dcsimg
false
Toolbox

Governance

Eni considers sound Corporate Governance 1 to be a foundation stone of its business model, understanding that good governance is a prerequisite for pursuing its corporate mission while ensuring compliance with standards of fairness and cost effectiveness: the governance system is designed to support the relationship of trust between Eni and its stakeholders and, supplementing Eni’s business strategy, to help achieve stable results and create sustainable value over a long-term period. Eni, as Italy’s top company by capitalisation, is committed to building a Corporate Governance system inspired by excellence. In line with the principles set out in its Corporate Governance Policy, Eni has participated in the debate on issues regarding the management and control of listed companies, developing a number of proposals for the Italian Corporate Governance system. Many of the proposals were included in the recommendations introduced with the Corporate Governance Code in December 2011 2. Furthermore, with a view to continuously improving the Corporate Governance system of Eni and its subsidiaries, numerous internal initiatives were undertaken in 2012 to implement as completely as possible the recommendations set out in the Code and, above all, to promote the highest standards that Eni pursues in this field.

Eni’s Corporate Governance structure

The Corporate Governance arrangements of Eni are structured along the lines of the traditional model, which, without prejudice to the responsibilities of the Shareholders’ Meeting, assigns corporate management duties to the Board of Directors, monitoring functions to the Board of Statutory Auditors and statutory auditing of the accounts to the audit firm.

The Board of Directors and the Board of Statutory Auditors of Eni are appointed by the Shareholders’ Meeting using a slate voting mechanism. Three directors and two statutory auditors, including the Chairman of the Board of Statutory Auditors, are appointed by the non-controlling shareholders. In addition, of the nine directors, eight are non-executive directors, and seven of these meet the independence requirements as provided for by law and the Corporate Governance recommendations. Starting with the next election, the Board of Directors and Board of Statutory Auditors must have balanced representation of the genders, as provided for by law and already incorporated into the Company’s By-laws as of 2012.

The Board of Directors, which plays a central role in the Company’s governance, has appointed a Chief Executive Officer and delegated to the Chairman powers to identify and pursue integrated projects and international agreements of strategic importance.

Among those powers reserved to the Board, it has identified the most important strategic, operational and organisational responsibilities, in addition to those that cannot be delegated by law. Specifically, it has reserved to itself a central role in the areas of internal control and risk management, as well as in setting the key Corporate Governance 3 guidelines for Eni. The Board has also retained the exclusive power to set sustainability policies and agree upon the results to be presented to the Shareholders’ Meeting through an integrated reporting system that demonstrates how good performance in sustainability creates long-term value.

The Board of Directors has established four internal committees with consulting and advisory functions: the Control and Risk Committee, the Compensation Committee, the Nomination Committee and the Oil-Gas Energy Committee.

The following chart provides a graphical representation of the Company’s Corporate Governance structure:

Corporate governance structure

In order for the Board to take strategic decisions in an informed manner, adequately overseeing and monitoring operations, the Directors must be kept fully informed in a timely manner. For that purpose, Board meetings follow specific procedures and are carefully planned, with the help of the Board Secretary, by the Chairman, who provides leadership and moderates the discussion so as to give each Director the opportunity to make an effective contribution.

In addition, following the appointment of the corporate boards in June 2011, Eni introduced a new training program (the “Board Induction”) for newly appointed Directors and Statutory Auditors, in which other members of the two bodies were also invited to participate. The program continued in 2012 (“Ongoing Induction”), with an in-depth examination of business issues and with visits to a number of operating facilities. Sustainability and business ethics were also addressed in the induction process, with the goal of training Directors and Statutory Auditors to understand how social and environmental issues affect the business environment, and how social and regulatory trends can create new opportunities and risks 4.

In 2012, Eni also conducted a training program for new members of the boards of directors of Eni’s subsidiaries, emphasising the contribution of diversity within the boards. The Board also conducted, for the seventh consecutive year, a self-assessment (“Board Review”) of the composition of the Board and its operation, with the support of an independent external advisor. At the same time, with the support of the same external advisor, Eni’s Board also carried out a peer review process for Directors for the second year consecutive. The peer review process consists of an evaluation by each Director of the contribution made by the other Directors. The board review and the peer review are instruments for continually improving the quality of Eni governance and the effectiveness of the Board.

Remuneration policy

Pay mix

Eni’s remuneration policy for its Directors and top management is established in accordance with the recommendations of the Corporate Governance Code and best practices in the field. The Policy seeks to attract personnel with high-level professional and management skills and to align the interests of management with the priority objective of creating value for shareholders over the medium/long-term. For that purpose, the structure of the remuneration of Eni’s top management is established on the basis of the position and the responsibilities assigned, with due consideration given to market benchmarks for similar positions and the significance of the persons involved. Remuneration is composed of a balanced mix of fixed and variable components. Under the Eni remuneration policy, considerable importance is given to the variable component, which is linked to results through a system of incentives tied to the achievement of performance/financial, business development and operational objectives, defined in terms of the sustainability of the results, in line with the Company’s Strategic Plan 5. The remuneration policies were submitted to the Shareholders’ Meeting of 2012 and received its full support 6.

The internal control and risk management system

Eni has adopted an integrated, comprehensive internal control and risk management system based on tools and the circulation of information that, involving all Eni personnel, reach all the way up to the Company’s top management.

The members of the Board, as well as the members of the other corporate bodies and all Eni personnel, are required to comply with Eni’s Code of Ethics (an integral part of the Company’s Model 231), which sets out the rules of conduct for the fair and proper management of the Company’s business.

In 2012, consistent with the recommendations of the Corporate Governance Code adopted on April 26, 2012, the Board of Directors, with the assistance of the Control and Risk Committee, began a number of important initiatives to further strengthen the internal control system, particularly in the area of risk management. Eni adopts a risk prevention approach that supports informed decision-making processes, as well as, where possible, the translation of the principal risks into opportunities and competitive advantage.

In this context, Eni has evolved the existing system to develop a new integrated risk management model that makes it possible, through the dissemination of a common language and the use of common tools, to achieve a comprehensive view of the primary risks faced by the Company.

To this end, in April 2012, the Risk Committee (chaired by the CEO and composed of Eni’s top management) and the Integrated Risk Management unit (reporting directly to the CEO) were formed. At the meeting of December 13, 2012, the CEO reported to the Board of Directors on the results of the integrated risk assessment cycle performed to identify and measure the primary business risks. In addition, after consulting with the Control and Risk Committee, the Board approved the “Integrated Risk Management Principles”, charging the CEO, as the director responsible for the internal control and risk management system, with the job of implementing the principles through specific internal rules, which were issued on December 18, 2012.

The project to rationalise the control and risk management system also led to the adoption, in March 2013, of a unified integrated risk management manual setting out the duties, the responsibilities and the procedures for coordinating the actions of the main actors involved. More specifically, the Board has sought to govern the coordination between the system actors in order to maximise its efficiency and reduce duplication, unifying the schedule for reporting to top management, thereby permitting the Board, with the support of the Control and Risk Committee, to assess the system with a complete vision of the situation.

An integral part of the Eni internal control system is the internal control system for financial reporting, the goal of which is to provide reasonable certainty as to the reliability of the financial reporting itself and as to the ability of the financial report preparation process to generate such information in accordance with generally accepted international accounting standards. Eni’s CEO and CFO are responsible for planning, establishing and maintaining the internal control system for financial reporting. The CFO also serves as the officer in charge of preparing financial reports (FRO), who must satisfy specific professional requirements set out in the Eni Bylaws.

The nomination for the position is proposed by the CEO in agreement with the Chairman. The CFO/FRO establishes the administrative and accounting procedures for preparing the periodic accounting documentation and any other financial disclosures, certifies along with the CEO the adequacy and effective application of these procedures, as well as the veracity of accounting documents and their compliance with applicable regulations. The CFO/FRO plays an important role in providing support to the unit responsible for the Company’s Integrated Risk Management process.

Transparency and communication with the public

The foregoing reflects, albeit in brief, the most important management and control issues that characterise the governance system and rules. Eni also places great emphasis on open, transparent communication with its shareholders and all other stakeholders, underscoring its continuing commitment to ensuring that each and every shareholder can effectively exercise their rights. Eni is committed to making complete, timely, understandable, freely accessible information available to all. Information is a strategic business asset and as such must be managed so as to ensure that the interests of the Company, its shareholders and the market are protected. To this end, on October 29, 2012, the Eni Board of Directors, acting on the proposal of the CEO after consultation with the Control and Risk Committee, approved the new Market Abuse procedure, establishing the principles for the proper internal management and disclosure of corporate information, consolidating in one set of rules the three previous regulations on market abuse in order to rationalise Company rules for preventing market abuse and make them more effective.

  1. Appointed by the minority list.
  1. For further information on Eni’s Corporate Governance system, please refer to Eni’s Corporate Governance Report, published on the Company’s website in the Governance section.
  2. Specifically, the new edition of the 2011 Corporate Governance Code incorporates the proposals on diversity (not limited to gender diversity) of directors; on introducing staggered boards; the strategic role of the Board of Directors; the rationalisation of controls; and streamlining the formalities and procedures for Shareholders’ Meetings.
  3. More specifically, with regard to the composition of the boards of unlisted subsidiaries and the establishment of the criteria for designating their members, the Eni Board of Directors has decided to move forward the effects of the law on gender balance within Eni’s Italian subsidiaries, requiring that at least 1/3 of the members of the boards appointed starting from 2012 be women with regard to those appointments that Eni may make as shareholder. Upon the appointment of the boards of directors of 15 Italian subsidiaries comprised of Eni employees, 35.1% of the directors are women out of those positions appointable by Eni, compared with 7.4% during the previous term, and 34.2% of the standing statutory auditors are women, again out of the total positions appointable by Eni, compared with 2.6% during the previous term.
  4. Eni is member of the UN Global Compact LEAD Group, actively contributing to the “Board Education Program” project.
  5. For more information, see the Remuneration Report, available on the Company’s website, in which the Remuneration Policy is subject to an advisory vote of the Shareholders’ Meeting.
  6. More specifically, Eni received a vote that was much higher than the average for major Italian listed companies. Of the 56.4% of the share capital represented at the meeting, 92.6% of the shares present voted in favour, corresponding to 52.2% of Eni share capital.

Top of page

Eni S.p.a. - Registered Head Office
Piazzaie Enrico Mattei, 1
00144 Roma

Branches
Via Emilia, 1
e Piazza Ezio Vanoni, 1
20097 - San Donato Milanese (MI)

VAT number
n. 00905811006

Company share capital
€ 4.005.358.876,00 paid up.

Rome Company Register
Tax Identification Number. 00484960588

Mission
We are a major integrated energy company, committed to growth in the activities of finding, producing, transporting, transforming and marketing oil and gas. Eni men and women have a passion for challenges, continuous improvement, excellence and particularly value people, the environment and integrity.