Board of Directors’ committees

To carry out its duties effectively, the board of directors has created two internal committees - the compensation committee and the audit committee - and it has approved the relative regulations. No nominations committee was set up, as provided for by the Code of Conduct for Listed Companies, because the appointment of directors is carried out during shareholders’ meetings on the basis of lists presented by the shareholders, who pre-emptively select candidates and verify that they meet the regulatory and statutory requirements.

COMPENSATION COMMITTEE

The compensation committee is composed of three non-executive directors: Giuseppe Airoldi, Davide Croff and Massimo Mondazzi, of whom the first two are independent. Mr Airoldi chairs the committee.

The compensation committee is charged with submitting to the board of directors a proposal for the annual compensation of the chairman and the CEO, and with examining the compensation criteria for senior management. Directors' salaries are decided by shareholders, while the remuneration of the chairman and the CEO is determined by the board of directors. Committee meetings are valid if at least two members are present, and decisions require an absolute majority of those present. The head of corporate systems, human resources and services performs the role of secretary and takes minutes of the meetings.

At least twice a year, on the occasions of the half-year and annual financial statements, the committee provides the board of directors with a progress report. The committee met five times in 2009 (on 12 February, 11 March, 23 March, 7 July and 29 July) with an average participation of about 90%. It discussed: (i) achievement of 2008 company objectives; (ii) achievement of 2008 EBITDA and determination of the multiplier to apply to the deferred cash incentive announced in 2006; (iii) recognition of TSR positioning for 2008 relevant to allocations for the 2006-2008 stock option plan, the average positioning for 2006-2008 and subsequent determination of the exercise percentage relative to the 2006 allocation; (iv) annual cash incentive proposal, connected to the results obtained in 2008, for the chairman and the CEO; (v) analysis of long-term incentive systems and identification of guidelines for 2009; (vi) definition of 2009 company objectives: performance plan and EBITDA indicator; (vii) definition of guidelines and criteria for remuneration policy for junior management regarding merit changes relative to roles and responsibilities; (viii) allocation criteria and guidelines for long-term managerial incentives for 2009; (ix) proposal for technical adjustment of the 2006-2008 stock option plan following the share capital increase; (x) long-term managerial incentives – 2009 implementation: deferred cash incentive plan; (xi) proposal for revision of the fixed compensation for the CEO considering the role and responsibility of this function, and for implementation of long-term incentives.

AUDIT COMMITTEE

The audit committee is composed exclusively of independent non-executive directors: Roberto Lugano (chairman), Roberto Lonzar and Renato Santini. In accordance with the Code of Conduct for Listed Companies, the board of directors has ascertained that all members of the audit committee have adequate experience in accounting and financial matters.

In accordance with the regulations, the committee:

  • assists the board of directors in defining guidelines for the internal control system so that the main risks may be correctly identified and adequately measured, managed and monitored for purposes of fit and proper business management;
  • examines the work plan and regular progress reports prepared by the head of the Internal Audit unit;
  • verifies the correct application of accounting principles and their consistency when preparing the consolidated financial statements, with the assistance of the manager in charge of financial reporting and the independent auditors;
  • assesses the recommendations made by the independent auditors, their audit plan and related findings set out in their audit reports and any recommendations made in their management letter;
  • examines the transparency and substantial and procedural correctness of related-party transactions;
  • reports at least twice a year to the board of directors on its activities and the fitness of the internal control system.

Committee meetings are valid when the majority of standing members is present, and decisions require an absolute majority of those present. The chairman of the board of statutory auditors or a designated standing auditor participates in these meetings; upon invitation by the committee, non-members may also participate as well as the company chairman and the CEO.

In its meeting of 20 March 2007, after consulting the audit committee, the board of directors appointed the internal audit unit manager as head of internal control and set remuneration for the post in line with company policy. The internal audit manager acts as committee secretary, takes minutes of the meetings and assists it in carrying out its functions.

During 2009, the internal audit committee met nine times (on 12 February, 5 March, 22 April, 7 July, 29 July , 29 September, 27 October, 3 December and 21 December). Attendance by its members was 100%; at least one member of the board of statutory auditors was present each time. During said meetings, the committee: (i) analysed the organisational structure of the Internal Audit unit and the work programme for 2009; (ii) examined the audit reports and the effects of the quarterly follow- up of audit issues; (iii) examined periodical progress reports on the Internal Audit unit in 2009 and quarterly reports on notifications received by Snam Rete Gas S.p.A and its subsidiaries/associates; (iv) analysed issues relating to the separate and consolidated financial statements at 31 December 2008 with the head of planning, administration, finance and control and with the independent auditors; (v) analysed related-party transactions; (vi) analysed the half-year reports of the manager appointed pursuant to Law no. 262/2005 on the fitness of internal controls over company reporting and compliance with accounting procedures; (vii) met with the supervisory body constituted pursuant to Legislative Decree 231/2001; (viii) examined the planning process for investing in the development of the pipeline network with the business development and commercial director; (ix) monitored adjudication for the task of auditing the Eni group for the period 2010-2018. In its meeting of 10 February 2010, the committee examined the annual report of the head of internal control for 2009.

During the meetings of 29 July 2009 and 10 March 2010, the committee reported to the board of directors on its activities in the first and second half of 2009 respectively. The board of directors, in the meeting of 10 March 2010 and as specified by the Code of Conduct, evaluated the fitness of the internal control system on the basis of reports from the audit committee.