Pirelli & C.

View your recently saved pages:
View all pages (0)

8. Remuneration committee

8.1 Composition

The Board established the “Remuneration Committee”, a subcommittee from among its members, charged with fact-finding, advising and recommending functions, in the year 2000.

Going beyond the recommendations of the Self-Regulatory Code52, the members of the Remuneration Committee appointed by the Board of Directors in its meeting on 29 April 2008, (directors Berardino Libonati, Alberto Bombassei and Giampiero Pesenti) and in its meeting on 29 July 2009 effective from 1 September 2009 (director Umberto Paolucci), are all independent directors.

As a result, at the Date of the Report, the Remuneration Committee is composed as follows53:

  • Berardino Libonati (Chairman);
  • Alberto Bombassei;
  • Giampiero Pesenti;
  • Umberto Paolucci.

The Secretary to the Board of Directors, Anna Chiara Svelto, acts as Secretary to the Committee.

8.2 Tasks assigned to the Committee

In line with the recommendations of the Self-Regulatory Code, the Board of Directors confirmed the fact-finding and advisory role of the Remuneration Committee.

Specifically, the Remuneration Committee:

  • formulates proposals to the Board for the remuneration of the managing directors and those persons who hold certain offices to ensure that their remuneration is aligned with the objective of shareholder value creation in the medium-long term;
  • periodically evaluates the remuneration criteria for the top management of the Company and, as requested by the managing directors, formulates proposals and recommendations, with specific reference to the adoption of possible stock option plans or stock bonuses;
  • monitors the application of the decisions made by the competent bodies and of the company policies regarding the remuneration of top management.

8.3 Operation

The Committee – which may also request the assistance of external consultants in fulfilling its mandate – meets whenever its Chairman deems it appropriate or when a meeting has been requested by another member of the committee or by a Managing Director.

The whole Board of Statutory Auditor54 and, if deemed appropriate and at the invitation of the Committee, other Company and/or Group representatives, as well as representatives of the External Auditors attend the meetings of the Committee.

In line with the recommendations of the Self Regulatory Code55 and with best practice, directors vested with special offices do not attend Remuneration Committee meetings.

The information and documents available and required for informed deliberation of the topics submitted to the committee have always been circulated to all members reasonably in advance.

The meetings of the Remuneration Committee are regularly minuted by the secretary and the minutes are transcribed into a specific register56.

The Committee also has the right57 to access company departments and information as necessary for the execution of the tasks assigned to it, making use of the support of the Secretary of the Board of Directors.

The Committee has adequate financial resources for the performance of its duties with independent expenses.

8.4 Activity during the financial year.

During 2009 the Remuneration Committee met twice: all its members attended and the meetings lasted on average one hour.

During the financial year, the Committee examined – and formulated its proposals to the Board – the fixed and variable remuneration package of the Chairman, and evaluated those of managers with strategic responsibilities, and specifically, of the General Director, Tyre and Parts, and of the Assistant to the Chairman and Group General Counsel, approving the criteria used to determine them. Making use of leading consultancies in the field of executive compensation, the Committee developed its analyses by benchmarking comparable jobs, and analysing by grade, independently of the specific offices held. The analysis was developed taking data published by Italian and International Groups considered comparable in terms of organisational structure and/or industrial sector and/or capitalisation into account.

The Committee noted that for 2008 no incentive policy was applied, and that there was an international block on pay policy in 2009. These actions resulted in an average fall of approximately 20% in total manager remuneration.

The Committee evaluated in advance a new incentive plan for about 80 senior managers, subsequently approved by the Board of Directors58.

The Committee also examined and proposed to the Board its determinations concerning the termination by agreement of the management employment contract of the Chief Operating Officer, Mr. De Conto, who as Director of Finance, has concentrated his activities on Pirelli RE.

During 2010, to the date of this Report, the Committee has met once, approving the budget for the annual variable remuneration of the Chairman and managers with strategic responsibilities in the business for the results achieved in the 2009 financial year. The Board approved the proposals submitted by the Committee in its meeting on 10 March 2010.

52 Self-Regulatory Code Principle 7.P.3, specifies that the remuneration committee should be composed exclusively of non-executive directors, most of whom should be independent.

53 See Table 4 for greater detail.

54 This circumstance characterises the corporate governance rules adopted by the Company, and offers the Board of Statutory Auditors, in its own interest, the possibility of directly following the activities of the Committees so as to more effectively execute the control function assigned to it.

55 Self Regulatory Code: Criterion of application 7.C.4..

56 Also in accordance with the recommendations of the Self Regulatory Code: Criterion of application 5.C.1, lett. d).

57 Also in line with the provisions of the Self Regulatory Code. Criterion of application 5.C.1, lett. e).

58 Please see the section entitled “Remuneration”.