DELEGATED BODIES

Chairman and Managing Director

The Board of Directors appoints its Chairman, in accordance with the Company Bylaws when the Shareholders’ Meeting has not already done so.

The Board of Directors appointed Marco Tronchetti Provera as Chairman and Managing Director in the meeting held on April 21, 2011.
The Chairman is the Company’s legal representative.

The Chairman and Managing Director, Marco Tronchetti Provera, is responsible for the following organisational functions:

  • relations with shareholders and the information provided to them;
  • defining the strategies concerning the general policy and the development policy for the Company and the Group, as well as the extraordinary transactions to be submitted to the Board of Directors;
  • proposals to appoint General Managers and the remuneration due and payable to them, after having consulted the Remuneration Committee;
  • all forms of communications to the market.

The Chairman and Managing Director is conferred with full powers – to be exercised with separate signature – necessary to perform the actions concerning the Company’s business in its various executions, none excluded. All the foregoing with the power to issue special and general mandates, conferring on the representative the authority to sign, individually or collectively, on behalf of the company and with the responsibilities he shall deem appropriate to assure the Company’s best interests, including the power to subdelegate.

The Board of Directors has identified the limits to the management powers conferred on the Chairman and Managing Director, which have been qualified as the internal limits of the relationship between the delegating collegial body and the person with delegated powers.

In particular, the following internal limits have been identified: the power to issue guarantees for the Company’s bonds and the subsidiaries’ bonds for a value exceeding euro 25 million, or in the interests of third parties concerning bonds with a value exceeding euro 10 million; in the latter case the Chairman’s signature is to be accompanied by that of another legal representative with similar powers (in particular, reference is made to “Executives with strategic business responsibilities”).

Company organisation

Pirelli initiated a review during the financial year (a) of the functioning procedures; (b) the processes and (c) the top management relations of the organisation that will accompany the Group to “execute” the Industrial Plan, in conjunction with the approval of the  “new” Industrial Plan with an outlook extending to 2015 and the review of the 2012-2014 Targets.

Moreover, the organisational structure envisages three organisational entities: Functions, Business Units and Regions/Countries.

The Functions support the activities engaged in by the Business Units and the Regions supervise some key processes, for example: the operations, supply chain, quality and purchases.

While the Business Units define the strategy of a specific business on a global level, with particular focus regarding the allocation of the production and the product in relation to the expected profitability and to supervise the Marketing processes.

While the Regions and Countries assure the implementation, at a local level, of the strategies defined by the Business Units and Functions, adapting them to the local scenario.

In addition, the Regions and Countries contribute to defining the strategy by transferring to the centre information and reports concerning specific opportunities.

In particular, a top management coordination activity has been established to overview the entire production structure, referred to as the Executive Office and composed of the Managing Director (CEO), Marco Tronchetti Provera and the General Manager (COO), Francesco Gori with the former having a special focus on achieving the leadership position in the premium segment of the car business and the latter having a special focus on the development of profitability and cash flow of the other businesses.

This will enable an organisation to be developed that is more integrated and reactive by streamlining the structure and simplifying the management mechanisms of committees and business meetings.

All the functions report to the Executive Office with the sole exclusion of the functions which report directly to the Chairman, thereby assuring consistent policies and plans of action among the various Business Units and the various Regions.

The following continue to report to the Chairman: General Counsel; Investor Relations; Communication and Media Relations; Culture; whereas the following report to the Executive Office (i) under the direct responsibility of the CEO: Products and Environmental Services Business Unit; Car Business Unit; PZero Fashion; Europe Region; Russia Region; and (ii) under the direct responsibility of the COO: Truck Business Unit; Motorcycle Business Unit; Agro and Special Vehicles Business Unit; Steelcord Business Unit; Latam Region; Apac Region; Mea Region; Nafta Region.

The Administration and Finance; Management Control; Human Resources and Organisation; Image & Brand Extension; Quality; Product and Materials Quality; Operations and Industrial Quality; Purchases; Logistics; IT & Business Process Improvement functions give their support to all the business functions.

Furthermore, the C.E.O., as Chairman of the Executive Office, assures the overall coordination of the Business Units and the Regions by availing of the Central Functions in order to guarantee the necessary rapid implementation of the corporate strategies.
The Management Committee meets once a month to verify constantly the Group’s economic performance; the development of programmes, plans and initiatives common to the Group and the Business Units or Regions which have a common importance.

Moreover, the Board of Directors qualified the following Executives with strategic responsibilities (confirming them), during the meeting held on April 21, 2011, since they have the power to adopt management decisions which can impact the development and future prospects: Francesco Gori (General Manager); Francesco Chiappetta, lawyer (General Counsel and Chief of General and Institutional Affairs); Francesco Tanzi (Chief Financial Officer and Responsible Officer) and Maurizio Sala (Chief Management Control).

The powers relating to the specific functions assigned were attributed to the abovementioned Executives with strategic business responsibilities.

More limited powers, to be used in the framework of the respective responsibilities, were also conferred on other senior managers and managers.

Information to the Board

Pirelli believes that the completeness of the information made available to the Directors represents an essential condition to exercise correctly the tasks and responsibilities in management, policy-making and control inherent to the position of Directors and Statutory Auditors.

For this reason, Directors and Statutory Auditors receive a continuous flow of information from the Executive Directors to assure the transparency of company management; to assure the conditions to achieve an efficient and effective guidance and control of the Company’s activities and operation of the business by the Board of Directors and to provide the Board of Statutory Auditors with the information required to perform its role efficiently.

Where appropriate, the delegated bodies report on the transactions in which they have an interest, in their own right or on behalf of third parties. The notification is made promptly, and however, at least every three months, at the date of the Board of Directors’ meetings (and the meetings of the Executive Committee, if appointed) or by means of a written memorandum.

The Company has developed a special procedure to favour the orderly organisation of the flow of information, this procedure has been implemented since July 2002 and defines in detail, the rules be followed in order to comply with the information reporting obligations.

The Procedure was also updated to take into account the new requirements introduced to the internal regulatory system by the Procedure for Transactions with Related Parties and aims to regulate and coordinate all the various forms of information flowing to Directors and Statutory Auditors, since they are united by the common aim of making the information required to exercise correctly their management, policy-making and control responsibilities continuously available to the Directors and Statutory Auditors.

The updated version of the Procedure on information flows to Directors and Statutory Auditors is reported on the Pirelli Internet website.

27 Article 150, paragragh 1 of the Unified Finance Law (TUF).
28 Article 11 of the Company Bylaws.