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remuneration Policy 2017

Policy and 2017 assessment

The remuneration system recognises responsibilities assigned, results achieved and the quality of the professional contribution, and it adheres to the principles of personal development and equal opportunity that have always formed a part of Snam’s organisational culture.

 
The Compensation Committee undertook its annual assessment of Snam’s remuneration policy in early 2017. In making its decisions, with a view to consistency, the Committee took into account the decisions taken by the Shareholders’ Meeting of 27 April 2016 and by the Board of Directors in 2016, following an evaluation of the regulatory framework regarding remuneration, as well as the practices in the preparation of the remuneration report in a national and international context.
 

The Snam Remuneration Policy for 2017 for directors and managers with strategic responsibilities was approved by the Board of Directors on 6 March 2017.

 

New aspects introduced in 2017

Introduction of a Long-term Equity Incentive Plan

During 2017, the Remuneration Committee, with a view to creating the conditions for greater alignment of the variable long-term remuneration to the primary objective of creating value for shareholders, has proposed to the Board of Directors to adopt, for the CEO and the executives most directly responsible for the business results, a plan based on the allocation of ordinary shares of the Company (Performance Shares) instead of medium-long term monetary incentive plans. The plan has been approved by the Shareholders’ Meeting on 11 April 2017. 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.
 

Introduction of a new objective on non-regulated activities in the company’s Performance Plan

In order to strengthen and bring remuneration tools in line with changes in the Strategic Plan,  the Remuneration Committee has introduced a new objective on non-regulated activities (CNG) in Snam’s Performance Plan. 

At-a-glance: Snam’s remuneration policy

 
Short-term incentive systems Long-term incentive systems
       
Existence of a short-term incentive system (cash)     Existence of a long-term incentive system (equity)

   

Short Term Incentive parameters for the CEO Weight
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%

   

Long-term equity plan
Parameters Weight
Ebitda 60%
Adjusted net profit 30%
Sustainability 10%
 

CYCLE OF ACTIVITIES OF THE COMPENSATION COMMITTEE

2017 Remuneration Policy guidelines

In the light of the new challenges and the new ownership structure, the 2017 Remuneration Policy Guidelines include the development of the existing variable remuneration systems in order to strengthen the connection between the actions of management and the value created for shareholders.
 
Specifically, it has been developed a new share-based Long-Term Incentive Plan (ILT) for the CEO and a limited number of Executives (a maximum of 20), who hold the positions which have a greater impact on the creation of wealth or of strategic importance for the purpose of achieving Snam’s multi-year targets. The plan involves the granting of the Company’s ordinary shares if performance targets measured over a period of three years are reached. The maximum number of annual shares to service the plan is 3,500,000. This new share plan replaces the previous medium-/long-term variable remuneration tools for beneficiaries (IMD and IMLT) and guarantees a direct connection with stock performance.
 
The 2017 Remuneration Policy guidelines were defined in line with the aims and general principles stated and were evaluated, by the Remuneration Committee, to be consistent with the applicable market benchmarks.

The remuneration instruments are summarised and explained in the following diagram:

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updated
12 July 2017 - 15:46 CEST