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Remuneration Policies

03/30/2018 - 11:45 AM

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The Group remuneration policy is established in such a way as to guarantee the necessary levels of competitiveness of the Company on the employment market. Competitiveness translates into supporting the strategic objectives, pursuing sustainable results in the long-term, ensuring the engagement with people, safeguarding internal fairness principles, and seeking to safeguard coherence at Group level, while taking into account the diversity of the reference markets. The result is a remuneration structure that seeks to guarantee the correct balance between fixed and variable components, both short and long-term, alongside benefit and welfare systems with total rewarding in mind. In 2017, the company turnaround process and the need to guarantee an economically sustainable corporate management brought about the need for a strict, selective remuneration policy.
In brief, the remuneration policy structure is essentially based on the following components:
•          fixed remuneration;
•          variable remuneration;
•          benefit and welfare.
 
More specifically, the fixed component reflects the breadth and strategic nature of the position held and is dictated by performance in the reference markets.
The short-term variable remuneration (MBO) on the other hand aims to establish a transparent link between pay and the degree of fulfilment of annual targets. To this end, the targets were fixed according to qualitative and quantitative indicators that represent and are consistent with the strategic priorities and business plan, measured according to pre-established and objective criteria. In 2017, as in 2016, the management incentives structure was simplified by reducing the number of objectives.
In 2017, the gate – the Group's Ebitda objective - constituted a condition for access to the bonus associated with all incentivised objectives, with an amended mechanism for application compared to 2016: the level to be reached to receive the bonus is the Target level equal to the budget value. In 2016, the Group’s EBITDA objective was a condition of access to the bonus associated with the Company’s objectives and the level to reach was minimal. The objectives are Group, departmental and individual objectives, with different weights for each corporate department. The Performance Management objective, which was also provided for in 2017 for all MBO beneficiaries (excluding the Executive Directors), with a relative weight set at 30%, is based on the overall result of the assessment, which considers both individual targets and leadership model-related behaviours, in equal measures.
A contractual clawback mechanism is in force, which allows retrieval of the variable remuneration paid out to Executive Directors and managers with strategic responsibilities starting from 2016. As defined in the policy, the clawback clause can be triggered in the three years following payment of the sums. The long-term variable component is aimed at promoting consistency between the interests of management and those of shareholders, through sharing of the business risk; the start of a new Long-term Plan for the 2017-2019 three-year period was considered upon termination of the 2014-2016 Stock Option Plan. For reasons of expediency and economic sustainability, the launch of a new Long-term plan was postponed until 2018.
In light of the termination of the employment contract of Mr Cattaneo, the 2016-2019 Special Award, which was introduced when he joined the Company, should be considered extinguished. In keeping with the Special Award regulations, the other beneficiaries were chosen by the CEO from the managers who, in his opinion, contributed to the achievement of “over-performance”; following approval of the financial statements for 2019 they will receive only the sum accrued in 2016 (80% in shares and 20% in cash).
No Long-Term Incentive (LTI) Plan has been pre-established by contract for the new CEO Amos Genish. Mr Genish shall therefore take part in the LTI plans under the terms and conditions to be approved for the Company’s management by the Company’s competent bodies. In particular, a Performance Share Plan was made available for the three-year period 2018-2020 - with a three-year vesting period and two-year lock up period. This Plan is reserved to the Chief Executive Officer and owners of managerial positions with a major impact on company results. The Plan is subject to the achievement of the performance condition linked to the increase in both the share value and economic and financial indicators. The LTI Plan is subject to the claw back clause. Its approval is expected at the BoD and Shareholders’ Meeting on 24 April 2018.
With a view to establishing a total compensation system, the conventional monetary tools have been joined by non-monetary ones including benefits, by extending some of them to everyone in the company.
Benefits and welfare generate a separate economic value from the other forms of remuneration. These resources, services and performance systems are aimed at improving the welfare of individuals and their families from an economic and social perspective.

 

Reference stakeholders Targets subject to incentives % of managers
(to whom the target applies)
Customers Customer satisfaction 25%
Quality of the service delivered 21%
Quality of the service perceived by consumer and business customers 27%
Quality of the service perceived by other national fixed and mobile telephony operators 16%
Human Resources Health and safety of employees

 

 

4%

Programmes of training and professional growth
Welfare activities (People Caring) and the wellbeing of employees
The Environment Consumption of materials, energy 1%
Shareholders and Institutions Quality and speed of company information delivery 3%
The Community Organisation of corporate events

 

2%

Quality of corporate initiatives/projects