Composition

The Company’s Board of Directors is composed of no less than 7 and no more than 23 members, in accordance with the Company Bylaws, and remain in office for 3 financial years (unless a shorter period is established by the Shareholders’ Meeting at the date of the appointment) and they may be re-elected.

The Board of Directors was composed of 20 Directors7 at the Date of the Report and was appointed by the Shareholders’ Meeting held on April 21, 2011 for 3 financial years, falling from office with the Shareholders’ Meeting convened to approve the Financial Statements as of and for the year ending December 31, 2013.

At the Date of the Report the average age of the Directors in office was approximately 64 and with an average term in office corresponding to approximately 5 years.

By adopting the voting list system, the socalled minorities were able to appoint 4 Directors, corresponding to one fifth of the total (in particular, the Directors Franco Bruni, Elisabetta Magistretti, Pietro Guindani and Francesco Profumo8).

2 lists were presented to the Shareholders’ Meeting held on April 21, 2011: one from the shareholders participating in the Pirelli & C. Shareholders’ Agreement (that obtained 84% of the votes of the voting capital9) and one from a group of institutional investors10 (who obtained 15.6% of the votes of the voting capital11).

Those proposing the lists made the candidates’ profiles available to permit their personal and professional characteristics be known prior to voting, as well as the fact that some candidates satisfied the requirements to be qualified as independents.The updated version of the curriculum vitae of each Director are published on the Pirelli Internet website.

The following persons fell from office during the 2011 financial year: (i) prof. Francesco Profumo on November 16, 2011, who accepted an appointment as a Minister of the Italian Republic and (ii) Enrico Tommaso Cucchiani on December 16, 2011 after having accepted other positions.

Pursuant to Article 2386 of the Italian Civil Code, the Board of Directors appointed the Giuseppe Vita to substitute Mr. Cucchiani in the meeting held on March 1, 2012, and in the same meeting, at the proposal of the Appointments and Succession Committee, the Board appointed the Ms. Manuela Soffientini to substitute Prof. Profumo (selected from the minority list). Even though the Appointments and Succession Committee is responsible for defining the candidates to be submitted to the Board to then co-opt the person concerned  when an independent Board Member is to be substituted, in this case, the Committee deemed it appropriate to involve Assogestioni to identify the candidate to be submitted to the Board to substitute Prof. Profumo, since representing a Board Member elected from the list presented by institutional investors under the auspices of Assogestioni. The latter proposed a shortlist of two names to the Committee from which the Committee decided to propose Ms. Manuela Soffientini to the Board of Directors, also having considered the opportunity of a further enhancement of the gender diversity within the Board, and, as has been said, Ms. Manuela Soffientini was appointed in the meeting held on March 1, 2012.

The female presence on the Board of Directors corresponded to 20% after this appointment and was thereby immediately in line with the requirements envisaged by Law No. 120 dated July 12, 2011 that amended the Articles of the Unified Financial Law (TUF) relating to the composition of the administration bodies (Article 147-ter) and control bodies (Article 148), and, once fully effective, requires at least one fifth of the gender less represented to have a presence in the company bodies (in the first application).
The new provisions will be applicable from the first renewal of the administration and control bodies one year after the date the Law comes into force, therefore, in the case of Pirelli’s Board of Directors, starting from the renewal of the Board envisaged with the Shareholders’ Meeting convened to approve the Financial Statements as of December 31, 2013.

The cited Directors appointed by the Board of Directors will fall from office, as required by law, with the Shareholders’ Meeting convened to approve the 2011 Financial Statements that, accordingly, will be called to resolve the confirmation of the appointment.

Maximum number of positions held in other companies

The Board of Directors passed a resolution on April 21, 2011, in accordance with the recommendations contained in the Self-Regulatory Code12, confirming the Policy13, adopted by the Board of Directors in 200714, whereby, in principle, it was deemed that serving as a Director or Auditor in more than 5 companies other than those subject to management and coordination by Pirelli & C. S.p.A. or controlled by or affiliated therewith, was not considered compatible with the role of Director of the company when concerning (i) listed companies included in the FTSE/MIB index (or also in equivalent foreign indexes), or (ii) companies which engage in banking or insurance activities; moreover, it is not deemed compatible for the same Director to hold more than 3 executive positions in the companies described in sub (i) and (ii).

The offices held in several member companies of the same group are considered to be a single office and an executive position prevails over a non-executive position.

The Board of Directors retains the right to make a different assessment and this assessment is disclosed in the Report and the motives are to be duly substantiated.

Shareholders that intended to present lists concerning the Board of Directors’ composition were invited to examine the cited policy when the Board of Directors was to be reappointed.

In the meeting held on March 12, 2012 the Board of Directors examined the positions held, as duly notified by the individual Directors, and after examination by the Committee for Internal Control, Risks and Corporate Governance, it was found that all the Directors held a number of positions compatible with the role of a Director of Pirelli & C. in compliance with the policy adopted by the Company. In particular, none of the Directors in office held a number of offices exceeding the maximum number indicated in the Policy.

The principal offices held by the Directors in companies other than member companies of the Pirelli Group are detailed in an annex to the Report15.

7 The Board was composed of 18 Directors as of December 31, 2011, after the following Directors had resigned: Prof. Francesco Profumo resigned on November 16, 2011 after being appointed a Minister of the Italian Republic and Enrico Tommaso Cucchiani resigned on December 16, 2011 after accepting new positions in other companies.
The number of Directors was returned to 20 in the Board of Directors' meeting held on March 1, 2012 that appointed Giuseppe Vita and Ms. Manuela Soffientini as Board Members.
8 Refer to preceding note.
9 Data obtained from the summary statement of the votes cast in the Shareholders' Meeting held on April 21, 2011 available on the Pirelli Internet website.
10 The minority list was presented by: Amber Capital Italia SGR S.p.A. (manager of the Amber Italia Equity fund); Amber Capital LP (manager of the PM Manager Fund, SPC); Amber Global Opportunities Master Fund Ltd.; Anima SGR S.p.A. (manager of the Europa, Sforzesco, Visconteo Italia, Iniziativa Europa, Anima Europa funds); APG Algemene Pensione Groep N.V. (manager of the Stichting Depositary APG Developed Markets Equity Pool fund); Arca Sgr S.p.A. (manager of the Arca Azioni Italia and Arca BB funds); Ersel Sicav; Ersel Asset Management SGR S.p.A. (manager of the Fondersel Italia fund); Eurizon Capital SGR S.p.A. (manager of the Eurizon Focus Azioni Italia and Eurizon Italia 130/30 funds); Eurizon Capital SA (manager of the Eurizon Stars Fund European Small Cap Equity, Eurizon Stars Fund Italian Equity, Eurizon Easy Fund Equity Consumer Discretionary, Eurizon Easy Fund Equity Europe, Eurizon Easy Fund Euro, Eurizon Easy Fund Equity Italy funds); Fideuram Investimenti SGR S.p.A. (manager of the Fideuram Italia fund); Fideuram Gestions SA (manager of the Fonditalia Equity Italy, Fondiatalia Euro Cyclical, Fideuram Fund Equity Itlay, Fideuram Fund Equity Europe, Fideuram Fund Equity Euope Growth funds); Interfund Sicav (manager of the Interfund Equity Italy fund); Kairos Partners SGR S.p.A. (Manager of Kairos Italia – Speculative Fund); Mediolanum International Funds Limited (manager of the Challenge Funds); Pioneer Asset Management SA; Pioneer Investment Management SGR S.p.A. (manager of the Pioneer Azionario Crescita fund); Pioneer Alternative Investment Management Limited; Prima SGR S.p.A. (manager of the Prima Geo Italia S.p.A. fund).
11 Data obtained from the summary statement of the votes cast in the Shareholders' Meeting held on April 21, 2011 available on the Pirelli Internet website.
12 Self-Regulatory Code: Application criterion 1.C.3.
13 The cited Policy is annexed to the Report and is also available on the Company's Internet website.
14 Board of Directors' Meeting held on November 7, 2007. In the meeting held on March 8, 2011 the Board of Directors, after having acknowledged the amendments to the so-called unified banking law which entailed, inter alia, the abrogation of the so-called “special list” of companies operating in the financial sector aimed at the general public (the former Article 107 of Legislative Decree No. 385 of 1993 introduced with Legislative Degree No. 141/2010), resolved to adopt the foregoing amendment in the policy governing the  maximum number of offices which previously also included the companies included in the foregoing list among the companies to be considered for the purposes of the “maximum number”, consequently, the reference made to such companies was eliminated. The document that contains the Policy concerning the maximum number of offices that a Company Director can hold in other companies is provided at the end of this Report.
15 Self-Regulatory Code: Application criterion 1.C.2.