Other information

Treasury shares held by the company and subsidiaries

In accordance with the provisions of Article 40, paragraph 2, letter d) of Legislative Decree no. 127/91 and Article 2428, paragraph 3, points 3 and 4 of the Italian Civil Code, the treasury shares held by the company at 31 December 2010 are analysed in the table below:

Period Number of shares Average cost () Total cost (€ million) Share capital (%) (**)
Purchases
2005 800,000 4.399 3 0.04
2006 121,731,297 3.738 455 6.22
2007 73,006,653 4.607 336 3.73
195,537,950 4.061 794 -
Treasury stock allocated/sold to be deducted:
. assigned free of charge pursuant to 2005 stock grant plans (39,100)
. sold pursuant to 2005 stock option plans (69,000)
. sold pursuant to 2006 stock option plans (1,015,499)
. sold pursuant to 2007 stock option plans (229,700)
Treasury stock held at 31 December 2010 (*) 194,184,651

(*) For a book value of €789 million.
(**) The share capital is as at the date of last acquisition in the year.

It is also noted that: (i) the subsidiaries of Snam Rete Gas S.p.A do not hold, and have not been authorised by their shareholders to acquire, shares in Snam Rete Gas S.p.A; (ii) Snam Rete Gas S.p.A and its subsidiaries do not hold, and have not been authorised by their shareholders to acquire, shares in their ultimate parent Eni S.p.A.

Investments held by the directors and statutory auditors, general managers and key managers.

Pursuant to Article 79 of Consob Resolution no. 11971 of 14 May 1999 and subsequent amendments, the following table sets out the investments in Snam Rete Gas S.p.A. held by its directors, statutory auditors, general managers and other key managers, as well as their spouses who are not legally separated, and children below the age of majority, directly or via subsidiaries, trustees or nominees as per the Shareholder Register, communications received and other information acquired from them.

Persons who have held these positions, even for a portion of 2010, are included.

The number of shares is given for the directors, statutory auditors and general managers separately and, as a combined figure, for the other key managers. These persons hold the shares.

Name and surnameSubsidiary/
associate
Number of shares held at 31 December 2009Number of shares purchased Number of shares soldNumber of shares held at 31.12.2010
Board of Directors
Alberto Meomartini (a) Snam Rete Gas S.p.A. 4,213 4,213
Carlo Malacarne (b) Snam Rete Gas S.p.A. 123,238 64,500 187,738
Alessandro Bernini (c) Snam Rete Gas S.p.A. 23,000 23,000 (d)
Massimo Mondazzi (a) Snam Rete Gas S.p.A. 1,100 1,100
Board of Statutory Auditors
Giulio Gamba (c) Snam Rete Gas S.p.A. 2,101 2,101
Roberto Mazzei (c) Snam Rete Gas S.p.A. 10,000 10,000 (d)
Chief Operating Officer
Francesco Iovane (e) Snam Rete Gas S.p.A. 95,063 95,063
Other executives with strategic responsibilities (f) Snam Rete Gas S.p.A. 147,366 35,000 182,366 (g)

(a) In office until 27 April 2010.
(b) Appointed director by the shareholders’ meeting of 27 April 2006 and as Chief Executive Officer by the board of directors on 8 May 2006. Confirmed by the board of directors on 30 April 2010.
(c) Appointed by the shareholders’ meeting of 27 April 2010.
(d) Held entirely by spouse.
(e) Appointed as Chief Operating Officer by the board of directors on 8 May 2006.
(f) Managers who were on the company’s management board during the year, excluding directors and the Operations General Manager (six managers).
(g) 50,000 shares of which are held by their spouses.

The information required under the terms of Article 78 (“Amount of compensation for directors and statutory auditors, general managers and key managers”) of Consob Resolution no. 11971 of 14 May 1999 (as amended) may be found at Note 29 (“Compensation”) to the financial statement of Snam Rete Gas S.p.A.

Incentive plans for managers with Snam Rete Gas shares

In order to motivate and ensure the loyalty of managers, encourage them to get involved in implementing business strategies, assuming business risk and increasing value for the shareholders, the company has introduced long-term share-based payments as part of their remuneration. The plans are implemented through the allocation of stock options that either assign shares from new issues or treasury shares bought on the market.

Pursuant to Article 2359 of the Italian Civil Code, managers of Snam Rete Gas and its subsidiaries who have the greatest responsibility for results or occupy key positions are eligible for the plans.

The stock option plans are described below.

Incentive and loyalty plan for the three-year period from 2002 to 2004

In their meeting of 24 April 2002 and in accordance with Article 2443 of the Italian Civil Code, the shareholders authorised the board of directors to increase before 31 July 2004, in one or more instalments, the company’s share capital against payment up to a maximum of €2,000,000 (equal to roughly 0.1023% of the share capital) by issuing a maximum of 2,000,000 ordinary shares with a par value of €1 each and regular rights to dividends, excluding options as per the last paragraph of Article 2441 of the Italian Civil Code and Article 134, paragraphs two and three of Legislative Decree no. 58 of 24 February 1998. These shares were offered for subscription to managers of the company and its subsidiaries in the three-year period from 2002 to 2004 as per Article 2359 of the Italian Civil Code.

With respect to the 2002-2004 plan, the company’s board of directors resolved:

  • on 25 June 2002, to increase the share capital against consideration by a maximum of €608,500 for 2002 by issuing a maximum of 608,500 ordinary shares with a nominal value of €1 to be offered with options to the managers of Snam Rete Gas S.p.A. and its subsidiaries at a price of €2.977 (the average of the official prices on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A. in the month before the date of the resolution);
  • on 18 June 2003, to increase the share capital against consideration by a maximum of €640,500 for 2003 by issuing a maximum of 640,500 ordinary shares with a nominal value of €1 to be offered with options to the managers of Snam Rete Gas S.p.A. and its subsidiaries at a price of €3.246 (the average of the official prices on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A. in the month before the date of the resolution);
  • on 28 July 2004, to increase the share capital against consideration by a maximum of €677,000 for 2004 by issuing a maximum of 677,000 ordinary shares with a nominal value of €1 to be offered with options to the managers of Snam Rete Gas S.p.A. and its subsidiaries at a price of €3.53 (the average of the official prices on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A. in the month before the date of the resolution).

Incentive and loyalty plan for the year 2005

In their meeting of 27 April 2005 the shareholders authorised the repurchase of 800,000 treasury shares as part of the 2005 management incentive and loyalty plan. The transaction was concluded on 28 July 2005.

On the same date, the board of directors proceeded to assign the rights to the managers identified. A total of 658,000 stock options were assigned, at an exercise price of €4.399 per share.

The options may be exercised three years after assignment (‘the vesting period’) over five years for the 2002-2004 and 2005 plans. The options are personal, unavailable and non-transferable. Options not exercised by the established expiry date are forfeited and therefore do not give the beneficiary any rights.

In the cases of: (i) the mutual termination of the employment of the beneficiary; (ii) loss of control by Snam Rete Gas S.p.A. over the company in which the beneficiary works; (iii) sale to a third party of the company (or business unit) in which the beneficiary works; or (iv) death of the beneficiary, the beneficiary or their heirs maintain the right to exercise the options before 31 December of the year in which the vesting period ends. Should the employee or company unilaterally terminate the employment contract before the three years are up, the options are forfeited.

Incentive and loyalty plan for the three year period from 2006 to 2008

In their meeting of 10 November 2005 and in accordance with Article 2357 of the Italian Civil Code, the shareholders authorised the board of directors to repurchase a maximum of 194,737,950 ordinary Snam Rete Gas shares on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A., within 18 months of the date of the resolution, up to a maximum of €800 million28.

On 27 April 2006, the shareholders authorised the board of directors to make available a maximum of 9,000,000 treasury shares (equal to 0.46% of the share capital) for the stock option plans for 2006 to 2008.

The plan includes assigning three instalments of stock options in 2006, 2007 and 2008. Unlike the earlier plans, exercise of the options for the 2006-2008 plan is tied to the achievement of performance targets. At the end of each three-year vesting period, the board of directors decides the number of options which can be exercised using a scale of between zero and 100 per cent based on the average Total Shareholders’ Return (TSR) of the Snam Rete Gas share compared to that of the six main European utilities companies, listed and operating on regulated markets.

The options may be exercised three years after their assignment (vesting period) and for a maximum of three years. Options which have not been exercised six years after their grant date are forfeited and do not give the beneficiary any rights. In the cases of: (i) the mutual termination of the employment of the beneficiary; (ii) loss of control by Snam Rete Gas S.p.A. over the company in which the beneficiary works; (iii) sale of the company (or business unit) in which the beneficiary works to a third party; or (iv) death of the beneficiary, the beneficiary or their heirs maintain the right to exercise the option before 31 December of the year in which the vesting period ends in proportion to the period of time between assignment and the occurrence of these events. In the event that the employment contract is terminated unilaterally during the vesting period, the options are forfeited. If this event takes place during the exercise period, the options may be exercised within three months.

With respect to the 2006-2008 plan, the company’s board of directors resolved:

  • on 26 July 2006, to assign 2,597,500 stock options for 2006 for the purchase of an equal maximum number of Snam Rete Gas treasury shares at an exercise price of €3.542 per share;
  • on 24 July 2007, to assign 2,326,500 stock options for 2007 for the purchase of an equal maximum number of Snam Rete Gas treasury shares at an exercise price of €4.322 per share;
  • on 29 July 2008, to assign 2,235,000 stock options for 2008 for the purchase of an equal maximum number of Snam Rete Gas treasury shares at an exercise price of €4.222 per share.

The unit price is equal to the average of the official prices on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A. in the month preceding the grant date or, if greater, the average cost of the shares in the portfolio on the day before the grant date. On 29 July 2009 the board of directors updated the 2006-2008 stock option plan, which was approved by the shareholders on 27 April 2006 and submitted for implementation to the board of directors on the dates 26 July 2006 (Assignment 2006), 24 July 2007 (Assignment 2007) and 29 July 2008 (Assignment 2008).

In line with the provisions of the Regulations for implementing the Plan, the change made regards the technical adjustment of the exercise price (equal to €2.905, €3.545, and €3.463 for the 2006, 2007, and 2008 grants, respectively) and number of options assigned to the recipients of the Plan (336,075, 456,300, and 491.000 options for the 2006, 2007, and 2008 grants, respectively), whose actual assignation is subject to the achievement of the required performance goals, resulting from the paid share capital increase transaction passed by the shareholders in their extraordinary meeting of 17 March 2009 and concluded on 8 June 2009.

No new stock option plans were issued during 2010. At 31 December 2010, there are a total of 5,949,951 options in circulation, of which 3,407,251 can be exercised.

Transactions with related parties

The amounts involved in commercial, financial and other transactions with related parties, a description of the nature of the key transactions, and their effect on the balance sheet, income statement and cash flow statement are given in note 30 to the consolidated financial statements and, with regard to the parent company Snam Rete Gas S.p.A, in note 30 of the annual report.

Relationships with the ultimate parent and companies managed and coordinated by it

Snam Rete Gas S.p.A. is managed and coordinated by Eni S.p.A. Relationships with Eni S.p.A. and companies managed and coordinated by it are relationships with related parties and are disclosed in note 30 “Relationships with related parties” of the notes to the consolidated financial statement and the annual report.

Performance of subsidiaries

For performance information about the sectors in which the company operates wholly or in part through subsidiaries, please refer to the paragraphs “Business segment operating performance” and “Financial Review” within this Report.

Data protection code (Legislative Decree no 196 of 30 June 2003)

As controller for processing personal data for Snam Rete Gas, the Chief Executive Officer states that the Data protection code has been updated pursuant to Legislative Decree no. 196 of 30 June 2003.

Branch offices

As required by Article 2428-quinquies of the Italian Civil Code, it is noted that Snam Rete Gas S.p.A. does not have branch offices.

Research and Development

Research and development activities carried out by the Snam Rete Gas group are described by business segment in the section “Commitment to sustainable development”.

EU legislation in 2009

European Parliament and Council Directives 2009/72/EC and 2009/73/EC of 13 July 2009 (the “Third Energy Package”) introduced new provisions for operators on unbundling electricity transmission systems and natural gas transportation from other activities in the gas sector. Member states are required to adopt these provisions by 3 March 2011.

The European Union law (Law no. 96/10) which delegates responsibility for adopting the Third Energy Package to the government, in its guidelines for delegation, under Article 17, paragraph 4, letter h, provides for “ensuring the effective unbundling of transportation, balancing, distribution and storage services from other activities in the natural gas sector”.

One of the key elements of the Third Energy Package is the obligation on member states to adopt one of the following models for operating natural gas transportation networks (to ensure that the networks are independent from vertically integrated companies) 29:

  • Ownership Unbundling (“OU”), which requires that ownership of TSOs (Transmission System Operators) be separate from vertically integrated companies;
  • the creation of an Independent System Operator (“ISO”) to operate the network, or a third party whose ownership is separate from the company that owns the asset, which may remain integrated with the production and sale company (the “hands” and the “brains”);
  • the creation of an Independent Transmission Operator (“ITO”), which is owned by a vertically integrated company but ensures that the network is independent thanks to a special regulatory system.

Subsequent events

On 3 March 2011 the Council of Ministers approved the draft legislative decree which implements Directive 2009/73/EC. For more information, please refer to the paragraph “Adoption of EU Legislation” in the next chapter “Information on corporate governance and ownership structure”.

(28) The transaction was completed on 2 May 2007. The company repurchased 194,737,950 own shares for a total outlay of €791 million.
(29) A member state may decide not to select any of the above options (the “ITO Plus” option), provided it can prove that, as at 3 September 2009, a mechanism (regulatory system) was already in place which ensured greater independence for the transportation system operator from vertically integrated companies than the ITO option (however, the fulfilment of this condition must be verified by the Commission following the certification procedure).