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Top management

Chairman

The remuneration package awarded to the Chairman consists solely of the fixed component; it should be noted that the variable component consisting of the End of Mandate Indemnity provided for the previous holder of the office has been made obsolete owing to the judgments expressed by the shareholders at the General Meeting of 2019.

The following is a description of the Chairman’s remuneration package, as determined by the Board of Directors on October 21, 2019:

  • Fixed component

For the functions of Chairman, the annual gross amount is €600,000. The Chairman is not the recipient of

remuneration for the office of Director or for that of a member of the Strategic Committee (pursuant to Article

2389 paragraph 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 payment

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 Articles of Association.

Chief Executive Officer

Below is a description of the remuneration package established by the Board of Directors (upon proposal and assent of the Nomination and Remuneration Committee) on ovember 18, 2018, when Mr. Luigi Gubitosi was hired as General Manager and appointed Chief  xecutive Officer:

  • Fixed component

A gross annual amount of €1,400,000 is set for the Chief Executive Officer as fixed remuneration, distributed between the remuneration for the executive employment relationship and the remuneration for the office of CEO, as established by the Board of Directors on November 18, 2018 and thereafter revised on April 1, 2020. 

The Chief Executive Officer is not the recipient of remuneration for the office of Director or member of the Strategic Committee (pursuant to Article 2389 paragraph 1 of the Italian Civil Code).

The fixed component of the Chief Executive Officer’s remuneration is to be considered adequate to provide remuneration for the position held in the event that the variable component described below is not paid due to the failure to achieve the performance objectives indicated by the Board of Directors.

  • Short-term variable component

For each year of his/her term of office, the Chief Executive Officer is awarded a short-term variable component, based on the achievement of the targets set annually by the Board of Directors, corresponding to 100% of his/her fixed remuneration (€1,400,000); a parametric scale is applied that recognizes a bonus equal to 50% of the target in case of reaching the minimum level, up to a bonus equal to 150% of the target in case of reaching the maximum level.

Each target is measured individually, so different combinations of target achievement levels are possible for the appreciation of which the linear interpolation mechanism will be used.

On March 10, 2020, 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:

Obiettivi Peso Min (%tgt) Tgt Max (% tgt)

TIM Group EBITDA GATE 

30%

95%

Bdg

105%

TIM Group Equity Free Cash Flow

25%

- 12%

Bdg

+12%

TIM Group Net Financial Position 

15%

+2,5%

Bdg

-2,5%

TIM Group Services Revenues

10%

-2%

Bdg

+2%

ESG INDICATOR:

Employee Engagement (50%)

Customer Satisfaction Index (50%)

20%

 

-3 pp

-1,9%

 

Target

Target

 

+2 pp

+1,9%

For 2020, the TIM Group EBITDA gate is confirmed, the achievement of which at a inimum level is a condition for access to the bonus, with the effect that failure to achieve it does not allow the bonus to be paid. The Customer Satisfaction Index is reintroduced as an essential condition of business sustainability, consistent with the need to favor a "customer-centric” approach. Finally, in line with the sustainability policy pursued by the Company, an objective is introduced that takes into account staff engagement.

In the three years following payment of the bonus, the clawback clause may be activated, as per the policy.

  • Long-term variable component

2020-2022 LTI

The Chief Executive Officer, by virtue of the office held, will be the recipient of the 2020-2022 cycle of the new 2020-2022 rolling LTI Plan, subject to its approval by the Shareholders’ Meeting scheduled for April 23.

The condition for the allocation of the new Plan will be the waiver of the 2020 annual installment of the current 2018-2020 LTI Plan (see next paragraph). For the general description of the 2020-2022 LTI Plan, please refer to pages 10-11 and 12; for more details on the 2020-2022 Plan, please refer to the information document of the initiative available on the website www.telecomitalia.com.

2018-2020 Performance Share Plan

The Chief Executive Officer is also the recipient of the 2018-2020 Performance Share Plan, for the two-year period 2019-2020, with an annual participation target of 200% of the fixed component. Please refer to the 2018 Report on Remuneration document for a description of the plan.

  • Severance payment

As per policy, in the event of termination of the Board of Directors without just cause, an indemnity equal to the remuneration due until the natural expiry of the mandate is paid, with a maximum of 24 months’ salary. With respect to the termination of the employment contract, severance pay packages established by law and the National Collective Labor Agreement are provided for, with a maximum of 24 additional months’ pay.

  • Benefits

In relation to the executive employment relationship, the Chief Executive Officer enjoys the benefits provided for the Company’s management (health care coverage through supplementary health care for Telecom Italia Group executives; supplementary pension coverage through membership of the Telecom Italia Group Executives’ Supplementary Pension Fund; insurance cover for professional/extra-professional accidents, life and disability due to illness; company car for general use check-ups). The Company is also covered by an “occupational risk policy” for all its Directors & Officers.

  • Pay mix

The percentages indicated alternatively assume the disbursement of the minimum, target and maximum value for both the short-term incentive scheme – MBO – and the new 2020-2022 LTI Plan, whose approval is submitted to the Shareholders’ Meeting of April 23, 2020. With regard to the 2020-2022 LTI, the first three-year cycle is considered, net of the potential effects of the bonus/malus factor of the payout, and assuming the waiver of the 2020 target bonus for the 2018-2020 LTI.

Key Managers with strategic responsibilities

The following are the names of Key Managers with Strategic Responsibilities in the period 2019-2020:

Directors:

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

Key managers:

  • Lorenzo Forina - Chief Revenue Office (1)
  • Michele Gamberini -  Chief Technology & Information Office (2)
  • Nicola Grassi - Responsabile Procurement (3)
  • Stefano Grassi - Responsabile Security (4
  • Pietro Labriola - Presidencia TIM Participacoes (5
  • Giovanni Gionata Massimiliano Moglia - Chief Regulatory Affairs & Wholesale Market Office (6)  
  • Carlo Nardello - Chief Strategy, Customer Experience & Transformation Office (7)
  • Agostino Nuzzolo - Responsabile Legal and Tax
  • Federico Rigoni - Chief Revenue Office (8)
  • Elisabetta Romano -  RChief Innovation & Partnership Office (9)
  • Giovanni Ronca - Chief Financial Office  (10)
  • Luciano Sale - Responsabile Human Resources, Organization & Real Estate (11)
  • Stefano Siragusa - Chief Operations Office (12)

1 until February 3, 2020

2 from November 12, 2019; previously the function was called “Chief Technology and Innovation Office” and the responsibility was entrusted to Elisabetta Romano

3 from March 16, 2020

4 from June 27, 2019

5 from April 3, 2019; previously the responsibility was entrusted to Sami Foguel

6 from June 27, 2019until November 11, 2019, the function was called the “Chief Regulatory Affairs Office”

7 from March 8, 2019; previously the function was called the “Chief Strategic Development & Transformation Office”

8 from February 4, 2020; previously Head of Procurement

9 until November 11, 2019 “Chief Technology and Innovation Office” from November 12, 2019 “Chief Innovation & Partnership Office”

10 from June 3, 2019; previously the responsibility was attributed to P. Peluso

11 rom February 5, 2019; until April 29, 2019 the function was called “Human Resources & Organizational Development”

12 until November 11, 2019 the function was called Chief Wholesale Infrastructures Network & Systems Office.

 

The structure of the remuneration package for Key Managers with Strategic Responsibilities, excluding the Chief Executive Officer, for 2020 is as follows:

  • Fixed component

The guideline for 2020 is to keep remuneration in line with market practice, with selective criteria for adjusting fixed remuneration (see page 9).

  • Short-Term Variable Component (MBO)

The annual incentive plan for 2020, with pay opportunities at targets up to a maximum of 50% of fixed remuneration, is linked to the achievement of a combination of predefined targets:

a) business objectives of an economic-financial nature;

b) Function objectives

c) ESG indicator, consisting of the Customer Satisfaction indicator and the employee engagement target.

 

The breakdown of objectives is described in the table below:

Targets Weight

TIM GROUP EBITDA (GATE)

30%

TIM GROUP EQUITY FREE CASH FLOW

15%

TIM GROUP NET FINANCIAL POSITION

10%

TIM GROUP SERVICES REVENUES

15%

FUNCTION SPECIFIC OBJECTIVE

10%

ESG INDICATOR: 

  • EMPLOYEE ENGAGEMENT (50%)

  • CUSTOMER SATISFACTION INDEX (50%)

A performance gate is also envisaged for 2020, consisting of the TIM GROUP EBITDA, in which achievement of a minimum level is a condition for access to the entire incentive system The parametric scale of appreciation of the objectives recognizes a bonus equal to 50% of the target value awarded if the minimum level is reached, up to a bonus equal to 150% of the target value awarded if the maximum target level is reached.

Each objective is measured individually, so different combinations of target achievement levels are possible for the appreciation of which the linear interpolation mechanism will be used.

With regard to this segment of the population, the multiplier factor of the overall payout linked to the failure to implement corrective actions/remediation plans defined with the Control Functions is applied. It is possible to opt between paying the accrued bonus on a payroll and paying the entire amount - or 50% of it - to the Fontedir supplementary pension fund, thereby benefiting from more favorable tax and contribution treatment.

In the three years following payment, the clawback clause may be activated on the sums disbursed, as per the specific Company Regulations.

  • Long-Term Variable Component

2020-2022 LTI

These resources are the recipients of the new LTI 2020-2022 rolling Plan, subject to its approval at the Shareholders’ Meeting scheduled for April 23. The condition for the allocation of the new Plan will be the waiver of the 2020 annual installment of the current  2018-2020 LTI Plan. For more details on the 2020-2022 LTI Plan, please refer to the information document of the initiative available on the Website www.telecomitalia.com 

2018-2020 Performance Share Plan 

Key Executives with Strategic Responsibilities were assigned the 2018-2020 Long-Term Plan, with an annual participation target of 75% of the fixed component. Please refer to the 2018 Report on Remuneration for a description of the plan.

  • 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. 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 performed – may be recipients of a severance pay package, which may be associated with a non-competition agreement, if the termination of the employment relationship could entail risks for the Company.

  • Benefits

Benefits similar to those provided for the general management of the company are recognized: motor vehicle for mixed-use, insurance policies (occupational accidents, life and disability due to illness), supplementary health cover, supplementary pension fund and check-ups. The Company is also covered by an “occupational risk policy” for all its Directors & Officers.

  • Lump sum

The adoption of bonuses independent of performance conditions for Managers with Strategic Responsibilities is not envisaged. Exceptionally, the Company may provide, in favor of Key Managers with Strategic Responsibilities, for the possibility of making lump sum payments during the hiring phase in order to favor 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 2020 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 new 2020-2022 LTI Plan, whose approval is submitted to the Shareholders’ Meeting of April 23, 2020. With regard to the 2020- 2022 LTI, the first three-year cycle is considered, net of the potential effects of the multiplication/demultiplication factor of the payout, and assuming the waiver of the 2020 target bonus for the 2018-2020 LTI.