Remuneration Policy: Consultation

Dear Shareholders,

in accordance with art. 123-ter paragraphs 3 and 6 of the Consolidated Finance Act (“TUF”), we invite you to submit your advisory vote on the first section of the Remuneration Report which illustrates the Policy on remuneration of members of the administrative bodies, the General Managers, the Executives with strategic responsibility, the Senior Manager and the Executives of the Pirelli Group.

The Policy submitted to you for your vote this year has been prepared based on the Policy of previous years, on relevant experience of application, and takes into account the regulatory requirements adopted by Consob, as well as the adoption in 2014 of a new Long Term Incentive Cash Plan for the period 2014-2016 (“LTI Plan”) in support of the new Business Plan 2013-2017.

With respect to last year, the Policy was revised to simplify the structure without prejudice to its content and to provide further details on the remuneration structure, in particular as regards the targets of incentive systems that determine the short and medium-long term variable components for Top Management. Moreover, it was planned that the annual (MBO) and multiannual (LTI) incentive plans adopted by Pirelli after 1 January 2015 in favour of: Directors with special offices or who are assigned specific functions, General Managers and Executives with strategic responsibility, provide, inter alia, for mechanisms known as clawbacks.

As set out by art. 123-ter of the TUF, the Remuneration Report submitted to you is organised into two distinct sections:

  • the first section illustrates:
    • the remuneration Policy for Directors, General Managers, and Executives with strategic responsibility, as well as, more generally, the remuneration Policy for Management as a whole;
    • the procedure adopted for updating the Policy;
  • the second section, designated for the members of the administrative and control bodies, the General Managers and, in aggregated form, for those Executives with strategic responsibility illustrates:
    • the items making up the remuneration, including the procedures envisaged in the event of resignation or termination of employment, highlighting consistency with the policy adopted in the previous financial year;
    • the compensation paid in 2014 for any reason, and in any form, by the Company and by subsidiaries or associates, indicating any components of these fees that are related to activities carried out in years previous to the year in question, and also highlighting the fees to be paid in one or more subsequent years against activities carried out in the year in question, and indicating an estimated value for the components that are not objectively quantifiable in the year in question.

As required by the Consolidated Finance Act, we ask you to provide your advisory vote on the first section of the Remuneration Report.