Composition

In compliance with the shareholders’ resolution passed during the ordinary meeting held on May 13, 2011, the Board of Directors numbers nine members, whose term will expire with the approval of the financial statements as of 2013.

The members of the Board of Directors, in accordance with that resolved by the Shareholders’ Meeting of May 13, 2011 are: Luigi Roth, Flavio Cattaneo, Paolo Dal Pino, Matteo Del Fante and Michele Polo (Directors appointed within the majority list formulated by Cassa Depositi e Prestiti S.p.A.), Fabio Buscarini, Salvatore Machì and Romano Minozzi (Directors appointed from the minority list submitted by shareholder Romano Minozzi and companies he controls).

The Directors appointed represent two of the three lists submitted for the indicated Shareholders' Meeting. Further information regarding the submitted lists of candidates and on the results of the voting is available on the Company's website at www.terna.it in the section "Investor Relations/Corporate Governance/Company bodies/Shareholders' Meetings/Shareholders' Meeting of May 13, 2011".

Following the resignation of Director Andrea Camporese (appointed by the abovementioned Shareholders' Meeting from the majority list), the Board of Directors in its meeting on July 29, 2011, resolved to appoint by co-optation Francesco Pensato (subject to indications from the same majority shareholder Cassa Depositi e Prestiti S.p.A. that had expressed the resigning Director). This appointment was confirmed by the Shareholders’ Meeting of May 16, 2012.

On the basis of the statements made for the appointment, of the vote count and of the end of voting, the appointed Board of Directors, also following appointment by appointment of Director Pensato, largely meets the requirements envisaged by Article 147-ter, paragraph 3 of the Consolidated Law on Finance and three members of the Board of Directors appointed by the Meeting on May 13, 2011 were taken by the minority list that has obtained the highest number of votes and is not connected in any way, not even indirectly, with the members who have submitted or voted the list that won for a number of votes.

The Board of Directors consists of executive and non-executive directors and provides for the presence of a Chairman, appointed by resolution of the Shareholders’ Meeting of May 13, 2011, in accordance with Article 16 of the Bylaws, and a single executive director, the Chief Executive Officer, appointed by the Board of Directors in accordance with Article 22 of the Bylaws, in accordance with that specified in the following title of this section "Appointed bodies and other executive directors" with suitable competence and professionalism (Articles 2.P.1 and 2.P.4 of the Governance Code).

Terna's Directors are suitably competent and professional (Article 2.P.1 of the Governance Code). A brief description of the Board members' professional background is provided:

• Luigi Piergiuseppe Ferdinando Roth, 72 years old - Chairman

[born in Milan on November 1, 1940]

With a degree in Business Administration from the “Luigi Bocconi” University, Milan, he is a registered auditor. He was appointed Chairman of Terna S.p.A. in November 2005; he was appointed Chairman of Terna Rete Italia S.r.l. in November 2009 (formerly TELAT S.r.l.) and in February 2012, Chairman of Terna Rete Italia S.p.A., a subsidiary of Terna S.p.A. He has also been Chairman of Alba Leasing S.p.A. since May 2012 and independent director on the board of Pirelli & C. S.p.A. and Autostrada Torino Milano S.p.A. since April 2007.

Mr. Roth began his career as a business manager with the Pirelli Group, handling activities in Italy and abroad. He then joined Metropolitana Milanese as Director of Planning. Since 1980, he has managed mid-sized companies both in the manufacturing and real estate sectors, in the positions of General Manager and CEO. From 1986 to 1993 he was Managing Director of Ernesto Breda S.p.A.

From 1993 to 2001 he was Chairman and Managing Director of Breda Costruzioni Ferroviarie S.p.A.. From April 1996 to January 1998, he was Chairman of Società Ferrovie Nord Milano S.p.A. of which he was CEO from December 1996 to January 1998. From December 1996 to January 1998 he was Chairman and CEO of Società Ferrovie Nord Milano Esercizio S.p.A.. From May 1998 to December 2000 he was CEO of Ansaldo Trasporti S.p.A. and transmission agent for Finmeccanica S.p.A.. From 2002 to 2006, he was Board Member at the Luigi Bocconi University.

From January 2004 to April 2007 he was Deputy Chairman at Cassa Depositi e Prestiti S.p.A. From May 2004 to April 2007 he was Board Member at TELECOM Italia S.p.A. and from 2001 to 2009 he was President of the Fondazione Fiera Milano. From May 2006 to November 2009, he was Deputy Chairman of Terna Participações S.A., a subsidiary of Terna S.p.A., from April 2009 to April 2012, Chairman of Banca Popolare di Roma and from 2009 to 2010, Director on the Board of Cassa di Risparmio di Ferrara.

• Flavio Cattaneo, 49 years old – CEO

[born in Rho (Milan) on June 27, 1963]

With a degree in Architecture from the Milan Politecnico, Mr. Cattaneo has also received specialized training in business management. Since November 2005, Flavio Cattaneo has been CEO of Terna S.p.A.. Since January 2008 he has been Independent Director in Cementir Holding S.p.A. Since October 2008, he has been Deputy Chairman in Charge of Energy and Environmental Policies at UIR, Union of Industrialists and Companies in Rome.

He has held important managerial and administrative positions in various Italian companies in the building, radio and television, service, new technologies, public service and facilities sectors. He became head of the former Ente Autonomo Fiera Internazionale di Milano as Extraordinary Commissioner in 1999 and went on to oversee its stock market listing as Fiera di Milano S.p.A., serving as Chairman and CEO until 2003.

Flavio Cattaneo has been Director of many energy companies (from 1999 to 2001), including: AEM S.p.A. of Milan (as Deputy Chairman), Serenissima Gas S.p.A., Triveneta Gas S.p.A., Seneca S.r.l. and Malpensa Energia S.r.l.. From April 2003, he was appointed at the top of the public TV R.A.I. S.p.A. as General Manager until August 2005, also dealing with the merger with Rai Holding and the separation of the accounts. From May 2006 to November 2009 he was Chairman of Terna Participações S.A., a subsidiary of Terna S.p.A..

• Fabio Buscarini, 65 years old - Director

[born in Ancona on February 6, 1948]

He has a degree in Sociology from the University of Trento. Since January 1, 2007 he has been the Managing Director and General Manager of INA Assitalia S.p.A., positions individually held from the previous year in both companies before their merger. From 1969 he was with Assicurazioni Generali, where he held various positions, including General Manager in April 2005.

He currently also holds an important corporate role in a company of the Generali Group, namely Generali Business Solutions S.p.A. and is also a Director on the Board of Burgo Group S.p.A.

Since May 2011 he has been a member of the Board of Directors of Terna S.p.A..

He is a representative for ANIA at the CONSULTA for Rome Businesses Association.

He has also held the following offices: Deputy Chairman and Director in ImpreBanca Finanziaria d’Impresa S.p.A. (May 2008 - April 2012), Director on the Board of Compass S.p.A. (October 2010 - April 2012), in Banca Generali S.p.A. (April 2009 - May 2011) in FATA Assicurazioni Vita e Danni S.p.A. (December 2006 - April 2009) and at Banca di Credito dei Farmacisti (February 2006 - July 2008); Italian Member of the International Management Board - sponsor of Operational Excellence (2005 - 2006); President of Risparmio Assicurazioni (December 2004 - August 2006); Member of the Board at Generali Vita (April 2003 - April 2006), Europ Assistance (March 2003 - April 2004) and Finagen (March 2003 - April 2004).

• Paolo Carlo Renato Dal Pino, 50 years old - Director

[born in Milan on June 26, 1962]

He has a degree in Economics from the University of Pavia. He is presently the Executive President of Pirelli Latin America. Since April 2008, he has been Director on the Board of Terna S.p.A. and, as part of this office, Chairman of the Control and Risk Committee, Coordinator of the Related Party Transactions Committee and member of the Remunerations Committee.

He previously held the following offices: Managing Director of Wind Telecomunicazioni S.p.A. (2006 - 2007); Chairman of Telecom Italia Latin America and of Tim Brasil (2004 - 2005); Managing Director of SEAT S.p.A. (2001 to 2004); General Manager of Gruppo Editoriale L’Espresso (1995 – 2001); Chief Financial Officer of Editoriale la Repubblica S.p.A. and has also been Managing Director of Kataweb S.p.A. and Director and member of the Executive Committee of ANSA.

In 1986, he began his career in the Fininvest Group and from 1987, until 1990, he joined the Mondadori Group where he was CFO of the Verkerke Group in The Netherlands. 

• Matteo Del Fante, 45 years old - Director

[born in Florence on May 27, 1967]

He has a degree in Economic Policy from the “Luigi Bocconi” University in Milan. He began his career with J.P. Morgan in 1991 holding positions of increasing responsibility for Italy and for foreign countries in the sector of fixed income markets. From 1999 to 2003, as Managing Director in London, he managed significant financial and strategic operations in Europe. Since June 2010 he has been General Director at Cassa Depositi e Prestiti S.p.A., where he previously was Head of the Financial Department and of the Real Estate Department.

Since July 2010, leaving the position of CEO, he took on the position of chairman of the Board of Directors of “CDP Investimenti SGR”, a savings management company which founded and manages the “Fondo Investimenti per l'Abitare” operating in the private social construction sector. Since May 2007, he has been a Board member of the consulting firm SINLOC, a subsidiary of bank-based Foundations. Since April 2008, he has been a Director on the Board of Terna S.p.A. and, as part of this appointment, member of the Control and Risk Committee.

Since July 2011, he has been a member of the Supervisory Board of "EEFF - European Energy Efficiency Fund S.A." fund for energy efficiency promoted by Cassa Despositi e Prestiti, the European Commission, European Investment Bank (EIB) and Deutsche Bank.

• Salvatore Machì, 75 years old - Director

[born in Palermo on May 28, 1937]

He holds a degree in Electronic Engineering and has received specialized training at the Istituto Superiore di Telecomunicazioni, in addition to his professional experience with Esso and IBM, he joined Enel in 1965 and held various positions up to 1999, including Manager of the Transmission Department, National Manager of Thermoelectrical Energy Generation and Purchase and Tender Manager. He was CEO (from July 1999 to April 2000) and, then, Chairman (up to July 2003) of the Gestore della Rete di Trasmissione Nazionale S.p.A., and Director of Gestore del Mercato Elettrico S.p.A. during that time.

He has been Chairman of the Board of Directors of CESI S.p.A. since March 2003, where he previously (from July 1999 to October 2001) served as CEO. He has been a Director on the Board of Terna S.p.A. since September 2004 and, as part of this appointment, Chairman of the Remunerations Committee and Coordinator of the Related Party Transactions Committee. 

• Romano Minozzi, 78 years old - Director

[born in Castelnuovo Rangone (Modena) on March 6, 1935]

He has a degree in Business and Economics from the University of Bologna.

He began his career at the Banca Commerciale Italiana. In 1961 he was one of the founders of Iris Ceramica, where he holds the position of President and is still the principal reference person.

He is currently not only Chairman of Iris Ceramica S.p.A. but also Director of Castellarano Fiandre S.p.A. and, since January 7, 2013, Chairman of GranitiFiandre S.p.A.

He has been a Director on the Board of Terna S.p.A. since May 2011 and, as part of this appointment, member of the Remunerations Committee and of the Related Party Transactions Committee.

Romano Minozzi has received recognition for his activities, including the “Innovazione 2000” award by the Academy of Ceramics.

In the past, he held various roles: for 10 years, Director of Banco S. Geminiano e S. Prospero, subsequently merged into Banco Popolare; from July 2002 to May 2005, Independent Director of Ferrari Automobili S.p.A. Maranello (MO) on the appointment of Mediobanca and member of the syndicate agreement of Mediobanca since its constitution; Director of GranitiFiandre S.p.A. from April 2004 and Chairman of Fincea S.p.A. and Domfin S.p.A., Sole Director of IRIS Due S.p.A., Sole Director of R.M. Finanziaria S.p.A. and Canalfin S.p.A. (the latter incorporated by merger of October 31, 2012 into Iris Ceramica S.p.A.).

• Francesco Pensato, 66 years old - Director

[born in Casalpusterlengo (LO) on February 17, 1947]

He holds a Law Degree from the University of Milan. He is a professional Supreme Court of Cassation lawyer and, since 2001, has been Senior Partner at the Associated Legal Office “Franzosi-Dal Negro-Pensato-Setti”, as head of the department of corporate law and bankruptcy procedures and is presently owner of the “Pensato & Partners Avvocati” associated law firm. Since July 2011, he has been a Director on the Board of Terna S.p.A. and, as part of this appointment, member of the Control and Risk Committee. Since 2010 he has also been Board Member at Mediocredito Italiano S.p.A.

His professional experience in the field of legal consulting and assistance in corporate and commercial matters for medium and large Italian and foreign companies also includes various legal corporate appointments such as Chairman of Arbitration tribunals, as well as Adjuster and Extraordinary Commissioner with management functions upon appointment by the Ministry for Economic Development. As a legal appointment, he is currently the Common Representative of Telecom Italia S.p.A.'s bondholders.

He has been a member of the Commission for Reforming Bankruptcy Procedures on appointment of the Ministry of Justice and has been a member of the Commission for reforming the extraordinary administration of the large groups facing critical situations formed by the Ministry for Economic Development. From 2001 to 2004, he was Vice President of the Organismo Unitario dell’Avvocatura Italiana (OUA) and, from 1998 to 2001, joint Chairman with the Chairman of the Court of Appeal of Milan of the Joint Commission for relations between the Magistracy and the Bar in Milan.

• Michele Polo, 55 years old - Director

[born in Milan on August 7, 1957]

He has a degree in Business and Economics from the “Luigi Bocconi” University in Milan, and graduated in Economic Policy with a Masters in Economic Sciences from the London School of Economics. From 2003 he has been Ordinary Professor of Economic Policy and from 2007, Vice-Chancellor at the “Luigi Bocconi” University. Since April 2008, he has been a Director on the Board of Terna S.p.A. and, as part of this appointment, member of the Internal Control Committee (now the Control and Risk Committee).

He is Director of the Institute for Economics and Policy of Energy and the Environment (IEFE) of the Bocconi University and carries out other scientific and academic activities: he is Director of the Journal of Economists and member of the Editors Committee of Economy of Energy Sources and the Environment and of the Editor's Committee of Market, Competition, and Regulations.

He is scientific advisor of the publishing house “Il Mulino”, in Bologna. From 2003 to 2006 he was Economic Advisor of the General Management of Competition of the European Commission. Since April 2008 he has been a member of the Board of Directors of Terna S.p.A.. He is also the author of numerous essays and monographs on themes such as antitrust, liberalisation and energy sectors.

During its term, the Board of Directors has confirmed the existence of the requirements of honour and professionalism held by each of its members (Article 2.P.1 of the Governance Code).

The evaluation regarding the existence of the requirements of independence for each of the non-executive members was made, taking into account the information provided by each person, during the appointment and during the meeting held on March 15, 2013 according to the terms stated in the following paragraph “Independent Directors”.

Table 1 attached gives information on the members of the Board of Directors as at March 15, 2013 (Articles 1.C.1 letter i)-(1) of the Governance Code and 123-bis, paragraph 2, letter d) of the Consolidated Law on Finance).

Maximum number of positions in other companies

All the Directors accept their appointment to office when they believe they can devote the necessary time to the diligent performance of their duties – also considering the number and type positions they hold outside the Company in other companies listed on regulated markets (also abroad), financial companies, banks, insurance companies and significantly large companies, and the work required of additional working and professional activities carried out and the association offices held – and to devote the necessary time to the diligent performance of their duties, as they are well aware of the responsibilities of the office held.

To this end, since February 2007, in compliance with Article 1.C.3 of the Governance Code, Terna's Board of Directors approved its own guidelines regarding the maximum number of positions as Director or Statutory Auditor in significantly large companies that can be held still enabling the efficient performance of the duties as Director of Terna S.p.A. included in the internal document "Orientations concerning the maximum number of positions that can be held by Directors of Terna S.p.A." requiring the Directors of Terna consider the acceptance of the office. 4 years after adoption, following the constant monitoring of the governance choices made by the company and in line with the practice seen in similar companies, in the meeting of October 7, 2011, the Board of Directors proceeded to review said guidelines, which, in order to consider the clarifications provided by the Governance Code in the December 2011 edition, were further updated by the resolution of December 19, 2012.

To this purpose, “significantly large companies” were defined as:

  1. companies with shares listed on regulated markets, in Italy or abroad;
  2. Italian or foreign companies with shares not listed on regulated markets, and operating in the insurance, banking, brokerage, asset management or financial sectors;
  3. other Italian or foreign companies with shares not listed on regulated markets, not operating in the sectors listed in letter b), having net assets exceeding € 1 billion.

The Board has identified different general criteria for the commitments required of each role (CEO, Executive Director - for example Executive Chairman, Managing Director, i.e. with special proxy - Non-executive and/or Independent Director and Standing Statutory Auditor), considering the nature and size of the Company in which the positions are held and whether they are part of the Terna Group or are Terna's investees (which, originating from the assignment itself, are not calculated in the total number). It is specified that the attribution of deputy powers or for urgent cases only to directors without management powers of attorney does not, in itself, make them executive directors, except where such powers are, in actual fact, used significantly frequently. A “weight” was assigned to each type of position for the purposes of assessing the commitment required, and the Directors also established that the role of CEO at Terna is incompatible with the same role in other significantly large companies.

When more assignments are held within the same Group, also for a work relation with a company belonging to the Group itself, only the most important assignment is considered.

All the Directors in office that were appointed by the Meeting on May 13, 2011 informed about the positions they held at the time the lists were submitted and subsequently when they accepted their appointment. Likewise, the Director that was confirmed by the Shareholders’ Meeting on May 16, 2012 at the time of appointment. Based on the updated information delivered to the Company in compliance with the approved guidelines, as of March 15, 2013, all Directors held a number of positions that is compatible with the guidelines set by the Board.

In the summaries of each Director's personal characteristics, all the positions held by them are indicated. The total number of positions held as Directors or Statutory Auditors in other significantly large companies is provided in the attached table 1.

There have not been exceptions, issued by Terna's Shareholders' Meeting, to the prohibition of competition by the Directors provided for by Article 2390 of the Civil Code (Article 1.C.4 of the Governance Code).

Induction Programme

Terna has considered the organisation of initiatives appropriate, which now constitute an at least annual tradition, aimed at providing Directors and Statutory Auditors with suitable knowledge of the segment of business in which the company operates, business dynamics and their evolution and the reference legislative framework, as established by Article 2.C.2 of the Governance Code.

At the initiative of the Chairman, by agreement with the Chief Executive Officer, subsequent to appointment and during FY 2012, the Directors of Terna were involved in meetings with the company management, also attended by the members of the Board of Statutory Auditors, in relation to the core business, with specific reference to the preparation of the National Transmission Grid development plan.

Moreover, during the Board meetings of the committees, at the request of the Chairman and in line with the provisions of Article 1.C.6 of the Governance Code, executives of the company attended the meeting, whose presence was considered helpful to ensuring the best possible information on the items on the agenda and, where required by the specific subject, to explain the reference legislative framework.

In addition, the Directors are kept constantly informed by competent departments on the main legislative and regulatory innovations concerning the Company and the exercise of own functions. On occasion of the appointment, they are adequately informed about the existing Corporate Governance system and the fundamental lines of governance.