Remuneration policy

Non-Executive Chairman

The remuneration package for the Chairman consists of only the fixed component; below is a description of the remuneration package assigned to the Chairman, as determined by the Board of Directors on 28 April 2021, on the proposal and with the approval of the Nomination and Remuneration Committee.

• Fixed component

The fixed remuneration for the functions of Chairman is set at the gross sum of 600,000 euros per annum. The Chairman does not receive any remuneration for the office of Director or his membership of the Sustainability Committee (pursuant to Art. 2389, subsection 1 of the Italian Civil Code).

• Variable component

The Chairman is not entitled to any form of variable remuneration, either short or long term.

• Severance

There is no severance payment planned.

• Benefits

The Chairman is not a recipient of benefits but receives reimbursement of expenses incurred in the performance of his duties, in accordance with the Bylaws.

Chief Executive Officer

A description of the remuneration package of the Chief Executive Officer and General Manager in office on the date of approval of this report, whose structure was established by the Board of Directors on 21 January 2022 (on the proposal and approval of the Nomination and Remuneration Committee) with reference to the position of General Manager and office of Chief Executive Officer, is provided below.

• Fixed component

The fixed remuneration for the Chief Executive Officer is set at a gross annual amount of 1,400,000 euros, divided between the remuneration for the executive position (1,300,000 euros) and the remuneration for the office of Chief Executive Officer (100,000 euros).

The Chief Executive Officer does not receive remuneration for the office of Board Director, nor as a member of Committees, if any (art. 2389 subsection 1 of the Italian Civil Code).

• Short-term variable component

For each financial year, the Chief Executive Officer is assigned a short-term variable component (MBO), linked to the achievement of objectives set annually by the Board of Directors, corresponding to a target of 100% of his fixed remuneration (1,400,000 euros); each objective is measured individually, with a parametric scale as described in the paragraph "Short-term Incentive System" of the Remuneration report.

On 2 March 2022, the Board of Directors drew up – at the proposal of the Nomination and Remuneration Committee, and in line with the general architecture – the following incentive objectives for the 2020 MBO:

• Long-term variable component

The Chief Executive Officer is a beneficiary of the 2022-2024 Stock Option Plan previously described. The pay opportunity at target provides for the assignment of 24,000,000 option rights, which may increase to 26,400,000 depending on the level of achievement of the performance parameters. For more details, see the information document on the initiative, which can be consulted on the link 2022-2024 Stock Option Plan Information Document.

• Severance payment

As per policy, in the event of termination of the Chief Executive Officer position without just cause, an indemnity equal to the remuneration due for the office will be paid until the natural expiry of the mandate, with a maximum of 24 months' salary (calculated as the sum of the fixed and MBO components). With respect to the termination of the employment contract, the severance pay established by law and by the CCNL (National Labour Contract) is provided, with recognition of additional monthly payments up to a maximum of 24 (calculated on the fixed component).

• Clawback

In the three years following the payment of the bonus of the variable remuneration components, a clawback clause for the amounts paid may be activated, as per policy.

• Benefits and Welfare

In relation to the managerial role, the Chief Executive Officer enjoys the benefits specified for the management of the Company (health insurance cover through the TIM Group Executive supplementary healthcare assistance; supplementary pension cover through membership of the TIM Group Executive complementary pension fund; insurance cover for work-related and non-work-related accidents, life and invalidity benefit due to illness; a company car for mixed use; check-up). The Company also holds a “professional risks policy” that covers all its Directors and Officers.

• Pay mix

The pay mix for 2022 is shown below. The percentages indicated alternatively assume the disbursement of the minimum, target and maximum value for both the short-term incentive scheme – MBO – and the 2022-2024 LTI Plan, which shall be submitted to the Shareholders’ Meeting of 7 April 2022 for approval. With regard to the 2022-2024 LTI plan, the option rights have been valued on an annual basis assuming the fair value of the share as at 2 March 20221, the date on which TIM’s Board of Directors approved the plan architecture, proposing its approval to the Shareholders' Meeting of 7 April.

The following are the names of Key Managers with Strategic Responsibilities in the period 2021-2022:

Directors:

Luigi Gubitosi - Managing Director and Chief Executive Officer of Telecom Italia S.p.A. - General Manager ¹

Pietro Labriola - Managing Director and Chief Executive Officer of TIM S.p.A. - General Manager ²

Key managers:

• Giovanna Bellezza - a.i. Human Resources, Organization & Real Estate ³
• Adrian Calaza Noya - Chief Financial Office ⁴
• Paolo Chiriotti - Procurement ⁵
• Simone De Rose - Procurement ⁶
• Michele Gamberini  - Chief Innovation & Information Office ⁷
• Nicola Grassi - Chief Technology & Operations Office ⁸
• Stefano Grassi - Security
• Alberto Mario Griselli - Diretor Presidente of TIM S.A. ⁹
• Massimo Mancini - Chief Enterprise Market Office ¹⁰
• Giovanni Gionata Massimiliano Moglia - Chief Regulatory Affairs Office ¹¹
• Carlo Nardello - Chief Strategy, Business Development & Transformation Office ¹²
• Agostino Nuzzolo - Legal & Tax
• Claudio Ongaro  - Chief Strategy & Business Development Office ¹³
• Federico Rigoni - Chief Revenue Office ¹⁴
• Giovanni Ronca - Chief Financial Office ¹⁵
• Andrea Rossini - Chief Consumer, Small & Medium Market Office ¹⁶
• Luciano Sale - Human Resources, Organization & Real Estate ¹⁷
• Stefano Siragusa - Chief Network Operations & Wholesale Office ¹⁸

_______________________________

¹ until 26 November 2021

² from 27 November 2021 General Manager TIM S.p.A. and from 21 January 2022 also Chief Executive Officer of TIM Group

³ from 30 November 2021

⁴ from 1 March 2022

⁵ from 5 July 2021 to 6 December 2021; the Procurement position was previously held by Nicola Grassi

⁶ from 1 February 2022; previously - from 7 December 2021 - he was interim manager in the same position

⁷ until 20 September 2021

⁸ from 5 July 2021 to 6 December 2021; he was previously Head of Procurement

⁹ 1 February 2022; previously this position was held by Pietro Labriola

¹⁰ from 7 December 2021

¹¹ from 7 December 2021; until 6 December, Head of Chief Regulatory Affairs & Wholesale Market Office

¹² until 6 December 2021

¹³ from 1 February 2022; previously - from 7 December 2021 - interim manager of the same position

¹⁴ until 4 July 2021

¹⁵ until 1 March 2022

¹⁶ from 21 February 2022

¹⁷ until 29 November 2021

¹⁸ from 7 December 2021; from 21 September until 6 December 2021, Chief Revenue, Information & Media Office; from 5 July 2021 until 20 September 2021, Chief Revenue Office; from 9 April 2021 until 4 July 2021, Chief Technology & Operations Office; until 8 April 2021, Chief Operations Office.

The structure of the remuneration package for Key Managers with Strategic Responsibilities, excluding the Chief Executive Officer, for 2022 is as follows:

• Fixed component

The guideline for 2022 is to keep remuneration in line with the market median, with the possibility of achieving even higher values, setting selective criteria for adjusting fixed remuneration

• Short-Term Variable Component (MBO)

The annual incentive plan for 2022, with a target pay opportunity equal to 50% of fixed remuneration, includes some changes for Executives with Strategic Responsibilities compared to 2021:

• the gateway target (consisting of the Group EBITDA) is reduced from 30% in 2021 to 25%
• the space reserved for objectives linked to the role (Functional objectives) is increased and the weighting relative to the company's macro-economic objectives is reduced accordingly
• the distribution of corporate and functional macroeconomic objectives is differentiated according to the role held

For the reference diagrams see the Remuneration report.

Each objective is measured individually, with a parametric scale as described in the section "Short-term Incentive System".

• Long-Term Variable Component

The Key Managers with Strategic Responsibilities were beneficiaries of the 2022-2024 Stock Option Plan previously described. 

The pay opportunity at target provides for the assignment of up to a maximum of 6,250,000 option rights,

which may increase to a maximum of 6,875,000 depending on the level of achievement of the performance parameters. 

For more details, see the information document on the initiative, which can be consulted on the link 2022-2024 Stock Option Plan Information Document. 

• Severance and Non-Competition Package

The treatments applicable under the law and the CCNL are provided for. The additional allowances provided may not exceed 24 months’ salary (calculated as the sum of the gross annual pay and MBO).

In the event of termination of the employment relationship in the absence of just cause for dismissal, it will be the responsibility of the Chief Executive Officer to identify the resources that - due to the importance and strategic nature of the role covered - may receive severance pay, to which a non-competition agreement may be associated, depending on the importance and strategic nature of the role covered, for a maximum period of one year calculated on the fixed remuneration.

• Benefits and Welfare

Benefits are granted similar to those provided for all other company managers: company car for mixed use, insurance policies (workplace/non workplace accidents, life and invalidity caused by illness), complementary health insurance cover, complementary pension fund and check-up. The Company also holds a “professional risks policy” that covers all its Directors and Officers.

• Lump sum

No bonuses can be assigned that are not tied to performance conditions. The Company has exceptionally reserved the right to make lump sum payments during the hiring phase in order to favour the acquisition of resources with specific skills considered essential for the achievement of the strategic business objectives and who have accrued the right to specific deferred remuneration from their Company of origin.

• Pay mix

The pay mix for 2022 is shown below. 

The percentages indicated alternatively assume the disbursement of the minimum, target and maximum value for both the short-term incentive scheme – MBO – and the 2022-2024 LTI Plan, which shall be submitted to the Shareholders’ Meeting of 7 April 2022 for approval. With regard to the 2022-2024 LTI plan, the option rights have been valued on an annual basis assuming the fair value of the share as at 2 March 20221, the date on which TIM’s Board of Directors approved the plan architecture, proposing its approval to the Shareholders' Meeting of 7 April.