Delegated bodies and other Executive Directors

CEOs

On May 13, 2011 the current structure of the Board of Directors provides for only one CEO, to which the Board has attributed powers, defining their content, limits and any exercise modalities; no executive committee was established.

The CEO has powers of legal representation of the Company and is entrusted with the widest powers for the administration of the Company, pursuant to Board Resolution, with exception of those differently attributed by the Law, by the Bylaws or reserved for the Board of Directors, as described in this section under the "Role of the Board of Directors" (Article 2.C.1 of the Governance Code).

The CEO informs the Board of Directors and the Board of Statutory Auditors of the activities and of the management of the Company as well as of the resolutions passed in exercising his powers pursuant to Article 21.3 of the Bylaws, at least on a quarterly basis and on occasion of Board meetings.

On a quarterly basis, specific reports are prepared in order to inform the Board on major action and activities.

As at the date of this Report and in accordance with 2.C.5 of the Governance Code, it is specified that there are no situations referred to as "cross directorship": in actual fact the Chief Executive Officer of Terna does not hold any offices of Director in companies outside the Terna Group, of which another Director of Terna is Chief Executive Officer.

Exception made for the CEO Flavio Cattaneo, the other 8 members of the Board of Directors (Luigi Roth, Fabio Buscarini, Paolo Dal Pino, Matteo Del Fante, Salvatore Machì, Romano Minozzi, Francesco Pensato and Michele Polo) must all be considered as non-executive. In actual fact, we note, in this regard, that the Chairman Luigi Roth does not hold an executive role, insofar as he has not been assigned individual management powers, nor does he have a specific role in preparing business strategies (Articles 2.P.1 and 2.C.1 of the Governance Code).

As already explained in the previous title "Board Meetings and role of the Chairman", the Bylaws assign the Chairman powers of legal representation of the Company and the company signature, the chair of the Shareholders’ Meetings and the power to convene and chair the Board of Directors and verify the implementation of the Board's resolutions (Article 25 of the Bylaws); he is also assigned the duties assigned to the Chairman by law and by the Governance Code.

In this context, the separation of roles between the Chairman and CEO in Terna strengthens the characteristics of impartiality and balance required of the Chairman of the Board of Directors as envisaged by the Governance Code (Comment to Article 2 of the Governance Code).

Non-executive directors (insofar as they do not have any operative powers of attorney and/or management functions within the company):

  • enrich with their specific competences the Board’s discussions, so as to favour the examination of the subjects according to various perspectives and subsequently pass deeply analysed, conscious and respectful resolutions in line with social interests (Article 2.P.2 of the Governance Code) and
  • for their number, competence, authority and availability of time, they are capable of guaranteeing that their judgement can have a significant weight in Board's decisions in line with what provided for by the Governance Code (Article 2.P.3 of the Governance Code).

The suitability of the dimension, composition and function of Terna's Board and its committees, in this regard is certified by the results of the annual board reviews, as illustrated in the previous title "Assessment of the function of the Board of Directors".

Independent Directors

A suitable number, also for competence, of Non-executive Directors is independent.

Although independence characterises the activity of all the Directors, executives and non-, the presence of Directors that can be qualified as “independent” in compliance with the independence requirements set out by the law, the Bylaws and the Governance Code adopted by Terna, and whose role is significant both within the Board and its committees, suitably ensures adequate consideration of all shareholding members’ interests.

Since February 2007, therefore the Company has been equipped with a specific internal procedure that defines the criteria for the assessment of independence of the non-executive members and for the assessment of the requirements necessary according to the Bylaws and the Corporate Governance Code (“Criteria of application and procedure for the assessment of independence of the directors pursuant to Article 3 of the Governance Code”), in coherence with the provisions of the Governance Code, according to the already explained in the previous section II under "Appointment, requirements and term of office of Directors".

With reference to this criteria, and on the basis of the information supplied by the individual parties concerned, the Board of Directors has assessed the existence of the requirements of independence set out by the law, the Bylaws and the Governance Code with each Director at the first opportunity following appointment (Articles 3.P.2 of the Governance Code and 144-novies, paragraph 1-bis of the Issuers Regulation) and, subsequently, once a year at the board review (Articles 3.P.2 and 3.C.4 of the Governance Code).

More specifically, in the meeting of March 15, 2013, the Board of Directors assessed, on the basis of the information provided by the individual parties concerned, any commercial, financial and professional relations entertained, directly or indirectly, by the Directors with TERNA, and which may be or appear to be such as to affect the independence of a Director by virtue of their significance both in absolute terms and with reference to the economic-financial position of the party concerned and certified the existence of the requirements of independence with the following 6 non-executive directors: Fabio Buscarini, Paolo Dal Pino, Salvatore Machì, Romano Minozzi, Francesco Pensato, Michele Polo (Articles 3.C.1, 3.C.2, and 3.C.4 of the Governance Code).

At the same time, the correct application of the defined criteria and the procedures adopted by the Board of Directors was verified by the Board of Statutory Auditors (Article 3.C.5 of the Governance Code).

Among the assessments carried out by the Board, with reference to the 6 Directors, the existence is proven of the requirement of independence envisaged for in Article 15.4 of the Bylaws that requires that at least 1/3rd of the Directors in force - with rounding, in case of fractional number lower than the unit, to the following unit - meets the requirements of independence established for Statutory Auditors by Article 148, paragraph 3, of the Consolidated Law on Finance.

The number of independent directors is therefore already in line with the requirements for the members of the board as set out in the Governance Code for issuers belonging to the FTSE-MIB index, which applies as from the forthcoming renewal of the body (Article 3.C.3 of the Governance Code).

The number and competences of the independent directors have also guaranteed a suitable membership of the committees indicated by the Governance Code and instituted in Terna in accordance with the provisions of current transitional regulations of said Code (paragraph VIII of the "Guidelines and transitional regime" and 3.C.3, first sentence, of the Governance Code).

Following the composition and the work method of the Board of Directors, as well as the presence of Independent Directors in the composition of the Committees, in the operating system a constant exchange of information between the same Independent Directors has been taking place, both at meetings of the Internal Committees and at the Board meetings, which has not required a specific meeting to be held for them (Article 3.C.6 of the Governance Code).

Lead Independent Director

The work method and composition of the Board of Directors has assured the suitable coordination of the contributions and the requests of the Non-executive Directors and, in particular, of the Independent Directors; it also guaranteed a preventive exchange of information that rendered the work of the Board productive and focused on the true requirements of the Company. On the basis of these assumptions, confirmed by the results of the board review to which the Board is subjected, and without the criteria being met as specified in the provisions of the 2006 edition of the Governance Code, updated in 2010 or the new provisions of the Governance Code (Article 2.C.3 of the Governance Code), which are intended to be applied as from the next renewal of the body, in Terna the figure of Lead Independent Director has not yet been instituted (Article 2.C.4 of the Governance Code).