APPOINTMENTS AND SUCCESSION COMMITTEE

Composition

The Board of Directors set up the Appointments and Succession Committee in the meeting held on April 21, 2011, also taking into account the indepth studies performed in the previous mandate.

The Appointments and Succession Committee is composed of 4 Board Members, the majority of whom are non-executive Directors (2 Independent Directors).

The Appointments and Succession Committee was composed as follows at the Date of the Report41:

  • Marco Tronchetti Provera (Chairman);
  • Luigi Campiglio;
  • Vittorio Malacalza;
  • Luigi Roth.

The Senior Advisor Human Resources, Gustavo Bracco acts as the Committee’s Secretary.

Duties assigned to the Committee

When defining the duties of the Appointments and Succession Committee the Board of Directors assessed the increasing importance for Pirelli and the market of the Board’s direct involvement in defining the succession policies (i) not only and not just in relation to possible natural changes of the Executive Directors, for which however the decisions made by the shareholders assume a decisive role, but in general (ii) concerning the top and senior management to assure the necessary continuity of the management action.

Accordingly, the Committee:

  • proposes to the Board of Directors the candidates to be co-opted, if an Independent Director is to be substituted;
  • proposes the definition of “emergency” succession plans concerning the Company’s top Management by identifying professional figures (inside and outside Pire lli) who can assure the succession, in particular, (i) of the C.E.O.; (ii) of the C.O.O.;
  • identifies the criteria for the succession plans in relation to the top and senior management, in general, in order to ensure continuity in the business strategies;
  • periodically examines the organisational structure of the Company and the Group presenting possible suggestions and opinions to the Board in this regard.

Operation

The Committee meets whenever its Chairman deems it appropriate, or whenever a request is made by at least one member, by the Chairman of the Board of Directors or by the Managing Director, if appointed, and however, as often as appropriate to ensure the Committee performs its functions correctly.

The Committee’s meetings are convened by a notice, also sent by the Secretary, duly appointed by the Committee Chairman.
The documentation and the information available (and in any event, the documentation and information required) are transmitted to all the Committee members sufficiently in advance to enable the members to express their opinion in the meeting.

The Committee’s meetings are validly constituted provided the majority of its members in office are present and the resolutions are passed with the absolute majority of the members in attendance.

The Committee’s meetings may also be held using telecommunications media and are regularly reported under the Secretary’s responsibility and transcribed in the special register.

The Committee may avail itself of external consultants when performing its functions and has adequate financial resources to perform its duties with absolute expenditure autonomy.

The Committee has the authority to access company information and functions which are important to perform its duties and can avail itself of the Secretary’s support for this purpose.

The Chairman of the Board of Statutory Auditors has the authority to participate in the Committee’s meetings.

Activities during the financial year

The Appointments and Succession Committee met once during the 2011 financial year; the duration of the meeting was approximately 1 hour and 15 minutes. All the Committee members attended the meeting; the tables provided at the end of the Report summarise the participation of the members at the Committee’s meetings.

In particular, with the support of the Senior Advisor Human Resources, the Committee endorsed the review (a) of the functioning arrangements; (b) the processes and (c) the management relations of the organisation that will accompany the Group to “execute” the Industrial Plan.

The Committee then examined the selection, development and training process of the socalled “talents” and the management training and focused on the management review process and the succession planning.

The Committee has already met once in the early months of 2012 to identify a company with expertise in this area and to subsequently appoint the company to support Pirelli in the Governance of the top and senior management succession plans.

In this regard, the reader is referred to the “Succession Plans” section.

41 The reader is referred to Table 4 for further details.