On 27 February 2020, the Iren Board of Directors, upon proposal of the Company’s Remuneration and Appointments Committee, approved the Guidelines on remuneration for Iren's Executive Directors and Group Senior Executives with Strategic Responsibilities for financial year 2020, in line with the recommendations of the current Corporate Governance Code for listed companies.
Objectives and general principles of the remuneration policy
Remuneration policies, defined in compliance with the Company’s governance model, as well as with the recommendations contained in article 6 of the current Corporate Governance Code for Listed Companies, pursue the general goal of attracting, retaining and motivating the best individuals for the development of the Iren Group, recognising the responsibilities assigned to them and guiding their actions towards the achievement of company objectives, rewarding the results obtained.
More specifically, these policies serve to align the interests of management with respect to the prioritised objective of guaranteeing an increase in value for shareholders over the medium/long-term, making it possible to achieve stable and sustainable results over the short and long-term, in line with the Business Plan, ensuring adequate retention of those in strategic positions for governance and business and, more generally, promoting the company's mission and values, also in terms of sustainability.
As part of the remuneration policy, the short-term incentive system for the Iren Chief Executive Officer and General Manager and the IREN Group Senior Executives with Strategic Responsibilities is a tool intended to distinguish excellent performance without any form of automatic recognition and not linked to the achievement of assigned objectives and pursues the goals of:
- rewarding performance based on quantitative and qualitative variables with a direct connection to company performance;
- guaranteeing that the variable component, with respect to the fixed component, creates an incentive and is significant;
- avoiding the creation of excessively complex mechanisms, difficult to communicate and manage;
- selectively guiding individual performance, while also guaranteeing the achievement of Group and company goals.
The goals of the long-term variable component, again confirmed for 2019-2021 for the Iren Chief Executive Officer and General Manager and the Iren Group Senior Executives with Strategic Responsibilities, are:
- to stimulate the ability to create value for the Group, rewarding the achievement of industrial, strategic and business objectives;
- to guarantee the achievement of economic/financial objectives in the context of medium/long-term sustainability;
- to strengthen the motivation of the relative beneficiaries in pursuing the strategic objectives set out in the Business Plan, aligning their interests with those of stakeholders;
- to attract and motivate employees, rewarding the achievement of results and a culture of performance, as well as virtuous behaviours implemented to achieve the same;
- to develop and strengthen retention policies for key company resources, making it possible to increase their sense of belonging and create incentives for them to remain with the IREN Group;
- to ensure that the pay-mix (relative weights of fixed remuneration, short-term and long-term variable remuneration) is in line with market practices, without prejudice to the principle of sobriety which characterises the Company.
The definition of the Remuneration Policy for Iren Executive Directors and Group Senior Executives with Strategic Responsibilities for 2020 also considered:
- decisions made on the issue of compensation to the Directors, adopted by the Shareholders' Meeting on 22 May 2019, in particular the principles of the comprehensive nature of remuneration and the transfer obligation for employees and amounts established as compensation for Directors with special offices at Iren;
- the indications expressed by public shareholders regarding the positions appointed by them pursuant to current shareholders’ agreements;
- the overall significance of positions and roles examined.
In addition, requests from the market and institutional investors regarding top management remuneration policies were taken into account, as well as best practices on the market, through:
- investigations regarding the results of the Shareholders' Meeting vote on the Remuneration Report submitted to the Shareholders' Meeting on 22 May 2019;
- examination of the issues needing attention raised by the Chairperson of the Italian Corporate Governance Committee in the letter sent in December 2019 to the Chairpersons of Italian listed companies;
- a study regarding the annual self-assessment activities carried out by the Board of Directors and its Committees pursuant to Application Criterion 1.C.1.(g) of the Code.
With reference to the developments in the regulatory context and implementation in Italian law of Directive 2017/828,the remuneration policies were aligned with these new regulations, particularly with regard to say on pay.
The Principles adopted by the Shareholders' Meeting on 22 May 2019, substantially already in effect for the previous term, with only marginal changes, were inspired by a logic of containing payments and impacted, through various innovations, the remuneration policy already prepared and applied in previous years. These can be summarised as follows:
- principle of comprehensive remuneration received through the employment relationship and the transfer requirement, effective for all Group company executives/employees, based on which all corporate positions held within the Group companies/entities must be filled without any additional compensation, as they fall under the assigned tasks1;
- the principle of the use of the Directors of the parent company Iren and employees in the administrative bodies of the companies directly and indirectly controlled by Iren.
The criteria summarised above, as well as the principles adopted by the Shareholders' Meeting were applied, to the extent compatible, also when the delegated bodies determined the remuneration for Iren Group Senior Executives with Strategic Responsibilities, as established in the Corporate Governance Code.
2020 Remuneration Policy
A summary of the Guidelines for remuneration policy for Iren Executive Directors and Group Senior Executives with Strategic Responsibilities for financial year 2020 is provided in the details.
On 4 August 2020, in line with Art. 123-ter, paragraph 3 of the Consolidated Law on Finance, adopting the right described in Section One of the Report on the 2020 Remuneration Policy and on compensation paid for financial year 2019 and in observance of the indications contained in the Company's Related-Party Transaction Procedure, the Iren Board of Directors, following assessment by the Company’s Remuneration and Appointments Committee, approved a temporary update to the aforementioned Policy, with specific reference to incentive mechanisms and the final calculation methods defined in the context of the short-term incentive system for financial year 2020, assigned to company management (including Iren Group Senior Executives with Strategic Responsibilities), with possible relevance also for 2021.
Please see the press release published on the same date.
Report on the 2020 Remuneration Policy and Compensation Paid for 2019
The Report, approved by the Iren Board of Directors on 25 March 2020, following proposal by the Remuneration and Appointments Committee, was created in observance and application of the current legal and regulatory requirements.
The Report indicates:
- in Section One, the Remuneration Policy adopted for 2020 for the remuneration of the Company's Directors and the Iren Group's Senior Executives with Strategic Responsibilities and, without prejudice to Article 2402 of the Italian Civil Code, the members of the Company's Board of Statutory Auditors, specifying the general purposes pursued, the bodies/entities involved, the way these contribute to the corporate strategy, the pursuit of the Company’s long-term interests and sustainability, and the procedures used to adopt and implement the Policy, as well as changes which have occurred with regards to 2019; the First Section was submitted for the approval of the shareholders at the Annual Shareholders’ Meeting of 29 April 2020 (binding vote), with votes in favour totalling 98.48% of shareholders represented;
- in Section Two, the compensation paid in 2019 to the Directors and Auditors, by name, and to Iren Group Senior Executives with Strategic Responsibilities, in aggregate form, as well as the shareholdings in Iren held by members of the administration and control bodies and by other SESRs, as well as non-legally separated partners and minor children, directly or through subsidiaries, trust companies or third parties; the Second Section was submitted for assessment by the shareholders at the Annual Shareholders’ Meeting of 29 April 2020 (consultation vote), with votes in favour totalling 97.84% of shares represented.
The Policy illustrated in Section One of this Report has also been adopted by the Company, as established in Consob Regulation 17221/2010, as amended, on related-party transactions, also in accordance with and pursuant to article 6, letter f of Iren’s Related-Party Transaction Procedure.
1The IREN Chief Executive Officer and General Manager is the exception, limited solely to the fixed compensation component, pursuant to Article 2389, paragraph 3 of the Italian Civil Code, due for performing the duties of the Company's Chief Executive Officer.