Ansaldo STS adopts a corporate governance4 system that is based on the highest business management transparency and fair practice standards. This corporate governance system is compliant with the provisions of law and with the regulatory provisions of CONSOB and Borsa Italiana. It is also in line with the contents of the code of conduct for listed companies adopted by Borsa Italiana S.p.A. - which Ansaldo STS has implemented - and international best practice. The corporate governance system is aimed at maximising value for shareholders, monitoring business risks, transparency with the market and reconciling the interests of all shareholders, with particular attention on smaller shareholders.
Ansaldo STS’s corporate governance system is based on a traditional model, and includes:
- shareholders’ meetings;
- the Board of Directors, which includes the following committees;
- risk and control committee;
- appointments and remuneration committee;
- the board of statutory auditors;
- the independent auditors.
The company’s main corporate governance tools are listed below:
- code of ethics;
- Organizational, management and control model pursuant to Legislative decree no. 231/01;
- shareholders’ meeting regulations;
- Board of Directors’ regulations;
- risk and control committee regulations;
- appointments and remuneration committee regulations;
- related party transactions - procedure adopted pursuant to article 4 of Consob regulation no. 17221 of 12 March 2010;
- procedure for keeping and updating the register of persons with access to privileged information;
- procedure for the management and communication of privileged information;
- internal dealing code of conduct.
4. For additional details, reference should be made to the “Directors’ report on the corporate governance system and the implementation of the code of conduct for listed companies for 2015”.
Board of Directors
Ansaldo STS’s Board of Directors has the widest powers for the management of the company, with the power to take any and all suitable action to achieve the company purpose, except for those reserved for shareholders.
The current Board of Directors was appointed by the shareholders during the ordinary meeting held on 13 May 2016.
|BOARD OF DIRECTORS IN OFFICE||Risk and|
|Office||Components||In office since||In office until||List (M/m)||Exec.||Non- esec.||Indep.|
Cons. fin. act
|Chairman||Alistair Dormer||13 May 2016||Shareholders' meeting approving the 2018 financial statements||M||X||-||-||N.A||-||N.A||-||N.A|
|Deputy Chairman||Katherine Jane Mingay||13 May 2016||Shareholders' meeting approving the 2018 financial statements||M||-||x||-||-||N.A||-||N.A||-||N.A|
|Director||Andrew Thomas Barr||13 May 2016||Shareholders' meeting approving the 2018 financial statements||M||x||-||-||-||N.A||-||N.A||-||N.A|
|Director||Katharine Rosalind Painter||13 May 2016||Shareholders' meeting approving the 2018 financial statements||M||-||x||x||x||N.A||X||N.A||Chairman||N.A|
|Director||Giuseppe Bivona||13 May 2016||Shareholders' meeting approving the 2018 financial statements||m||-||x||x||x||N.A||-||N.A||-||N.A|
|Director||Rosa Cipriotti||13 May 2016||Shareholders' meeting approving the 2018 financial statements||m||-||x||x||x||N.A||-||N.A||-||N.A|
|Director||Alberto de Benedictis||13 May 2016||Shareholders' meeting approving the 2018 financial statements||M||-||x||x||x||N.A||Chairman||N.A||X||N.A|
|Director||Mario Garraffo||13 May 2016||Shareholders' meeting approving the 2018 financial statements||M||-||x||x||x||N.A||X||N.A||X||N.A|
|Director||Fabio Labruna||13 May 2016||Shareholders' meeting approving the 2018 financial statements||m||-||x||x||x||N.A||-||N.A||-||N.A|
* This column indicates M/m, showing whether the member was elected from a majority (M) or minority (m) list.
** This column indicates the percentage of director participation in board and committee meetings respectively during the period considered (no. of meetings attended/no. of meetings held during the term of office).
*** In questa colonna è indicata con una “X” l’appartenenza del componente del C.d.A. al Comitato.
The following table illustrates the composition of the Board of Directors in 2015.
|BOARD OF DIRECTORS IN OFFICE until 13 May 2016||Risk and|
and remuneration committee
|Office||Components||In office since||In office untill||List (M/m)||Esec.||Non- esec.||Indep. under the code||Indep. under the Cons. fin. act||% **||Number of other offices ***||***||**||***||**|
|Chairman||Alistair Dormer||2 November 2015 (1)||Shareholders' meeting approving the 2017 financial statements||M||X(6)||-||-||-||100||-||-||-||-||-|
|Deputy Chairman||Karen Boswell||2 November 2015 (2)||Shareholders' meeting approving the 2017 financial statements||M||-||X||-||-||100||-||-||-||-||-|
|CEO||Stefano Siragusa||2 November 2015 (3)||Shareholders' meeting approving the 2017 financial statements||M||X||-||-||-||100||-||-||-||-||-|
|Director||Giovanni Cavallini||2 November 2015||Shareholders' meeting approving the 2017 financial statements||m||-||X||X||X||100||1||chairman||100||-(7)||-(8)|
|Director||Bruno Pavesi||2 November 2015||Shareholders' meeting approving the 2017 financial statements||M||-||X||X||X||100||-||X||100||X(9)||100|
|Director||Giulio Gallazzi||2 November 2015||Shareholders' meeting approving the 2017 financial statements||m||-||X||X||X||100||-||-||-||Chairman(10)||85.7|
|Director||Alessandra Piccinino||9 November 2015 (4)||Next shareholders' meeting||-||-||X||X||X||100||1||-||-||X||100|
|Director||Paola Giannotti||2 November 2015||Shareholders' meeting approving the 2017 financial statements||m||-||X||X||X||100||-||X||100||-||-|
|Director||Mario Garraffo||25 November 2015 (5)||Next shareholders' meeting||-||-||X||X||X||100||3||-||-||-||-|
(1) Alistair Dormer was appointed chairman of the Board of Directors by the shareholders in their meeting of 2 November 2015.
(2) Karen Boswell was appointed deputy chairwoman of the Board of Directors on 25 November 2015, replacing Ryoichi Hirayanagi.
(3) Co-opted by the Board of Directors on 11 December 2013 and, with effect from 1 January 2014, replacing Mr. Grasso.
(4) Co-opted by the Board of Directors on 9 November 2015, replacing Barbara Poggiali.
(5) Co-opted by the Board of Directors on25 November 2015, replacing Ryoichi Hirayanagi.
(6) Alistair Dormer, as chairman of the Board of Directors, has an executive role, although he did not receive any specific proxy from the board. Consequently, he does not hold any executive role within the company, due to the positions he holds in the Hitachi Group.
(7) From 1 January 2015 to 2 November 2015, Mr. Cavallini has been a member of the Appointments and remuneration committee.
(8) Being a member of the Appointments and remuneration committee from 1 January 2015 to 2 November 2015, Mr. Cavallini participated in 5 out of 6 meetings.
(9) From 1 January 2015 to 2 November 2015, Mr. Pavesi has acted as chairman of the Appointments and remuneration committee.
(10) From 1 January 2015 to 2 November 2015, Mr. Gallazzi has been a member of the Appointments and remuneration committee.
|BOARD OF DIRECTORS BY AGE AND GENDER||MEN||WOMEN|
|DIRECTORS WHO LEFT DURING THE YEAR||Risk and control committee||Appointments and remuneration committeee|
|Office||Components||In office since||In office untill||List (M/m)||Esec.||Non- esec.||Indep. under the code||Indep. under the code||% **||***||**||***||**|
|Chairman||Sergio De Luca||15 April 2014(1)||30 October 2015(2)||M||X(3)||-||-||-||92.3||-||-||-||-|
|Deputy Chairman||Domenico Braccialarghe||1° October 2014(4)||2 November 2015||-||-||X||-||-||76.9||-||-||-||-|
|Deputy Chairman||Ryoichi Hirayanagi||2 November 2015||20 November 2015||M||-||X||-||-||100||-||-||-||-|
|Director||Alessandra Genco||15 April 2014||2 November 2015||M||-||X||-||-||100||-||-||-||-|
|Director||Paola Pierri||15 April 2014||2 November 2015||M||-||X||X||X||92.3||X||100||-||-|
|Director||Barbara Poggiali||15 April 2014||3 November 2015||m||-||X||X||X||100||X||100||-||-|
(1) Co-opted by the Board of Directors on 14 June 2007. On 11 December 2013, Mr. De Luca resigned from the office of CEO and was appointed chairman of the Board of Directors with effect from 1 January 2014.
(2) Mr. De Luca announced he would resign on 30 October 2015 with immediate effect.
(3) As Chairman of the Board of Directors, Mr. De Luca has not received any operating proxies. However, he is considered to be an executive director pursuant to the code of conduct as he has been the Operations general manager of Finmeccanica S.p.A., which manages and coordinates Ansaldo STS, since 1 January 2014.
(4) Co-opted by the Board of Directors on 1 October 2014, replacing Luigi Calabria who acted as director and deputy chairman from 1 January 2014 to 1 October 2014.
Appointment of the Board of Directors
The company is managed by a Board of Directors consisting of at least seven and not more than 13 members.
Before electing the board, the shareholders decide what the number of members will be within this range. The directors are appointed for up to three years and can be re-elected pursuant to article 2383 of the Italian Civil Code.
In line with the amendments to the Consolidated finance act introduced by Law no. 120 of 12 July 2011, the current by-laws – following the most recent changes made by the shareholders at the extraordinary meeting of 6 May 2013 – provide for mechanisms to ensure a balance of men and women on the boards of directors and statutory auditors, which will be applied upon the first three renewals of the board of statutory auditors after one year following the date when the aforementioned law takes effect (i.e. after 12 August 2012).
The directors are appointed by the shareholders during an ordinary meeting by voting for lists.
Each list must include two candidates who meet the independence requirements provided for by law, indicating them separately and placing one at the top of the list.
Furthermore, lists with a number of candidates equal to or more than three must include candidates of different genders, in accordance with the notice of call of the shareholders’ meeting, so that the new Board of Directors is comprised of members of the least represented gender, in accordance with current legislation. In the event of fractions, the number is rounded up. If these obligations are not met, the list is considered as not having been submitted.
In order to ensure the effective participation of noncontrolling owners in corporate management and the transparency of the selection and appointment process for directors, the by-laws explicitly enable each shareholder to submit or participate in the submission of one list only, that each candidate can be presented in one list only or will be considered ineligible and that each rightful voter can vote for one list only.
The shareholders elect the Chairman of the Board of Directors, selecting the Chairman from among the members of the board. If the shareholders do not elect the Chairman, the Chairman is elected by the board itself. The board can also elect a Deputy Chairman, replacing the Chairman when the Chairman is absent or unable to chair the board.
For additional information on the appointment of the Board of Directors during the ordinary shareholders’ meeting of 13 April 2016, reference should be made to the Company’s website5.
Directors’ requirements and duties
Under the by-laws, in order to take office as director, one must not only meet the requirements of honourableness provided for by current legislative and regulatory provisions (or any similar requirements established by equivalent provisions), but must also meet the specific requirements of professionalism indicated in the by-laws.
In particular, candidates may not be appointed director of the company, and if they have been appointed, their term of office is considered immediately terminated, if they do not have at least three years of overall experience in the following:
- administration or supervision activities or managerial duties with companies with a share capital of at least €2 million;
- professional activities or university teaching as a full professor of legal, economic, financial or technical/ scientific subjects closely related to the company’s business activity; or
- senior management functions with public bodies or administrations active in the credit, financial and insurance sectors or, in any case, in industries which are closely related to the company’s business activity.
This experience can be assessed on the basis of the candidates’ curriculum vitae, which should contain exhaustive information on the personal and professional characteristics of each candidate and be available to the public, along with each list pursuant to article 144-octies.1 of the Issuers Regulation.
The Board of Directors verifies that these requirements are met by each of its members.
The Board of Directors is mainly comprised of nonexecutive members (who have not been assigned any operating powers and/or management functions within the company) to guarantee, given the number of such directors and their degree of authority, that their judgement significantly influences board decisions.
Non-executive directors bring their specific expertise to board discussions, to support the examination of matters considered from a different perspective and to encourage the adoption of well- thought out resolutions, in line with the company’s interests. At present all members, except the CEO and Chairman, are non-executive directors.
Independence of directors
In implementation of the provisions of the code of conduct, on 9 November 2015, following the appointment of the directors and co-opting of Alessandra Piccinino, and with respect to the director Mario Garraffo on the date he was co-opted (25 November 2015), the Board of Directors has evaluated, based on the statements of the above people, whether the independent directors are party to any relationships that could, or could appear to, jeopardise their independent judgement. The findings of this evaluation were disclosed to the market in a press release on 9 and 25 November 2015.
On 13 November 2015, after the appointment of the directors and co-opting of Alessandra Piccinino, and with respect to the director Mario Garraffo on 9 December 2015, the board of statutory auditors, on the basis of the statements made by the directors and considering the board’s findings, certified the board’s evaluation of the independence of its members in accordance with the criteria.
Following the appointment of the Board of Directors by the shareholders in their ordinary meeting on 13 May 2016, the Board of Directors checked: i) on 16 May 2016, the independence of the following directors: Katharine Rosalind Painter, Alberto de Benedictis, Giuseppe Bivona, Rosa Cipriotti and Fabio Labruna and ii) on 24 May 2016, the independence of the director Mario Garraffo. The findings were disclosed to the market in the press releases dated 16 May 2016 and 24 May 2016.
The independent directors met without the other directors on 17 November, 1 December and 16 December 2015 to express the opinion required by article 39 bis of the Issuer Regulation on the mandatory public tender offer launched by Hitachi Rail Italy Investments S.r.l. on all Ansaldo STS’s shares.
Board of directors activities and assessment of its functioning
In 2015, the board held 18 meetings. Any absences were duly justified. The average length of the board’s meetings in 2015 was approximately three and a quarter hours.
The meetings of the Board of Directors saw the participation, depending on the items on the agenda, of the Chief Financial Officer, the Chief Operating Officer, the Internal Audit Manager and, upon the Chairman’s recommendation, other company managers, in order to provide suitable details on the items on the agenda.
In 2015, the secretary to the board and General Counsel & Compliance function manager Filippo Corsi participated in all the board meetings.
In accordance with the by-laws, the Board of Directors meets whenever the Chairman, or another member in his place, deems it necessary, or upon the written request of the majority of board members.
On 15 February 2016, with respect to the annual evaluation process of the size, composition and working of the board and its committees, in accordance with the recommendations of article 1.C.1.g) of Borsa Italiana’s code of conduct for listed Companies, the board decided not to carry out this evaluation process in 2015 since most directors, appointed by the shareholders in their meeting of 2 November 2015, held this office for the first time.
In order to increase the efficiency and effectiveness of the work of the Board of Directors, the risk and control committee and the appointments and remuneration committee have been established within the board and in accordance with the criteria of the Company’s code of conduct.
In this respect, following the approval of the new code of conduct in December 2011, the Company approved the adoption of the principles in the updated code, thereby updating its corporate governance system to meet the new provisions.
Specifically, on 18 December 2012, the Company decided, inter alia: (i) to set up an appointments committee, combining it with the previously established remuneration committee and naming the new committee - vested with the dual function - the “appointments and remuneration committee”, approving its regulation; and (ii) to modify and redefine the duties and functions of the different parties involved in the company’s internal control and risk management system, also approving the regulation of the “risk and control committee”.
Risk and control committee
The risk and control committee currently in office is comprised of three directors, who are all nonexecutive and independent. They are the directors Alberto De Benedictis (Chairman), Mario Garraffo and Katharine Rosalind Painter, appointed by the Board of Directors on 16 May 2015. Pursuant to the code, at the time of their appointment, the Board of Directors examined the accounting and financial experience of its chairman, Alberto De Benedictis, and the members Mario Garraffo and Katharine Rosalind Painter. In the period from 1 January 2015 to 2 November 2015, the risk and control committee was comprised of Giovanni Cavallini (Chairman), Paola Pierri and Barbara Poggiali. From 10 November 2015 to 13 May 2016, the risk and control committee was comprised of the directors Giovanni Cavallini (Chairman), Paola Giannotti and Bruno Pavesi.
The committee meetings are governed by an internal regulation which was last modified by the board on 18 December 2012, in accordance with the new code of conduct dated December 2011. The regulation, in its updated version, is available on the company’s website6.
The risk and control committee has advisory, proposal and preliminary preparation functions on behalf of the Board of Directors, mainly in relation to the definition of guidelines for the internal control and risk management system and the periodic evaluation of the adequacy and effective functioning of the Organizational structure of such a system.
Specifically, the committee is responsible for verifying the functioning and adequacy of the internal control and risk management system, as well as the effective compliance with procedures and internal directives adopted to both ensure sound and efficient management and identify, prevent and manage, insofar as possible, financial, operational and fraud risks to the detriment of the company.
Appointments and remuneration committee
In accordance with the provisions of article 37 of the market regulation, all members of the appointments and remuneration committee are non-executive and independent.
The committee was appointed by the Board of Directors on 16 May 2016 and is comprised of the non-executive independent directors Katharine Rosalind Painter (Chairwoman), Alberto De Benedictis and Mario Garraffo.
In the period from 1 January 2015 to 2 November 2015, the appointments and remuneration committee comprised Bruno Pavesi (Chairman), Giovanni Cavallini and Giulio Gallazzi. From 10 November 2015 to 13 May 2016, the appointments and remuneration committee comprised the directors Giulio Gallazzi (Chairman), Alessandra Piccinino and Bruno Pavesi.
In accordance with article 6.P.3 of the code of conduct, when the committee members were appointed, the company’s Board of Directors verified and certified that all the directors had accounting and financial expertise and experience.
The committee’s activities are governed by a regulation in line with the code of conduct. The board approved the regulation on 29 January 2007 and it was later modified on 12 May 2008, 5 March 2012 and 18 December 2012. The regulation is available on the company’s website7.
With respect to the code of conduct committee’s functions for both its role in the appointment of directors and remuneration, reference should be made respectively to articles 5 and 6 of the code, which can be found on the Borsa Italiana S.p.A. website8.
Information on the remuneration of the directors, the general manager and key managers is given in the remuneration report, which is prepared pursuant to articles 123-ter of the Consolidated finance act and 84-quater of the Issuer Regulation, published on the Company’s website9 and made available to the public in the other ways provided for by current legislation. On 25 March 2015, the company’s Board of Directors, with the prior approval of the appointments and remuneration committee, approved the company’s remuneration policy for 2015 and Ansaldo STS’s remuneration report, prepared pursuant to article 123-ter of the Consolidated finance act. The first section of the report illustrates the Company’s remuneration policy and the procedures followed to adopt and implement this policy and it was therefore put to a non-binding vote by the shareholders on 23 April 2015, in accordance with article 123-ter. The shareholders approved the report.
Furthermore, on 25 February 2016, upon the proposal of the appointments and remuneration committee, the Board of Directors approved the remuneration policy for 2016.
On the same date, the Board of Directors approved, with the prior approval of the appointments and remuneration committee, the remuneration report pursuant to article 123-ter of the Consolidated finance act. In accordance with the aforementioned article 123-ter.6 of the Consolidated finance act, the first section of the remuneration report, which illustrates the 2016 remuneration policy for members of the Board of Directors, the general manager and key managers, was approved by the shareholders’ meeting on 3 May 2016.
7. http://www.ansaldo-sts.com/sites/ansaldosts.message asp.com/files/downloadspage/5_regolamento_comitato_nomine_e_remunerazione_clean.pdf
Board of statutory auditors
The statutory auditors are appointed by the shareholders during an ordinary meeting by voting for lists. In line with the amendments to the Consolidated finance act introduced by Law no. 120 of 12 July 2011, the current by-laws – following the most recent changes made by the shareholders at the extraordinary meeting of 6 May 2013 – provide for mechanisms to ensure a balance of men and women on the boards of directors and statutory auditors, which will be applied upon the first three renewals of the board of statutory auditors after one year following the date when the aforementioned law takes effect (i.e. after 12 August 2012).
As with the presentation of lists of candidates for the appointment of members of the Board of Directors, if a list of candidates for the office of statutory auditor is not submitted within the above term, the lists will be considered as not having been submitted.
The lists include the names of one or more candidates, and the number listed may not exceed the number of members to be elected. Each candidate can be presented in one list only or will be considered ineligible. Lists are divided into two sections: one for candidates for the office of standing statutory auditor and one for candidates for the office of substitute statutory auditor. The first candidate in each section must be registered with the roll of certified auditors and have at least three years of experience in the performance of legallyrequired audits.
Furthermore, the lists that, considering both sections, include a number of candidates equal to or greater than three must also include, for both the first two candidates on the list for standing statutory auditors and the first two candidates on the list for the replacement statutory auditors, candidates of different genders.
The Chairman of the board of statutory auditors is appointed by the shareholders and is the standing auditor elected by the minority, unless only one list is voted for or no list is submitted. In these cases, the shareholders appoint the Chairman of the board of statutory auditors according to the legal majorities.
The current board of statutory auditors was appointed by the shareholders in their ordinary meeting of 15 April 2014 and it has three standing statutory auditors and three substitute statutory auditors.
During the year, the board held 11 meetings. The following table provides information on the attendance of each statutory auditor at the meetings of the board of statutory auditors and the Board of Directors in 2015:
Board of statutory auditors in office
|Members||Board of statutory auditors attendance||Board of directors attendance|
|Giacinto Sarubbi (Chairman)||100%||100%|
|Maria Enrica Spinardi *||91%||94.7%|
*in office since 15 April 2014
The board of statutory auditors is responsible for monitoring:
- compliance with the law and by-laws;
- compliance with the principles of correct administration;
- the adequacy of the company’s Organizational structure in the areas for which it is responsible, the adequacy of the internal control system and the administrative/accounting system, and the latter’s reliability in correctly reflecting operations;
- the actual implementation method of the corporate governance rules established by the codes of conduct prepared by the companies that manage regulated markets or trade associations, with which the company is required to comply through public disclosure;
- the adequacy of the company’s instructions to its subsidiaries pursuant to article 114.2 of the Consolidated finance act;
- the financial disclosure process;
- the efficiency of internal control, internal audit and risk management systems;
- the legally-required audit of the annual separate and consolidated financial statements;
- the independence of the independent auditors or independent audit company, particularly with respect to the provision of non-audit services to the company;
- the compliance of the company’s related partytransaction procedures with the principles of the related-party regulation and their compliance, reporting to the shareholders in this respect pursuant to article 153 of the Consolidated finance act.