Appointment and replacement of Directors

Pursuant to the law and the Company Statutes of the Board of Directors the appointment is made on a list system which ensures to "minorities", where two or more lists are submitted, one-fifth of the Directors.

Below is a summary of the provisions contained in the Company Statutes in relation to the appointment and replacement of Directors. Please refer in each case to the Statutes (which must be considered prevalent over that which appears below) for further information.

The lists submitted by shareholders must be deposited at the registered office of the Company at least 25 days before the meeting and published at least 21 days before the same.

Each shareholder may present or participate in the presentation of a single list and each candidate may be presented on only one list under penalty of ineligibility. Shareholders are entitled to submit lists if, alone or together with others, they hold shares representing at least 1% of the share capital entitled to vote at an ordinary general meeting, or have the minimum holding required by the Consob3 regulations, with the further obligation to prove ownership of the number of shares required to submit lists, by the Company’s list publication deadline.

Any documents required by the Statutes must be filed with each list. At the meeting, each person entitled to vote may vote for one list only. The election takes place as follows:

  • from the list that received the majority of votes cast are taken four-fifths of the directors to be elected, rounded down in the event of a fractional number;
  • the remaining directors are taken from other lists; using the quota method provided in the statutes.

If more than one candidate obtains the same quotient, the candidate elected is the one from the list that has not yet had a director elected or that has the lowest number of directors elected.

In the event that none of these lists has elected a director or all have elected the same number of directors, from amongst these lists, the elected candidate shall be the one who has obtained the highest number of votes. In case of equality of votes and an equal quota, there will be a new vote by the entire Shareholders' Meeting and the candidate elected will be the one who receives a simple majority of the votes.

If application of the voting list mechanism does not ensure the minimum number of independent directors required by applicable law, the non-independent candidate, i.e. the one with the higher progressive number in the list that received the most votes, will be replaced by an independent candidate from the same list, in the order of presentation and so on, list by list, until the minimum number of independent directors is completed.

For the appointment of directors for any reason not appointed pursuant to the procedure, the shareholders decide by the legal majority.

In order to ensure a balance between genres, the Statute provides that the lists for the election of the Board of Directors that contain a number of candidates equal to or greater than three, must be present a number of candidates of the less represented gender at least to the extent of the minimum required by the applicable legal and/or regulatory framework, as specified in the notice of the meeting. If application of the voting list mechanism does not produce the required minimum number of Directors belonging to the less represented gender, the Statutes provide for a progressive mechanism of automatic replacement.

Furthermore, where a General Meeting, or the Board of Directors (in the case of co-option), should provide for the appointment of Directors without following the voting list, the gender balance within Board of Directors must be respected in all cases. If, during the year, one or more directors leave, Article 2386 of the Commercial Code provides that there is no failure in the requirement for independent directors if there remain on the Board the legal minimum of directors having the legal requirements for independence.

For more information on the mechanisms for the election of members of the Board of Directors, please refer to the Articles available on the Pirelli website, and the documents which will be made available at least 40 days prior to a notice to re-elect the Board of Directors.

3  Cf. Consob Resolution 19109 of 28 January 2015. The percentage fixed by Consob for the presentation, by shareholders, of lists of candidates for administration and control organs of Pirelli & C. is 1% of the share capital entitled to vote in an ordinary general meeting.