Remuneration Policy: consultation

Shareholders,

Pursuant to the combined provisions of Article 123-ter, paragraph 6 and 3 of the Consolidated Finance Law (“TUF”), we have called you to submit the first section of the Remuneration Report for advisory vote by you. This Report illustrates the Pire lli policy governing remuneration of the members of the Board of Directors, the General Managers, Key Managers, Senior Managers and Executives of Pire lli.

In this regard, we remind you that the Remuneration Policy had been submitted for your vote last year, although the Company had no obligation to do so.

The new Policy that is being submitted for your vote this year has been prepared on the basis of the Policy application experience last year. Therefore, its structure has been refined and its content expanded, by incorporating in it elements that had previously been contained in the application criteria, in view of facilitating full comprehension of the link existing between the structure of management remuneration and the creation of value over the medium-long term.

The new Policy also reflects the recent regulatory provisions adopted by Consob in Resolution no. 18049 of November 23, 2011 and the adoption of a new Long Term Incentive Plan. Pire lli has decided to terminate the existing plan for the three-year period 2011-2013 by proposing a new one for the three-year period 2012-2014 that is consistent with the Business Plan for that same period.This new plan has been accompanied by adjustment of the compensation paid to Directors holding special offices, and particularly the Chairman and Chief Executive Officer in the terms that will be illustrated in the Policy. Furthermore, the new Long Term Incentive Plan now includes non-financial objectives, in accordance with the Recommendations of the European Commission.

Therefore, as envisaged in Article 123-ter TUF, the Remuneration Report that we are submitting to you is broken down into two distinct sections:

  1. the first section illustrates:
    • the Pire lli Remuneration Policy for Directors, General Managers, Key Managers and, more generally, the Pire lli Remuneration Policy for all of management;
    • the procedures used for adoption and implementation of this Policy;
  2. the second section, regarding specific members of the Board of Directors and Board of Statutory Auditors, the General Managers and, as a corporate governance disclosure since the conditions imposed by the Consob Regulation do not apply, for Managers with strategic responsibility:
    • provides an adequate representation of each item that composes remuneration, including the treatment envisaged in the event of expiration of the position or termination of the employment relationship, highlighting its consistency with the Policy approved during the previous year;
    • accounts for the compensation paid in 2011 for any reason and in any form by the Company and by its subsidiaries or associates, highlighting any components of that compensation related to activities performed in years prior to the reference year, while also highlighting the compensation to be paid in one or more subsequent years in exchange for the activity performed during the reference year, possibly by indicating an estimate of the components that cannot be objectively quantified in the reference year.

As envisaged by the Consolidated Finance Law, we request that you express your opinion by voting on the first section of the Remuneration Report.