Today’s meeting of the Board of Directors of Telecom Italia, chaired by Aldo Minucci, unanimously approved the text of the report to the shareholders’ meeting on the appointment of the new Board.
The document, which was developed from the proposals of Chief Executive Officer Marco Patuano, formulates suggestions and recommendations to the shareholders in light of the candidacies for the upcoming renewal of the Board of Directors, to ensure that the company has an adequate governance structure.
In short, the Board's report, the contents of which are shared with the Board of Statutory Auditors, suggests:
- The reduction to 11 or 13 members for the composition of the next Board of Directors.
- A term of office of three financial years (until approval of the financial statements at 31 December 2016) and remuneration proportional to the new composition of the board.
- A delegated powers structure based on a non-executive Chairman and a separate Chief Executive Officer, strongly focussed on the work of the board as a whole based on the investigative activities of its committees.
- That the Chairman be chosen from among the appointed Directors who fulfil the requirements of independence and represents a an impartial guarantor of all the shareholders.
- A Control and Risk Committee of 5 members (currently 4) and a Nomination and Remuneration Committee comprised of 3 members, with different chairs to be assigned to independent Directors, preferably from the minority slates. It suggests that an Executive Committee should not be constituted.
- Ensuring the new Board of Directors a substantial level of independence from both the management and the reference shareholder. It therefore recommends that in each slate there should be a clear majority of candidates qualifying as independent according to the criteria of the Corporate Governance Code of Borsa Italiana. The assessment of independence should be carried out examining substance over form: maximum transparency is suggested in the description of the connecting relations, in the broadest sense, of the individual candidates with the relative majority shareholders, the remaining major shareholders, those who submit the slate, and the related executive management, as well as the Telecom Italia Group, extending the period of time considered to at least 3 years.
- Ensuring an adequate mix of professional skills and competencies. The competences deemed opportune on the Board are those regarding the telecommunications sector or closely related businesses, finance, organisation, risk management and internal control. Experience in CEO and CFO roles in major companies is preferred, although the contribution of academics with expertise in financial and taxation matters, risk management and law is also deemed useful. An international dimension would be welcome, with the inclusion of non-Italians or people with experience gained abroad in the slates of candidates.
- That, when the slates are submitted, the characteristics of the candidates are illustrated and the reasons they are suitable to hold office as directors of Telecom Italia are argued. Moreover, regarding the candidates qualified as independent, the reasons they so qualify should be explained.
- Submitting the slates of candidates (and obviously the proposals on the number, duration and remunerations) sufficiently in advance of the deadline as per law.
Finally, it suggests that the next Board defines any amendments to be made to the Bylaws and/or the remaining corporate governance instruments in force in order to implement the recommendations summarized above and in any case the best practices.
The proposal contained in the document to renew Telecom Italia's corporate governance stems from the desire to meet the demands arising from the debate conducted during the last shareholders' meeting held on 20 December 2013. The recommendations listed are the fruit not only of the experience it has accrued during its term of office, which is now coming to an end, but also of in-depth benchmarking against comparable Italian and international companies, direct comparison with some of the major shareholders and authoritative representatives of the world of institutional investors, proxy advisors, and Assogestioni. Finally, account was also taken of the contributions made by individual Directors and shareholders, who spontaneously supplied suggestions and professional contributions.
Adopting an interpretation of the Bylaws text more favourable for minorities, and which, according to Consob, is more in line with the rationale behind the regulation on slates voting, the Board of Directors has indicated the minimum shareholding required to submit candidates is set at 0.5% of the share capital entitled to vote. The Shareholders' Meeting is called to appoint the new Board of Directors, reserving the right to complete the agenda in the meeting on 6 March next. The Shareholders' Meeting will therefore be held on 16 April 2014 at the location of Rozzano (Milan).
The explanatory report of the Board of Directors on corporate governance will be published on the company website (www.telecomitalia.com/assemblea).
Milan, 27 February 2014
