Share capital structure:
the share capital subscribed and paid amounted to € 1,345,380,534.66, divided into a total of 487,991,493 shares with no par value and distributed as follows:
|No. shares||% of share capital||Listed|
|Ordinary shares *||475,740,182||97.49%||Listed on the MTA organised and managed by Borsa Italiana S.p.A. - Blue Chip Segment|
|Savings shares **||12,251,311||2.51%|
* ISIN IT0004623051
** ISIN IT0004623333
The share capital has not changed during the 2014 financial year.
No financial instruments with a right to subscribe to new shares had been issued at the Date of the Report.
Table 1 lists those who, as published by Consob, own shares with voting rights at an Ordinary General Meeting in excess of 2% of the ordinary capital.
Rights and obligations:
the shares are divided into ordinary shares and savings shares, without par value. Without prejudice to the provisions of the law, Articles 6 and 18 of the Statute establishes the rights and obligations of ordinary and savings shares. In particular, the savings shares are entitled to an increase in share in any dividend received under the terms and limits of Article 18 of the Company Statutes; they are entitled to priority in the repayment of capital within the limits and terms stated in Article 6 of the Company Statutes. The reduction of capital for losses has no effect on the savings shares except for the portion that exceeds the proportion of capital represented by other actions as provided by Article 6 of the Company Statutes.
This is discussed in more detail in the Statutes themselves available at http://www.pirelli.com/corporate/it/governance/laws/default.html.
the Company does not currently have any share incentive plans.
In the course of 2014, Pirelli approved the "launch" of a "new" LTI "Cash” Plan for 2014 to 2016, in support of the objectives outlined in the 2013-2017 Business Plan.
More information on the LTI Plan is given in the information document - prepared in accordance with Articles 114-bis of TUF and 84-bis of the Issue Regulations - and in the Remuneration Policy for the Year 2014 available on the Pirelli website.
Rules applicable to the appointment and replacement of Directors and the Board of Auditors:
Reference is made in regard to the Board of Directors and to the Board of Auditors.
On 24 May 2014, following the agreement in principle of 15 March 2014 (the ''Maximum Agreement"), published and filed under Article 122 of the TUF, there were signed:
- a co-investment agreement (the "Co-Investment Agreement") between UniCredit S.p.A. ("UC"), Intesa Sanpaolo S.p.A. ("ISP"), Nuove Partecipazioni S.p.A. ("NP") and Long-Term Investments Luxembourg S.A. (the "Strategic Investor"), concerning the regulation of mutual rights, liabilities and obligations of the parties within the framework of a project for implementation of a programme of business development, strategies and activities to support further growth at Pirelli;
- a shareholder agreement ("CF Agreement") between the same parties, which includes the rules (a) for governance of Camfin S.p.A. ("Camfin"), a company identified by the parties to the agreement as a vehicle for the realisation of the partnership between them, (b) the presentation of the list for the election of directors of Pirelli, (c) to the extent possible and provided that they attain the quorum necessary in a Pirelli General Meeting, the number of directors to be appointed by the Parties to the Board of Directors of Pirelli, (d) the rules for the maintenance of standards of governance of Pirelli in line with best market practices and (e ) of the rules applicable to the transfer of their holdings in Camfin and, indirectly, in Pirelli.
On 10 July 2014, having fulfilled all the activities provided by the agreements between the Parties, the Camfin Shareholders' Agreement came fully into force. Also on 24 May 2014, upon the signing of the Shareholders Agreement CF, UC, ISP and NP also signed a shareholders' agreement (the "Coinv Shareholder Agreement") that governs the relationships of its signatories in relation to each other and in relation to the Co-Investment Agreement and the Camfin Shareholder Agreement.
The Coinv Shareholders' Agreement relates to, among other things, (i) the corporate governance of Coinv (a company holding 50% of Camfin share capital); (ii) the composition of the list to be submitted to Camfin for the appointment of those members of the Board of Directors of Camfin who must be designated by Coinv, (iii) the possible exit from Coinv and divestment by Camfin and (iv) management for the progressive and timely liquidation of other assets and liabilities of Camfin which, under the agreements between the parties, have been transferred to Coinv.
On 10 July 2014, the Coinv Shareholders' Agreement came fully into force. The finalisation of definitive agreements provided by the aforesaid Maximum Agreement meant that the "Lauro Shareholders Agreement" signed on 4 June 2013 between Nuove Partecipazioni S.p.A., Intesa Sanpaolo S.p.A., UniCredit S.p.A. Marco Tronchetti Provera & C. S.p.A., Marco Tronchetti Provera Partecipazioni S.p.A., Gruppo Partecipazioni Industriali S.p.A. and Lauro Cinquantaquattro S.r.l. was superseded and, therefore, terminated by mutual consent with effect from 10 July 2014.
On 22 March 2015, the following were signed:
(i) a sale and purchase and co-investment agreement (the “Agreement”) between China National Chemical Corporation (“CC”), China National Tire & Rubber Corporation Ltd. (“CNRC”), Camfin S.p.A. (“Camfin”) and Long-Term Investments Luxembourg S.A. (“LTI”) and Coinv S.p.A. (“Coinv”).
The Agreement provides for (i) the purchase of the investment held by Camfin in the share capital of Pirelli, (ii) the simultaneous reinvestment by Camfin of a portion of the income from the sale, (iii) the acquisition will be made through a newly established Italian company (Bidco) that will be indirectly controlled by CNRC in partnership with Camfin through two newly established Italian companies (Newco and Holdco), (iv) following completion of the acquisition, a Mandatory Tender Offer (Mandatory Opa) - on the remaining ordinary share capital of Pirelli at a price of 15.00 euros per share - and a Voluntary Public Offer (Voluntary Opa) - on the totality of the savings capital of Pirelli at a price per savings share of 15.00 euros subject to the achievement of not less than 30% of the savings capital - will be launched by Bidco, with the aim of proceeding to the de-listing of Pirelli (v) the dividend related to 2014 results will be paid before the acquisition by Bidco part of the Pirelli shares held by Camfin.
Completion of the transaction is subject to conditions typical of a transaction of this type and is expected in the summer of 2015, after approval by the antitrust authorities and other competent authorities.
The commitment is expected of the parties to enter into a Shareholders' Agreement, subject to fulfilment of precedent conditions under the agreement,
- a restatement agreement between Nuove Partecipazioni (“NP”), Coinv, LTI, Intesa Sanpaolo SpA (“ISP”) and UniCredit S.p.A. (“UC”), which governs the relations between the parties relating to and upon completion of the agreements and transactions referred to in the Sale and Purchase and Co-investment Agreement;
- a restatement agreement between Nuove Partecipazioni (“NP”), Intesa Sanpaolo S.p.A. (“ISP”) and UniCredit S.p.A. (“UC”), which governs the relations between the parties relating to and upon completion of the agreements and transactions referred to in the Sale and Purchase and Co-investment Agreement.
For more information on the provisions contained in these shareholder agreements, please refer to the extracts of the agreements available on the Pirelli website.
Change of control clauses
There is no party that can exercise control over Pirelli & C., either directly or indirectly, by virtue of shareholder agreements, individually or jointly with other parties included in shareholders' agreements.
It follows that no change of control of the Company is presently foreseeable.
For the sake of completeness, the following are confirmed.
The 500 million euro bond placed on the market by Pirelli & C. provides for the right of bondholders to request early repayment in the event of a "Change of Material Shareholding" that would obtain following cases: (i) Pirelli & C. ceases to hold (directly or indirectly) a percentage of at least 85% of the share capital of Pirelli Tyre (except in the event Pirelli Tyre is incorporated within, or merges with, Pirelli & C. or another company of the Pirelli Group); (ii) to the extent applicable, a person other than one or more of the shareholders belonging to the then Pirelli Shareholders Block Agreement1 (provided Camfin continues to have the greatest Pirelli shareholding amongst the members) comes to hold more than 50% of the share capital with voting rights of Pirelli & C. or acquires the right to appoint or remove the majority of members of the Board of Directors; (iii) Camfin ceases to hold (directly or indirectly) at least 20% of the share capital with voting rights in Pirelli & C..
A similar clause is envisaged, except for the provision indicated in point (iii) above: (a) for the American issue of bonds worth 150 million US dollars by Pirelli International Limited guaranteed by Pirelli & C. and by Pirelli Tyre; (b) for the "Schuldschein” financing obtained by Pirelli International Ltd and guaranteed by Pirelli & C. and by Pirelli Tyre, totalling 155 million euros.
The latest bond issue of 600 million euros placed on the market (November 2014) by Pirelli International Plc. and guaranteed by Pirelli & C., the interval agreement between Pirelli & C., Pirelli Tyre and Pirelli International Plc. with a syndicate of banks, granting Pirelli a line of credit in mixed form of 1 billion euros (in January 2015), and the interval agreement between Pirelli & C. and Pirelli Tyre with a more restricted pool of banks granting Pirelli a line of credit in mixed form of 200 million euros (February 2015) provides for the option of the bondholders and, respectively, of the lending banks, to request early repayment in the event of a "Change of Material Shareholding" that would obtain in the following cases: (i) Pirelli & C. ceases to hold (directly or indirectly) a percentage higher than 50% of the share capital of Pirelli Tyre (except in the event Pirelli Tyre is incorporated within, or merges with, Pirelli & C. or another company of the Pirelli Group); (ii) within the current framework of shareholder agreements concerning, among others, Pirelli, a subject different from Camfin or from the concert of the current trust members or by those acting in concert with Camfin, either comes to hold more than 20% of the Pirelli & C. share capital with voting rights, or comes to hold a greater percentage of shares than that held by Camfin or acquires the right to appoint or remove the majority of members of the Board of Directors; (iii) after a split of Camfin S.p.A. when upon completion of the current trust, the members mentioned above are allocated pro rata a direct shareholding in Pirelli & C., and a third party, being their assignee or successor, or a party acting in concert with them, comes to hold a stake in the Pirelli & C. share capital with voting rights higher than that of each of them, taken individually, or the third party becomes entitled to appoint or remove the majority of members of the Board of Directors.
The joint venture contract between Pirelli Tyre and PT Astra Otoparts Tbk provides that in the event of a change of control of either party, the other has a right to terminate the joint venture. In particular, if the change of control concerns Pirelli Tyre, PT Astra Otoparts Tbk has a put option for the sale of its stake in Pirelli, while, in the opposite case, Pirelli Tyre would have a call option for the purchase of the participation of PT Astra Otoparts Tbk.
Statutory provisions of OPA: Pirelli & C. Company Statutes do not provide for exemptions from the provisions on the passivity rule nor the application of the counteraction rule provided in Article 104-bis of the TUF.
Powers to increase the share capital: there are powers granted to the Directors to increase, the share capital by one or more times, nor are they granted the right to issue bonds convertible into shares, either ordinary and savings, or warrants for the subscription of shares.
Authorisation to purchase own shares: At the date of this Report, the Board of Directors is authorised to proceed with the purchase and disposal of own shares - ordinary and savings, up to a maximum number of shares (own) that does not exceed 10% of the share capital, also regarding treasury shares held directly or indirectly (through subsidiaries) by the Company - by virtue of a special resolution passed, on 12 June 2014 by the shareholders, which granted this authorisation for a period of 18 months.
At the date of this Report, the Company holds 351,590 ordinary own shares representing approximately 0.07% of the ordinary shares and of the entire share capital and 408,342 own savings shares representing approximately 3.33% of the savings shares and about 0.08% of the total share capital, all held before 12 June 2014. Therefore the aforementioned shareholders' authorisation has not been used by the Board of Directors of Pirelli to purchase or dispose of any own shares.
Since there are now the same opportunities that persuaded the directors to propose to the General Meeting of 12 June 2014, the above authorisation, the Board of Directors has deemed it useful to submit to the 2014 Budget Meeting a proposal to renew the authorisation to purchase and dispose of shares on the same terms as the current authorisation, in order to prevent the convening of a new meeting near the end of the 18 months of the current authorisation. For more information, please refer to the related Board of Directors Meeting, which will be made available on the Pirelli website at the latest 21 days prior to the 2014 Budget Meeting.
Directors’ indemnity in case of resignation, dismissal or termination of employment following a takeover bid 2: Pirelli's policy is not to enter into with Directors, Key Managers, Senior Managers and Executives agreements that regulate ex ante any financial issues that may arise from early termination by the Company or by an individual (so-called "Parachutes").
Indeed, the agreements entered into with Pirelli in the event the employment relationship is interrupted for reasons other than just cause do not represent "parachutes”. Pirelli adopts a policy that seeks to come to agreements to reach a consensual conclusion of the employment relationship. In any event, contractual and legal obligations still obtain regarding any agreements reached concerning termination of the relationship with Pirelli, guided by the reference benchmark and within the limits defined by the case law and practices of the country where the agreement is made.
The Company defines the internal criteria which are also to be complied with by other Group companies when managing the agreements which govern early termination of relationships concerning Executives and/or Directors assigned special duties.
As for the directors holding particular positions at Pirelli & C., who are assigned specific functions and are not concerned with labour relations management, Pirelli does not provide for the payment of indemnities or extraordinary compensation related to termination of their mandates.
The payment of a specific indemnity (which may therefore be considered a "parachute”) may be acknowledged, always subject to assessment by the competent company bodies in the following cases:
- termination on the Company's initiative not supported by a just cause
- termination by a Director for just cause, meaning, without limitation, a substantial change in their role or assignments and/or a "hostile takeover".
In such cases, the allowance is equal to 2 year of the annual gross compensation, meaning the sum of the gross annual fixed salaries for the positions held in the Group, the average annual variable remuneration (MBO) accrued during the previous three years and the severance package of the aforementioned amounts.
For more information, please refer to the Remuneration Report which will be available on the Pirelli website at the latest 21 days prior to the 2014 Budget Meeting.
Management and coordination ex Article 2497 et seq. of the Commercial Code: there is no party which, directly or indirectly, or by virtue of shareholder agreements, either alone or jointly with the other signatories of the agreements, exercises control over Pirelli & C.
Nor is the Company subject to management and coordination by another company or body, pursuant to Article 2497 et seq. of the Italian Civil Code.
On the contrary, Pirelli & C., which heads the Group, exercises direction and coordination of numerous subsidiaries, as published under Article 2497-bis of the Italian Civil Code.
More information under Article 123 bis, Paragraph 1 of the TUF
- There are no restrictions on transfers of securities;
- There are no shares granting special rights of control;
- In the case of employee share ownership, there is no mechanism for exercising voting rights if they are not exercised directly by the employees;
- There are no restrictions on voting rights (such as limitations of the voting rights to a certain percentage or a certain number of votes, deadlines for exercising the right to vote or systems by which, with the cooperation of the Company, financial rights attached to securities are separated from ownership of the securities);
- Amendments to the Company Statutes are resolved as provided for by law.
1 It is recalled that the Block Agreement terminated with effect from 31 October 2013.
2 The information contained in this section is provided also in compliance with the requirements set out in Consob Communication DEM/11012984 dated 24 February 2011.