Appointments and succession Commitee

Composition

The Board of Directors set up the Appointments and Succession Committee in the meeting held on April 21, 2011, and at the Date of the Report, the Committee is composed of 3 Board Members, the majority of whom are Independent Directors37 and in particular:

  • Marco Tronchetti Provera (Chairman);
  • Luigi Campiglio;
  • Luigi Roth.

It is important to note that compared to the Committee’s composition as at December 31, 2012, on May 10, 2013, Mr. Vittorio Malacalza resigned as a Committee member. The Senior Advisor Human Resources, Mr. Gustavo Bracco acts as the Committee’s Secretary.

Duties assigned to the Committee

When defining the duties of the Appointments and Succession Committee the Board of Directors assessed the increasing importance for Pirelli and the market of the Board’s direct involvement in defining the succession policies (i) not only and not just in relation to possible natural changes of the Executive Directors, for which however the decisions made by the shareholders assume a decisive role, but in general (ii) concerning the top and senior management to assure the necessary continuity of the management action.

Accordingly, the Committee:

  • proposes to the Board of Directors the candidates to be co-opted, if an Independent Director is to be substituted;
  • proposes the definition of “emergency” succession plans concerning the Company’s top management by identifying professional figures (inside and outside Pirelli) who can assure the succession, in particular, of the C.E.O.38;
  • identifies the criteria for the succession plans in relation to the top and senior management, in general, in order to ensure continuity in the business strategies;
  • periodically examines the organisational structure of the Company and the Group presenting possible suggestions and opinions to the Board in this regard.

Operation

The Committee meets whenever its Chairman deems it appropriate, or whenever a request is made by at least one member, by the Chairman of the Board of Directors or by the CEO, if appointed, and however, as often as appropriate to ensure the Committee performs its functions correctly. The Committee’s meetings are convened by a notice, also sent by the Secretary, duly appointed by the Committee Chairman. The documentation and the information available (and in any event, the documentation and information required) are transmitted to all the Committee members sufficiently in advance to enable the members to express their opinion in the meeting. The Committee’s meetings are validly constituted provided the majority of its members in office are present and the resolutions are passed with the absolute majority of the members in attendance. The Committee’s meetings may also be held using telecommunications media and are regularly reported under the Secretary’s responsibility and transcribed in the special register. The Committee may avail itself of external consultants when performing its functions and has adequate financial resources to perform its duties with absolute expenditure autonomy.

The Committee has the authority to access company information and functions which are important to perform its duties and can avail itself of the Secretary’s support for this purpose.

The Chairman of the Board of Statutory Auditors has the authority to participate in the Committee’s meetings.

Activities performed during the financial year

The Appointments and Succession Committee met 2 times during the 2013 financial year; the duration of the meeting was approximately 2 hours; the tables provided at the end of the Report summarise the participation of the members at the Committee’s meetings.

In particular, the Committee submitted to the Board of Directors a structured succession plan for the Company’s top management, to be implemented in the case of an “emergency” – the plan was subsequently approved by the Board – as well as the process to be followed to define the natural succession plan referred to the Company’s top management. In this regard the reader is referred to the “Succession Plans” section.

Members of Senior Management and external consultants participated in the Committee’s work, at the Chairman’s invitation, in relation to several items on the Agenda of the above-mentioned meetings, in order to assist the Committee to perform its functions.

37 The 2011 Self-Regulatory Code (Principle 5.P.1) recommends the establishment of an Appointments and Succession Committee with the majority of its members being Independent Directors. Although in the case of Pirelli the application of this principle will be effective from the next renewal of the Board of Directors with the approval of the financial statements as at December 31, 2013, the current composition is already in line with the provisions of the cited Code.
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It is important to note that at the time the Appointments and Succession Committee was set up its duties also envisaged assuring “emergency” succession plans for the C.O.O. It is to be noted that the C.O.O. Francesco Gori resigned from this office on May 10, 2012.