Roles and functions

ROLE AND FUNCTIONS

The board of directors is the central player in the company’s corporate governance system. In addition to those responsibilities that cannot be delegated by law, it:

  • a) sets strategies and objectives, including sustainability policies, after consulting the CEO, and reviews and approves the company’s strategic, business and financial plans as well as its strategic agreements;
  • b) reviews and approves the company and group budget;
  • c) examines the annual financial statements of subsidiaries;
  • d) reviews and approves the quarterly and half-yearly interim reports of the company and the consolidated interim reports required under current legislation, and reviews and approves the sustainability report;
  • e) defines the corporate governance system and rules. In particular, after consulting the internal audit committee, it adopts rules to ensure the transparency and substantial and procedural correctness of transactions with related parties and transactions involving a director, either directly or through a nominee, as well as a procedure to manage and disclose company information, especially privileged information;
  • f) sets up internal committees which advise and assist the board of directors, appointing members, establishing their duties and ratifying the rules of procedure;
  • g) receives information every six months from these internal committees;
  • h) monitors the company’s performance, particularly by taking into consideration information received from the chairman, CEO and audit committee, paying particular attention to any conflicts of interest and periodically comparing actual and forecast figures (from the financial statements and interim reports);
  • i) grants and revokes proxies to the chairman and CEO, setting a limit on such proxies and deciding how they may be exercised. It establishes their remuneration for the proxies after consulting the relevant committee and board of statutory auditors. It may issue instructions to the relevant bodies and suggest transactions covered by the proxies. The chairman and CEO report to the board of directors and to the board of statutory auditors at least once a quarter on their activities and the key transactions performed by the company and its subsidiaries which affect the company’s financial position, cash flow and results of operations. They also report on atypical and/or unusual transactions and related party transactions. Information is made available promptly when the directors have a direct interest in the transaction, when third parties are involved or when the transaction could be affected by the company which manages and coordinates Snam Rete Gas;
  • j) on the recommendation of the CEO, it adopts decisions concerning:
    • – acquisitions, disposals, sales and contributions of companies or business units (including rent and usufruct), investments and properties worth more than €2.5 million;
    • – contracts for the sale of goods and/or services used for commercial and administration purposes by the company for amounts greater than €1 billion and/or for a term of more than 15 years;
    • – contracts for the purchase and sale and exchange of chattels, including those listed in public registers, contracts for the purchase of advertising space and time, rental agreements and leases, contracts for intellectual property services, service agreements, charter agreements, transport and delivery contracts, tenders, insurance contracts as the insured party, brokerage and representation agreements, mandates, commission agreements, agency agreements, sales concessions, storage agreements, subcontracts, agreements relating to use on a free–loan basis, publishing and printing contracts, usufruct, user and residential agreements, purchase and sale contracts, hire, leases and rental agreements for hardware and software and computer systems for amounts greater than €50 million and/or for a term of more than 15 years;
    • – as the lessee in property finance leases for amounts greater than €2.5 million and/or for a term of more than 15 years and chattels, including those listed in public registers in Italy and elsewhere, for amounts greater than €50 million and/or for a term of more than 15 years;
    • – granting of loans to non–Eni group companies;
    • – sureties and other forms of personal guarantee, in addition to letters of patronage, in relation to commitments assumed or to be assumed by companies in which the company directly or indirectly holds an investment of more than €30 million and in any event if the amount is not proportional to the investment held therein;
    • – sureties given to guarantee commitments assumed or to be assumed by the company with third parties, for more than €30 million;
  • k) appoints and dismisses the general managers after consulting the CEO and chairman, granting them the related powers;
  • l) appoints and dismisses the chief financial officer after consulting the CEO and chairman and obtaining approval from the board of statutory auditors, granting him the necessary powers and resources;
  • m)appoints and dismisses the internal auditor after consulting the CEO and audit committee, setting his compensation in line with the company’s compensation policy;
  • n) ensures that an investor relations manager has been appointed;
  • o) defines the criteria for compensation of senior executives after reviewing the proposals made by the relevant committee, implements compensation plans based on shares or securities approved by shareholders;
  • p) defines the basic guidelines of the organisational, administrative and accounting structure of the company and its subsidiaries, and assesses the adequacy of the organisational, administrative and accounting structure as drawn up by the CEO, particularly with regard to how conflicts of interest are handled;
  • q) after examining proposals made by the audit committee, it sets the guidelines for the audit system so as to ensure the identification, measurement, management and monitoring of the key risks of the company and its subsidiaries, and performs an annual review of the adequacy, efficiency and effectiveness of the audit system under the supervision of the CEO;
  • r) adopts decisions concerning the exercise of voting rights at meetings of shareholders of its subsidiaries and the appointment of members of subsidiaries’ internal bodies, based on the CEO’s proposals;
  • s) draws up draft resolutions to be submitted to shareholders at meetings;
  • t) reviews and deliberates on other issues that executive directors wish to draw to the attention of the board to, when such issues are of particular importance and sensitivity.

The articles of association also give the board of directors the authority to adopt decisions on proposals concerning:

  • – mergers in the cases referred to in articles 2505 and 2505-bis of the Italian Civil Code, in addition to demergers in the cases envisaged by the same articles;
  • – the opening, modification and closure of branch offices;
  • – the reduction in share capital when a shareholder retires;
  • – compliance between the articles of association and statutory provisions;
  • – the transfer of the registered office within Italy.

The board of directors, at the meeting of 23 March 2009, also resolved to grant the Independent Operator34 the following powers:

  • – to represent the functionally separate business in dealings with third parties;
  • – to draw up a proposal for an annual and long-term development plan for the key transmission, dispatching and regasification infrastructure;
  • – to manage staff assigned to the functionally separate business;
  • – to authorise spending commitments for decisions relating to unscheduled work in connection with the functionally separate business in view of the objective requirements and degree of urgency;
  • – to decide how commercially sensitive information is handled and accessed;
  • – to appoint proxies to exercise the aforementioned powers.

The board of directors has since resolved to integrate its own powers in order to approve the following, subject to the mandatory opinion of the CEO, as the organisational structure of the Independent Operator:

  • – the annual and long-term development plan for transmission, dispatching and regasification infrastructure;
  • – the definition of the organisational structure for the functionally separate business;
  • – the purchasing procedures for goods and services by Eni S.p.A. companies to ensure that there are no restrictions on such purchases;
  • – arrangements for the handling of commercially sensitive information and access to this;
  • – related party transactions in accordance with the legislative provisions applicable to the company.

At its meeting of 10 March 2010, the board of directors verified the adequacy of the organisational, administrative and accounting structure of Snam Rete Gas S.p.A., as well as of Italgas S.p.A and Stogit S.p.A, two strategically important subsidiaries.

During 2009, the board of directors reviewed the size, composition and functioning of the board itself and its committees in accordance with the provisions of the Code of Conduct. It also engaged the services of Egon Zehnder International, an independent consultant specialising in this area.

The review process essentially consisted of:

  • – individual discussion with each director based on a questionnaire;
  • – analysis of the points raised and comments made and the drafting of a report for the board;
  • – board discussion of the key results and subsequent follow- up.

The results of the Egon Zehnder International survey led to the following assessment.

“In our opinion, based on the assessment carried out, the board of Snam Rete Gas has proven standards of excellence.

It is ideally placed to exemplify best practice in terms of corporate governance:

  • – as a company with solid results;
  • – with a regulated business suited to corporate governance of the highest standard;
  • – as part of a ‘rich’ and coherent group of independents under solid management.”

The board of directors, at its meeting of 23 March 2009, confirmed the results published by Egon Zehnder International, expressing praise for the size, composition and operation of the board and its committees.

(34) Appointed in accordance with guidelines issued by the Italian energy regulator (AEEG) on functional separation as per the Unbundling Act referred to in resolution no. 11/2007, as subsequently amended.