2.6 Appointment, composition and term of office

(i) 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 of Directors appointed by minority shareholders on the Board of Directors, as well as compliance with the criteria of gender representation, in accordance with the provisions of Article 147-ter of the TUF. Furthermore, 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 out in the TUF³³.

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 out in the Bylaws, and makes the relevant appointments. The term of office of directors thus elected shall expire with those in office. Candidates meeting the independence requirements must be identified specifically 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 0.5% of the share capital, as provided for by Consob Resolution 19499 of 28 January 2016). Each shareholder may present or be involved in the presentation of only one list, and may vote for one list only.

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 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 arise.

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:

1. 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 decimal;
2. 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 therein. 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 that 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;
3. if the procedure described in letters a) and b) above does not allow for compliance 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, notwithstanding 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 under e). If candidates from different lists have obtained the same lowest quotient, the candidate from the list from which the greater number of directors has been taken shall be replaced, or 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 resolution by the Shareholders’ Meeting shall be replaced;
4. if the procedure described in letters a) and b) above does not allow for compliance 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, notwithstanding 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 under e). If candidates from different lists have obtained the same lowest quotient, the candidate from the list from which the greater number of directors has been taken shall be replaced, or 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 resolution by the Shareholders’ Meeting shall be replaced;
5. for the appointment of directors not appointed for any reason by the above procedures, the Shareholders’ Meeting shall resolve by statutory majority to ensure that the composition of the Board of Directors is consistent both with the law and with the Bylaws.

Additional binding legal provisions, including regulatory rules, remain unchanged in any case.

(ii) 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 financial statements as at 31 December 2015.

Two lists for the appointment of directors were submitted at the Shareholders’ Meeting of 26 March 2013: one by CDP RETI (six candidates) and one submitted jointly by minority shareholders and institutional investors (three candidates). All the proposed candidates were appointed. The share capital represented at the Shareholders’ Meeting, all holders of which voted on the appointment of directors, accounted for 50.68% of the Company’s share capital. The list submitted by CDP RETI was voted for by 31.17% of the Shareholders present at the Meeting, while the list submitted jointly by minority shareholders received 19.13% of the votes.

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 Governance³⁴.

Women are currently the least-represented gender on the Board of Directors. Women on the Board are three out of nine members (one third of the total). The presence of the female members is in line with the limits laid down by the applicable regulations on gender balance³⁵.

At its meeting on 26 March 2013, the Board of Directors confirmed Marco Reggiani, Snam’s Director of Legal & Corporate Affairs and Compliance, in the role of Secretary of the Board.

(iii) Term of office, termination and forfeiture

Pursuant to Article 13.2 of the Bylaws, directors may be appointed for a period not exceeding three financial years, which term expires on the date of the Shareholders’ Meeting called to approve the financial statements for the last financial year of their term of office. They may be re-elected.

Pursuant to Article 13.8 of the Bylaws, if, during the financial year, the office of one or more directors should be vacated, the provisions of law shall apply³⁶. 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.

Pursuant to Article 13.4 of the Bylaws, the Board shall evaluate, on an annual basis, the independence and integrity of the directors, as well as the lack of grounds for ineligibility and incompatibility³⁷. 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 them to be replaced, or will ask that they either remove the grounds for incompatibility within an established period of time or forfeit the post.

At its meeting of 24 February 2016, the Board of Directors certified:

1. that there are no grounds for ineligibility, forfeiture or incompatibility in relation to the directors in office, and that they fulfil the integrity requirements provided for by the applicable regulations; and
2. that, in relation to the Executive Responsible for preparing corporate accounting documents and based on the declaration made by the latter, there are no grounds for incompatibility pursuant to Article 16.4 of the Bylaws and that he fulfils the integrity requirements laid down by the applicable regulations³⁸.