Functions of the Board of Directors

The Board of Directors is responsible for:

  • reviewing and approving the strategic, industrial and financial plans of the Company and the Group, monitoring periodically their implementation;
  • preparing and adopting the Company’s corporate governance rules and defining the Group’s governance guidelines;
  • defining the guidelines of the internal control system, appointing a Director responsible for overseeing the internal control system and defining their tasks and powers;
  • supervising the process of risk governance by defining the overall threshold of acceptable risk ("risk appetite”);
  • evaluating, once a year at least, the adequacy of the internal control system and risk management with respect to the characteristics of the risk profile, as well as its effectiveness;
  • assessing the adequacy of the organisational, administrative and accounting structure of the Company and its strategic subsidiaries;
  • establishing one or more internal Board committees, appointing the members, and determining its tasks, powers and remuneration;
  • granting and revoking the powers of the Managing Directors and the Executive Committee - if there is one - defining the limits and procedures for their exercise; also determining the frequency, not exceeding three months, with which such bodies must report to the Board on the activities delegate to them;
  • defining the general remuneration policy;
  • determining, on the recommendations of the Remuneration Committee and Statutory Auditors, the remuneration of the Managing Directors and other Directors who hold special positions, and, if this has not been decided by the General Meeting, the division of the total remuneration between members of the Board;
  • evaluating the general performance of management, taking into account, in particular, the information provided by other company bodies, as well as periodically comparing the results they achieve;
  • reviewing and approving transactions of the Company and its subsidiaries when these transactions have a significant strategic, economic, or financial impact;
  • assessing, at least once a year, the size, composition and functioning of the Board and its Committees, expressing opinions on those professionals whose presence on the Board is deemed appropriate;
  • establishing a Supervisory Board pursuant to Legislative Decree 231 of 8 June 2001;
  • appointing the general managers, the manager responsible for preparing corporate accounting documents, determining their responsibilities and powers, and appointing key managers;
  • appointing and dismissing, on the recommendation of the Director in charge of overseeing the internal control system, the Internal Audit Director, determining their responsibilities and remuneration in line with company policy, after consultation with the relevant Board committee and the Board of Auditors;
  • approving, at least annually, the plan prepared by the head of the internal audit department, in consultation with the Board of Auditors and the Director in charge of the system of internal control and risk management;
  • evaluating and approving periodic reports according to applicable legislation;
  • assessing, with the Statutory Auditors, the results presented by the external auditor in any letter of recommendations and report on key matters arising from the statutory audit;
  • evaluating and approving transactions of major importance with related parties in accordance with the Procedure for Transactions with Related Parties;
  • formulating proposals to be submitted to the shareholders;
  • exercising such other powers and performing the tasks assigned to it by law and the Company Statutes.

Subject to (i) the responsibilities and powers reserved to the Board by law and the Company Statutes, (ii) the structure of the proxies and (iii) the internal corporate procedures, the Board of Directors shall approve the following operations and transactions - not intragroup - when made by the Company or by companies, included those unlisted and foreign, which are subject to the management and coordination of Pirelli & C.:

  • taking and the granting of loans for a total value of over 200 million euros and lasting more than 12 months;
  • issues of securities intended to be listed on regulated markets or outside Europe (and their delisting) for a total of more than 100 million euros;
  • the granting of guarantees to or for third parties, for amounts exceeding 100 million euros;
  • entering into derivative contracts that have i) a notional value in excess of 250 million euro and ii) that do not have as their exclusive purpose and/or effect to cover business risks (but not limited to: hedging interest rates, exchange rates, or raw materials);
  • the acquisition or disposal of investments in subsidiaries and for values in excess of 150 million euros that would allow the entry into (or exit from) geographical and/or product markets;
  • the acquisition or sale of equity investments (other than those mentioned in the previous point) for amounts exceeding 250 million euros;
  • the acquisition or sale of companies or company branches that have strategic importance or, anyway, are worth more than 150 million euros;
  • the acquisition or sale of assets and other activities that have strategic importance or, anyway, have a total value exceeding 150 million euros.

Also subject to prior approval by the Board of Directors of the Company are transactions included in a strategic plan or executive programme which if, taken together, exceed the quantity thresholds above.

Meetings of the Board of Directors, at the invitation of the Chairman and CEO, may be attended by members of the management in order to facilitate timely and in-depth knowledge of the activities of the Company and the Group as well as to promote access to senior management in order to augment the supervision of the Board of Directors over business activities.