Arnoldo Mondadori Editore S p A : Corporate governance report 2023 (579 kb)

REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE

Pursuant to article 123-bis CFA

(traditional administration and control model)

FINANCIAL YEAR 2023

Approved by the Board of Directors of

Arnoldo Mondadori Editore S.p.A.

on 14 March 2024

www.gruppomondadori.it

TABLE OF CONTENTS

1. PROFILE OF THE ISSUER	5
2. INFORMATION ON THE OWNERSHIP STRUCTURE (EX ART. 123-BIS.1, CFA) AS AT
(16/03/2023)	8
A) STRUCTURE OF SHARE CAPITAL (EX ART. 123-BIS.1.A), CFA)	8
B) RESTRICTIONS ON THE TRANSFER OF SHARES (EX ART. 123-BIS.1.B), CFA)	9
C) MAJOR SHAREHOLDINGS (EX ART. 123-BIS.1.C), CFA)	9
D) SECURITIES CONFERRING SPECIAL RIGHTS (EX ART. 123-BIS.1.D), CFA)	9
E) EMPLOYEE OWNERSHIP: MECHANISM FOR EXERCISE OF VOTING RIGHTS (EX ART. 123-
BIS.1.E), CFA)	9
F) RESTRICTIONS ON VOTING RIGHTS (EX ART. 123-BIS.1.F), CFA)	9
G) SHAREHOLDER AGREEMENTS (EX ART. 123-BIS.1.G), CFA)	9

1. CHANGE OF CONTROL CLAUSES (EX ART. 123-BIS.1.H), CFA) AND PROVISIONS OF THE ARTICLES OF ASSOCIATION WITH REGARD TO PUBLIC TENDER OFFERS (EX ARTS. 104.1-

TER, AND 104-BIS.1)	10
I) AUTHORISATIONS TO INCREASE THE SHARE CAPITAL AND BUY BACK OWN SHARES (EX
ART. 123-BIS.1.M), CFA)	10
J) MANAGEMENT AND COORDINATION ACTIVITIES (EX. ART. 2497 ET SEQ. C.C.)	13
3. COMPLIANCE (EX ART. 123-BIS.2.A), PART ONE, CFA)	13
4. BOARD OF DIRECTORS	14
4.1 ROLE OF THE BOARD OF DIRECTORS	14
4.2 APPOINTMENT AND REPLACEMENT (EX ART. 123-BIS.1.L), PART ONE, CFA)	16
4.3 COMPOSITION (EX ART. 123-BIS.2.D) AND D-BIS, CFA)	22
DIVERSITY CRITERIA AND POLICIES IN THE COMPOSITION OF THE BOARD AND THE CORPORATE ORGANISATION	22
LIMIT ON ACCUMULATION OF POSITIONS HELD IN OTHER COMPANIES	23
4.4. OPERATION OF THE BOARD OF DIRECTORS (EX ART. 123-BIS.2.D), CFA)	25
4.5 ROLE OF THE CHAIR OF THE BOARD OF DIRECTORS	26
SECRETARY TO THE BOARD OF DIRECTORS	27
4.6 EXECUTIVE DIRECTORS	27
CHIEF EXECUTIVE OFFICER	27
EXECUTIVE COMMITTEE (EX ART. 123-BIS.2.D),CFA)	28
OTHER EXECUTIVE DIRECTORS	28
4.7 INDEPENDENT DIRECTORS AND LEAD INDEPENDENT DIRECTOR	28
INDEPENDENT DIRECTORS	28
LEAD INDEPENDENT DIRECTOR	29
5. MANAGEMENT OF CORPORATE INFORMATION	29
(I) MANAGEMENT AND DISCLOSURE OF SIGNIFICANT AND INSIDER INFORMATION	29
(II) INTERNAL DEALING	30
(III) BLACK-OUT PERIODS	30
6. BOARD COMMITTEES (EX ART. 123-BIS.2.D), CFA)	31

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INTRODUCTION	31
ADDITIONAL COMMITTEES (OTHER THAN THOSE REQUIRED BY LAW OR RECOMMENDED BY THE CODE)	31

7. SELF-ASSESSMENT AND SUCCESSION OF DIRECTORS - REMUNERATION &

APPOINTMENTS COMMITTEE	31
7.1 SELF-ASSESSMENT AND SUCCESSION OF DIRECTORS	31
7.2 REMUNERATION & APPOINTMENTS COMMITTEE	32
COMPOSITION AND OPERATION OF THE REMUNERATION & APPOINTMENTS COMMITTEE (EX ART. 123-BIS.2.D),CFA) 32
FUNCTIONS OF THE REMUNERATION & APPOINTMENTS COMMITTEE	33
8. REMUNERATION OF DIRECTORS - REMUNERATION COMMITTEE	34
8.1 REMUNERATION OF DIRECTORS	34
REMUNERATION POLICY	34
REMUNERATION POLICY GUIDELINES	34
COMPENSATION FOR DIRECTORS IN THE EVENT OF RESIGNATION, DISMISSAL OR SEVERANCE FOLLOWING A PUBLIC
TENDER OFFER (EX ART. 123-BIS.1.I),CFA)	35
8.2 REMUNERATION COMMITTEE	35

9. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM - CONTROL & RISKS COMMITTEE 35

MAIN CHARACTERISTICS OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM	35
INTRODUCTION	35
GUIDELINES FOR THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM	36
DETERMINATION OF THE LEVEL OF COMPATIBILITY OF RISKS WITH ACHIEVEMENT OF STRATEGIC OBJECTIVES	38
9.1 RISK MANAGEMENT	38
9.2 CHIEF EXECUTIVE OFFICER	39
9.3 CONTROL, RISKS & SUSTAINABILITY COMMITTEE	40
COMPOSITION AND OPERATION OF THE CONTROL, RISKS & SUSTAINABILITY COMMITTEE (EX ART. 123-BIS.2.D),CFA)40
FUNCTIONS ATTRIBUTED TO THE CONTROL, RISKS & SUSTAINABILITY COMMITTEE	42
9.4 HEAD OF THE INTERNAL AUDIT FUNCTION	43
9.5 SUPERVISORY BODY AND ORGANISATION MODEL EX LGS.DECREE 231/2001	44
9.6 INDEPENDENT AUDITORS	46
9.7 MANAGER IN CHARGE OF PREPARING THE CORPORATE ACCOUNTS AND OTHER
CORPORATE ROLES AND FUNCTIONS	46
9.8 COORDINATION OF THE PARTIES INVOLVED IN THE INTERNAL CONTROL AND RISK
MANAGEMENT SYSTEM	47
10. DIRECTORS' INTERESTS AND RELATED-PARTY TRANSACTIONS	48
RELATED PARTIES COMMITTEE	49
11. BOARD OF STATUTORY AUDITORS	49
11.1 APPOINTMENT AND REPLACEMENT	49
11.2 COMPOSITION AND OPERATION (EX ART. 123-BIS.2.D) AND D-BIS), CFA)	53
DIVERSITY CRITERIA AND POLICIES	55
INDEPENDENCE	55
SELF-ASSESSMENT OF THE BOARD OF STATUTORY AUDITORS	55
REMUNERATION	56
MANAGEMENT OF INTERESTS	56
12. INVESTOR RELATIONS	57
ACCESS TO INFORMATION	57
ENGAGEMENT WITH SHAREHOLDERS	57
13. SHAREHOLDERS' MEETINGS	58

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14. ADDITIONAL CORPORATE GOVERNANCE PRACTICES (EX ART. 123-BIS.2.A), PART TWO,

CFA)	60
15. CHANGES AFTER THE REPORTING DATE	60
16. REMARKS ON THE LETTER OF THE CHAIR OF THE CORPORATE GOVERNANCE
COMMITTEE	60

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GLOSSARY

Code/CG Code/Corporate Governance Code: the Corporate Governance Code for listed companies approved in January 2020 by the Corporate Governance Committee.

Civ. Code/ C.C.: the Italian Civil Code.

Committee/CG Committee/Corporate Governance Committee: the Italian Corporate Governance Committee for listed companies, promoted by Borsa Italiana S.p.A. and by ABI, Ania, Assogestioni, Assonime and Confindustria.

Board: the Board of directors of the Issuer.

Issuer or Company: Arnoldo Mondadori Editore S.p.A.

Financial Year: the financial year to which the Report refers.

Consob Issuers Regulation: the Regulation concerning issuers promulgated by Consob with Deliberation no. 11971 of 1999 (as subsequently amended).

Consob Markets Regulation: the Regulation concerning markets promulgated by Consob with

Deliberation no. 20249 of 2017.

Consob Related Parties Regulation: the Regulation concerning related-party transactions promulgated by Consob with Deliberation no. 17221 of 12 March 2010 (as subsequently amended).

Report: the report on corporate governance and ownership structure that companies are required to draw up and publish pursuant to art. 123-bis CFA.

Remuneration Report: the report on remuneration policy and fees paid that companies are required to draw up and publish pursuant to art. 123-ter CFA and art. 84-quater Consob Issuers Regulation. Consolidated Finance Act/CFA: Lgs.Decree no. 58 of 24 February 1998.

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1. PROFILE OF THE ISSUER

Arnoldo Mondadori Editore S.p.A. (hereinafter, "AME") - a company with shares listed on the Borsa Italiana Euronext STAR Milan market - is one of the largest Italian publishers.

It is the leading publisher of Trade books with the Mondadori, Giulio Einaudi editore, Piemme, Sperling & Kupfer, Frassinelli, Rizzoli, BUR, Fabbri Editori, Rizzoli Lizard, Mondadori Electa publishing houses and brands, and, since 2022, also with De Agostini Libri and Star Comics, which are headed by Mondadori Libri S.p.A. It is also active in art and illustrated book publishing, management of museum concessions and organisation of cultural exhibitions and events through the subsidiary Electa S.p.A., and present in the illustrated book sector in the USA and at international level with Rizzoli International Publications Inc.

Furthermore, the Group is the leading player in educational publishing, through Mondadori Education S.p.A., Rizzoli Education S.p.A. and D Scuola S.p.A., with an offer covering every order of educational establishment from pre-schools to universities.

Mondadori's book business is supported by the largest network of bookstores in Italy, managed by Mondadori Retail S.p.A., with more than 500 stores managed directly or through franchising agreements, the bookclub formula and the mondadoristore.it e-commerce website.

Through the subsidiary Mondadori Media S.p.A., the Group is the leading digital publisher in multimedia and social media, and also has a presence in magazines. The Group is also active in mobile advertising and proximity marketing through the AdKaora company, in tech-advertising with the Hej! company, and in influencer marketing with the Zenzero, Power and TAAG! talent agencies.

CORPORATE GOVERNANCE SYSTEM

Arnoldo Mondadori Editore S.p.A. has chosen a corporate governance system organised on the basis of the "traditional" administration and control model pursuant to arts. 2380-biset seq. Civ. Code, with a Board of Directorsand a Board of Statutory Auditorsappointed by the shareholders' meeting, with the roles, functions, composition and responsibilities illustrated in this report.

The Board of Directors has formed a Remuneration & Appointments Committeeand a Control, Risks & Sustainability Committee, both with advisory and consultative functions as recommended by the Corporate Governance Code, and a Related Parties Committeepursuant to the Consob Related Parties Regulation and the procedures concerning related-party transactions adopted by the Company.

The Board of Directors is vested with full powers of ordinary and extraordinary administration and plays a central role in the Issuer's corporate governance system by determining the strategy and organisation of the Company and the Group.

Under the strategic lead provided by the Board of Directors, specific importance is attached to the pursuit

• through a gradual process consisting of the stages and procedures illustrated later in this Report - of sustainable success, in terms of the creation of long-term value for the shareholders and taking into account the interests of all the Issuer's key stakeholders.

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The Board of Statutory Auditors monitors compliance with the law and oversees the management of the Company. It monitors compliance governance, with a specific focus on the fitness for purpose and organisational, administrative and accounting structure.

the Articles of Association and with the principles of correct operation of the Company's

The engagement for auditing the separate financial statements and the consolidated financial statements for the nine financial years 2019-2027 and providing the additional services as per Lgs.Decree 39/2010 was conferred on the EY S.p.A. auditing firm by the shareholders' meeting of 17 April 2019.

The operations, composition and competences of the Company's governing bodies are examined in detail in this Report.

SUSTAINABILITY STRATEGY

In the area of Sustainability, the Mondadori Group has reached a level of maturity that has enabled it to move from detailed reporting, in line with the GRI Standards, to a strategic approach based on established ESG guidelines, consistently with the global objectives of the United Nations.

Consequently, in 2022, Mondadori was able to draw up its first Sustainability Plan, approved by the Board of Directors with the preparatory, advisory and recommendatory support of the Control, Risks & Sustainability Committee. The Plan sets out quantitative and qualitative targets and short- and medium- term measures for continuous improvement in social, governance and environmental terms.

During 2023, the quantitative targets were monitored constantly, making it possible to precisely record the degree of attainment on one hand and identify new future measures for continuous updating of the Plan on the other.

In the first half of the year, after a benchmark study, the Group stakeholder map was updated and analysis work continued to identify the current and potential areas of Group impact on the economy, people and the environment of greatest significance.

The mapping was accompanied by stakeholder listening events with the active involvement of the management, employees and other equally important interlocutors, including teachers, customers of our bookstores, suppliers and analysts.

The results of the analysis led to the identification of the materiality issues with top priority for Mondadori, on which the Group will continue to work with determination and commitment, with a view to continuous improvement and consistently with the strategic guidelines set out in the Sustainability Plan.

In preparation for the implementation of the new Corporate Sustainability Reporting Directive (CSRD), the Group also conducted a gap analysis and an initial double materiality exercise to identify the sustainability topics that could have a positive or negative influence on its development and performance.

Detailed information on the issues covered by current activities and the guidelines for future Group action in Sustainability and on the definition and development of the related Plan is provided in the 2023 Non- Financial Disclosure available on the www.gruppomondadori.it website and on the 1Info authorised

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storage mechanism (www.1info.it).

Plan Focus

The Sustainability Plan references three macro areas and eight strategic guidelines - shown in the diagram below - with future objectives linked to the Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development.

SOCIAL - Enhancement of people, content and places for education and culture

			1.	To	become	a
				reference model for diversity, equality and
				inclusion, enhancing and contributing to the well-
				being of our people through welfare tools and
				skills development.
			2.	To	promote a	fair
				and inclusive quality culture and education, that
				promotes continuous learning.
			3.	To	create, plan and
				develop content of value and ESG-friendly
				products and accessions.
			4.	To	support cultural
				activities for social development by valorising
				bookstores, schools, museums, social channels,
				events and partnerships.

GOVERNANCE - Promotion of sustainable business success

			1.	To	pursue	sustainable
				business success by fostering ESG integration in
				governance, corporate plans and the operating model,
				and by strengthening listening channels for
				stakeholders in order to develop paths for continuous
				improvement.
			2.	To	maintain	the highest
				standards for monitoring and managing risks and
				opportunities across the value chain.

ENVIRONMENT - Promotion of an environmental culture and mitigation of impact on ecosystems

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			1.	To	promote an
				environmental culture, in part through education
				geared to development of a more sustainable
				lifestyle.
			2.	To	mitigate
				environmental impact throughout the paper
				product life cycle by promoting protection of
				biodiversity and reduction of climate-altering
				emissions.

It should be noted that:

1. the Issuer is classified as a PMI [Piccola Media Impresa - small-medium enterprise] pursuant to art. 1.1.w-quater.1) of the CFA and art. 2-ter of the Issuers Regulation, given 2023 capitalisation of 527.1 million Euro;
2. the Issuer comes under the Code's definition of company with concentrated ownership and therefore has flexible options for application of the Code.

As parent company, the Issuer draws up and approves strategic plans relating to itself and the Group and exercises management and coordination functions pursuant to arts. 2497 et seq. Civ. Code over its subsidiary companies.

2. INFORMATION ON THE OWNERSHIP STRUCTURE (EX ART. 123-BIS.1, CFA) AS AT (16/03/2023)

A) STRUCTURE OF SHARE CAPITAL (EX ART. 123-BIS.1.A), CFA)

As at the date of approval of this Report, the share capital of Arnoldo Mondadori Editore S.p.A. was 67,979,168.40 Euro fully subscribed and paid-up, represented by 261,458,340 ordinary shares with a par value of 0.26 Euro each. Shares are recorded in a central dematerialised securities depository and are traded on the Mercato Telematico Azionario (MTA) - Euronext STAR Milan market organised and run by Borsa Italiana S.p.A.

Mondadori shares are registered, indivisible, and freely transferable shares which grant the right to vote at the Company's ordinary and extraordinary shareholders' meetings in accordance with law and the Articles of Association; furthermore, they grant the additional administrative and capital rights envisaged by law on shares with voting rights.

There are no other classes of shares or securities not traded on regulated markets.

No other financial instruments are issued that confer the right to subscribe newly-issued shares.

The structure of the share capital at 31 December 2023 is illustrated in Table 1 attached to this Report.

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B) RESTRICTIONS ON THE TRANSFER OF SHARES (EX ART. 123-BIS.1.B), CFA)

There are no restrictions on the transfer or holding of shares, nor are there any clauses for approval by the Company or other security holders regarding the transfer of shares.

C) MAJOR SHAREHOLDINGS (EX ART. 123-BIS.1.C), CFA)

Table 1 attached to this Report illustrates the major shareholdings in excess of 5% of capital or above the materiality threshold, held directly or indirectly, as reflected in the stock ledger supplemented by the notices received pursuant to art. 120 Lgs.Decree no. 58/1998 and by other available information.

D) SECURITIES CONFERRING SPECIAL RIGHTS (EX ART. 123-BIS.1.D), CFA)

No shares have been issued that confer special control rights.

The extraordinary Shareholders' Meeting of 27 April 2017 approved an amendment to art. 7 of the Articles of Association with the introduction of a system of "increased voting rights" (pursuant to art. 127-quinquies of the CFA), which, among other things, provides for a double voting right to be assigned to each share held by the same party for a continuous period of not less than 24 months, as from registration in the special list set up by the Company. As of the date of this Report, 139,359,650 shares representing 53.30% of the share capital and 69.538% of the voting capital were registered in the special list. Increased voting rights had vested on all the shares referred to above as of the date of this Report.

For further information about increased voting rights, see the Regulation for Increased Voting Rights published on the Company website www.gruppomondadori.it.

The Issuer's Articles of Association do not contemplate shares with multiple voting rights.

1. EMPLOYEE OWNERSHIP: MECHANISM FOR EXERCISE OF VOTING RIGHTS (EX ART. 123-BIS.1.E), CFA)

There is no specific mechanism for the exercise of voting rights that can be applied to an employee stock ownership plan.

F) RESTRICTIONS ON VOTING RIGHTS (EX ART. 123-BIS.1.F), CFA)

There are no restrictions on the exercise of voting rights with the exception of the treasury shares held by the Company on which voting rights are suspended pursuant to art. 2357-ter Civ. Code.

G) SHAREHOLDER AGREEMENTS (EX ART. 123-BIS.1.G), CFA)

1. On 15 September 2023, the Company, pursuant to arts. 122 of the CFA and 129.2, and 130.1, of the Issuers Regulation, announced the publication, on the 1Info authorised storage mechanism
   (www.1info.it) and the Investors section of the Mondadori website (www.gruppomondadori.it/investors/capitale-sociale-e-azionariato/patti-parasociali), of the extracts pursuant to art. 129 of the Issuers Regulation and the essential information pursuant to art. 130 of the Issuers Regulation concerning the material agreements pursuant to art. 122 of the CFA contained in the shareholder agreements relating to, among other topics, Fininvest S.p.A. and Arnoldo Mondadori Editore S.p.A., signed on 11 September 2023 by Marina Elvira Berlusconi, Pier Silvio Berlusconi, Barbara Berlusconi, Eleonora Berlusconi and Luigi Berlusconi and also on 11 September 2023 by Marina Elvira Berlusconi and Pier Silvio Berlusconi.

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