Letter from the Chairman of the Remuneration Committee

Dear Shareholders,

As Chairman of Snam’s Remuneration Committee, comprising directors Pia Saraceno, Andrea Novelli and myself, I am happy to present the Remuneration Report, which, since 2012, has been published annually by Snam and submitted to the vote of the Ordinary Shareholders’ Meeting with the aim of providing shareholders and investors with maximum transparency in terms of the quality of the Company’s remuneration systems.

The commitment of the Remuneration Committee is to propose to the Board of Directors the adjustments to be made to Snam’s remuneration system in order to ensure, firstly, that is always in line with international best practices and with national and European legislation, and secondly to support and encourage the development of the Company in a manner consistent with its Strategic Plan.

With this aim in mind, in 2014 the Remuneration Committee focused on performance indicators used in the variable incentive systems of Snam’s management. The overall proposal, which was prepared by the Committee and approved by the Board of Directors, is based on the objective of making the relationship between Snam’s strategic goals and variable incentive systems even closer by further aligning management’s interest in creating value for shareholders over the medium and long term.

An example of this is the proposal to introduce the Total Shareholder Return, which is widely used in international practice, as the performance indicator of the Long-Term Incentive Plan, which will be submitted to the Shareholders’ Meeting for approval. Furthermore, the investment, operational and financial efficiency and sustainability targets serve as benchmarks for the variable incentive system through appropriate Key Performance Indicators that can be determined in advance and are measurable.

In recent years we have been constantly open to ways to make improvements in the Remuneration Policy and in the Report describing it with the desire to initiate transparent, constructive and regular discussions with all stakeholders.

This year, this ongoing discussion has also led to suggestions and ideas to improve the transparency and readability of the 2015 Report, which we have decided to incorporate by adding a new beginning section summarising the content of the Report, improving and expanding graphs and charts and inserting additional information on the Company’s performance.

Snam’s Remuneration Committee is therefore delivering the 2015 Remuneration Report to all stakeholders and the Shareholders’ Meeting, which is asked to cast a non-binding vote on the first section, with the hope that this edition will also fully explain and describe Snam’s remuneration system and its contribution to the creation of shared value, which is the Company’s ongoing goal.

Elisabetta Oliveri
Chairman of the Remuneration Committee