www.ansaldo-sts.com

Corporate Governance

Ansaldo STS adopts a corporate governance 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 the international best practices. 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’ corporate governance system is based on a traditional model, and includes:

  • shareholders’ meetings;
  • the board of directors (with the risk and control committee and appointments and remuneration committee set up within in);
  • the board of statutory auditors;
  • the independent auditors.

The company’s main corporate governance tools at present are listed below:

  • By-laws;
  • Code of ethics;
  • Organisational, management and control model pursuant to Legislative decree no. 231/01;
  • 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 the handling of privileged information and list of people with access to such information;
  • Internal dealing code of conduct;
  • Shareholders’ meeting regulations.

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 2012.

Governance bodies and tools

SHAREHOLDERS’ MEETINGS

During ordinary and extraordinary meetings, the shareholders are responsible for resolving on the matters reserved for their decision by law or the by-laws. Particular emphasis is placed on encouraging the utmost attendance of those with the right to vote and to ensuring the highest quality of information provided to shareholders in such circumstances, in accordance with the restrictions and procedures for disclosing price sensitive information. In order to allow those entitled to vote to take informed decisions, the board of directors publishes detailed reports on each item on the agenda (for as far as it is concerned).

Protecting non-controlling interests

The regulations for the shareholders’ meetings (approved by the shareholders on 12 December 2005 and amended on 5 April 2011) define the procedures for the orderly and functional proceeding of the meetings, ensuring the rightful people can take the floor on the items of the agenda and specifying certain aspects (time limits for speakers and voting procedures and operations) to encourage the correct proceeding of meetings. The directors are appointed during the ordinary shareholders’ meeting on the basis of lists. In order to ensure that non-controlling shareholders can effectively participate, the by-laws explicitly establish that each shareholder is entitled to submit, individually or with other shareholders, only one list. Each person entitled to vote may vote for one list only. Shareholders who belong to the same group and shareholders who are a party to a shareholders’ agreement involving the company’s shares may not submit or vote for more than one list, neither individually nor through nominees or trustees. The directors are elected as follows: (i) two thirds of the directors to be elected from the list that receives the majority of the votes, in the order in which they are listed, with the resulting number rounded down in case of fractional number; (ii) the remaining directors from the other lists in accordance with the criteria and procedures specified in the by-laws.

BOARD OF DIRECTORS

Ansaldo STS’ 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 the shareholders. The board of directors has between seven and thirteen members. Before the board is elected, the shareholders decide the number of members within this limit. On 5 April 2011, the shareholders decided the number of members would be nine, and appointed the new board, which will remain in office until the ordinary shareholders’ meeting called to approve the financial statements as at and for the year ended 31 December 2013.

Following the early resignation of the independent director,

Filippo Giuseppe Maria Milone, Bruno Pavesi was appointed independent director by co-option by the board of directors on 30 March 2012 and was confirmed by the shareholders on 7 May 2012.

The board of directors is currently comprised as follows.

BOARD OF DIRECTORS      RISK
AND CONTROL
COMMITTEE
APPOINTMENT
AND REMUNERATION
COMMITTEE
     INDIPENDENT     
DIRECTOROFFICELIST(*)
EXECUTIVENON
EXECUTIVE
Civil
Code
TUF%
PRESENCE
AT MEETINGS
MEMBERS%
PRESENCE
MEMBERS%
PRESENCE
Alessandro PansaChairmanMX(**)   100%    
Giancarlo GrassoDeputy ChairmanM X  100%    
Sergio De LucaCEOMX   91.6%    
Giovanni CavalliniDirectorm XXX83.3%  X85%
Maurizio CeredaDirectorm XXX100%X100%Chairman100%
Paola GirdinioDirectorM XXX100%X100%  
Bruno PavesiDirector(***) XXX100%  X100%
Tatiana RizzanteDirectorm XXX75%    
Attilio SalvettiDirectorM XXX100%Chairman100%  
(*) “M”: Director appointed from the majority list / “m”: Director appointed from the minority list. (**) The Chairman has not been given any specifi c delegated powers and, therefore does not hold any executive positions within the company. However, he is considered to be an executive director under the provisions of the code of conduct, as he is General Manager of Finmeccanica S.p.A., which manages and coordinates Ansaldo STS. (***) Bruno Pavesi is not on any of the lists presented for the shareholders’ appointment of the board of directors on 5 April 2011.

The directors Alessandro Pansa, Sergio De Luca, Paola Girdinio, Giancarlo Grasso and Attilio Salvetti were all elected from the majority list presented by Finmeccanica S.p.A., which held 40.065% of share capital. Maurizio Cereda was elected from the list presented jointly by the non-controlling shareholders Mediobanca - Banca di Credito Finanziario S.p.A. and Banca IMI S.p.A..

The directors Giovanni Cavallini and Tatiana Rizzante were elected from the list presented jointly by the noncontrolling shareholders Allianz Global Investor Italia SGR S.p.A., which manages the Allianz Azioni Italia investment fund; Anima SGR S.p.A. which manages the Europa, Iniziativa Europa e Italia and Visconteo investment funds; Arca SGR S.p.A. which manages the Arca Azioni Italia and Arca BB investment funds; Fidelity Investment Funds- European Fund; Fideuram Investimenti SGR S.p.A., which manages the Fideuram Italia investment fund; Fideuram Gestions SA, which manages the Fonditalia Equity Italy and Fideuram Fund Equity Italy investment funds; Interfund Sicav, which manages the Interfund Equity Italy investment fund; Mediolanum Gestione Fondi SGRpA, which manages the Mediolanum Flessibile Italia investment fund; Mediolanum International Funds, which manages the Challenge Funds; Pioneer Asset Management SA; Pioneer Investment Management SGRpA, which manages the Pioneer Azionario Crescita investment fund; Prima SGR S.p.A., which manages the Prima Geo Italia investment fund. Together, these non-controlling shareholders held 2.176% of the share capital.

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, but must also meet he specific requirements of professionalism indicated in the by-laws. In particular, candidates may be appointed director of the company only if they have at least three years of experience in:

  • 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; or6
  • top 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.

Non-executive directors

The board of directors is mainly comprised of non-executive 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 judgment significantly influences board decisions.

Non-executive directors bring their specific expertise to the table in board discussions, to support the examination of the matters considered from a different perspective and to encourage the adoption of well-pondered resolutions, in line with the company’s interests.

All board members are non-executive, except for the CEO and Chairman.

Independence of directors

In the implementation of the provisions of the Code of Conduct, following the appointment of the directors, i.e. after 5 April 2011, and on the basis of the statements made by each and available to the company, the board of directors has evaluated whether the independent directors are party to any relationships that could, or that could appear to, jeopardise their independent judgment. The findings of this evaluation were disclosed to the market in a press release on 5 April 2011.

Subsequently, on 13 December 2011, on the basis of the documentation submitted by each independent director, the board reviewed whether they still met the independence requirements provided for by the current legislative and regulatory provisions and pursuant to article 3 of the Code. In their review, the board applied all Code criteria.

At the same time, on the basis of the statements made by the directors and considering the board’s findings, the board of statutory auditors certified the board’s evaluation of the independence of its members in accordance with the criteria.

The independent directors met on 18 December 2012.

The main purpose of the meeting was to examine transactions with Finmeccanica, which manages and coordinates Ansaldo STS.

In accordance with the Code, the company is not required to appoint a lead independent director, since the Chairman of the board of directors is not also the main person responsible for company management (CEO) and does not hold a controlling interest in the company.

Board of the directors activities and functioning

In 2012, the board held 12 meetings. Any absences were duly justified. Twelve meetings are already scheduled for 2013. Since the start of 2013, the board met on 28 January 2013, 11 February 2013 and 5 March 2013. The average length of the board’s meetings in 2012 was approximately three hours.

The meetings of the board of directors saw the participation, depending on the items on the agenda, of the Chief Financial Officer, the Internal Audit Manager, the company’s Risk Manager, the Corporate Affairs & Group Insurance Manager and, upon the Chairman’s recommendation, other company managers, in order to provide suitable details on the items on the agenda.

In 2012, Mauro Gigante, Secretary to the board of directors, participated in board meetings. On 27 September 2012, he was replaced by Grazia Guazzi, who participated in all board meetings in this position.

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.

In 2012, Ansaldo STS’ board of directors conducted the second evaluation of the board and committees of its mandate, which was the seventh time the board’s evaluation process was carried out.

The valuation process was carried out in accordance with the recommendations of article 1.C.1..g) of the Borsa Italiana’s Code of Conduct for listed companies, and in line with international best practices. For 2012, the board decided to draw on the professional assistance of an advisory company that has not had any current or recent professional or business relationships with Ansaldo STS, based on the belief that the assistance of an external, independent and specialised advisory company can encourage better discussion with directors and offer other best practice perspectives.

The evaluation was carried out through a series of personal interviews with each board member, the Chairman of the board of statutory auditors and the Secretary of the board of directors, as well as by participating in several meetings of the board of directors and those of its internal committees. In addition, the minutes of the meetings of the board and its committees in 2012 and early 2013 were analysed. Furthermore, the evaluation entailed comparison with Italian and foreign companies with similar ownership structures to Ansaldo STS.

The advisory company shared the directors’ positive opinion of the functioning of the board and its committees, in accordance high standards of professionalism, and confirmed the high level of compliance with the guidelines of the Code of Conduct, in application of international corporate governance best practices.

6 On 5 March 2013, Mr. Pansa informed the board of directors and the Chairman of the board of statutory auditors that he had decided to resign from the office of Chairman and member of the board of di-rectors of Ansaldo STS S.p.A., effective from the end of the shareholders’ meeting called to approve the financial statements as at and for the year ended 31 December 2012. His resignation was due to the fact that he had been newly appointed CEO of Finmeccanica S.p.A. with effect from 13 February 2013 - in addition to his position as General Manager of the parent - and a greater commitment was required of him as a result.

COMMITTEES

In order to improve the effectiveness and efficiency of the board meetings, the risk and control committee (formerly the internal control committee) and the appointments and remuneration committee (formerly the remuneration committee) were set up within the board.

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.

Following its adoption of the updated Code, the company resolved to: i) set up an appointments committee, integrating it with the remuneration committee that was already in place and naming the new committee - with this dual role - the appointments and remuneration committee, and approving its regulation; ii) adopt a succession plan for the CEO, assigning the appointments and remuneration committee responsibility for handling the preliminary preparation of the plan and presenting it for the approval of the board of directors; iii) modify and redefine the duties and functions of the various parties involved, in different ways, in the company’s internal control and risk management system, and align the titles of these parties to those indicated in the updated Code of Conduct. In this scope, the board renamed the internal control committee the risk and control committee and approved its regulation.

The duties, characteristics and functions of the former internal control committee and remuneration committee are described in the 2011 report on corporate governance and the adoption of the code of conduct for listed companies, which is published on the company’s web site7.

Risk and control committee

The risk and control committee currently in office is comprised of three directors, who are all executive and independent. They are the directors Attilio Salvetti (Chairman), Maurizio Cereda and Paola Girdinio.

The committee, initially appointed by the board of directors on 5 April 2011, was confirmed by the board on 18 December 2012 when the committee was updated to the new Code of Conduct. Pursuant to the Code, at the time of the appointment, the board of directors examined the accounting and financial experience of the committee’s Chairman, Attilio Salvetti, and the members Maurizio Cereda and Paola Girdinio, and deemed adequate Maurizio Cereda’s experience.

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 web site8.

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 organisational structure of such 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

On 18 December 2012, as recommended by the Code of Conduct, the board of directors resolved to set up an appointments committee, integrating it with the remuneration committee that was already in place. It decided to combine these two committees for internal organisational reasons, since the members of the pre-existing remuneration committee already met the independence, professionalism and experience requirements for members of the appointments committee as well.

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 members of the committee initially appointed by the board of directors on 5 April 2011 (which at the time was required to act as the remuneration committee only) were the non-executive and independent directors Maurizio Cereda (Chairman), Giovanni Cavallini and Filippo Giuseppe Maria Milone.

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 the directors Maurizio Cereda and Giovanni Cavallini had accounting and financial expertise and experience.

Following the resignation of Filippo Milone, who was replaced by the independent director Bruno Pavesi, the latter was also appointed to the committee when he was first coopted on 30 March 2012 and later, being confirmed by the shareholders on 7 May 2012, he was appointed by the board of directors on 23 May 2012.

After Bruno Pavesi’s appointment, the committee’s members are Maurizio Cereda (Chairman), Giovanni Cavallini and Bruno Pavesi. This composition was last confirmed by the board of directors on 18 December 2012, when the appointments committee was set up and integrated with the pre-existing remuneration committee.

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 and 5 March 2012.

The committee’s regulation was again modified on 18 December 2012, to update it to include its new duties as appointments committee.

The regulation is available on the company’s web site9.

In particular, the committee’s role for the appointment of directors pursuant to article 5 of the Code of Conduct, involves the following duties:

  • preparing opinions for the board of directors on the board’s size and composition and recommending the professionals whose presence on the board is deemed appropriate, as well as on the matters specified in Criteria 1.C.3 (maximum number of positions as director and statutory auditor) and 1.C.4 (non-competition clause waivers) of the Code of Conduct;
  • proposing director candidates to the board of directors in the event of co-option, when independent directors must be replaced;
  • as mandated by the board of directors, carry out the preliminary preparation of the plan for the succession of executive directors. 

On the other hand, its duties as the remuneration committee, pursuant to article 6 of the Code of Conduct, include the following:

  • preparing proposals for the board of directors on policies for the remuneration of directors and key managers, where the latter have been appointed;
  • periodically evaluate the adequacy, consistency and actual application of the above remuneration policy, on the basis of information provided by the CEO with respect to key managers, and preparing, if necessary, proposals in this respect for the board of directors;
  • submitting proposals or expressing opinions to the board of directors on the remuneration of the executive directors and other directors in specific offices, as well as setting performance targets in relation to variable performance-based bonuses, monitoring that the board’s decisions are applied and that the performance targets are actually achieved;
  • evaluating the CEO’s proposals with respect to general remuneration and incentive policies, in addition to the managerial development plans and systems, key resources within Ansaldo STS and Group companies’ directors with powers;
  • assisting top management in the definition of the best management policies for the Group’s managers;
  • proposing share-based remuneration plans for the directors and managers of the company and the Group companies, as well as the related implementation regulations, performing the duties reserved for it with respect to the management of the plans adopted by the company from time to time;
  • report to the company’s shareholders on how their functions are performed.

Directors’ remuneration

Information on the remuneration of 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 Issuers’ regulation, published on the company’s web site10 and made available to the public in the other ways provided for by current legislation.

In 2011, in the regulatory definition of the remuneration of directors and key managers, the board of directors set and defined the remuneration policy for the CEO and key managers, defining, in particular, the principles and criteria for performance-based bonuses.

This policy was then approved by the board of directors on 5 March 2012, upon the proposal of the remuneration committee on 1 March 2012.

On 30 March 2012, with the approval of the former remuneration committee, the company’s board of directors approved the Ansaldo STS remuneration report prepared pursuant to article 123-ter of the Consolidated finance act. The first section of the report, which describes the company’s remuneration policy and the procedures followed to adopt and implement such policy, was then submitted – pursuant to article 123-ter.6 – to the non-binding vote of the shareholders on 7 May 2012. The shareholders approved the policy.

The board of directors confirmed the company’s approved remuneration policy on 5 March 2012, upon the appointments and remuneration committee’s proposal, for 2013. Following the approval of the appointments and remuneration committee, the board also approved the remuneration report pursuant to article 123-ter of the Consolidated finance act. In accordance with the provisions of article 123-ter.6 of the Consolidated finance act, during the ordinary meeting called to approve the draft 2012 financial statements, the shareholders will be asked to again express their opinion on the first section of the remuneration report, provided for by article 123-ter.3, which describes the remuneration policy for members of the board of directors and key managers, as well as the procedures applied to adopt and implement such policy.

With respect to the remuneration of Ansaldo STS’ directors for 2012, reference should be made to the second section of the remuneration report approved by the board of directors on 5 March 2013, available on the company’s web site11.

On 5 March 2012, the board of directors identified the key managers to whom the Ansaldo STS remuneration policy applies, upon the remuneration committee’s proposal. They are the managers of the following Business Units: Signalling, Standard Product & Platform and Transportation Solutions.

The incentive systems for the Internal Audit Manager and the manager responsible for financial reporting are consistent with the duties assigned to them.

7 http://www.ansaldo-sts.com/sites/ansaldosts.message-asp.com/files/downloadspage/asts_relazione_corporate_governance_eng_final_1.pdf
8 http://www.ansaldo-sts.com/sites/ansaldosts.message-asp.com/files/downloadspage/7_regolamento_comitato_controllo_e_rischi_en_1.pdf
9 http://www.ansaldo-sts.com/sites/ansaldosts.message-asp.com/files/downloadspage/5_regolamento_comitato_nomine_e_remunerazione_en.pdf
10 http://www.ansaldo-sts.com/en/governance/nomination-and-remuneration-committee and http://www.ansaldo-sts.com/en/governance/shareholder-meeting/shareholder_meeting_2013
11 http://www.ansaldo-sts.com/en/governance/nomination-and-remuneration-committee and http://www.ansaldo-sts.com/en/governance/shareholder-meeting/shareholder_meeting_2013

BOARD OF STATUTORY AUDITORS

The shareholders appoint the statutory auditors in an ordinary meeting on the basis of voting by lists. The statutory auditors are appointed as follows:

  • two standing statutory auditors and one substitute statutory auditor are elected from the list that receives the most votes, in the order in which they are listed;
  • the remaining standing statutory auditors and substitute statutory auditor are elected from the other lists, in accordance with current legislative and regulatory provisions.

The company’s board of statutory auditors has three standing statutory auditors and two substitute statutory auditors. It was appointed by the shareholders on 5 April 2011. The statutory auditors currently in office are Giacinto Sarubbi, Renato Righetti and Massimo Scotton. During the year, 11 meetings were held. From the start of 2013 to the date of this report, four meetings have been held.

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 2012:

MEMBERSBOARD OF STATUTORY AUDITORS
ATTENDANCE
BOARD OF DIRECTORS
ATTENDANCE
Giacinto Sarubbi11/1112/12
Renato Righetti10/1111/12
Massimo Scotton8/1110/12

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 organisational structure in the areas for which it is responsible, the adequacy of the internal control system and the administrative/accounting system, and the latter’ 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 party-transaction 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.