Directors' remuneration

Directors' remuneration is determined, for each financial year, by the Ordinary General Shareholders'Meeting called to approve year-end financial statements. The Shareholders' Meeting also determines the fee for the independent directors called to serve on the Nominations and Remuneration Committee or of the Control and Risk Committee.
2020 Remuneration Report
Pursuant to Article 123-ter of Legislative Decree no. 58 dated 24 February 1998
(published on March 30, 2020)
2020 Ordinary and extraordinary Shareholders' meeting

2020 Remuneration Policy Guidelines


Fixed Remuneration Enhances the responsibilities, the skills and the contribution demanded by the position. Ensures attraction and retention through continuous market benchmarking.
Remunerates the activity carried out in the event that the variable component is not paid out.
 

Executive Deputy Chairman
 
Chief Financial Officer

Both roles receive an annual compensation, as members of the Board of Directors, and an annual remuneration for their role as
Executive Directors.

The amount of remuneration is determined through a benchmark of the posts held by them within a peer group consisting of FTSE
MIB and MID CAP companies in the industrial sector comparable to ERG in terms of capitalisation, shareholder structure, distribution of powers and complexity.
 
General Manager 
Other Executives with Strategic Responsibilities
 

Annual earnings, from employment.
The benchmark is carried out on the basis of a sample made up
of companies that operate on the Italian market in non-financial
markets.
 
Annual earnings, from employment.
The benchmark is carried out on the basis of salary surveys for
executive roles in companies that operate on the Italian market.

Short-term variable remuneration (MBO) Aimed at the achievement of economic, financial and strategic targets, predetermined, measurable and in line with the budget.
 

Executive Deputy Chairman
 
Chief Executive Officer
Not envisaged

Not envisaged

General Manager
Other Executives with Strategic Responsibilities
 

MBO System: 100% cash
Sustainability Clause2: ON/OFF Company target
Clawback Clause: exercisabile within 3 years

Company Target 30% EBT
Target score <50% nothing is owed
Target score >150% 150% of the target bonus is owed

Personal Target 70% targets (Economic, Operational,
Financial, Business development and/or specific projects)
Target score <80% nothing is owed
Target score >120% 120% of the target
bonus is owed
MBO System: 100% cash
Sustainability Clause2: ON/OFF Company target
Clawback Clause: exercisabile within 3 years

Company Target 30% EBT
Target score <50% nothing is owed
Target score >150% 150% of the target bonus is owed

Personal Target 70% targets (Economic, Operational,
Financial, Business development and/or specific projects)
Target score <80% nothing is owed
Target score >120% 120% of the target
bonus is owed

Long-Term Variable Remuneration (LTI)
Aimed at aligning the interests of the beneficiaries with the pursuit of the priority objective of the creation of sustainable value for the shareholders over the medium/long term. Contributes to the strategy of ensuring the Company's sustainability over time, incentivising management to achieve strategic results, consistent with the specific objectives of the 2018-2022 Business Plan, with the prospect of sustainable success.
 

Executive Deputy Chairman3
 
Chief Executive Officer3 General Manager  Other Executives with strategic
responsibilities

2018–2020 Performance Share System
Performance indicator ON/OFF: 90% expected cumulated EBITDA for three-year period 2018-20204
Clawback clause: exercisable within 3 years
Single awarding at plan inception, with three-year vesting.

At the end of the plan
p/sh ERG < EUR 16 p/sh ("Target Price"): Shares assigned = 100% Shares allocated
p/sh ERG > EUR 21 p/sh ("Cap Price"): Shares assigned = 200% Shares allocated
p/sh ERG <> between Target Price and Cap Price: Shares allocated following a linear incentive strategy.
 
1 The variable component assigned to the Chief Audit Officer is linked to objectives that do not depend on financial performance indicators. These objectives are formalised in the annual audit plan and are linked to the degree of efficiency and effectiveness of the audit activities.
2 The variable remuneration referred to the company target will not be paid out, for the reference year, regardless of the corporate performances recorded, if there is a fatal accident involving a Group employee or an accident causing a level of permanent disability greater or equal to 46%.
3 As Executive Directors with a strategic importance for the purposes of the achievement of the 2018-2022 Business Plan.
4 Press release issued on 8 March 2018 in the context of the presentation to the Market of the 2018-2022 Business Plan.
 
5 The weight of the total variable component, made up of the short-term incentive (MBO System) and the long-term incentive (LTI System) for remuneration, on an annual basis, may vary between 45% and 50% of the target total remuneration depending on the strategic relevance of the role for the purposes of achieving the 2018-2022 Business Plan.

Non-monetary benefits In a Total Reward approach, the compensation package is integrated with benefits, mainly in the form
of pension and social security.
 
Executive Deputy Chairman Chief Executive Officer General Manager Other Executives with strategic
responsibilities

Medical assistance and insurance coverage against the
risk of death and disability (which are subtracted from the
annual compensation)
Company car for mixed use
 
Medical assistance
Insurance policies for the risk of death and disability
Company car for mixed use


SUSTAINABILITY INDICATORS
ERG believes that the full compatibility of its activities with the health and safety of the workers and the safeguard of communities, natural resources and the environment is an essential requirement to make its plants and operations acceptable and to achieve its growth objectives.

Therefore, ERG is committed to ensuring that all Companies of the ERG Group operate with the highest respect for the health and safety of employees and third parties, as well as for the environment, defined in its broadest sense6.
Consistently with the provisions of the Code of Ethics of the ERG Group, a sustainability clause based on workplace accidents has been added to the MBO System.

Sustainability clause

In the MBO System, the variable remuneration referred to the company target will not be paid out, for the reference year, regardless of the corporate performance recorded, if there is a fatal accident involving a Group employee or an accident causing a level of permanent disability greater or equal to 46%.

2019: ON
The accidents occurred in 2019 resulted in a residual disability level equal to or less than 3%.

Sustainability Clause_ENG
 
6 Code of Ethics of the ERG Group, 2018 version.
7 No. accidents*1,000,000/worked hours.
8 No. days lost*1,000/worked hours.
PAY FOR PERFORMANCE

In the last two years, ERG has rewarded its shareholders with total dividends of approximately EUR 284 million (including a non-recurring component of approx. EUR 60 million) and a share performance of 27.5%, almost 22 points higher than the FTSE All Share average.
 
Source: ERG 2020 Report on the policy regarding remuneration and fees paid
Page updated at 27 Jul 2020