3.1 Remuneration Committee
The Remuneration Committee provides consultative and advisory functions to the Board of Directors with regard to the remuneration of directors, and 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 Chief Executive Officer, are permanent members of the Company’s Executive 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 envisaged by law;
- it examines the contents of the vote on Remuneration Report expressed by the Shareholders’ Meeting and issues an opinion to be submitted to the Board of Directors;
- it makes proposals concerning the remuneration of the Chairman and the Chief Executive Officer in terms of the various forms of compensation and pay arrangements;
- it makes proposals concerning the remuneration of members of the Board Committees;
- it examines information reported by the Chief Executive Officer and proposes:
– the general criteria for the remuneration of managers with strategic responsibilities;
– annual and long-term incentive plans, including share-based plans;
– general guidelines for the remuneration of other managers of Snam and its Controlled Companies;
- it proposes the determination of performance objectives and final calculations of company results connected with the implementation of incentive plans and the determination of the variable remuneration of executive directors;
- it monitors the application of decisions adopted by the Board;
- it periodically evaluates the adequacy, overall consistency and practical application of the policy adopted, as described in letter 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 it carries out at least every six months, and within the deadline for approving the financial statements and the half-year report, at the Board meeting indicated by the Chairman of the Board;
- 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 Remuneration 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.
The composition of the Remuneration 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.
In 2013 the Remuneration Committee met six times, with an average attendance of 94% of its members. The average duration of Committee meetings was 87 minutes.
Below is a brief description of the main issues dealt with by the Remuneration Committee during the 2013 financial year:
- it examined the implementation of the policies defined in 2012 for the remuneration of the Chief Executive Officer and other managers with strategic responsibilities, deeming them to be coherent with the Company’s governance model and adequate in terms of overall positioning and pay mix. It also examined the logic and criteria used to define the draft policy guidelines for 2013 for non-executive directors, the Chief Executive Officer and other managers with strategic responsibilities, taking into account the outcomes of the assessment of the policies implemented in 2012;
- it checked the results achieved in relation to the corporate objectives set out in the 2012 performance plans approved by the Board of Directors on 12 March 2012 and examined the information relating to the corporate objectives set out in the 2013 performance plans, for the purposes of annual monetary incentive plans. It also checked the 2012 EBITDA results and 2013 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 Chief Executive Officer in 2013, determined based on Snam’s 2012 results;
- it examined the Chief Executive Officer’s remuneration in light of national market references for similar positions at an equivalent level, and consequently proposed to the Board of Directors that his fixed remuneration be adjusted;
- it analysed the positioning of the non-executive directors’ remuneration and the results of the Shareholders’ Meeting vote on the 2013 Remuneration Report, beginning an in-depth examination of the matters of interest to shareholders and proxy advisors, as well as the performance indicators to be used for variable incentive plans;
- it examined the content of the exit agreements in place for the Chief Executive Officer;
- it reviewed the text of the Committee Regulations, comparing them with the remuneration committee regulations adopted by Italy’s biggest listed companies, with the support of the competent company departments. Having completed this analysis, although the Committee confirmed that the Regulations were in line with the best practices adopted by other Italian listed companies, it deemed it necessary to make a number of improvements, which it submitted for the approval of the Board of Directors.
The Committee reported to the Board of Directors, at the Board meetings of 30 July 2013 and 27 February 2014, on the activities it carried out in the first and second halves of 2013 respectively.
The Committee has scheduled four meetings for 2014. As at the Report approval date, the first meeting has already taken place.
Pursuant to the Regulations governing the Board of Directors, the directors refrain from attending Committee meetings during which proposals are formulated concerning the directors’ remuneration.
In 2013, the Chairman of the Board of Statutory Auditors regularly attended Committee meetings, and on invitation of the Committee also external parties (no members of the Committee) attended the meeting in order to provide information and explanations.
The Committee has made use of external consultants, some of whom are also conducting activities (which do not compromise their independent judgement) for the structures of the Human Resources and Security department.
Pursuant to the Regulations governing the Remuneration Committee, the Board of Directors gives the Committee the necessary resources to fulfil its duties within the budget limits approved by the Board, and the Committee may, within the same limits, make use of external consultants, through Company structures, provided said consultants are not in a situation that could compromise their independence of judgement.