Annex 3 – Board of Directors: appointment, term of office and functioning
1. Appointment of the Board of Directors
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, pursuant to 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 TUF68. The list voting mechanism applies only for the replacement of the entire Board of Directors. The Shareholders’ Meeting may change the number of members on the Board of Directors, including during its term of office, provided that it remains within the limit of a minimum of five and a maximum of nine, as set out in the Bylaws, making 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 submitted by shareholders that, 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. 19856 of 25 January 2017). Each shareholder may submit or be involved in the submission 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; and
- 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.
(ii) List voting mechanism
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 decimal;
- the remaining directors shall be taken from other lists that may not be associated in any way, including indirectly, with shareholders that submitted or voted for the list that obtained the highest number of votes; therefore, the votes obtained by said lists are divided successively by one, two or three, depending on the progressive 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 are 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;
- if, after applying 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 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 persons who meet the independence criteria and appointed pursuant to the procedure described under e). If candidates taken from different lists have obtained the same quotient, the candidate from the list from which the highest number of directors has been taken shall be replaced, or, if these numbers of directors are the same, 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 obtains the fewest votes in a dedicated resolution by the Shareholders’ Meeting shall be replaced;
- if the procedure described under 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 next highest order number) taken from the same list as the replaced candidate; otherwise, the candidate shall be replaced by the person appointed pursuant to the procedure described 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 obtains the fewest votes in a dedicated resolution by the Shareholders’ Meeting shall be replaced; and
- 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, shall remain applicable in any case.
2. 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 apply69. 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 to replace it.
Pursuant to Article 13.4 of the Bylaws, the Board shall evaluate, annually, the independence and integrity of the directors, as well as the lack of grounds for ineligibility and incompatibility70. 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.
3. Meetings of the Board of Directors
Pursuant to the Bylaws and the Regulations, the Board of Directors is convened by the Chairperson or, if he/she is absent or unable to do so, by the CEO, or, finally, if he/she is absent or unable to do so, by the eldest Board member.
At the beginning of each Board meeting, directors and statutory auditors are required to inform the Board of Directors and the Board of Statutory Auditors of any interest that they have, either on their own behalf or on behalf of third parties, in a given Company transaction.
Sufficient time is dedicated to each agenda item to hold a constructive debate, and the Chairperson encourages all directors to make a proactive contribution.
The Board of Directors meets regularly, at least once every quarter, pursuant to the time limits set out by law.
68 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.
69 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 the condition that the majority of the directors have been appointed by the Shareholders’ Meeting.
70 The grounds for incompatibility include the provisions of Article 2, paragraph 2, letter c) of the Decree of the President of the Council of Ministers of 25 May 2012, which stipulate that members of administrative or supervisory bodies, as well as those that carry out managerial functions, may not be members of the management or control bodies, or hold senior management positions, at Eni S.p.A. and its subsidiaries, nor may they have any direct or indirect professional or financial relationship with said companies.