Ethical Code - Code of Conduct and Organisational Model 231

The internal control system described above is completed by:

  • the Group’s Ethical Code;
  • the Group’s Code of Conduct;
  • Organisational Model 231

The Ethical Code sets out the general principles which form the reference framework to perform and conduct business within Pirelli; the Ethical Code indicates the targets and the values underlying the Company’s business activities. Indeed, Pirelli performs its internal and external business activities based on compliance with the Ethical Code in the belief that business success cannot be separated from business ethics.

The Directors, Statutory Auditors, Executives and employees of the Pirelli Group, and in general, everyone who operates on behalf of Pirelli, or has business relations with Pirelli are required to comply with the principles and provisions contained in this Code, each in the context of their own functions and responsibilities.

In particular, the Code of Conduct contain the “operative” statement of the principles contained in the Ethical Code and establish rules for the entire Group designed to prevent the creation of an environment that is favourable to committing offences in general.

The Ethical Code and the Code of Conduct have been translated in all the languages in use within the Pirelli Group (22 different languages).

The Organisational Model 231 approved by the Board of Directors on July 31, 2003 was subsequently revised and updated following changes in the laws and regulations. The Organisational Model endeavours to assure the fine tuning of a system that is based on the specific requirements arising from the coming into force of Legislative Decree No. 231/2001 concerning companies’ administrative liability for the offences committed by their employees and is based on a structured pyramidal system of principles and procedures which can be outlined as follows, starting from the base:

  • the Group’s Ethical Code, which have already been described;
  • the general internal control principles, which characterise the Internal Control System and of which the field of application extends continuously throughout the different organisational levels;
  • the Code of Conduct, which have already been described;
  • Internal Control schemes, which list the principal phases of each high and medium risk operative process and the specific control activities referred to the instrumental processes, aimed at achieving a reasonable prevention of the risk of committing offences, as well as special information flows to the Supervisory Body to highlight situations of possible non-compliance with the procedures established in the organisational model.

A summary of the organisational model’s guidelines is available on the Pirelli Internet website.

The Supervisory Body

A special Supervisory Body oversees the operation and compliance with the model, the Supervisory Body is economically independent and is composed of the Board Member Carlo Secchi, the Lead Independent Director and the Chairman of the Committee for Internal Control, Risks and Corporate Governance, the Statutory Auditor Paolo Domenico Sfameni and the Internal Audit Manager and Internal Control Officer, Maurizio Bonzi.

This structure assures that the Supervisory Body is completely autonomous and independent, as well as having the presence of the various professional skills which contribute to control the Company’s management.

The Supervisory Body is also responsible for ensuring that the Board of Directors implements all the necessary changes to the Organisational Model to incorporate the changes in legislation, the methods of performance and the type of business activities. On the other hand, the Supervisory Body reports of the Board of Directors, to the Committee for Internal Control, Risks and Corporate Governance and to the Board of Statutory Auditors in relation to the verification activities performed and their outcome.

Each member of the Supervisory Body is paid an annual fee of 25 thousand euro.

The Supervisory Body was appointed by the Board of Directors on April 21, 2011, and falls from office at the same time as the Board of Directors that appointed it. With reference to the other Italian Group companies, the Supervisory Body was identified by searching for the technical and operative solution that was suited to the size and organisational context of each company, while complying with the mandate and the powers reserved to it by legislation.

Lastly, the introduction of a disciplinary system has been envisaged to sanction any non-compliance with the measures indicated in the organisation, management and control models.

Finally, it is important to note that when requested by the Supervisory Bodies of the Group Companies, the Internal Audit Department of Pirelli & C. and the Group Compliance Department provide the operational support to manage and analyse the information flows established, in accordance with Article 6, paragraph 2, sub-section d) of Legislative Decree No. 231/2001, as well as to perform specific audits based on the information received via the above-mentioned information flows.