achieved. Errors that do not impact the final determination of the incentive sum are to be considered of no importance.
Any additional severance indemnities and non-competition clauses, for roles featuring greater competition risks, defined within a certain amount or a certain number of years or months of remuneration, in line with the remuneration received.
The 2017 Remuneration Policy Guidelines provide for focusing the attention on the definition of 2017 objectives in line with the Company's strategic plan, in light of the new challenges of the market and the new organisational structure, and confirm the more general policy adopted in the previous year. For non-executive Directors the 2017 Guidelines reflect the resolutions taken by the Board of Directors on May 25, 2015 and June 15, 2015, following the renewal of the company bodies, based on the shareholders' meeting deliberations of April 30, 2015, and on the principle of continuity of the remuneration structure with that defined for the previous mandate, and do not therefore envisage significant changes over the previous year. For the CEO and the other Senior Managers with strategic responsibilities, the 2017 Guidelines confirm the structure of the remuneration package envisaged in 2016, which introduced the share-based Long-Term Incentive Plan (LTI). For further information on the characteristics of the Plan, please refer to the section 'Long-Term Variable Incentive Plans' of this Report.
| Role | remuneration DATa providers |
RAtIONALE | PEER GROUP | ||||
|---|---|---|---|---|---|---|---|
| Chairman | Korn Ferry Hay Group |
Analogous roles in Italian and | Italian companies Autogrill, Prysmian Leonardo, Snam, Terna. |
European companies Amec, Balfour, Beatty, Bilfinger, Hoctief. |
|||
| Non-executive Directors |
Korn Ferry Hay Group |
European listed companies comparable to Saipem in terms of turnover, capitalisation and business. |
Italian companies Atlantia, Autogrill, Prysmian, Leonardo, Luxottica, Snam, TIM, Terna. |
European companies Alstom, Amec, Balfour Beatty, Bilfinger, Colas, Eiffage, Hoctief, Technip. |
|||
| CEO | Korn Ferry Hay Group |
Analogous roles in companies comparable by level of complexity and responsibility in the leading European companies comparable to Saipem in terms of turnover, capitalisation and business. |
Italian companies Leonardo, Telecom Italia, Luxottica, Prysmian, Atlantia. |
European companies Bilfinger, Technip, Hochtief, Amec, Colas, Balfour Beatty, Alstom, Eiffage, Petrofac, SBM Offshore, Wood Group. |
|||
| Senior Managers with strategic responsibilities |
Willis Towers Watson |
Roles with the same level of responsibility and managerial complexity in Italian and European industrial groups comparable with Saipem in terms of turnover and capitalisation in various commodity sectors with a prevalence of companies operating in project management and construction of large works and infrastructure. |
Remuneration for the Chairman of the Board of Directors and for non-executive Directors reflects the resolutions taken by the Board of Directors on May 25, 2015 and June 15, 2015.
The Policy Guidelines for the Chairman of the Board of Directors reflect the resolutions passed by the Board of Directors on June 15, 2015, which defined a fixed remuneration, in consideration of the greater powers attributed, of €278,000, inclusive of €60,000 remuneration for the office of Director resolved by the Shareholders Meeting of April 30, 2015, in line with the reference market benchmarks, to which is added the remuneration of €20,000 for the role of Chairman of the Corporate Governance Committee and Scenarios.
The Shareholders' Meeting of April 30, 2015 set gross annual remuneration for non-executive Directors at €60,000.
An additional annual remuneration will continue to be paid out to non-executive Directors for service on Board Committees. The fees, resolved by the Board of Directors on May 25, 2015 are determined as follows:
For the Chairman and non-executive Directors, no payments are provided for in the event of expiry of term of office or early termination.
There are no benefits for the Chairman and for non-executive Directors.
For the CEO the 2017 remuneration structure reflects the resolutions taken by the Board of Directors on June 15, 2015 and June 27, 2016. In relation to the mandates assigned, it incorporates the remuneration resolved by the Shareholders' Meeting for the Directors, and the remuneration potentially due for participation on the Boards of Directors of subsidiary or invested companies.
In line with the resolutions of 2016, the gross fixed remuneration of the CEO is set at
(7) The Corporate Governance Committee and Scenarios was established for the first time in 2015 by the Board of Directors, with the role of supporting the Board of Directors within the framework of preliminary investigation functions, for proposing and consulting on evaluations and decisions relating to the Company's and Group's corporate governance, business social responsibility and in examining scenarios for the development of the strategic plan.
€900,000 per year. The sum was set by the Board of Directors at the proposal of the Compensation and Nomination Committee.
The annual variable incentive plan is associated with achievement of the Saipem performance results for the previous year and each is measured according to a 70-130 performance scale, in relation to the weighting assigned to them (a performance below 70
points is considered zero). The minimum individual performance level for incentive pay-out purposes is 85 points. The Plan will be determined based on results achieved by Saipem in the previous year, measured on a performance scale consisting of a minimum level performance (85 points), a target level performance (100 points) and a maximum level performance (130 points), corresponding respectively to 51%, 60% and 78% of fixed remuneration.
| Minimum (85) | 51% |
|---|---|
| Target (100) | 60% |
| Maximum (130) | 78% |
The 2017 targets resolved by the Board of Directors on January 27, 2017 for the annual variable incentive plan are in line with the
business model and strategic guidelines and are divided into the following:
| ECONOMIC-FINANCIAL | ECONOMIC-FINANCIAL | STRATEGIC | SUSTAINABILITY |
|---|---|---|---|
| TARGETS | TARGETS | OBJECTIVES | OBJECTIVES |
| Free cash ow (weighting: 35%) |
Adjusted EBITDA (1) (weighting: 30%) |
Fit For the Future (2) (weighting: 25%) 1. Fixed monetary costs (weighting: 20%) 2. Fit For the Future 2.0 (weighting: 5%) |
Sustainability and HSE (3) (weighting: 10%) 1. TRI (weighting: 5%) 2. We Want Zero (weighting: 2.5%) 3. Global Compact (weighting: 2.5%) |
(1) The adjustment is referred only to reorganisation.
(2) Fit For the Future 2.0 provides for three objectives: an objective linked to xed monetary costs (weighting: 20%) and two objectives linked to 'Fit For the Future 2.0' programme (weighting: 5%). Within this programme, that aims at dening Saipem new industrial and organisational model to obtain more organisational agility and competitiveness, the two objectives refer to the issue of Division organisational structure and matrix of authorisation.
(3) The Sustainability and HSE objective focuses on the issues of health and safety, divided between the following indicators:
the Total Recordable Injury Frequency Rate;
the 'We Want Zero' objective, which provides for fatal injury prevention programmes for continually reducing the injury rate and achieving the target of zero;
the objective relating to the 'Global Compact'. Guaranteeing respect of human and labour rights all along the supply chain, is a consolidated indicator relating to the involvement of vendors of goods, materials and services in Human & Labour Rights (HLR) issues, according to the three specic actions of auditing, training and feedback.
The Share-based Long-Term Incentive Plan 2016-2018 (approved by the Board of Directors on March 16, 2016 and by the Shareholders' Meeting on April 29, 2016), which includes all managerial resources, which includes all managerial resources, with three awards beginning in July 2016, encompasses the free allocation of ordinary Saipem shares (performance shares) against the achievement of two performance conditions, the first in relation to a business objective (measured over the three-year vesting period), and the second linked to the performance of the Saipem share, both measured at the end of the three-year period of reference. The Plan requires that the performance conditions be measured on the basis of the following parameters:
| Performance in line with or greater than median | Performance less than median | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Position in ranking | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | ||
| Maturation | 100% | 100% | 100% | 100% | 75% | 50% | 0% | 0% | 0% | 0% | 0% | 0% |
in at least one of the two objectives, a part of the award will mature regardless of the performance achieved in the other objective. The achievement of the maximum result level for each performance condition leads to the payment of 100% of the shares promised, while on achievement of a threshold result, 50% of the shares assigned for the TSR and 30% for the NFP will mature. In the event of performances below the threshold level, no shares will be issued.
The maximum level of incentive attributed by the Plan for the CEO is defined in relation to fixed remuneration, consistent with the principles laid down in the Guidelines, and is equal to 153% of fixed remuneration, leaving unchanged the maximum incentive percentages contained in the previous long-term monetary incentive plans. The maximum value at the end of the vesting period cannot be any more than four times
The performance conditions operate independently of each other. This means that, in the presence of an adequate performance
(8) Total Shareholder Return (TSR) of the Saipem share, with a weighting of 50%, measured on a three-year basis in terms of positioning relative to the peer group consisting of the main international companies operating in the same sector as Saipem. The Total Shareholder Return (TSR) of Saipem and its peers is calculated over a time period of 3 years, using the average of the closing values of the share price during the period between December 2016 and January 2017 and the average of the closing share price during the period between December 2019 and January 2020.
the value of the shares at the moment of their allocation.
If the mandate is not renewed it is envisaged that the definitive amount of shares be allocated at the end of the associated vesting period, according to the performance conditions of the Plan.
With a view to aligning the Company's
interests with those of its shareholders over the long term, and of ensuring the sustainability of the results obtained, the Plan also requires that 25% of the shares matured by virtue of the achievement of the above mentioned results are to be locked up for a period of two years, during which the CEO cannot dispose of them.
All short- and long-term variable incentives include a clawback clause enabling the recovery of variable remuneration components found to have been paid out in error or as the result of intentional misconduct by beneficiaries, in accordance with the conditions, methods and terms of application described in the 'Aims and general principles of the Remuneration Policy' section of this Report. (page 12).
The following payments are envisaged for the CEO, in line with the relevant practices and the provisions of the Recommendation of the European Commission No. 385 of April 30, 2009, and to protect the company from potential competition risks:
a) Indemnities for termination of office or termination of employment.
b) Non-competition agreement.
The CEO is granted insurance cover against the risk of death and permanent disability and membership of the supplementary healthcare fund (FISDE), as well as use of a Company car for business and personal use and reimbursement of expenses for a Rome-Milan journey once per week, if needed.
Fixed remuneration of SMSR is set based on roles and responsibilities assigned, taking into account average levels of remuneration at other major Italian and international companies for roles of a similar level of managerial responsibility and complexity, and may be adjusted periodically in the framework of the annual salary review process which is carried out for all managers.
Taking into account the relevant context and current market trends, the 2017 Guidelines will employ selective criteria designed to ensure adequate levels of competitiveness and motivation.
In particular the proposed actions will involve: (i) the possibility of making adjustments to align fixed remuneration with the market median for resources that are particularly strategic for the achievement of Company results, for those who have increased the perimeter of their responsibility or the level of coverage of their role, or who have highly critical skills with a high impact on business; (ii) the possibility of awarding very selective, special one-off bonus payments (up to a maximum of 25% of fixed remuneration) for excellent performances on key projects or targeted at recovering competitiveness, and in consideration of retention purposes and performances of excellent quality.
The Annual variable incentive plan envisages a remuneration calculated with reference to Saipem and individual performance results of the previous year and measured according to a 70-130 performance scale (below 70 points the performance of each target is deemed to be zero), with a minimum individual incentive threshold of 85 points, below which no bonus is payable, in line with that previously described for the CEO. The target level incentive (performance = 100) and maximum level performance (performance = 130) entail payouts that vary in accordance with the role of the beneficiary, up to a maximum of 40% and 52% of fixed remuneration, respectively. The performance objectives of other SMSR are calculated on the basis of the objectives assigned to Top Management and focus on economic-financial performance, operations, internal efficiency, sustainability (especially health and safety, environmental protection, stakeholder relations), as well as in relation to the manager's area of responsibility for the role covered, in accordance with the Company Performance Plan.
Senior Managers with strategic responsibilities, in line with that defined for the CEO, participate in the long-term incentive
plan defined by the Board of Directors on March 16, 2016 and approved by the Shareholders' Meeting on April 29, 2016. The Long-Term Incentive Plan (LTI) 2016-2018, which includes all managerial resources, with three awards beginning in July 2016, encompasses the free allocation of ordinary Saipem shares (performance shares) against the achievement of two performance conditions, the first in relation to a business objective measured over the three-year vesting period, and the second linked to the performance of the Saipem share in the three-year period of reference. The Plan requires that the performance conditions be measured on the basis of the following parameters:
The TSR is measured in relation to the following peer group: Subsea 7, Petrofac, Hyundai E&C, McDermott International, Samsung Engineering Co, Aker Solutions, Technip, Tecnicas Reunidas, Noble Corporation, Ensco, Nabors Industries. The plan requires that a part of the award for the performance condition measured in terms of Saipem's TSR be at least equal to the median performance of the peer group as illustrated in relation to the CEO. The performance conditions operate independently of each other. This means that, in the presence of an adequate performance in at least one of the two objectives, a part of the award will mature regardless of the performance achieved in the other objective. The achievement of the maximum result level for each performance condition leads to the payment of 100% of the shares, while on achievement of a threshold result, 50% of the shares assigned for the TSR and 30% for the NFP will mature. In the event of performances below the threshold level, no shares will be issued.
The maximum levels of incentive attributed by the Plan are defined in relation to the position covered and to fixed remuneration, consistent with the principles laid down in the Guidelines, and are equal to 100% of fixed remuneration, leaving unchanged the maximum incentive percentages contained in the previous long-term incentive plans. The maximum value at the end of the vesting period cannot be any more than four times the value of the shares at the moment of their allocation. The Plan further provides that 25% of the
shares matured at the end of the three-year vesting period by virtue of the degree of achievement of the above mentioned performance conditions will be invested in a co-investment plan for a two-year period during which the beneficiaries cannot in any way dispose of the part of matured shares, and at the end of which the beneficiaries will receive one additional share for each share invested. The co-investment aims to strengthen further the alignment of interests between management and shareholders over the long-term and to act as leverage for the retention of management.
The Plan includes clauses designed to encourage retention whereby, in the event of termination of the employment contract by mutual consent or loss of control by Saipem of the company where the beneficiary of the plan is employed during the vesting period, the beneficiary conserves the right to the incentive, which is reduced on a pro-rata basis in relation to the time elapsed between the award of the base incentive and the
occurrence of the event. In the event of unilateral termination of employment, no payment is made.
The clawback clause is envisaged for Senior Managers with strategic responsibilities, and has the conditions, methods and terms of application described in the 'Aims and general principles of the Remuneration Policy' section on page 12 of this Report.
provided by the National Collective Labour Agreement for Senior Managers in the event of voluntary redundancy or early retirement. These criteria take account of the actual and pensionable age of the Senior Manager at the time the contract is terminated and his/her annual remuneration. In addition, severance payments up to a maximum of two years' fixed remuneration for a Change of Control resulting in resignation or termination and/or demotion may be established on the basis of individual termination indemnity agreements.
Minimum Term Agreement may be prescribed to protect the know-how with the aim of guaranteeing continuity in achieving the business objectives for a maximum period of 12 months of remuneration.
c) Non-competition agreements.
In continuity with the remuneration policies implemented in 2016 and in accordance with the relevant collective labour agreement established at national level and supplementary agreements reached at company level for Saipem Senior Managers, Senior Managers with strategic responsibilities are granted membership of the supplementary pension fund FOPDIRE9 and the Supplementary Healthcare Fund FISDE10, death and disability insurance coverage and a company car for business and personal use.
(9) Closed pension fund operating on a defined contribution, individual account basis, www.fopdire.it.
(10) Healthcare fund providing reimbursement of medical expenses for working and retired Senior Managers and their family members, www.fisde-eni.it.
This section of the report provides a description of the remuneration policies implemented in 2016 for the Chairman of the Board of Directors, non-executive Directors, the CEO and Senior Managers with strategic responsibilities.
Implementation of the 2016 Remuneration Policy, according to what has been verified by the Compensation and Nomination Committee on the periodic evaluation envisaged by the Corporate Governance Code, was found to be in line with the 2016 Remuneration Policy approved by the Board of Directors on March 16, 2016, according to the provisions of the resolutions taken by the Board of Directors on May 25, 2015, June 15, 2015 and June 27, 2016, regarding the remuneration of non-executive Directors participating in Board Committees and the definition of the remuneration of the Chairman and the CEO. Based on the evaluation expressed by the Committee, the 2016 Policy is in line with the market benchmarks.
The Chairman was paid the remuneration for the office approved by the Board of Directors on June 15.
This remuneration includes that for the office of Director approved by the Shareholders' Meeting of April 30, 2015. The Chairman was also paid the remuneration for the post of Chairman of the Corporate Governance Committee and Scenarios.
Non-executive Directors were paid the fixed remuneration approved by the Shareholders' Meeting of April 30, 2015.
The CEO was paid the remuneration approved by the Board of Directors on June 15, 2015. This remuneration includes that for the office of Director approved by the Shareholders' Meeting of April 30, 2015.
For Senior managers with strategic responsibilities, as part of the annual salary review envisaged for all managers, in 2016 adjustments were made to the fixed remuneration for positions whose perimeter of responsibility has increased or are placed below the average market benchmarks.
During 2016 special one-off bonus payments (up to a maximum amount of 25% of the individual fixed remuneration) were also paid, associated with achieving particularly significant results or projects during the year or through having contributed to operations associated with the demerger from Eni and improvement of the Company's financial stability, also through debt refinancing transactions, for a total amount of € 329,000. The sums for fixed remuneration and, as regards employment salaries, for indemnities covered under the national contract for senior managers and under supplementary company agreements, are specified in the relevant item of Table No. 1 of the chapter 'Remuneration paid in 2016'.
Non-executive Directors were paid the additional remuneration due for service on Board Committees, according to the resolution of the Board of Directors dated May 25, 2015, according to the criteria of differentiation between the Chairman and other members.
Remuneration for service on Board Committees is shown in Table No. 1 of the section 'Remuneration paid in 2016'.
The Saipem results for 2015, evaluated and approved by the Board of Directors on the proposal of the Compensation and Nomination Committee at the Meeting on March 16, 2016, led to the calculation of a performance score less than the set minimum threshold. In accordance with the 2016 Remuneration Policy Guidelines, the performance score achieved did not activate the annual monetary incentive system for the CEO and for the Senior Managers with strategic responsibilities, apart from for those roles belonging to control functions having their own autonomy and independence from the corporate results.
The incentives awarded to the Senior Managers with strategic responsibilities are indicated under the item 'Non-equity variable remuneration/bonuses and other incentives' in Table No. 1, and detailed in Table No. 3 of the section 'Remuneration paid in 2016'.
Up to 2015, the Saipem long-term variable component consisted of two separate incentive plans:
The annual performance is assessed according to a scale between 70% and 130% (below the minimum threshold of 70% the performance is considered equal to zero).
In 2016, a new share-based Long-Term Incentive (LTI) Plan was introduced to replace the previous DMI and LMIT plans, which involves free allocation of ordinary shares in the Company against the achievement of performance conditions, measured via a business objective (Net Financial Position, weighting 50%) and an objective relating to the trend of the Saipem share price (Total Shareholder Return in proportion to its primary international competitors, weighting 50%), both measured over a period of 3 years, maintaining the maximum incentive percentages envisaged by the previous 2 long-term plans unchanged.
In 2016, the deferred monetary incentive allocated in 2013 to critical managerial resources accrued. On March 16, 2016, on the proposal of the Compensation and Nomination Committee, the Board of Directors decided on a 3-year average factor of 23% to be applied to the incentive base for calculating the 2013 allocation, based on the Saipem EBITDA for the period 2013-2015. Table 1 shows the performances achieved during the vesting period as used to determine the percentage of the award paid out to SMSR.
| Deferred Monetary Incentives (DMI) | Performance during vesting period | % incentive | ||
|---|---|---|---|---|
| 2013 | 2014 | 2015 | ||
| EBITDA ≥ Max level | 170% | 170% | 170% | |
| Budget ≤ EBITDA ≤ Max level | 130% | 130% | 130% | |
| Threshold ≤ EBITDA ≤ Budget | 70% | 70% | 70% | 23% |
| EBITDA ≤ Threshold | 0% 0% |
0% | 0% |
The incentives awarded to the Senior Managers with strategic responsibilities are indicated under the item 'Bonuses from prior years payable/paid out' in Table No. 3B of the section 'Remuneration paid in 2016'.
In 2016, the long-term monetary incentive allocated in 2013 to managerial resources accrued. On July 27, 2016, on the proposal of the Compensation and Nomination Committee, the Board of Directors decided on a 3-year average factor of 33% to be applied to the incentive base for calculating the allocation, based on the final Saipem Net Adjusted Profit + D&A for the period 2013-2015. Table 2 shows the performances achieved during the vesting period as used to
(11) Earnings before interest, tax, depreciation and amortisation.
table 1
determine the percentage of the incentive paid out to Senior Managers with strategic responsibilities.
| Long-Term Monetary Incentive (LTMI) | Performance during vesting period | % incentive | ||
|---|---|---|---|---|
| Positioning in the peer group (*) | 2013 | 2014 | 2015 | |
| 1° | 130% | 130% | 130% | |
| 2° | 115% | 115% | 115% | |
| 3° | 100% | 100% | 70% | |
| 4° | 85% | 85% | 85% | 33% |
| 5° | 70% | 70% | 70% | |
| 6° | 0% | 0% | 0% | |
| 7° | 0% | 0% | 0% |
(*) Positioning in the peer group based on Saipem Net Adjusted Profit + Depreciation & Amortisation results.
The incentives awarded to the Senior Managers with strategic responsibilities are indicated under the item 'Bonuses from prior years payable/paid out' in Table No. 3B of the section 'Remuneration paid in 2016'.
In accordance with the 2016 Remuneration Policy Guidelines and the contractual conditions relating to the 2015-2017 mandate associated with the post of CEO approved by the Board of Directors on June 27, 2016, the Board of Directors decided at the meeting of July 27, 2016 on 3,653,489 ordinary shares in Saipem SpA as the number of shares subject to the 2016 allocation to the CEO. This forms part of the 2016-2018 share-based Long-Term Incentive Plan, according to the criteria and methods defined by the Board of Directors on March 16, 2016 and approved by the Shareholders' Meeting of April 29, 2016.
For Senior Managers with strategic responsibilities the 2016 allocation was made in an amount of shares of 10,274,645, within the sphere of the maximum incentive levels attributed by the Plan for Saipem management, defined in relation to the position held and the fixed remuneration or average remuneration of the relevant management band.
The shares subject to the allocation to the CEO and the Senior Managers with strategic responsibilities are reported in Table No. 1 of scheme 7 of Annex 3A of Regulation No. 11971/1999, according to the requirements of Article 84-bis (Annex 3A, scheme 7) of the Consob Issuers Regulation, with the associated detail in Table 3A of the section 'Remuneration paid in 2016'.
During 2016 no indemnities for termination of office were deliberated and/or paid to Directors and other Senior Managers with strategic responsibilities.
Table No. 1 of the chapter 'Remuneration paid in 2016' shows the taxable value of benefits paid in 2016, in particular with reference to the following benefits: (i) annual contribution to the supplementary pension fund FOPDIRE; (ii) annual contribution to the supplementary healthcare fund FISDE; (iii) assignment of a company car for business and personal use (the value stated is exclusive of the contribution paid by the assignee); (iv) amount payable for the weekly return flights between Milan and Rome.
In line with the 2016 Remuneration Policy Guidelines, the CEO was paid the second tranche, in the amount of €150,000 gross, of the €450,000 gross to be paid in three annual instalments beginning 2015, provided for under the non-compete option reserved to the Board of Directors for implementation of the non-competition agreement with the CEO.
The following table shows remuneration paid to Directors and Statutory Auditors, who are listed by name, and remuneration paid to other Senior Managers with strategic responsibilities12, which is shown on an aggregated basis. Separate indication is supplied for remuneration received from subsidiaries and/or associated companies, not including those renounced or paid into the Company. All persons who held the above-mentioned positions during the financial year are included in the table, even if they only held the position for part of the year. In particular:
indication of remuneration for each Committee on which the Director sits;
(12) There is no current legal requirement for disclosure on an individual basis.
(€ thousand)
| Non-equity variable remuneration | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name and surname | Office held | Expiry of term (*) | Fixed remuneration | on Board Committees Remuneration for service |
other incentives Profit sharing Bonuses and |
Non-monetary benefits |
remuneration Other Total |
Fair value of equity remuneration |
of office or termination for termination of employment Indemnities |
|||
| Board of Directors | ||||||||||||
| Colombo Paolo Andrea | Chairman (1) | 01.01-12.31 | 04.18 | 278 (a) | 20 (b) | 298 | ||||||
| Cao Stefano | Chief Executive Officer (CEO) (2) | 01.01-12.31 | 04.18 | 900 (a) | 29 (b) | 929 | 140 | |||||
| Cappello Maria Elena | Director (3) | 01.01-12.31 | 04.18 | 60 (a) | 20 (b) | 80 | ||||||
| Ferrucci Francesco Antonio | Director (4) | 01.01-12.31 | 04.18 | 60 (a) | 30 (b) | 90 | ||||||
| Mazzarella Flavia | Director (5) | 01.01-12.31 | 04.18 | 60 (a) | 24 (b) | 84 | ||||||
| Siragusa Stefano | Director (6) | 01.01-01.21 | 3 (a) | 1 (b) | 4 | |||||||
| Pattofatto Leone | Director (7) | 01.21-12.31 | 57 (a) | 14 (b) | 71 | |||||||
| Guzzetti Guido | Director (8) | 01.01-12.31 | 04.18 | 60 (a) | 33 (b) | 93 | ||||||
| Picchi Nicla | Director (9) | 01.01-12.31 | 04.18 | 60 (a) | 30 (b) | 90 | ||||||
| Ferro-Luzzi Federico | Director (10) | 01.01-12.31 | 04.18 | 60 (a) | 15 (b) | 75 | ||||||
| Board of Statutory Auditors | ||||||||||||
| Busso Mario | Chairman (11) | 01.01-12.31 | 04.17 | 70 (a) | 70 | |||||||
| Invernizzi Massimo | Statutory Auditor (12) | 01.01-12.31 | 04.17 | 50 (a) | 50 | |||||||
| De Martino Giulia | Statutory Auditor (13) | 01.01-12.31 | 04.17 | 50 (a) | 50 | |||||||
| Senior Managers with strategic responsibilities (**) |
(14) | 4,139 (a) | 984 (b) | 146 (c) | 5,268 | 409 | ||||||
| 5,908 | 187 | 984 | 175 | 7,252 | 549 |
(*) Term of office of Directors appointed by Shareholders' Meeting on April 30, 2015 expires at Shareholders' Meeting convened to approve the financial statements at December 31, 2017.
(**) All Senior Managers serving on the Advisory Committee, and at any rate all direct reports of the CEO (14 Senior Managers)
(1) Paolo Andrea Colombo - Chairman (a) The sum corresponds to the fixed remuneration set by the Board of Directors' Meeting of June 15, 2015 at €278,000, which includes the remuneration for the office of Director set by the Board of Directors' Meeting of April 30, 2015 (€60,000).
(b) The sum corresponds to the remuneration for the role of Chairman of the Corporate Governance Committee and Scenarios (€20,000).
(a) The amount corresponds to the fixed remuneration approved by the Board on June 15, 2015 (€900,000) which incorporates the base remuneration as CEO set by the Shareholders' Meeting (€60,000), added to which is the amount of €150,000 paid as the 2nd annual tranche of the non-competition option prescribed for the CEO for a total amount of €450,000. (b) The amount includes the value of the car benefit, the supplementary healthcare fund contributions paid by the company and the amount payable for the weekly return flights between Milan and Rome. (3) Maria Elena Cappello - Director
(a) The sum corresponds to the fixed Board meeting fees.
(b) The sum corresponds to remuneration for the role of Chairman of the Compensation and Nomination Committee (€20,000).
(a) The sum corresponds to the fixed Board meeting fees.
(b) The sum corresponds to remuneration for participation in the Compensation and Nomination Committee (€15,000) and in the Corporate Governance Committee and Scenarios (€15,000).
(a) The sum corresponds to the fixed Board meeting fees.
(b) The sum corresponds to remuneration for participation in the Audit and Risk Committee (€24,000).
(6) Stefano Siragusa - Director
(a) The sum corresponds to the pro-rata portion of the fixed remuneration set by the Board of Directors' Meeting on April 30, 2015 (€60,000). (b) The sum corresponds to the pro-rata portion of the remuneration for participation in the Corporate Governance Committee and Scenarios (€15,000).
(a) The sum corresponds to the pro-rata portion of the fixed remuneration set by the Board of Directors' Meeting on April 30, 2015 (€60,000).
(b) The sum corresponds to the pro-rata portion of the remuneration for participation in the Corporate Governance Committee and Scenarios (€15,000).
(a) The sum corresponds to the fixed Board meeting fees.
(b) The sum corresponds to remuneration for participation in the Audit and Risk Committee (€24,000) and to the remuneration for participation in the Corporate Governance Committee and Scenarios (€15,000).
(a) The sum corresponds to the fixed Board meeting fees.
(b) The sum corresponds to remuneration for the role of Chairman of the Audit and Risk Committee (€30,000).
(a) The sum corresponds to the fixed Board meeting fees.
(a) To the sum of €4,139,000 for gross annual remuneration can be added allowances for assignments in Italy and overseas that are in line with the national contract for Senior Managers and with supplementary company agreements, and entitlements related to employment, for a total amount of €216,000. (b) The amount includes the payment of €64,500 for the 2016 annual monetary incentive linked to the 2015 performance, the payment of €305,000 relating to the deferred monetary
incentives awarded in 2013, the payment of €280,000 relating to the long-term incentives awarded in 2013 and the payment of an extraordinary bonus in the amount of €329,000. (c) The amount includes the value of the car benefit, the supplementary healthcare fund and supplementary pension fund contributions payable by the Company and the payment of the bonus for the 25th year of service at the Company.
The following table shows long-term variable incentives based on financial Instruments other than stock options payable to the CEO and, as an aggregated figure, to SMSR. In particular:
the column 'Number and type of financial instruments' indicates the number of free shares allocated during the year, in implementation of the share-based long-term incentive plans;
the column 'Fair value at date of award' shows the total fair value of stock grant plans in place at the date of allocation;
The total of the column 'Financial instruments pertaining to the year - Fair value' corresponds with the amount indicated in Table No. 1.
| (€ thousand) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Name and surname | Office held | Plan | Number and type instruments of financial |
Fair value at date of award |
Vesting period | Award date | Market price on allocation |
pertaining to the year Financial instruments - Fair value |
| Stefano Cao | Chief Executive Officer (CEO) | 2016 Long-term Incentive Plan BoD, July 27, 2016 |
3,653,489 | 1,005 | three-year (2) | 07.27.2016 | 0.4396 | 140 |
| Senior Managers with strategic responsibilities (1) |
2016 Long-term Incentive Plan BoD, July 27, 2016 |
10,274,645 | 3,493 | three-year (3) | 07.27.2016 | 0.4396 | 409 | |
| Total | 4,498 | 549 |
The following table shows the short and long-term variable monetary incentives payable to the CEO and (as an aggregated figure) to SMSR. All persons who held the above-mentioned positions during the reporting period are included in the table, even if they only held such office for a part of the year. In particular:
connection with events relating to the employment contract pursuant to the Plan Rules;
The total of the columns 'Annual bonus - to be paid out/paid out', and 'Other bonuses' corresponds to the figure show in column 'Bonuses and other incentives' of Table No. 1.
| (€ thousand) | Annual bonus | Bonuses from previous years | ||||||
|---|---|---|---|---|---|---|---|---|
| Office held | Plan | To be paid out/paid out | Deferred | Deferral period | No longer payable | To be paid out/paid out | Still deferred | Other bonuses |
| Senior Managers | 2016 Annual Monetary | |||||||
| with strategic | Incentive Plan | |||||||
| responsibilities (1) | BoD, March 16, 2016 | 70 | ||||||
| 2015 Deferred Monetary Incentive Plan BoD, July 28, 2015 |
664 | |||||||
| 2015 Long-term Monetary Incentive Plan BoD, October 12, 2015 |
1,202 | |||||||
| 2014 Deferred Monetary Incentive Plan BoD, March 17, 2014 |
97 | |||||||
| 2014 Long-term Monetary Incentive Plan BoD, October 28, 2014 |
1,115 | |||||||
| 2013 Deferred Monetary Incentive Plan BoD, July 30, 2013; BoD, March 16, 2016 |
327 (2) | 305 (3) | ||||||
| 2013 Long-term Monetary Incentive Plan BoD, October 28, 2013; BoD, July 27, 2016 |
720 (4) | 280 (5) | ||||||
| Total | 70 | 1,047 | 585 | 3,078 | 329 | |||
| reference period 2013-2015. 2013-2015. |
(1) All Senior Managers serving on the Advisory Committee, and at any rate all direct reports of the CEO (14 Senior Managers). (2) Pro-rata amount of the deferred monetary incentive awarded in 2013 and no longer payable following the finalisation of the EBITDA performance during the three-year (3) Payout of deferred monetary incentive awarded in 2013, based on EBITDA performance during the three-year reference period 2013-2015. (4) Pro-rata amount of the long-term monetary incentive awarded in 2013 and no longer payable following the finalisation of the Net Adjusted Profit + Depreciation & Amortisation performance during the three-year reference period 2013-2015. (5) Payout of long-term monetary incentive awarded in 2013, based on Net Adjusted Profit + Depreciation & Amortisation performance during the three-year reference period |
Pursuant to Article 84-quater, paragraph 4, of the Consob Issuers Regulation, the following table shows shares held in Saipem SpA by the Directors, Statutory Auditors and other SMSR, as well as by their spouses, where not legally separated, and by their minor children, either
directly or through subsidiary companies, fiduciaries or third parties, as per the Shareholders Register, communications received or other information received from the persons concerned.
The table includes all persons that held office for whole or a part of the year.
The number of shares (all of which are 'ordinary') is indicated on an individual basis for Directors and Statutory Auditors and on an aggregated basis for SMSR. All shares are held as personal property.
| Name and surname | Office | Company | at end of previous year Number of shares held |
of shares purchased Number |
Number of shares sold | Number of shares held at end of current year |
|---|---|---|---|---|---|---|
| Board of Directors | ||||||
| Paolo Andrea Colombo | Chairman | Saipem SpA | - | 290,000 | - | 290,000 |
| Stefano Cao | Chief Executive Officer (CEO) | Saipem SpA | 285 | 290,000 | - | 290,285 |
| Federico Ferro-Luzzi | Director | Saipem SpA | - | 40,500 | 40,500 | - |
| Other Senior Managers with strategic responsibilities (1) (1) All Senior Managers serving on the Executive Committee, and at any rate all direct reports of the CEO (14 Senior Managers). The number of shares held at the end of the |
Saipem SpA | 56,100 | 341,000 | - | 397,100 | |
| previous financial year takes into account those also held by Senior Managers who became strategic during 2016. |
With reference to the 2016-2018 share-based Long-Term Incentive Plan approved by the Shareholders' Meeting on April 29, 2016, in conformity with the conditions and objectives illustrated in the Information Document available on the
Internet site www.saipem.com, the following table provides the details of the 2016 allocation for the Plan, pursuant to Article 84-bis (Annex 3A, scheme 7) of the Consob Issuers Regulation.
| (to be indicated only for the named individuals) Office |
Scheme 1 - Financial instruments other than stock options Section 2 - Newly allocated financial instruments based on the decision of the body responsible for implementing the shareholders' resolution |
|||||||
|---|---|---|---|---|---|---|---|---|
| Name and surname | shareholders' meeting Date of the associated resolution |
Type of financial instruments |
Number of financial instruments |
Award date | Any purchase price of instruments |
Market price on allocation |
Vesting period | |
| Stefano Cao | Chief Executive Officer (CEO) | April 29, 2016 stock grants | 3,653,489 | BoD 07.27.2016 CpR 07.20.2016 |
n.a. | 0.4396 | 3 years (2) | |
| Senior Managers with strategic responsibilities (1) |
April 29, 2016 stock grants | 10,274,645 | BoD 07.27.2016 CpR 07.20.2016 |
n.a. | 0.4396 | 3 years (3) | ||
| Other Senior Managers | April 29, 2016 stock grants | 47,106,968 | BoD 07.27.2016 CpR 07.20.2016 |
n.a. | 0.4396 | 3 years (3) | ||
| (1) All Senior Managers serving on the Advisory Committee, and at any rate all direct reports of the CEO (14 Senior Managers). (2) The Plan requires that 25% of the shares matured at the end of the vesting period are to be locked up for a period of two years. (3) The Plan also calls for the strategic resources to invest 25% of the matured shares at the end of the vesting period for a further two-year period (co-investment period), after which beneficiaries will receive an additional free share for every share invested. |
Headquarters: San Donato Milanese (Milan) - Italy Via Martiri di Cefalonia, 67 Branches: Cortemaggiore (Piacenza) - Italy Via Enrico Mattei, 20
Società per Azioni Share Capital €2,191,384,693 fully paid up Tax identification number and Milan Companies' Register No. 00825790157
Information for Shareholders Saipem SpA, Via Martiri di Cefalonia, 67 20097 San Donato Milanese (Milan) - Italy
Relations with institutional investors and financial analysts Fax +39-0244254295 e-mail: [email protected]
Publications Relazione finanziaria annuale (in Italian) Annual Report (in English)
Interim Consolidated Report as of June 30 (in Italian and English)
Saipem Sustainability (in English)
Also available on Saipem's website: www.saipem.com
Website: www.saipem.com Operator: +39-024421
Layout and supervision: Studio Joly Srl - Rome - Italy Printing: Stilgraf Srl - Viadana (Mantua) - Italy
saipem spa Via Martiri di Cefalonia, 67 20097 San Donato Milanese (Milan) Italy
saipem.com
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