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Remuneration policy of Senior Executives and key managers with strategic responsibilities

03/29/2018 - 02:00 PM

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Executive Directors - Chairman

Below is a description of the compensation package decided by the Board of Directors (at the proposal and with the approval of the Nomination and Remuneration Committee) on 27 July 2017, when conferring the role of Executive Chairman on Arnaud Roy de Puyfontaine.

  • Fixed component
    The remuneration for acting as Chairman is set at the gross sum of 900,000 euros per annum. The Chairman does not receive any remuneration for the office of Director or his membership of the Strategy Committee (pursuant to Art. 2389, subsection I of the Italian Civil Code).
  • Short term variable component (MBO)
    For each year of service, the short term variable component is correlated with the achievement of the targets set annually by the Board of Directors, in the target amount (100%) of 900,000 euros gross; a parametrised scale is applied that awards a bonus of 50% of the target amount if the minimum level is achieved, up to a bonus equal to 150% of the target amount if the maximum level is achieved.
    Each target is measured individually, so different combinations of the levels of achievement of the targets are possible; the linear interpolation mechanism will be used to assess these levels.

On 6 march 2018 the Board of Directors decided on the following incentive targets for the 2018 MBO, as proposed by the Nomination and Remuneration Committee and in line with the overall architecture of the plan:

Objectives

Weight Min vs Tgt Tgt

Max vs Tgt

TIM Group EBITDA (GATE)

40% -5% Bdg +5%

TIM Group Service Revenues

20% -2% Bdg

+2%

TIM Group Adj. Net Financial Position

20% +2% Bdg -2%

Assessment of efficiency in managing BoD
The evaluation will be edited by the Board of Directors

 

20%

Partially acted           
 
Completely acted

Acted beyond expectations

For 2018 the gate objective is confirmed. Achievement of this objective at the minimum level constitutes the condition to access all the bonus objectives, with the consequence that non-achievement would mean that the bonus could not be paid.
The clause to claw back the sums paid out may be activated in the three years following payment of the bonus, as set out in the policy.

  • Severance
    No specific severance treatment has been agreed.
  • Benefits
    The Chairman has the benefits prescribed for the senior management of the Company (work-related and non-work-related accident, life and sickness invalidity insurance cover, company car for mixed use, checkup). The Company is also covered by a "professional risks policy” for all Directors & Officers.

Executive Directors - Chief Executive Officer

The compensation package decided by the Board of Directors (at the proposal and with the approval of the Nomination and Remuneration Committee) on 28 September 2017, when conferring the role of Chief Executive Officer on Amos Genish is described below.

  • Fixed component

Gross annual fixed remuneration

An annual gross sum of €1,000,000 euros has been set for the management employment, with the duties of General Manager.

Fixed remuneration (pursuant to article 2389 subsection I of the Italian Civil Code)

The remuneration for acting as Chief Executive Officer is set at the gross sum of 400,000 euros per annum. The Chief Executive Officer does not receive remuneration for the office of Director or for his membership of the Strategy Committee (pursuant to Art. 2389, subsection 1 of the Italian Civil Code).

 

  • Short term variable component

    For each year of service correlated with the achievement of the targets set annually by the Board of Directors, in the target amount (100%) of 1,400,000 euros gross; a parametrised scale will be applied that awards a bonus of 50% of the target amount if the minimum level is achieved, up to a bonus equal to 150% of the target amount if the maximum level is achieved.
    Each target is measured individually, so different combinations of the levels of achievement of the targets are possible; the linear interpolation mechanism will be used to assess these levels.

 

On 6 march 2018 the Board of Directors decided on the following incentive targets for the 2018 MBO, as proposed by the Nomination and Remuneration Committee and in line with the overall architecture (of the plan):

Objectives

Weight Min vs Tgt Tgt

Max vs Tgt

TIM Group EBITDA (GATE)

30% -5% Bdg +5%
Operating Free Cash Flow 30% -5% Bdg +5%

TIM Group Service Revenues

15% -2% Bdg

+2%

TIM Group Net Financial Position

15% +2% Bdg -2%


Customer Satisfaction Index

1.Consumer 60%
2.Enterprise 20%
3.Vertical Large&Med. Enterprise 20%

 

 

10%

-2,4%
-3,2%
     -1,7%            
 
target of each segment

+1,5%
+2,8%
+0,9%

For 2018, the gate objective is confirmed. Achievement of this objective at the minimum level constitutes the condition to access all the bonus objectives, with the consequence that non-achievement would mean that the bonus could not be paid.
The clause to claw back the sums paid out may be activated in the three years following payment of the bonus, as set out in the policy.
In case of early termination, the company remuneration policies shall apply.
It remains understood that, for 2017, the Bonus will be temporarily reproportioned pro-rata, based on the number of complete months worked.

 

  • Long term variable component

At the Shareholders' Meeting held on 24 April 2018, it is proposed to reserve the First Tranche of the Long Term Incentive Plan 2018 to the Chief Executive Officer, for which service no. 30,000,000 ordinary TIM shares.

 

  • Severance pay

As per policy, in the event of termination of the office of Director without just cause, compensation is provided equal to the remuneration due up to the natural expiry of the mandate, with a maximum of 24 months. The same limit applies to the termination from the employment contract.
In case of early termination of the employment and administration role, company policy prescribes a severance payment of up to a maximum of 24 months’ salary, considering both the fixed gross annual remuneration and the average of the amounts received or accrued as MBO during the mandate.

 

  • Benefits

In relation to the managerial role, the Chief Executive Officer enjoys the benefits specified for the management of the Company (health insurance cover through the Telecom Italia Group Executive supplementary healthcare assistance; supplementary pension cover through membership of the Telecom Italia Group Executive complementary pension fund; work-related and non-work-related accident, life and invalidity due to illness insurance cover; a company car for mixed use; check-ups, sustaining removal costs for transfer to Italy. The Company is also covered by a "professional risks policy” for all Directors & Officers .
In relation to the office of Director, the Company has undertaken to pay the Chief Executive Officer with effect from the 1° August 2018 a gross annual amount of 400,000 euros as an 'expat' package to cover expenses for family’s relocation (housing, school education for children, transport and travel) with settlement split over time.

Executive Directors - Deputy Chairman

In addition to the remuneration as Member of the Board and Chair of the Strategic Committee, for the Vice Chairman Giuseppe Recchi are currently recognised:
- an additional fee of 45.000 euros gross per year for the office
- with effect from 28 September 2017, an additional fee of 10,000 euros gross per month
In relation to the assigned powers, the Deputy Chairman also accesses the standard benefits recognized by the company's Top Management.

Key Managers with Strategic Responsibilities, namely those persons having authority and responsibility for planning, directing and controlling the activities of the Telecom Italia Group, directly or indirectly, including directors, are at present identified as follows:

Directors:
Arnaud Roy de Puyfontaine Executive Chairman of Telecom Italia S.p.A.(1)
Giuseppe Recchi Executive Chairman of Telecom Italia S.p.A.(2)
Executive Deputy Chairman (3)
Amos Genish Managing Director and Chief Executive Officer di Telecom Italia S.p.A.(3)
General Manager (3)

(*)Executives:

Stefano De Angelis

Chief Executive Officer TIM Brasil

Stefano Azzi

Head of Consumer & Small Enterprise (4)

Stefano Ciurli

Head of Wholesale  (4)   

Giovanni Ferigo

Head of  Technology (4)

Lorenzo Forina

Head of  Business & Top Clients (4)

Cristoforo Morandini

Head of Regulatory Affairs and Equivalence (4)

Mario Di Mauro

Head of Strategy, Innovation & Quality (5)

Michel Sibony

Head of  Procurement Unit & Real Estate (5)

Agostino Nuzzolo Head of Legal, Regulatory and Tax (6)
Head of Human Resources & Organizational Development (7)
Riccardo Meloni Head of Human Resources & Organizational Development (8)

Piergiorgio Peluso

Head of Administration, Finance and Control

Stefano Siragusa

Chief TIM Infrastructures Office (9)

(1 ) from 01 June 2017;

(2) until 31 May 2017;

(3) from 28 September 2017;

(4)  Amounts until 5 March 2018;

(5)  from 6 March 2018;

(6)  from 6 March 2018; until 5 March 2018 Head of Legal Affairs;

(7)  until 15 March 2018 the responsibility of Human Resources & Organizational Development department was assigned temporary to Mr. Nuzzolo;

(8)  from 16 March 2018;

(9)  from 12 March 2018;

 

 

 

The structuring of the remuneration package for 2018 for Key Managers with Strategic Responsibilities, excluding the Chairman and the Chief Executive officer, is described below:

 

  • Fixed component

The strategy for 2018 is basically to maintain remuneration in line with the market, while providing for selective criteria for alignment of the fixed remuneration.

 

  • Short Term Variable Remuneration component (MBO)

The 2018 incentive plan is linked to the achievement of a combination of predefined targets:

  1. company targets generally of an economic and financial nature;
  2. departmental targets related to the specific activities of the Department;
  3. individual targets, contained in Performance Management.

 

The division of the corporate and departmental targets varies according to the organisational structure to which they belong, as described in the table:

Structures

Targets

Weight

COMMERCIAL + OPERATIONS Structures

GROUP/COMPANY

40%

DEPARTMENTAL 40%
PERFORMANCE MANAGEMENT 20%

STAFF structures

GROUP/COMPANY

50%

DEPARTMENTAL 30%
PERFORMANCE MANAGEMENT 20%

For 2018 there will again be a gate objective that - at minimum level - constitutes the condition for accessing the entire bonus system.
The parametrised scale to reward the objectives, and the pay-out curve, are described below:

  • bonus of 0 for achievement levels below the minimum
  • bonus of 70% of the assigned target bonus for achievement values between the minimum and the target (70-100)
  • bonus of 100% of the assigned target bonus for achievement values equal to the target
  • bonus of between 100% and 140% of the assigned target for increasing achievement levels between the target and the maximum (linear scale)
  • bonus of 140% of the assigned target for values at or greater than the maximum target level.

The MBO system for Key Managers with Strategic Responsibilities provides an annual target bonus of up to a maximum of 50% of fixed remuneration.

The clause to claw back the sums paid out may be activated in the three years following payment, as set out in the specific company Regulations.

  •       Special Award

The 2016-2019 Special Award launched last year has been superseded; some of the Key Managers with Strategic Responsibilities are beneficiaries of the Special Award, as identified by the preceding Chief Executive Officer, Mr Cattaneo; they will receive the bonus accrued for 2016 - after the approval of the 2019 Financial Statements.
The Special Award is subject to a clawback clause. See page 10 for more details.

  •       Benefits

Benefits are granted similar to those provided for all other company managers: company car for mixed use, insurance policies (workplace accidents, life and invalidity caused by illness), complementary health insurance cover, complementary pension fund and check-ups.
The Company is also covered by a "professional risks policy” for all Directors & Officers

  •       Severance pay

Settlements applicable by virtue of legal provisions, national collective labour agreements and supplementary individual agreements, are specified (always excluding cases of dismissal with just cause).
Including any payment in lieu of notice, these payments may be equivalent to no more than 36 months of Total Remuneration (Gross Annual Remuneration + MBO).