2.4 Appointment, composition and term of office
Appointment
Article 13 of the Bylaws provides for a list voting mechanism for the appointment of the Board of Directors, which should be structured in such a way as to permit the presence on the Board of directors appointed by minority shareholders, as well as compliance with the criteria of gender representation, in accordance with the provisions of Article 147-ter of the TUF. Specifically, the Bylaws state, with greater strictness than is required by Article 147-ter, paragraph 4 of the TUF, that at least one director, if the Board is made up of no more than seven members, or at least three directors, if the Board is made up of more than seven members, must meet the independence criteria set forth in the TUF8.
The list voting mechanism applies only for the replacement of the entire Board of Directors. Even during its term of office, the Shareholders’ Meeting may change the number of members on the Board of Directors, provided it is within the limit of a minimum of five and a maximum of nine, as set forth in the Bylaws, and shall make the relevant appointments. The term of office of directors thus elected shall expire with those in office.
Candidates meeting the independence requirements must be specifically identified on the lists. All candidates must also meet the integrity requirements provided for by applicable legislation.
Lists may be presented by shareholders who, either alone or together with other shareholders, represent the minimum percentage calculated pursuant to the regulations in force (equivalent to 1% of the share capital, as provided for by Consob Resolution No. 18775 of 29 January 2014). Each shareholder may present or be involved in the presentation of only one list, and may vote for one list only.
Seven tenths of the directors to be elected shall be taken from the list receiving the majority of the shareholders’ votes in the consecutive order in which the candidates appear on the list, rounding down to the nearest whole number if the number is a decimal. The remaining directors shall be taken from the other lists, which may not be associated in any way, even indirectly, with shareholders who have submitted or voted for the list which came in first in number of votes.
Lists are filed at the registered office by the twenty-fifth (25th) day prior to the date of the Shareholders’ Meeting called to resolve on the appointment of the members of the Board of Directors and made available to the public by the methods provided for by law and by the Issuer Regulations at least twenty-one (21) days prior to the date of the Shareholders’ Meeting. In addition to the lists, the following documents must also be submitted:
- a CV for each candidate;
- statements from the candidates in which they accept their candidacy and declare, assuming full responsibility, that there are no grounds for ineligibility or incompatibility, and that they satisfy all applicable integrity and independence requirements. Appointed directors must inform the Company if they cease to meet the independence and integrity requirements or if any grounds for ineligibility or incompatibility occur.
List voting mechanism for the election of directors
Below is a description of the procedures for appointing members of the Board of Directors through the list voting mechanism pursuant to Article 13 of the Bylaws:
- seven tenths of the directors to be elected are taken from the list receiving the majority of the shareholders’ votes in the consecutive order in which they appear on the list, rounding down to the nearest whole number, if the number is a fraction;
- the remaining directors shall be taken from the other lists, which may not be associated in any way, even indirectly, with shareholders who have submitted or voted for the list which came in first in number of votes; for that purpose, the votes won by said lists shall be divided successively by one, two or three, depending on the consecutive number of directors to be elected. The quotients thus obtained shall be assigned progressively to candidates from each of these lists, according to the order shown in them. The quotients thus assigned to candidates from the different lists shall be arranged in a single decreasing gradation. Those obtaining the highest quotients shall be elected. If several candidates obtain the same quotient, the candidate from the list which has not yet elected any director or that has elected the smallest number of directors will be elected. If none of these lists has yet elected a director or if all have elected the same number of directors, the candidate from the list obtaining the greatest number of votes shall be elected. If the voting on lists is tied and the quotient is also tied, a new vote by the entire Shareholders’ Meeting shall be held, and the candidate winning a simple majority of votes shall be elected;
- if, after following the procedure described above, the minimum number of independent directors required by the Bylaws is not elected, the quotient of votes to be attributed to each candidate taken from the lists is calculated by dividing the number of votes for each list by the order number of each of these candidates; non-independent candidates with the lowest quotients among the candidates taken from all the lists shall be replaced, starting from the very lowest, by the independent candidates taken from the same list as the candidate being replaced (following the order in which they are listed); otherwise, they shall be replaced by people who meet the independence criteria and are appointed in accordance with the procedure mentioned in letter e). Where candidates from different lists have obtained the same quotient, the candidate from the list from which the greater number of directors has been taken shall be replaced, or, if this is not applicable, the candidate taken from the list with the fewest votes shall be replaced, or, if the number of votes is the same, the candidate who receives the fewest votes in a dedicated vote by the Shareholders’ Meeting shall be replaced;
- if the procedure described in letters a) and b) above does not make it possible to comply with the law on gender representation, the quotient of votes to be attributed to each candidate taken from the lists shall be calculated by dividing the number of votes for each list by the order number of each of these candidates; the candidate of the most represented gender with the lowest quotient among the candidates taken from all the lists shall be replaced, in compliance with the minimum number of independent directors, by the candidate of the least represented gender (with the highest consecutive number) taken from the same list as the replaced candidate; otherwise, the candidate shall be replaced by the person appointed in accordance with the procedure mentioned in letter e). Where candidates from different lists have obtained the same minimum quotient, the candidate from the list from which the greater number of directors has been taken shall be replaced, or, if this is not applicable, the candidate taken from the list with the fewest votes shall be replaced, or, if the number of votes is the same, the candidate who receives the fewest votes in a dedicated vote by the Shareholders’ Meeting shall be replaced;
- for the appointment of directors not appointed for any reason by the above procedures, the Shareholders’ Meeting shall decide by statutory majority so as to ensure that the composition of the Board of Directors is consistent both with the law and with the Bylaws.
Additional binding legal and regulatory provisions remain unchanged.
Composition
The Shareholders’ Meeting held on 26 March 2013 set the number of directors at nine and their term of office at three financial years, terminating on the date of the Shareholders’ Meeting called to approve the separate financial statements as at 31 December 2015.
The table below lists the current members of the Board of Directors, showing the lists from which they were elected and the directors who were expressly indicated on the list as meeting the independence requirements pursuant to the TUF and the Code of Corporate Governance.
| Download XLS (23 kB) |
|
Director |
Position |
List from which he/she was appointed |
||
|
||||
|
Lorenzo Bini Smaghi |
Non-executive director and Chairman |
CDP Reti S.r.l. |
||
|
Carlo Malacarne |
Chief Executive Officer |
CDP Reti S.r.l. |
||
|
Sabrina Bruno |
Non-executive director (1) |
List presented jointly by minority shareholders |
||
|
Alberto Clô |
Non-executive director (1) |
CDP Reti S.r.l. |
||
|
Francesco Gori |
Non-executive director (1) |
List presented jointly by minority shareholders |
||
|
Roberta Melfa |
Non-executive director |
CDP Reti S.r.l. |
||
|
Andrea Novelli |
Non-executive director |
CDP Reti S.r.l. |
||
|
Elisabetta Oliveri |
Non-executive director (1) |
List presented jointly by minority shareholders |
||
|
Pia Saraceno |
Non-executive director (1) |
CDP Reti S.r.l. |
||
During 2013, the number of female directors increased. The number of females currently on the Board is four (out of nine members), higher than the minimum number required by the regulations currently in force on gender representation.
Further information on the lists of candidates submitted and the results of voting at the Shareholders’ Meeting of 26 March 2013 can be found on the Company’s website (http://www.snam.it/en/Governance/Social_bodies/shareholders_meeting/Minutes_documents.html). For details on the appointment and term-end dates of the directors, see Annex 1 to the Report.
At its meeting on 26 March 2013, the Board of Directors confirmed Marco Reggiani, General Counsel - Legal and Corporate and Compliance Affairs, in the role of Secretary of the Board.
Term of office, termination and forfeiture
Directors may be appointed for a period not exceeding three financial years, and their term expires on the date of the Shareholders’ Meeting called to approve the financial statements for the last year of their term of office; they may be re-elected.
If, during the financial year, the office of one or more directors should be vacated, the provisions of law shall apply9. If the majority of the directors should vacate their offices, the entire Board shall be understood to have resigned, and a Shareholders’ Meeting must be called without delay by the Board of Directors in order to replace it.
The Board periodically assesses the independence and integrity of the directors, as well as whether there are grounds for ineligibility or incompatibility. If one of the directors does not fulfil or no longer fulfils the established independence or integrity requirements imposed by law, or if there are grounds for ineligibility or incompatibility, the Board will dismiss the director and arrange for him to be replaced, or will ask that the grounds of incompatibility be removed within an established period of time, otherwise he must forfeit the post.
At its meeting on 27 February 2014, the Board of Directors confirmed (i) that there are no grounds for ineligibility, forfeiture or incompatibility in relation to the directors, and that they meet the integrity requirements pursuant to the applicable regulations; and (ii) that, based on the declaration made by the Executive Responsible for preparing corporate accounting documents, there are no grounds for the latter’s incompatibility pursuant to the Bylaws, and that the Executive Responsible for preparing corporate accounting documents meets the integrity requirements set forth by the applicable regulations10.
Independent directors
Except for the Chief Executive Officer, the Board of Directors is made up of non-executive members, a number of whom are independent, to ensure by both number and authority that their opinion can have a bearing on board decisions. Of the nine directors, five are independent. The presence of independent directors on both the Board of Directors and its Committees ensures that the interests of all shareholders are adequately protected.
The Board meetings of 26 March 2013 and 27 February 2014 also confirmed that non-executive directors Sabrina Bruno, Alberto Clô, Francesco Gori, Elisabetta Oliveri and Pia Saraceno meet the independence requirements set forth by the TUF and the Code of Corporate Governance11. On 23 April 2013, when the new Board of Directors was appointed, the Board of Statutory Auditors verified that the criteria and the procedures adopted by the Board of Directors in order to determine whether the directors met the independence requirements were correctly applied. During the first half of 2014, the Board of Statutory Auditors will carry out its annual check on the correct application of the criteria and the procedures adopted by the Board of Directors in order to determine whether the directors meet the independence requirements. The independent directors met in December 2013, without the other directors.
Maximum accumulation of offices held at other companies
At its meeting of 27 February 2014, the Board of Directors, based on proposals of the Appointments Committee, issued the following directives and expressed the following position on the accumulation of offices held by directors12:
- an executive director should not hold: (i) the office of executive director at another listed Italian or foreign company, or in a financial, banking, or insurance company or any other company with shareholders’ equity in excess of € 1 billion; (ii) the office of non-executive director or statutory auditor (or member of another control body) at more than three of the companies listed below (i). Furthermore, in the case of the Chief Executive Officer may not assume the office of director of another issuer not belonging to the same group whose Chief Executive Officer is a director of the Company;
- a non-executive director (including independent non-executive directors) should not, in addition to the position held at the Company, hold: (i) the office of executive director at more than two listed Italian or foreign companies, or financial, banking or insurance companies or any other companies with shareholders’ equity in excess of € 1 billion and the office of non-executive director or statutory auditor (or member of another control body) at more than five of the companies mentioned; or (ii) the office of non-executive director or statutory auditor (or member of another control body) at more than eight of the companies listed below (i).
For the purposes of calculating the maximum number of offices, positions held within the Snam Group and on Snam Committees are not relevant.
If the maximum limit on important positions held is exceeded, the directors must promptly inform the Board of Directors, which shall evaluate the situation in light of the Company’s interest and ask the director to comply with its decisions on the matter. Based on the declarations made by the directors, the following table lists the other important positions held by directors of the Company pursuant to the Code of Corporate Governance and the relevant recommendations issued by the Board of Directors.
| Download XLS (23 kB) |
|
Director |
Other important positions held |
|
Lorenzo Bini Smaghi |
Director of Morgan Stanley International |
|
Sabrina Bruno |
Director of Banca Profilo S.p.A. |
|
Alberto Clô |
Director of De Longhi S.p.A. |
|
Elisabetta Oliveri |
Director of Gruppo L’Espresso S.p.A. |
|
Andrea Novelli |
Financial Controller of the Supervisory Board of STMicroelectronics N.V. |
At its meeting on 27 February 2014, the Board of Directors confirmed that (i) except for the Chief Executive Officer, the directors hold a non-executive role; (ii) the Chief Executive Officer holds no other positions outside of the Snam Group13; (iii) the number of important positions held by the directors pursuant to the Code of Corporate Governance and the relevant recommendations issued by the Board is compatible with the effective performance of the role of director at Snam.
Lead Independent Director
Snam has not appointed a lead independent director due to the absence of the prerequisites set forth in criterion 2.C.3 of the Code of Corporate Governance and considering that the Chairman of the Board of Directors does not hold the office of Chief Executive Officer and does not hold a controlling stake in the Company. Furthermore, the appointment of a lead independent director was not requested by the independent directors.
8 Or, pursuant to Article 147-ter, paragraph 4 of the TUF, the independence criteria required for statutory auditors pursuant to Article 148, paragraph 3 of the TUF.
9 Pursuant to Article 2386 of the Italian Civil Code, if, during the financial year, the office of one or more directors should be vacated, the other directors will replace the director(s) in question by means of a resolution to be approved by the Board of Statutory Auditors, on condition that the majority of the directors have been appointed by the Shareholders’ Meeting.
10 Article 147-quinquies of the TUF stipulates that “parties that perform management functions must meet the integrity requirements set forth for members of control bodies by the regulations issued by the Ministry of Justice pursuant to Article 148, paragraph 4” of the TUF. These requirements were set forth by Article 2 of Decree No. 162 of the Ministry of Justice of 2000 (“Regulations containing rules for setting the professionalism and integrity requirements for members of the board of statutory auditors of listed companies to be issued based on Article 148 of Legislative Decree No. 58 of 24 February 1998”).
11 In relation to independence requirements for directors, criterion 3.C.1 of the Code of Corporate Governance states that: “[...]a director does not appear independent, as a rule, in the following cases, which are not to be considered exhaustive:
a. if he, directly or indirectly, including through subsidiaries, trust companies or an intermediary, controls the issuer or is capable of exercising significant influence over it, or is a party to a shareholder agreement whereby one or more parties may exercise control or significant influence over the issuer;
b. if he is, or has been in the previous three financial years, an important agent of the issuer, of one of its strategically important subsidiaries or of a company subject to common control with the issuer, or of a company or entity which, including with others through a shareholder agreement, controls the issuer or is capable of exercising significant influence over it;
c. if he has, or has had in the previous financial year, either directly or indirectly (for example through subsidiaries or companies of which he is an important agent, or in the capacity of partner of a professional law firm or consultancy company), a significant commercial, financial or professional relationship:
- with the issuer, one of its subsidiaries, or any of their respective important agents;
- with a party that, including together with others through a shareholder agreement, controls the issuer, or – in the case of companies or entities – with their respective important agents, or he is, or in the previous three financial years has been, an employee of one of the aforesaid parties;
d. if he receives, or in the previous three financial years has received, significant remuneration from the issuer or a subsidiary or parent in addition to the “fixed” salary as a non-executive director of the issuer, and in addition to the compensation for participation on committees recommended by this Code, including in the form of participation in share-based plans or other incentive plans associated with company performance;
e. if he has been a director of the issuer for more than nine of the last 12 years;
f. if he holds the office of executive director at another company in which an executive director of the issuer holds the office of director;
g. if he is a shareholder or director of a company or entity belonging to the network of the company engaged to audit the issuer;
h. if he is a close family relation of a person who is in any situation described in one of the previous items.
The subsequent article, criterion 3.C.2, states that “For the purposes of the foregoing, “important agents” of a company or entity refer to: the entity’s chairman the chairman of the board of directors, executive directors and managers with strategic responsibilities at the company or entity in question”.
12 Criterion 1.C.2 of the Code of Corporate Governance states that “Directors shall accept the office when they believe that they can devote the time necessary to the diligent performance of their duties, taking into account the commitment involved in their work and professional activities and the number of offices as director or statutory auditor held by them in other companies listed on regulated markets (including foreign markets), or in financial, banking, insurance or other large-sized companies. Based on the information received from the directors, the board must gather and publish each year in the report on corporate governance the offices as director or statutory auditor held by the directors in the aforesaid companies”. Criterion 1.C.3 of the Code of Corporate Governance states that “The board shall issue a recommendation with regard to the maximum number of offices as director or statutory auditor of the companies referred to in the previous paragraph that may be considered compatible with the effective performance of the role of director of the issuer, taking into account the directors’ membership of the board’s internal committees. For that purpose, it shall identify different general criteria depending on the commitment to each role (for executive, non-executive and independent directors), and the nature and size of the companies in which the offices are held, as well as whether they belong to the issuer’s group”.
13 According to criterion 1:C.2 of the Code of Corporate Governance.