3.1 Compensation Committee

(i) Composition

The composition of the Compensation Committee is as follows:

The Board of Directors identified the Chairwoman (Monica de Virgiliis) as the board member with sufficient knowledge and experience of financial matters or remuneration policies.

Compensation Committee meetings are valid with the presence of at least the majority of the members; the Committee adopts decisions with an absolute majority of the attendees. In the event of a tie, the Chairperson has the casting vote.

Committee meetings may be attended by the Chairperson of the Board of Statutory Auditors or by a standing auditor designated by the latter. At the invitation by the Committee Chairperson, other parties may attend the meetings to provide information and express an opinion on agenda items.

(ii) Duties

The Compensation Committee provides recommendations and advice, as described in the Regulations most recently approved by the Board of Directors on 11 May 2016, to the Board of Directors on directors’ remuneration.

Pursuant to the Board of Directors’ decision, the Compensation Committee annually reviews the remuneration structure of the Internal Auditor and ensures that it is consistent with the general criteria approved by the Board of Directors for all managers, indicating the above to the Chairperson of the Control, Risk and the Related-Party Transactions Committee for the purposes of the opinion which he must express on this matter at the Board of Directors’ meeting. Please also see Section III, Point 3.3.

For a detailed description of the duties of the Compensation Committee, please see Annex 5 to this Report.

(iii) Activities

In 2016 the Compensation Committee met ten times, with an average attendance of 100% of its members and an average duration of 83.7 minutes.

Below is a brief description of the main issues dealt with by the Compensation Committee during the 2016 financial year:

• Review of the implementation of policies defined in 2015 for the remuneration of the Chief Executive Officer and other managers with strategic responsibilities
• Examination of the criteria used to define the draft policy guidelines for 2016 for non-executive directors, the CEO and other managers with strategic responsibilities, taking into account the outcomes of the assessment of the policies implemented in 2015
• Verification of the results achieved in relation to the corporate objectives set out in the 2015 performance plans approved by the Board of Directors on 24 February 2015
• Examination of the information relating to the corporate objectives set out in Snam’s 2016 performance plans, for the purposes of annual monetary incentive plans
• Verification of the EBITDA generated in 2015 and the targets for EBITDA in 2016, for the purposes of implementing the deferred monetary incentive plan, and adjusted net profit for 2016, TSR for 2016 and the 2016 adjusted net profit target for the purposes of implementing the long-term monetary incentive plan
• Verification of the proposal to the Board of Directors for variable remuneration to be paid to the CEO in 2016, determined based on Snam’s 2015 results
• Examination of the remuneration of non-executive directors for participation in the Board Committees, of the Chairperson of the Board of Directors and of the Chief Executive Officer and formulation of a proposal regarding the remuneration of non-executive directors for participation in the Board Committees, the Chairperson of the Board of Directors and the CEO
• Analysis of the results of the vote of the Shareholders’ Meeting on the 2016 Remuneration Report, and began an in-depth examination of the issues raised by shareholders and proxy advisors
• Formulation of a remuneration proposal for the role of Senior Vice President Internal Audit

At the Board of Directors’ meetings of 26 July 2016 and 6 March 2017, the Committee reported on its work in the first and second halves of 2016, respectively. At the subsequent Board meeting, it reported on each Committee meeting since 11 May 2016, when the Regulations pursuant to Criterion 4.C.1, letter d) of the Code of Corporate Governance were amended.

Seven Committee meetings are scheduled for 2017; as at the Report approval date, five have been held.

Pursuant to the Regulations, the directors refrain from attending Committee meetings during which proposals are prepared concerning their remuneration.

During 2016, the Chairperson of the Board of Statutory Auditors regularly attended Committee meetings and, upon invitation by the Committee, other non-Committee members also attended to provide information and express an opinion on individual agenda items.

According to the Compensation Committee Regulations, the Board of Directors provides the Committee with the necessary resources to perform its duties; particularly, within the terms from time to time established by the Board of Directors, the Compensation Committee may turn to external consultants through the Company’s structure, provided that the external consultants’ position is not likely to compromise their independent judgement.

The Committee made use of external consultants, some of whom also carry out activities (which do not compromise their independent judgement) for the Human Resources and Organisation business area.

Table 1 in Section IV provides information about the attendance of each participant in Compensation Committee meetings.