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ITEN

Management and board pay

The following policies were adopted in 2017 for the compensation of Snam’s chairman, chief executive officer, managers with strategic responsibilities and non-executive directors.
 
The following are Snam’s managers with strategic responsibilities, other than Directors and Auditors: Chief Commercial, Regulation & Development Officer; Chief Industrial Assets Officer; Chief International Assets Officer; Chief Financial Officer; General Counsel; Executive Vice President Human Resources & Organization; Chief Corporate Services Officer.
 
Hereinbelow is represented the theoretical pay mix for the CEO.
 

chairman

The Chairman of the Board of Directors receives an annual gross fixed payment for the position of € 270,000, including the annual fixed pay for Directors established by the Shareholders’ Meeting, in addition to the refunding of expenses incurred in relation to the position.
 
There are no short- or long-term variable incentives, agreements concerning severance pay or benefits associated with the role.

 

chief executive officer

 

compension-chief-executive
The Remuneration Committee, having analysed the remuneration position of the CEO, at the meeting of 26 May 2016, through specific benchmarks with peer companies comparable with Snam in terms of size and complexity4, reported to the Board of Directors on 31 May 2016 that the position was below the market median values, both with regard to the fixed remuneration component and to total remuneration.
 
The fixed pay for the CEO was therefore defined at € 970,000, taking into consideration: the pay established by the Shareholders’ Meeting for Directors; the pay approved by the Board with regard to the powers delegated, equal to € 150,000; the annual gross pay for the position of General Director, equal to € 750,000.

The annual variable component (Annual Monetary Incentive Plan - IMA) is calculated with reference to a target incentive level (performance = 100) and a maximum level (performance = 130) respectively equal to 50% and 65% of the fixed remuneration, in connection with the results achieved by Snam in the previous year compared with the targets defined. A threshold level is set (performance = 85) below which the short-term incentive is not delivered. The 2017 targets approved by the Board of Directors are based on:

  • Free Cash Flow (30%)
  • Operating efficiency (30%)
  • Investments (20%)
  • Development of non-regulated activities – CNG (10%)
  • Sustainability  - accident frequency index and DJSI, FTSE4GOOD and VigeoEurope indexes (10%)
The 2017-2019 Long-Term Incentive Plan (ILT), for managerial positions with a greater impact on company results, involves the annual granting of free shares up to a maximum value for the CEO of 210% of fixed remuneration after three years (vesting period).
The plan is based on three indicators: Ebitda, weighting of 60%, measured on a linear scale with a minimum equal to the budget -2%, a target equal to the budget and a maximum equal to the budget +4%; Adjusted Net profit, weighting of 30%, measured on a linear scale with a minimum equal to the budget and a maximum equal to the budget +5%; Sustainability, weighting of 10%, measured on a linear scale in terms of reduction of natural gas emissions over the period  01/01/2017 - 31/12/2019 compared to the result recorded at the end of 2016, with a reduction of -1% / -1,5% / -2,5% respectively as minimum, target and maximum.
Total performance is calculated as the average performance of the parameters identified in the three-year vesting period. The three performance indicators act independently of each other.
At the end of the vesting period there are plans for an additional number of shares to be granted, defined as dividend equivalent, calculated as the value of the dividends not received in relation to the actual number of vested shares. The plan also includes a two-year lock-up period on 20% of the shares.

 

With regards to the indemnity for the termination of the directorship and executive position of the Chief Executive Officer, it is aligned with the recurring practice in reference markets and as already adopted by Snam in the past. Specifically, if the term of office is not renewed when it expires, or if it is terminated in advance, two years of fixed annual compensation will be payable upon termination of employment plus the average of the Annual Monetary Incentive paid over the last three years, subject to the application of the provisions of the national contract for executives of companies that produce goods and services. 

In line with the provisions of national agreements and supplementary company agreements for Snam senior management, the CEO comes under the supplementary pension (FOPDIRE), the supplementary healthcare benefits scheme (FISDE) and another health insurance (Generali/Previgen) to supplement the FISDE, life and disability insurance cover, as well as a company car for personal and business use.

MANAGER WITH STRATEGIC RESPONSABILITIES

The fixed remuneration is calculated based on the position and responsibilities assigned taking into consideration the average remuneration levels on the market for positions with similar levels of responsibility and managerial complexity in large national companies. The 2017 Guidelines include selective criteria while maintaining high levels of competitiveness and motivation.
Specifically, the proposed actions involve adjustment measures directed at those in positions where the scope of responsibility has been extended or in positions not higher than the market median references.
The Annual Monetary Incentive Plan (IMA) includes pay calculated with reference to the results of Snam and of individuals with a target incentive level (performance = 100) and a maximum level (performance = 130) differentiated according to the level of the position held up to a maximum of respectively 40% and 52% of the fixed remuneration. A threshold level is set (performance = 85) below which the short-term incentive is not delivered.
 
For Managers with Strategic Responsibilities, the annual variable incentive is calculated partly (50%) on the company results compared with the targets assigned to the CEO, and partly (50%) on a series of individual targets (focused on the economic/financial, operating and business performance, internal efficiency and sustainability).

In line with the provisions for the CEO, Managers with Strategic Responsibilities are part of the 2017-2019 shared-based Long-Term Incentive Plan (ILT) for managerial roles which have a great impact on company results. This Plan has the same performance conditions and characteristics as the Plan for the CEO. For Managers with Strategic Responsibilities the incentive assigned is differentiated by the level of the position up to a maximum of 150% of the fixed remuneration.

The number of shares granted at the end of the three-year (vesting) period is calculated in relation to the results achieved.

For Managers with Strategic Responsibilities the provisions include the termination of employment terms established by the national collective agreement and any supplementary terms agreed individually at the time of termination in accordance with the criteria established by Snam.
 
The effects of any termination of employment for Managers with Strategic Responsibilities on the rights assigned under the scope of long-term incentive plans are described in the allocation regulations. Specifically, in order to foster the retention of resources, it is provided that, in the case of the mutual termination of employment during the vesting period, the beneficiary keeping the right to the incentives reduced in relation to the period elapsed between the allocation of the based incentive and the occurrence of this event. No provision is due in cases of unilateral termination by the Company or for voluntary resignation or for just cause or if due to achieving objectively inadequate results.

Managers with Strategic Responsibilities come under the supplementary pension (FOPDIRE), the supplementary healthcare benefits scheme (FISDE) and another health insurance (Generali/Previgen) to supplement the FISDE, life and disability insurance cover, as well as a company car for personal and business use.

 

Non-executive directors

The Shareholders’ Meeting of 27 April 2016 approved the annual gross pay for the office of € 70,000, plus the refunding of expenses incurred in relation to the position.
Their remuneration is not linked to the financial results achieved by the company nor are they recipients of the share-based incentive plans.

The Shareholders’ Meeting of 26 March 2013 determined the remuneration of directors, setting fixed gross annual compensation at € 40,000 plus reimbursement of expenses incurred in relation to the position.

Their remuneration is not linked to corporate results nor do these directors benefit from share-based incentive plans.

Additional annual compensation is provided for participation in board committees:

  • for the Control and Risks Committee, with regard to the increasingly important role exercised in the oversight of company risks,€ 30,000 for the Chairman and € 20,000 for the other members
  • for the Remuneration Committee, the Appointments Committee and the Sustainability Committee € 20,000 for the Chairman and € 15,000 for the other members.

There are no agreements for severance pay for Non-executive directors or compensation in the event of dismissal or termination of employment without just cause or if their employment is terminated following a takeover bid.

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updated
27 November 2017 - 10:52 CET