Introduction

This Remuneration Report (“Report”) is organised into two sections:

  • Section I: “Policy” for the year 2015 (“Policy 2015”) and
  • Section II: “Account” of the year 2014 (“Account 2014”).

The Report has been drafted in accordance with art. 123-ter of the Consolidated Finance Act and art. 84-quater of the Consob Issuers’ Regulations and on the basis of Schedule 7-bis of Annex 3A of the Issuers’ Regulations. The drafting has taken into account the European Commission’s recommendations of 30 April 2009 concerning the remuneration of Directors of listed companies (2009/385/EC) as well as the remuneration recommendations of the Code of Conduct of the Italian Stock Exchange, to which Pirelli adheres.

The Report also adopts the procedures of art. 14 of the Procedure for Transactions with Related Parties, with regard to Pirelli.

Policy 2015 establishes principles and guidelines which Pirelli adheres to in order to (i) determine and (ii) monitor the application of the compensation policies, as stated below, relating to:

  • Pirelli & C.’s Directors vested with special roles, General Managers, and Executives with strategic responsibility;
  • the Senior Manager and the Executives of the Group.

The Account 2014, presented to inform the Shareholders’ Meeting, provides a balance sheet on remuneration for the year 2014, highlighting consistency with the Policy approved by the Company for that year.

To help make the Report more readable and comprehensible, below is a glossary of some frequently used terms.

Directors vested with special roles: meaning those Directors of Pirelli & C. holding the roles of Chairman, Chief Executive Officer, and Vice Chairman. Directors vested with special roles in other Pirelli Companies, who are also executives of the Group (unless decided otherwise by the Board of Directors of Pirelli & C., which qualifies them as “Executives with strategic responsibility”), are, for the purposes of the Policy, in relation to the role held, Executives or Senior Managers.

Directors not vested with special roles: meaning all the Directors of Pirelli & C. other than those vested with special roles.

Directors not vested with special roles in other Pirelli Companies, who are also executives of the Group (unless decided otherwise by the Board of Directors of Pirelli & C., which qualifies them as “Executives with strategic responsibility”), are, for the purposes of the Policy, in relation to the role held, Executives or Senior Managers.

Annual Total Direct Compensation at Target: means the sum total of the following components, independent of whether they are disbursed by Pirelli & C. or by other Companies of the Group:

  • gross annual fixed remuneration component;
  • annual variable component that the beneficiary would receive if achieving their target objectives;
  • medium/long-term variable annualisation component composed of the LTI the beneficiary would receive if achieving their three-year target objectives, and composed of the annual deferred payment rolling mechanism for the accrued portion of the MBO and payment of an increase of the entire accrued MBO, depending on the extent to which there is temporal continuity of achievement of the annual target objectives. 

Remuneration Committee: meaning Pirelli & C.’s Remuneration Committee.

Board of Directors: means the Board of Directors of Pirelli & C.

General Managers: persons, specified by the Board of Directors of Pirelli & C., vested with broad powers for managing the company.

Persons holding the role of General Manager in other Pirelli Companies, (unless decided otherwise by the Board of Directors of Pirelli & C., qualifying them as “Executives with strategic responsibility”), are, for the purposes of the Policy, in relation to the role held, Executives or Senior Managers.

Executives with strategic responsibility: executives, identified by express decision by the Board of Directors of Pirelli & C., having power or responsibility for planning and controlling the activities of the Company, or having the power to take decisions that may affect the future development prospects of same and, more generally, of Pirelli.

Executives: executives of the Italian Pirelli Company or employees of the Group’s foreign Companies, with a position or role that is equivalent to that of an Italian executive.

Pirelli Group or Pirelli: means the whole ensemble of Companies, including those within the scope of consolidation of Pirelli & C. S.p.A.

Management: means the whole ensemble of Directors vested with special roles, the General Managers, the Executives with strategic responsibility, the Senior Managers and the Executives.

MBO: means the variable annual component of the remuneration achievable with regard to achieving the predefined business objectives as illustrated in paragraph no. 5, below.

LTI Plan 2014-2016: means the Long Term Incentive Cash Plan illustrated in paragraph no. 5, below.

GAS: means the gross annual (salary) fixed component of remuneration for those that have employee status with a Pirelli Group Company.

Senior Managers: those in senior roles, reporting first to (i) the Directors vested with special roles, and by whom they are assigned specific functions, and to (ii) the General Managers whose activities have a significant impact on the business results.

Company: means Pirelli & C. S.p.A.

Top Management: means the whole ensemble of Directors vested with special roles, the General Managers, and the Executives with strategic responsibility.