REPORT ON REMUNERATION POLICY AND REMUNERATION PAID

(PREPARED PURSUANT TO ARTICLES 123-TER OF THE CONSOLIDATED LAW ON FINANCE (T.U.F.) AND 84-QUATER OF THE

ISSUERS' REGULATION AS WELL AS ARTICLE 6 OF THE SELF-REGULATORYCODE OF CONDUCT OF LISTED COMPANIES PROMOTED BY

BORSA ITALIANA S.P.A.)

APPROVED BY THE BOARD OF DIRECTORS OF TESMEC S.P.A. ON 12 MARCH 2021

1

GLOSSARY

The Self-Regulatory Code of Conduct of listed companies approved in

Self-Regulatory Code of

July 2018 by the Corporate Governance Committee and promoted by

Conduct or Code

Borsa Italiana S.p.A., ABI, Ania, Assogestioni, Assonime and

Confindustria.

Corporate Governance Code: the Corporate Governance Code of Listed

Companies adopted on 31 January 2020 by the Corporate Governance

Committee of Listed Companies and promoted by Borsa Italiana, ABI,

Corporate Governance Code

Ania, Assogestioni, Assonime and Confindustria. The companies that

adopt the Corporate Governance Code apply it from the first financial

period starting after 31 December 2020, informing the market of it in

the report on corporate governance to be published in 2022.

Remuneration and

The Remuneration and Appointments Committee set up by Tesmec

Appointments Committee

in accordance with the Code.

or Committee

Board of Directors or

The Board of Directors of Tesmec.

Board

Board of Statutory

The Board of Statutory Auditors of Tesmec.

Auditors

The executives, referred to in Article 65, paragraph 1-quater, of the

Executives with Strategic

Issuers' Regulation, which refers to the definition provided in Annex

Responsibilities

1 to the Related Party Regulation, possibly identified by the Board of

Directors.

Group

Tesmec and the companies controlled by it pursuant to Article 93 of

the Consolidated Law on Finance (T.U.F.)

Instructions

The instructions accompanying the Regulations of the Markets

accompanying the Stock-

organised and managed by Borsa Italiana S.p.A.

Exchange Regulations

The Remuneration Policy prepared by the Remuneration and

Appointments Committee for the meeting of 12 March 2020 and

Remuneration Policy or

approved on 13 March 2020 by the Board of Directors, as described

in Section I of this Report. The Remuneration Policy thus prepared

Policy

and approved will be submitted for approval by a binding vote of

the Ordinary Shareholders' Meeting convened to be held on 21 May

2020.

Regulation of the

The Regulation of the Remuneration and Appointments Committee.

Committee

2

Issuers' Regulation

The Regulation issued by CONSOB with resolution no. 11971 of 14

May 1999 on issuers, as subsequently amended and supplemented.

The regulation issued by CONSOB with Resolution no. 17221 of 12

Related Party Regulation

March 2010, concerning transactions with related parties, as

subsequently amended and supplemented.

This report on remuneration policy and remuneration paid drawn up

Report

pursuant to Articles 123-ter of the Consolidated Law on Finance

(T.U.F.) and Article 84-quater of the Issuers' Regulation as well as

in compliance with Article 6 of the Code.

Tesmec or Company or

Tesmec S.p.A.

Issuer

Consolidated Law on

Italian Legislative Decree no. 58 of 24 February 1998 as

Finance (T.U.F.)

subsequently amended and supplemented.

3

TABLE OF CONTENTS

Introduction

5

GLOSSARY

2

TABLE OF CONTENTS

4

INTRODUCTION

6

SECTION I: REMUNERATION POLICY

7

1. Remuneration policy for members of the administrative bodies, general managers and other

executives with strategic responsibilities

7

  1. Bodies or subjects involved in the preparation and approval and possible review of the Remuneration Policy, by specifying their roles, as well as bodies and subjects in charge of the correct implementation

of this Policy..........................................................................................................................................

7

  1. Intervention of the Remuneration and Appointments Committee, composition (distinguishing the non- executive directors from the independent directors), relevant responsibilities and operation procedures

and any other measured aimed at avoiding or managing onflicts of interests..........................................

8

  1. Name of the independent experts, if any, who took part in the preparation of the Remuneration Policy 8
  2. Purposes of the Remuneration Policy, principles on which it is based and any change in the

Remuneration Policy compared to the policy last approved by the Shareholders' Meeting........................

9

  1. Description of the policies regarding fixed and variable components of remuneration, with particular regard to the indication of their relative proportion in the overall remuneration and distinguishing

between short and medium/long term variable components ................................................................

10

f) Policy followed with regard to non-monetary benefits......................................................................

12

  1. With reference to variable components, description of the financial and non-financial performance targets according to which they are assigned, distinguishing short-term variable components from medium to long-term variable components, and information on the relation between the change in the

results and the change in the remuneration .........................................................................................

12

h) Methods used for assessing the achievement of performance targets at the basis of the allocation of

shares, options, other financial instruments or other variable components of remuneration .................

12

  1. Information aimed at highlighting the contribution of the Remuneration Policy and, in particular, of the policy on variable remuneration components, to the company strategy, to the pursuit of the long-

term interests of the Company.............................................................................................................

12

  1. Vesting periods, any deferred payment systems, with indication of deferment periods and the criteria used for determining such periods and, if provided for, ex-post correction mechanisms of the variable

component ..........................................................................................................................................

12

k) Information on any clause for the retention of the financial instruments in the portfolio after their acquisition, by indicating the periods of retention and the criteria used for determining such periods .. 13

l) Policy related to the treatments contemplated in case of termination of office or of the employment

relationship .........................................................................................................................................

13

m) Information on the presence of insurance, or social security or pension coverage, other than

compulsory insurance..........................................................................................................................

13

n) (i) Remuneration policy possibly followed with reference to:(i) independent directors, (ii) the

attendance to committees and (iii) the carrying-out of special offices (chairman, vice chairman, etc.) ....

14

o) Instructions on the possible use, as reference, of the remuneration policies of other companies for

defining the Remuneration Policy.........................................................................................................

14

q) Elements of the Remuneration Policy from which, in the presence of exceptional circumstances, it is

possible to depart and any further procedural conditions under which the departure can be applied.....

14

2. Remuneration policy for members of the Board of Statutory Auditors

15

SECTION II - REMUNERATION PAID DURING THE 2020 FINANCIAL PERIOD TO THE MEMBERS OF THE BOARD OF DIRECTORS AND OF THE BOARD OF STATUTORY AUDITORS, TO GENERAL MANAGERS

AND EXECUTIVES WITH STRATEGIC RESPONSIBILITIES

16

4

FIRST PART - ITEMS FORMING THE REMUNERATION

16

1.1

Items forming the remuneration ...................................................................................

16

1.1.1

Board of Directors ....................................................................................................

16

1.1.2

Board of Statutory Auditors ......................................................................................

17

1.1.3

General Manager and Executives with Strategic Responsibilities ................................

17

1.2 Agreements that provide for payment of indemnities in the case of early termination of the

employment relationship .........................................................................................................

18

1.3

Derogations to the Remuneration Policy .......................................................................

18

1.4

Variable component correction mechanisms .................................................................

18

1.5

Comparison information ..............................................................................................

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SECOND PART - TABLES

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Table 1: Remuneration paid to the members of the Board of Directors and Board of Statutory Auditors, to the General Manager and Executives with Strategic Responsibilities, during the 2020

financial period 22

Table 2: Monetary incentives plans for the members of the Board of Directors, the General Manager and Executives with Strategic Responsibilities 26

Table 3: Information on the equity investments of the members of the Board of Directors, of the Board of Statutory Auditors, of the General Manager and of the Executives with Strategic

Responsibilities 27

5

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