Appointment, composition and term of office

The number of members of the board of directors varies from five to nine, as decided by shareholders at the meeting which appoints them. Members of the board of directors remain in office for a maximum of three financial years and may be re-appointed. Article 16 of the articles of association establishes a voting list mechanism for the appointment of directors in order to ensure that minority shareholders are represented on the board.

According to the articles of association, lists may be presented by shareholders who, either individually or together with other shareholders, represent at least 2% of the shares with voting rights at ordinary meetings (or such other percentage as may be defined or required by the relevant statutory provisions and regulations). On 27 January 2010, Consob issued resolution no. 17148 which established this percentage as 1%. By law and under Consob regulations, shareholders may only present and vote on one list, whether individually or in a group. Candidates may only appear on one list; failure to comply will result in the candidate being disqualified. Lists are presented by shareholders and filed at the company’s registered office at least fifteen days before the date of the first call of the meeting. They are also published in accordance with the law and Consob regulations on the election of members of boards of directors and statutory auditors. The lists specify the candidates who meet the independence requirements for statutory auditors of listed companies. The lists for the appointment of directors, together with the relevant information about their background and an indication of those who meet the independence requirements defined in the articles of association, in addition to the names of the shareholders who presented the lists and their percentage holding in the company, are made public in a timely fashion and in any case within the statutory time limit at the company’s registered office and Borsa Italiana S.p.A., and are published on the company’s website (www.snamretegas.it). The list procedure is only necessary when the entire board of directors is being replaced. The articles of association state that when there is no longer a majority in office, the entire board is considered to have retired, and a meeting of the shareholders is called as soon as possible in order to appoint a new board.

When the number of board members is less than seven, at least one director – or at least three directors if there are more than seven board members – must meet the independence requirements for statutory auditors of listed companies. The voting list mechanism is structured in such a way that the number of independent directors required by the articles of association is appointed. Directors are elected as follows:

  • a) seven tenths of the directors are taken from the list with the majority of shareholders’ votes in the order in which they appear in the list; this is rounded down to the nearest whole number if necessary;
  • b) the remaining directors are taken from other lists, which may not be linked in any way, even indirectly, to the shareholders who presented or voted for the list that won the most votes. Therefore, the votes obtained by these lists are divided by one, two or three depending on the number of directors to be elected. The ratios thus obtained are assigned to the candidates on each list, based on the order shown in the list. The scores awarded to candidates on the various lists are entered in a single list, ranking these scores in decreasing order. Candidates with the highest scores are elected. If more than one candidate obtains the same score, the candidate from the list that has not elected any director or that has elected the smallest number of directors is elected. If none of these lists has elected a director or they have all elected the same number of directors, the candidate whose list has obtained the greatest number of votes is elected. If lists have the same number of votes and scores, the entire meeting will vote again and the candidate who receives the simple majority of the votes will be elected;
  • c) if, following the application of the aforesaid procedure, the minimum number of independent directors required by the articles of association is not appointed, a vote score is calculated for each candidate on the various lists using the system described in subparagraph b); candidates with the highest score not yet taken from the lists as per subparagraphs a) and b) and who meet the independent requirements will be elected to ensure that there are a sufficient number of independent directors as required by the articles of association. These will replace non-independent directors who have a lower score. If there are not enough candidates to ensure that there are a sufficient number of independent directors, the shareholders will vote, by statutory majority, to replace those candidates who do not meet the independence criteria;
  • d) the shareholders will vote by statutory majority to appoint directors who for any reason have not been appointed in accordance with the aforementioned procedure to ensure that the composition of the board of directors is legal and consistent with the articles of association.

All candidates must also meet the reputation requirements set by the current legislation.

The board regularly assesses the independence and reputation of directors and checks that there are no grounds for ineligibility or incompatibility. Should one of these requirements no longer be met or if there are grounds for ineligibility or incompatibility, the board will declare that the director is no longer fit for office and arrange to replace him. It may also ask the director in question to take steps to eliminate the cause of the incompatibility within a set time and if this is not complied with, the director must retire from office.

The board of directors appointed by the ordinary meeting on 26 April 2007 currently has nine members: Alberto Meomartini (chairman, re-elected by shareholders), Carlo Malacarne (CEO), and Giuseppe Airoldi, Davide Croff, Roberto Lonzar, Roberto Lugano, Massimo Mantovani, Massimo Mondazzi and Renato Santini (directors). Alberto Meomartini, Carlo Malacarne, Davide Croff, Massimo Mantovani, Massimo Mondazzi and Renato Santini were appointed from the list presented by the shareholder Eni S.p.A. The list specifically stated that Davide Croff and Renato Santini should meet the independence requirements set by the articles of association. Giuseppe Airoldi, Roberto Lonzar and Roberto Lugano were appointed from the list presented by the shareholder ARCA SGR S.p.A.

The board of directors will stand down at the shareholders’ meeting which approves the financial statements at 31 December 2009. At its meeting of 8 May 2007, the board conferred the necessary powers on the chairman who, in addition to the activities envisaged in the applicable laws and articles of association, shall oversee the internal audit. They also re-elected Carlo Malacarne as CEO, granting him the powers to manage the company, except for those that by law cannot be delegated and those reserved for the board. On 8 May 2006, the board named Francesco Iovane as chief operating officer, giving him the necessary operational authority. Pursuant to article 23 of the articles of association, the chairman and CEO are the legal representatives of the company.

The directors and statutory auditors must disclose to the other directors and to the board of statutory auditors any interests they may have in a specific company transaction either directly or on behalf of third parties. The profile of each director can be found on the company’s website. Except for the chairman and CEO, all board members are non-executive directors, and some are independent as well, in order to ensure that they can influence board decisions in terms of their number and authority. The presence of independent directors both on the board of directors and on related internal committees also ensures adequate protection of shareholders’ interests.

The independence and reputation of directors and the absence of any grounds for their ineligibility and incompatibility are assessed after they have been appointed and at least once a year by the board of directors, based on information provided both by themselves and available to the company by other means. At its meeting of 10 February 2010, the board of directors noted that there were no grounds for incompatibility or ineligibility of directors and found that members of the board of directors, the chief operating officer and the chief financial officer satisfied the integrity criteria for members of supervisory bodies laid down by the Ministry of Justice in its Decree no. 162 of 30 March 2000. (see the forthcoming “Chief financial officer” section).

The same meeting also noted that the non-executive directors Giuseppe Airoldi, Davide Croff, Roberto Lonzar, Roberto Lugano and Renato Santini satisfied the independence requirements set by current legislation and the Code of Conduct. The board of statutory auditors has confirmed that the criteria and procedures adopted by the board of directors to evaluate the independence of its own members have been applied correctly. These directors are considered to be independent since, pursuant to article 3 of the Code of Conduct:

  • i) they do not control the company, either directly or indirectly, even via subsidiaries, trustees or nominees, and are not able to exercise significant influence over the company, nor have they entered into a shareholder agreement whereby one or more parties has control or significant influence over the company;
  • ii) they do not hold, nor did they hold in the previous three years, key positions with the company or in one of its strategically important subsidiaries or in joint ventures with the company or a company or body that, together with others via a shareholder agreement, controls the company or is able to exercise significant influence over same;
  • iii) directly or indirectly (e.g. via a subsidiary or company in which they hold a key position or as partners in a professional firm or consultancy), they do not have, and did not have in the previous year, a significant commercial, financial or professional relationship:
    • − with the company, one of its subsidiaries or any of their officers;
    • − with a party that, even together with others as a party to a shareholder agreement, controls the company, or in the case of companies and bodies, with their officers; and are not, and were not in the previous three years, employees of one of said companies;
  • iv) do not receive and have not received in the previous three years, from the company or from one of its subsidiaries or parents, significant additional remuneration other than the “fixed” fees for non-executive directors of the company, including participation in performance-related incentives and share-based schemes;
  • v) have not been directors of the company for more than nine of the last 12 years;
  • vi) do not hold executive directorships in another company in which an executive director of this company also holds a directorship;
  • vii)are not shareholders or directors of a company or body belonging to the independent audit group engaged to audit the company’s financial statements;
  • viii) are not close family members of a person in one of the situations described above.

Moreover, in accordance with article 147-ter of Legislative Decree no. 58 of 24 February 1998, the directors meet the independence requirements established for statutory auditors by article 148.3 of the same decree. The independent directors will assess the expediency of calling meetings only of independent directors.

The board of directors has issued the following guidelines on multiple appointments: a) an executive director may not hold: i) the position of executive director in another listed company, whether Italian or foreign, or in a financial, banking or insurance company or a company with equity of more than €1 billion, or ii) the position of non-executive director or statutory auditor (or member of another supervisory body) in more than three of such companies; b) a non-executive director, even if independent, other than the post held with the company, should not hold: i) the position of executive director in more than two listed companies, whether Italian or foreign, or in a financial, banking or insurance company or a company with equity of more than €1 billion, or the position of non-executive director or statutory auditor (or member of another supervisory body) in more than five of such companies, or ii) a non-executive director or statutory auditor (or member of another supervisory body) in more than eight of such companies. If these limits are exceeded, directors shall immediately inform the board, which shall assess the situation from the company’s point of view and require the director in question to abide by its decision.

For directorships or auditorships held by directors in other companies listed on Italian or foreign regulated markets, or in financial companies, banks, insurance companies or companies with equity of more than €1 billion, the following was noted:

Director
Appointments held
Company
Davide Croff Chairman of the board of directors Permasteelisa S.p.A.
Roberto Lonzar Regular auditor
Regular auditor
Chairman of the board of statutory auditors
Chairman of the board of statutory auditors
Director

Member of the supervisory board
La Venezia Assicurazioni S.p.A.
TBS Group S.p.A.
Genertel S.p.A.

Simgenia SIM S.p.A.

Finanziara Internazionale Alternative Investment SGR S.p.A.
Generali Investment S.p.A.
Roberto Lugano Director Aeffe S.p.A.
Renato Santini Director
Regular auditor
Regular auditor
PBF S.r.l.
Marazzi Group S.p.A.
Perennius Capital Partners SGR

At its meeting of 10 February 2010, the board of directors verified that the number of directorships or auditorships held by the directors in the above companies was compatible with the effective performance of their duties as directors of Snam Rete Gas S.p.A. It also established the procedures for calling meetings. Board meetings are called by the chairman, who discloses the business on the agenda in a notice sent at least five days before the date on which the meeting is scheduled to take place, or at least 48 hours before urgent meetings and at least 24 hours before extremely urgent meetings. The directors and statutory auditors must be sent the documents and information necessary for them to be able to make informed decisions about the matters presented for their approval at meetings with adequate notice.

The board of directors met 11 times during 2009. On average 82.83% of directors attended, with around 90.91% on average of independent directors present.