3.1 Compensation Committee
The Compensation Committee provides consultative and advisory functions, as described in the Regulations most recently approved by the Board of Directors on 30 October 2014, in respect of the Board of Directors with regard to the remuneration of directors. In particular:
- it submits the Remuneration Report and, in particular, the remuneration policy for directors and managers with strategic responsibilities (managers of Snam who, during the course of the financial year and together with the CEO, are permanent members of the Company’s Steerimg Committee), to the Board of Directors, for its presentation to the Shareholders’ Meeting convened for the approval of the separate financial statements for the year, under the terms provided for by law;
- it reviews the vote on the Remuneration Report taken by the Shareholders’ Meeting in the previous financial year and expresses an opinion to the Board of Directors;
- it prepares proposals regarding the remuneration of the Chairman and the Chief Executive Officer, with regard to the various forms of compensation and economic treatment;
- it makes proposals concerning the remuneration of members of the Board Committees;
- it examines information reported by the Chief Executive Officer and proposes:
a. the general criteria for the remuneration of managers with strategic responsibilities;
b. annual and long-term incentive plans, including share-based plans;
c. general guidelines for the remuneration of other managers of Snam and its Subsidiaries;
- it proposes the definition of performance targets, the aggregation of company results, the definition of clawback clauses related to the implementation of incentive plans, and the determination of the variable remuneration of directors with powers;
- it proposes the definition, relation to directors with powers, of: i) indemnification to be paid in the event of termination of the employment contract; ii) non-compete agreements;
- it monitors the application of decisions made by the Board;
- it periodically evaluates the adequacy, overall consistency and practical application of the policy adopted, as described under a) above, by formulating proposals on this subject to the Board;
- it performs any duties that may be required by the procedure concerning related-party transactions carried out by the Company;
- it reports to the Board on the activities carried out, at least every six months and before the deadline for approval of the financial statements and the half-yearly report, at the Board meeting indicated by the Chairman of the Board of Directors;
- it reports on the exercising of its functions to the Shareholders’ Meeting convened to approve the separate financial statements for the year, through the Chairman of the Committee or another member appointed by the latter.
In accordance with the Board’s decision, the Compensation Committee annually reviews the remuneration structure of the Internal Auditor and ensures that it is consistent with the general criteria approved by the Board for all managers, and must indicate the above to the Chairman of the Control and Risk Committee for the purposes of the opinion which he must express on this matter at the Board meeting. See also Section III, Paragraph 3.3.
The composition of the Compensation Committee is as follows:
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Independent non-executive director(1) - Chairman
Independent non-executive director(1)
The Board of Directors has verified that at least one member has sufficient knowledge and experience of financial matters or remuneration policies.
The Committee meetings are deemed valid with the presence of at least the majority of the members in office; the Committee makes decisions by an absolute majority of the attendees. In the event of a tie, the Chairman of the Committee has the casting vote.
Committee meetings may be attended by the Chairman of the Board of Statutory Auditors or by a standing auditor designated by the latter. Meetings may also be attended by other parties, upon invitation by the Committee Chairman, in order to provide information and express an opinion on individual agenda items.
In 2014 the Compensation Committee met 6 times, with an average attendance of 100% of its members. The average duration of Committee meetings was 130.5 minutes.
Below is a brief description of the main issues dealt with by the Compensation Committee during the 2014 financial year:
- it examined the implementation of the policies defined in 2013 for the remuneration of the CEO and other managers with strategic responsibilities, deeming them to be consistent with the Company’s governance model and adequate in terms of overall positioning and pay mix. It also examined the rationales and criteria used to define the draft policy guidelines for 2014 for non-executive directors, the CEO and other managers with strategic responsibilities, taking into account the outcomes of the assessment of the policies implemented in 2013;
- it checked the results achieved in relation to the corporate objectives set out in the 2013 performance plans approved by the Board of Directors on 27 February 2013 and examined the information relating to the corporate objectives set out in the 2014 performance plans, for the purposes of annual monetary incentive plans. It also checked the 2013 EBITDA results and 2014 EBITDA target for the purposes of implementing the deferred monetary incentive plan;
- it checked and proposed to the Board of Directors the variable remuneration to be paid to the CEO in 2014, determined based on Snam’s 2013 results;
- it examined the remuneration of the CEO in light of national market benchmarks for similar positions at an equivalent level;
- it analysed the positioning of non-executive directors’ remuneration and the results of the vote of the Shareholders’ Meeting on the 2014 Remuneration Report, and began an in-depth examination of the issues raised by shareholders and proxy advisors;
- it drew up and proposed to the Board a number of amendments to the performance indicators relating to the variable incentive systems;
- it defined clawback clauses relating to the variable incentive tools in place and proposed their introduction to the Board;
- it proposed to the Board that its Regulations be updated in light of the revision of the Code of Corporate Governance in July 2014.
The Committee reported to the Board of Directors, at the Board meetings of 29 July 2014 and 11 March 2015, on the activities it carried out in the first and second halves of 2014 respectively.
The Committee has scheduled five meetings for 2015. As at the Report approval date, three meetings have been held.
Pursuant to the Regulations the directors refrain from attending Committee meetings during which proposals are formulated concerning the directors’ remuneration.
During 2014, the Chairman of the Board of Statutory Auditors regularly attended Committee meetings and, upon invitation by the Committee, other non-Committee members also attended in order to provide information and express an opinion on individual agenda items.
According to the Compensation Committee Regulations, the Board of Directors provides the Committee with the necessary resources to perform its duties, and the Committee may, through the Company’s structures, make use of external consultants, provided their situation is not likely to compromise their independent judgement.
The Committee made use of external consultants, some of whom also carry out activities (which do not compromise their independent judgement) for the Human Resources & Security Department. To that end, meetings were organised between said consultants and the Committee in order to examine the methodologies and rationales used by the consultancy firms in carrying out their analyses and work to support the Committee’s activities.
The Regulations are available on the Company’s website ().