Corporate governance

Ansaldo STS adopts a corporate governance system that is based on the highest business management transparency and fair practice standards. This corporate governance system is compliant with the provisions of law and with the regulatory provisions of Consob and Borsa Italiana. It is also in line with the contents of the code of conduct for listed companies adopted by Borsa Italiana S.p.A. - which Ansaldo STS has implemented - and international best practice. The corporate governance system is aimed at maximizing value for shareholders, monitoring business risks, transparency with the market and reconciling the interests of all shareholders, with particular attention on smaller shareholders.

Ansaldo STS’s corporate governance system is based on a traditional model, and includes:

The company’s main corporate governance tools today are listed below:

Board of directors

Ansaldo STS’s board of directors has the widest powers for the management of the company, with the power to take any and all suitable action to achieve the company purpose, except for those reserved for shareholders.

The current board of directors was appointed by the shareholders during the ordinary meeting held on 13 May 2016.

Board of directorsRisk and control
commitee
Appointments and remuneration committeeExecutive committee
OfficeMembersYear of bithDate first appointed
*
In office sinceIn office untilList (M/m)ExecNon Exec.Indep
under the Code
Indep. under the Cons. fin actNumber of other offices ***(*)(**)(*)(***)(**)(**)(*)
Chairman Alistair Dormer 1963 2 november 2015 13 may 2016 Shareholders’ meeting approving the 2018 financial statements M X(1) - -  . - 15/16 - - - - P 1/1
Deputy Chairman Alberto de Benedictis 1962 13 may 2016 13 may 2016 Shareholders’ meeting approving the 2018 financial statements M - x X X - 9/9 P 4/4 M 4/4 - -
CEO • ◊ Andrew Barr 1973 13 may 2016 13 may 2016 Shareholders’ meeting approving the 2018 financial statements M X - - - - 9/9 - - - - M 1/1
Director Giuseppe Bivona(2) 1964 13 may 2016 13 may 2016 19 gennaio 2017 m - x X X - 9/9 - - - - -
Director Rosa Cipriotti 1974 13 may 2016 13 may 2016 Shareholders’ meeting approving the 2018 financial statements m - x X X 5 9/9 - - - - - -
Director Mario Garraffo 1937 25 november 2015 (2) 13 may 2016 Shareholders’ meeting approving the 2018 financial statements M - X X X 2(4) 15/16 M 4/4 M 4/4 - -
Director Fabio Labruna 1968 13 may 2016 13 may 2016 Shareholders’ meeting approving the 2018 financial statements m - X X X - 8/9 - - - - - -
Director Katherine Mingay 1965 13 may 2016 13 may 2016 Shareholders’ meeting approving the 2018 financial statements M - X X - - 7/9 - - - - M 1/1
Director Katharine Painter 1960 13 may 2016 13 may 2016 Shareholders’ meeting approving the 2018 financial statements M - X X X - 9/9 M 4/4 P 4/4 - -

The symbols shown hereunder must be placed in the “Office” column:

• This symbol indicates the Director responsible for the internal control and risk management system.

◊ This symbol indicates the primary person responsible for the issuer’s management (Chief Executive Officer or CEO).

* The date first appointed given for each director means the date when the director was appointed for (absolutely) the first time to the issuer’s BoD.

** The list from which each director was taken is indicated in this column (“M”: majority list; “m”: minority list).

*** The number of offices of director or statutory auditor held by the interested party in other companies listed in regulated markets, including foreign, in financial, banking and insurance companies, or those of considerable size, is indicated in this column. The offices are specified in detail in the Corporate Governance Report. The offices indicated for the directors who left during the year of reference refer to the date they left.

(*) This column indicates the director participation in board and committee meetings respectively (number of meetings attended compared to the total number of meetings that they could have attended).

(**) The qualification of the member within the committee is indicated in this column: “C”: chairman; “M”: member.

During the year 2016, the Board of Directors met 16 time, the Risk and Control Committee 9 times, the Appointments and Remuneration Committee 12 times and the Executive Committee once.

Board of Directors BY AGE AND GENDERMENWOMEN
< 40 - -
40-50 2 1
51-60 2 2
> 60 2 -

 

Appointment of the board of directors

The company is managed by a board of directors consisting of at least seven and not more than 13 members. Before electing the board, the shareholders decide what the number of members will be within this range. The directors are appointed for up to three years and can be re-elected pursuant to article 2383 of the Italian Civil Code.

In line with the amendments to the Consolidated finance act introduced by Law no. 120 of 12 July 2011, the current by-laws – following the most recent changes made by the shareholders at the extraordinary meeting of 6 May 2013 – provide for mechanisms to ensure a balance of men and women on the boards of directors and statutory auditors, which will be applied upon the first three renewals of the board of directors after one year following the date when the aforementioned law takes effect (i.e. after 12 August 2012).

The directors are appointed by the shareholders during an ordinary meeting by voting for lists. Each list must include two candidates who meet the independence requirements provided for by law, indicating them separately and placing one at the top of the list.

Furthermore, lists with a number of candidates equal to or more than three must include candidates of different genders, in accordance with the notice of call of the shareholders’ meeting, so that the new board of directors is comprised of members of the least represented gender, in accordance with current legislation. In the event of fractions, the number is rounded up.

If these obligations are not met, the list is considered as not having been submitted.

In order to ensure the effective participation of noncontrolling owners in corporate management and the transparency of the selection and appointment process for directors, the by-laws explicitly enable each shareholder to submit or participate in the submission of one list only, that each candidate can be presented in one list only or will be considered ineligible and that each rightful voter can vote for one list only. The shareholders elect the Chairman of the board of directors, selecting the Chairman from among the members of the board. If the shareholders do not elect the Chairman, the Chairman is elected by the board itself. The board can also elect a Deputy Chairman, replacing the Chairman when the Chairman is absent or unable to chair the board.

For additional information on the appointment of the board of directors during the ordinary shareholders’ meeting of 13 April 2016, reference should be made to the Company’s website5.

Directors’ requirements and duties

Under the by-laws, in order to take office as director, one must not only meet the requirements of honorableness provided for by current legislative and regulatory provisions (or any similar requirements established by equivalent provisions), but must also meet the specific requirements of professionalism indicated in the by-laws.

In particular, candidates may not be appointed director of the company, and if they have been appointed, their term of office is considered immediately terminated, if they do not have at least three years of overall experience in the following:

  • administration or supervision activities or managerial duties with companies with a share capital of at least €2 million;
  • professional activities or university teaching as a full professor of legal, economic, financial or technical/ scientific subjects closely related to the company’s business activity; or
  • senior management functions with public bodies or administrations active in the credit, financial and insurance sectors or, in any case, in industries which are closely related to the company’s business activity.

This experience can be assessed on the basis of the candidates’ curriculum vitae, which should contain exhaustive information on the personal and professional characteristics of each candidate and be available to the public, along with each list pursuant to article 144-octies, 1 of the Issuers Regulation. The board of directors verifies that these requirements are met by each of its members.

Non-executive directors

The board of directors is mainly comprised of nonexecutive members (who have not been assigned any operating powers and/or management functions within the company) to guarantee, given the number of such directors and their degree of authority, that their judgment significantly influences board decisions.

Non-executive directors bring their specific expertise to board discussions, to support the examination of matters considered from a different perspective and to encourage the adoption of well- thought out resolutions, in line with the company’s interests. At present all members, except the CEO and Chairman, are non-executive directors.

Independence of directors

The board of directors appointed by the Shareholders’ Meeting held on 13 May 2016 is made up of 6 independent directors and, to be more precise, the directors Giuseppe Bivona (replaced following his dismissal by Mr. Michele Alberto Fabiano Crisostomo), Rosa Cipriotti, Alberto de Benedictis, Mario Garraffo, Fabio Labruna and Katharine Painter.

At the time the lists were presented, these directors undertook to promptly notify the board of directs of any changes in their declaration of being in possession of the independence requirements.

The board verified that the independence requirements of the directors pursuant to art. 148, paragraph 3 of the Consolidated finance act (applicable to directors pursuant to art. 147-ter, paragraph 4 of the Consolidated finance act), art. 3, paragraph 2 of the Code of Conduct and art. 37, paragraph 1, letter d) of the Market Regulation (i) regarding the directors Giuseppe Bivona, Rosa Cipriotti, Alberto de Benedictis, Fabio Labruna and Katharine Rosalind Painter exist on 16 May 2016 and, as regards the director de Benedictis, the requirements were once again checked on 11 July and 19 December 2016; (ii) regarding the director Mario Garraffo, on 24 May 2016 (since he was absent at the previous 16 May meeting); and lastly (iii) regarding the director Michele Alberto Fabiano Crisostomo on 30 January 2017.

In verifying the independence requirements of the directors, the board evaluated, based on the statements of the above people or however on the information at the Company’s disposal, whether the independent directors are party to any relationships that could, or could appear to, jeopardize their independent judgment.

The findings of this evaluation were disclosed to the market in the press releases distributed on 16 May 2016 and, with regard to Mr. Garraffo, on 24 May 2016.

On 10 June 2016, after the appointment of the board of directors, the board of statutory auditors, on the basis of the statements made by the directors and considering the board’s findings, certified proper application of the criteria and verification procedures adopted by the board to evaluate the independence of its members.

No meetings of the independent directors of the company were scheduled in 2016 since such need was not seen, also considering that the board was appointed only on 13 May 2016.

Board of directors activities and assessment of its functioning

In 2016, the board held 16 meetings. Any absences were duly justified. The average length of the board’s meetings in 2016 was approximately five hours.

The meetings of the board of directors saw the participation, depending on the items on the agenda, of the Chief Financial Officer, the Chief Operating Officer, the Internal Audit Manager and, upon the Chairman’s recommendation, other company managers, in order to provide suitable details on the items on the agenda.

In 2016, the secretary to the board Francesco Gianni as well as General Counsel & Compliance function manager Filippo Corsi participated in all the board meetings.

In accordance with the by-laws, the board of directors meets whenever the Chairman, or another member in his place, deems it necessary, or upon the written request of the majority of board members.

On 24 November 2016, with respect to the annual evaluation process of the size, composition and working of the board and its committees, in accordance with the recommendations of article 1.C.1.g) of Borsa Italiana’s code of conduct for listed companies, the board decided by majority, with the nay votes of Mr. Fabio Labruna and Ms.

Rosa Cipriotti, to not carry out this evaluation process in 2016 since most directors, appointed by the shareholders in their meeting of 13 November 2016, held this office for the first time.

Committees

In order to increase the efficiency and effectiveness of the work of the board of directors, the risk and control committee and the appointments and remuneration committee have been established within the board and in accordance with the criteria of the code of conduct that the company decided to adopt.

In this respect, following the approval of the December 2011 edition of the code of conduct, the Company approved the adoption of the principles in the updated code, thereby updating its corporate governance system to meet the new provisions.

Specifically, on 18 December 2012, the Company decided, inter alia: (i) to set up an appointments committee, combining it with the previously established remuneration committee and naming the new committee - vested with the dual function - the “appointments and remuneration committee”, approving its regulation; and (ii) to modify and redefine the duties and functions of the different parties involved in the company’s internal control and risk management system, also approving the regulation of the “risk and control committee”.

Risk and control committee

The risk and control committee currently in office is comprised of three directors, who are all non-executive and independent.

They are the directors Alberto De Benedictis (Chairman), Mario Garraffo and Katharine Rosalind Painter, appointed by the board 6. http://www.ansaldo-sts.com/sites/ansaldosts.message-asp.com/files/downloadspage/7_regolamento_comitato_controllo_e_rischi_en_1.pdf of directors on 16 May 2016.

Pursuant to the code, at the time of their appointment, the board of directors examined the accounting and financial experience of the chairman, Alberto De Benedictis, and the members Mario Garraffo and Katharine Rosalind Painter. In the period from 1 January 2016 to 13 May 2016, the members of the risk and control committee were: Giovanni Cavallini (Chairman), Bruno Pavesi and Paola Giannotti.

The committee meetings are governed by an internal regulation which was last modified by the board on 18 December 2012. The regulation was also found to be compliant with the amendments introduced to the code of conduct in July 2015. The updated version of the regulation is available on the company’s website6.

The risk and control committee has advisory, proposal and preliminary preparation functions on behalf of the board of directors, mainly in relation to the definition of guidelines for the internal control and risk management system and the periodic evaluation of the adequacy and effective functioning of the organizational structure of such a system.

Specifically, the committee is responsible for verifying the functioning and adequacy of the internal control and risk management system, as well as the effective compliance with procedures and internal directives adopted to both ensure sound and efficient management and identify, prevent and manage, insofar as possible, financial, operational and fraud risks to the detriment of the company.

Appointments and remuneration committee

In accordance with the provisions of article 37 of the market regulation, all members of the appointments and remuneration committee are non-executive and independent.

The committee was appointed by the board of directors on 16 May 2016 and is comprised of the non-executive independent directors Katharine Rosalind Painter (Chairwoman), Alberto De Benedictis and Mario Garraffo.

In the period from 1 January 2016 to 13 May 2016, the members of the appointments and remuneration committee were: Giovanni Cavallini (Chairman), Bruno Pavesi and Alessandra Piccinino.

In accordance with article 6.P.3 of the code of conduct, when the committee members were appointed, the company’s board of directors verified and certified that all the directors had accounting and financial expertise and experience.

The committee’s activities are governed by a regulation in line with the code of conduct. The board approved the regulation on 29 January 2007 and it was later modified on 12 May 2008, 5 March 2012 and 18 December 2012. The regulation is available on the company’s website7.

With respect to the code of conduct committee’s functions for both its role in the appointment of directors and remuneration, reference should be made respectively to articles 5 and 6 of the code, which can be found on the Borsa Italiana S.p.A. website8.

Directors’ remuneration

Information on the remuneration of the directors, the General Manager and key managers is given in the remuneration report, which is prepared pursuant to articles 123-ter of the Consolidated finance act and 84-quater of the Issuer Regulation, published on the Company’s website9 and made available to the public in the other ways provided for by current legislation.

On 25 February 2016, the company’s board of directors, with the prior approval of the appointments and remuneration committee, approved the company’s remuneration policy for 2016 and Ansaldo STS’s remuneration report, prepared pursuant to article 123- ter of the Consolidated finance act. The first section of the report illustrates the Company’s remuneration policy and the procedures followed to adopt and implement this policy and it was therefore put to a nonbinding vote by the shareholders on 13 March 2016, in accordance with article 123-ter. The shareholders approved the report.

Furthermore, on 24 March 2017, upon the proposal of the appointments and remuneration committee, the board of directors approved the remuneration policy for 2017.

On the same date, the board of directors approved, with the prior approval of the appointments and remuneration committee, the remuneration report pursuant to article 123-ter of the Consolidated finance act. In accordance with the aforementioned article 123-ter.6 of the Consolidated finance act, the first section of the remuneration report, which illustrates the 2017 remuneration policy for members of the board of directors, the General Manager and key managers as well as the procedures followed for its adoption and implementation, was submitted to the non-binding vote of the ordinary and extraordinary shareholders’ meeting on 11 May 2017. The shareholders approved the report.

Board of statutory auditors

The statutory auditors are appointed by the shareholders during an ordinary meeting by voting for lists. In line with the amendments to the Consolidated finance act introduced by Law no. 120 of 12 July 2011, the current by-laws – following the most recent changes made by the shareholders at the extraordinary meeting of 6 May 2013 – provide for mechanisms to ensure a balance of men and women on the boards of directors and statutory auditors, which will be applied upon the first three renewals of the board of statutory auditors after one year following the date when the aforementioned law takes effect (i.e. after 12 August 2012).

As with the presentation of lists of candidates for the appointment of members of the board of directors, if a list of candidates for the office of statutory auditor is not submitted within the above term, the lists will be considered as not having been submitted.

The lists include the names of one or more candidates, and the number listed may not exceed the number of members to be elected.

Each candidate can be presented in one list only or will be considered ineligible. Lists are divided into two sections: one for candidates for the office of standing statutory auditor and one for candidates for the office of substitute statutory auditor. The first candidate in each section must be registered with the roll of certified auditors and have at least three years of experience in the performance of legally-required audits.

Furthermore, the lists that, considering both sections, include a number of candidates equal to or greater than three must also include, for both the first two candidates on the list for standing statutory auditors and the first two candidates on the list for the replacement statutory auditors, candidates of different genders.

The Chairman of the board of statutory auditors is appointed by the shareholders and is the standing auditor elected by the minority, unless only one list is voted for or no list is submitted.

In these cases, the shareholders appoint the Chairman of the board of statutory auditors according to the legal majorities.

The current board of statutory auditors was appointed by the shareholders’ meeting held on 11 May 2017 and its members are the standing statutory auditors Antonio Zecca (Chairman), Giovanni Naccarato and Alessandra Stabilini, and the substitute statutory auditors Valeria Galardi, Cristiano Proserpio and Alessandro Speranza. No meetings of the board with its new structure had been held as at 31 December 2016.

The board of statutory auditors in office in 2016, appointed by the shareholders in their ordinary meeting of 15 April 2014, had three standing statutory auditors and three substitute statutory auditors.

During the year, the board held 25 meetings. The following table provides information on the attendance of each statutory auditor at the meetings of the board of statutory auditors and the board of directors in 2016:

Board of Statutory Auditors in office

MembersAttendance
Board of statutory auditors
Attendance
Board of directors
Giacinto Sarubbi (Chairman) 100% 100%
Renato Righetti 100% 100%
Maria Enrica Spinardi * 100% 100%

 

* in office since 15 April 2014.

The board of statutory auditors is responsible for monitoring:

  • compliance with the law and bylaws;
  • compliance with the principles of correct administration;
  • the adequacy of the company’s organizational structure in the areas for which it is responsible, the adequacy of the internal control system and the administrative/ accounting system, and the latter’s reliability in correctly reflecting operations;
  • the actual implementation method of the corporate governance rules established by the codes of conduct prepared by the companies that manage regulated markets or trade associations, with which the company is required to comply through public disclosure;
  • the adequacy of the company’s instructions to its subsidiaries pursuant to article 114.2 of the Consolidated finance act;
  • the financial disclosure process;
  • the efficiency of internal control, internal audit and risk management systems;
  • the legally-required audit of the annual separate and consolidated financial statements;
  • the independence of the independent auditors or independent audit company, particularly with respect to the provision of non-audit services to the company;
  • the compliance of the company’s related party-transaction procedures with the principles of the related-party regulation and their compliance, reporting to the shareholders in this respect pursuant to article 153 of the Consolidated finance act.