Other information

Treasury shares held by the company and subsidiaries

The treasury shares held by the company at 31 December 2011 are analysed in the table below:

At 31 December 2011 the total number of treasury shares held by the company was 192,553,051, each with a par value of €1, equal to 5.39% of the share capital having a total book value of €783 million. No share repurchase plans have been in place since 2008.

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 the ultimate parent Eni S.p.A.

Compensation paid to directors and statutory auditors, general managers and managers with strategic responsibilities, and investments held by each of these

Information on the compensation paid to directors and statutory auditors, general managers and managers with strategic responsibilities, and the investments held by each of these, can be found in the Remuneration Report, which is prepared in accordance with Article 123- ter of Legislative Decree no. 58/1998 (TUF) and approved by the Board of Directors on 12 March 2012. The Remuneration Report is available in the “Governance” section of the website http://www.snam.it.

Incentive plans for managers with Snam shares

As of 2009, Snam discontinued the managers’ incentive plan based on grants of stock options to managers of Snam and its subsidiaries pursuant to Article 2359 of the Italian Civil Code. The stock option plans for the preceding financial years are described below. At 31 December 2011, there were a total of 3,151,851 stock options for the purchase of 3,151,851 Snam ordinary shares at a par value of €1, fully exercisable.

Incentive plans 2002-2004 and 2005

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 by 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 pursuant to the last paragraph of Article 2441 of the Italian Civil Code and Article 134, paragraphs two and three of Legislative Decree no. 58/1998. These shares were offered for subscription to managers of Snam Rete Gas S.p.A. and its subsidiaries in the three-year period from 2002 to 2004 pursuant to Article 2359 of the Italian Civil Code. In their meeting of 27 April 2005 the shareholders authorised the repurchase of 800,000 treasury shares (0.04% of share capital) to service the 2005 stock option plan. The transaction was concluded on 28 July 2005.

In accordance with the powers assigned to it by the Shareholders’ Meeting, the Board of Directors decided that the options for the 2002-2004 and 2005 plans may be exercised three years after assignment (the ‘vesting period’) and over five years. 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.

The grants made between 2002 and 2005 and the related number of options in existence at 31 December 2011 are summarised as follows:

Incentive plans 2006-2008

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 shares on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A., within 18 months of the date of the resolution, and for up to a maximum of €800 million³⁰.

In their meeting of 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 stock option plans to be offered in three annual grants during 2006, 2007 and 2008, respectively.

Unlike the earlier plans, exercise of the options for the 2006-2008 stock option 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 stock 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 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.

On 29 July 2009, the Board of Directors updated the 2006-2008 stock option plan as a consequence of the paid share capital increase decided by the Extraordinary Shareholders’ Meeting of 17 March 2009 and completed on 8 June 2009. In line with the provisions of the Regulations for implementing the Plan, the change made regards the technical adjustment of the strike price and the integration of the number of options assigned to the recipients of the Plan, whose actual assignation is subject to the achievement of the required performance goals.

The grants made between 2006 and 2008 (as amended) and the related number of options in existence at 31 December 2011 are summarised as follows:

Relationships with related parties

Transactions carried out during the financial year by Snam and by companies within its scope of consolidation with related parties mainly involve the exchange of goods, the provision of services, and the provision and utilisation of financial resources, including the arrangement of derivative contracts to hedge interest rate risk with the ultimate parent Eni S.p.A. and its subsidiaries, as well as with Enel, a state-controlled company, and its subsidiaries.

These transactions are part of ordinary business activities and are generally settled at market conditions, i.e. the conditions which would be applied for two independent parties. All the transactions carried out were in the interest of the companies of the Snam group.

Pursuant to the provisions of the relevant legislation, the company has adopted internal procedures to ensure that transactions carried out by Snam or its subsidiaries with related parties are transparent and correct in their substance and procedure³¹.

Directors and auditors declare their interests affecting the company and the group every six months, and/or when changes in said interests occur; they also inform the CEO (or the Chairman, in the case of the CEO), who in turns informs the other directors and the Board of Statutory Auditors, of individual transactions that the company intends to carry out and in which they have an interest.

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 36 to the consolidated financial statements and, with regard to the parent company Snam Rete Gas S.p.A., in Note 32 of the individual financial statements.

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

Snam 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 36, “Relationships with related parties” of the Notes to the consolidated financial statements and Note 32 of the individual financial statements, respectively.

Performance of subsidiaries

For performance information concerning the sectors in which the company operates wholly or in part through subsidiaries, please refer to the sections “Business segment operating performance” and “Comments on the Results” within this Report.

Branch offices

As required by Article 2428, paragraph 4 of the Italian Civil Code, it is noted that Snam does not have branch offices.

Research and Development

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

Significant events after the end of the fiscal year

Development initiatives in European gas infrastructure

In January 2012 Snam and Fluxys G signed an agreement for the evaluation of future joint strategies aimed at taking advantage of potential opportunities for development in the European gas sector. The agreement involves natural gas transportation, storage and regasification activities, through projects designed to strengthen the flexibility and safety of current European infrastructure supplies. The initiatives also involve two-way flows, in line with the recommendations and guidelines of the third EU Directive for an integrated gas market, as adopted by the European Parliament and the Council, in order to promote cross-border flows and connect the major gas exchange infrastructures in north-western and southern Europe.

On 22 February 2012, Snam and Fluxys G entered into a joint agreement to purchase the following investments from Eni: (i) 16.41% of Interconnector (UK) Ltd, the owner and operator of the underwater pipeline between the United Kingdom (Bacton) and Belgium (Zeebrugge), enabling a strategic bi-directional connection between the United Kingdom and Europe’s biggest gas trading markets; (ii) 51% of Interconnector Zeebrugge Terminal SCRL, which includes the terminal and the compression plants that connect the Interconnector pipeline with the Belgian gas transportation system; (iii) 10% of Huberator S.A., a subsidiary of Fluxys G that operates the gas trading hub in Zeebrugge. The transaction involves the two purchasers acquiring the aforesaid investments in equal shares, for a total consideration of €150 million.

The transaction is expected to be completed by the second half of 2012, subject to the authorisation of the competent authorities.