2017 Remuneration Report

Transcription

1 2017 Remueratio Report

2 2017 Remueratio Report

3 Sam esures the greatest possible trasparecy i the quality of its remueratio systems ad i the results of their applicatio. The remueratio system, which is based o the priciples of Borsa Italiaa s Code of Corporate Goverace, recogises resposibilities assiged, results achieved ad the quality of the professioal cotributio, ad it adheres to the priciples of persoal developmet ad equal opportuity affirmed i the Code of Ethics that have always formed a part of Sam s orgaisatioal culture. The remueratio system supports the growth of Sam ad its fiacial results, helpig to alig maagemet actio with the iterests of the stakeholders ad shareholders, ad promotig the creatio of value i the medium-to-log term. Approved by the Board of Directors o 6 March 2017 The Report is published i the Ethics ad Goverace sectio of the Compay s website ( Sam 2017 Remueratio Report

4 Table of Cotets 4 Letter from the Chairma of the 29 Remueratio Committee Sectio II Pay ad Other Iformatio 7 11 Abstract Itroductio Implemetatio of 2016 remueratio policies 1.1 Fixed pay 1.2 Compesatio for participatio i board committees 1.3 Variable icetives 1.4 Severace pay or termiatio of employmet 1.5 Beefits 13 Sectio I 2017 Remueratio Policy Compesatio paid i Goverace of the remueratio process Equity ivestmets held Shareholders Meetig 1.2 Board of Directors 1.3 Remueratio Committee 1.4 Board of Statutory Auditors 43 Glossary Aims ad geeral priciples of the remueratio policy 2.1 Aims 2.2 Geeral Priciples 49 Subject Idex Remueratio Policy Guidelies Chairma 3.2 No-Executive Directors 3.3 Chief Executive Officer 3.4 Maagers with Strategic Resposibilities 3.5 Seior Vice Presidet of Iteral Audit 3.6 Claw-back mechaisms 3.7 Market bechmarks ad pay mixes Table of Cotets

5 4 Letter from the Chairma of the Remueratio Committee Moica de Virgiliis Chairma of the Remueratio Committee Dear Shareholders, The mai goal of this Committee is to work o remueratio systems to esure they cotiue to cosistetly support the busiess strategy ad creatio of value for shareholders. As Chairma of Sam s Remueratio Committee, which was established upo the re-appoitmet of corporate bodies durig the Shareholders Meetig of 27 April 2016, which, i additio to the udersiged, comprises board members Elisabetta Oliveri ad Alessadro Toetti, I am pleased to preset to you Sam s Remueratio Report for I am hooured to have take o this task at a time of sigificat compay chages ad I am pleased to start with a solid foudatio built by previous committees that cofirmed Sam s Remueratio Report as a best practice at the atioal level. The mai goal of this Committee is to work o remueratio systems to esure they cotiue to cosistetly support the busiess strategy ad creatio of value for shareholders. By maitaiig a ogoig dialogue with ivestors, the Committee proposes appropriate chages to the Board of Directors, icludig i relatio to Sam s ew value drivers ad i cotiuous compliace with iteratioal best practices. The ew Committee bega its work with recommedatios to the Board o the remueratio for the Chairma ad CEO. Specifically, the CEO s remueratio structure was partly determied o the basis of the competitive eviromet ad ew challeges the Compay will have to address i future years. Thus, durig the year, our work was focused o revisig variable icetive systems to stregthe ad brig remueratio tools i lie with chages i the Strategic Pla usig a approach focused o performace ad sustaiability. Sam 2017 Remueratio Report

6 5 This strategy has made it possible to establish a ew log-term, share-based pla, which is described i Sectio I of the Remueratio Report ad i its iformatio memoradum, iteded for the Chief Executive Officer ad a small umber of seior maagers who have a greater impact o busiess results ad the creatio of value. The pla s implemetatio is subject to the approval of the ext Shareholders Meetig of 11 April. As usual, the secod sectio of the report cotais all iformatio regardig the remueratio measures take i 2016, which are cosistet with the remueratio policy aouced that year. I hope that the actios ad chages itroduced will be welcomed ad reflected i the advisory vote you are asked to cast o the first sectio of the report. I would also like to thak you i advace for ay commets you may wish to make at the Shareholders Meetigs ad i all other discussios. I the future, we will cotiue our strog commitmet to esure a maximum degree of clarity ad trasparecy. Ms. Moica de Virgiliis Chairma of the Remueratio Committee Letter from the Chairma

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8 7 Overview Remueratio Policy Member Aims ad characteristics Criteria ad coditios for implemetatio Values Fixed remueratio Adequately compesates the skills, professioalism ad cotributio required from the positio held, with the goal of also supportig motivatio for retetio purposes Fixed remueratio is calculated based o the positio ad the resposibilities assiged, with referece to the levels adopted for equivalet positios o the market with possible aual adjustmets established for merit (cotiuity of idividual performace) or for progressio i the positio/resposibility Chairma: 270,000 (icludig aual fixed pay for directors established by the Shareholders' Meetig) CEO: 970,000 (icludig aual fixed pay for directors established by the Shareholders' Meetig) DIRS*: commesurate with the resposibilities assiged ad the positio held Short-term variable icetive (Aual Moetary Icetive - IMA) Provided aually i a moetary form, it is a istrumet that is helpful i motivatig ad directig maagemet's actio i the short-term, i lie with the corporate targets set by the Board of Directors. The amout of the short-term icetive depeds o the positio held ad compay ad idividual performace results Corporate/CEO Targets: - Free Cash Flow (30%) - Ivestmets (20%) - Operatioal Efficiecy (30%) - Developmet of o-regulated activities - CNG (10%) - Sustaiability (accidet frequecy idex for employees ad cotract workers - DJSI, FTSE4GOOD ad VigeoEurope idexes) (10%) DIRS Targets: the IMA is calculated at 50% from the results of the targets assiged to the CEO ad, for the remaiig 50%, from idividual targets (focused o ecoomic/fiacial, operatioal ad idustrial performace, iteral efficiecy ad sustaiability) Clauses Claw Back Icetives provided depedig o the results achieved i the previous year ad evaluated i accordace with a performace scale of 70/130 poits, with a miimum level for icetives equal to a overall performace of 85 poits CEO: 50% of the fixed remueratio for results of the corporate scheme equal to the target (score = 100); 65% of the fixed remueratio equal to the max (score = 130) DIRS: percetages of variable icetive based o the positio held, with a maximum of 40% of the fixed remueratio for results at the target ad 52% of the fixed remueratio for results at the max Share-based log-term variable icetive (Log-Term Icetive - ILT)** Reserved for those holdig positios with the most direct resposibility for compay results, guaratees greater aligmet betwee the iterests of shareholders ad the actios of maagemet Pla with aual gratig ad three-year vestig period Idicators: EBITDA (60%); Adjusted Net Profit (30%); Sustaiability (10%) Icetive assigmet: depedig o the positio held Icetive provisio: average of the results of the idicators i the three-year vestig period: - EBITDA measured i relatio to the budget o a liear scale; - Adjusted Net Profit measured i relatio to the budget o a liear scale; - Sustaiability measured o the basis of the aually defied targets. Claw-back clauses CEO: the maximum possible icetive is 210% of the fixed remueratio DIRS: variable icetive percetages based o the positio held, with a maximum equal to 150% of the fixed remueratio Beefits They are a itegral part of the remueratio package ad, by their ature, maily ivolve healthcare or pesios Cotiuously defied with the Policy implemeted i recet years ad i compliace with what is required by atioal egotiatios ad supplemetary corporate agreemets for seior maagemet The followig are assiged to the etire seior maagemet: - supplemetary pesio scheme - supplemetary healthcare beefits - forms of life ad disability isurace cover - car for persoal ad busiess use * DIRS - Maagers with strategic resposibilities ** The pla will be submitted for the approval of the Shareholders Meetig called for 11 April 2017 Abstract

9 8 PAY MIX OF THE CEO Pay mix The guidelies of the 2017 Remueratio Policy cotai a pay mix cosistet with the maagerial positio exercised. I the case of the CEO the weightig of the variable compoet is accetuated, compared with the rest of the maagerial structure, which takes precedece over the fixed compoet. The pay mix for 2017 calculated with the miimum ad maximum variable icetive levels is reported below. Miimum Maximum 100% 27% 17% 56% Fixed Remueratio Variable short-term (IMA) Variable log-term (ILT) Shareholders meetig vote o sectio I of the 2016 Remueratio Report As laid dow by existig legislatio, i 2016, the Sam Shareholders Meetig also took a vote i a advisory capacity o the first sectio of the Remueratio Report. The percetage of votes i favour was 95.80% of those preset. Compared with previous years a icrease i attedace was recorded for the third cosecutive year. Compared with 2015, there was a sigificat icrease i the presece of istitutioal ivestors which rose from 31.96% to 38.88% Total votes i favour Votes i favour - miority iterests 97,1% 89,3% 93,8% 74,0% Average cosesus Average cosesus Sam FTSE Mib Sam FTSE Mib I the five years of the implemetatio of the say o pay i Italy, Sam always obtaied votes i favour of more tha 95% of votes cast. The average cosesus reached i the five-year referece period, equal to 97.08%, cofirms Sam s best practice role compared with the pael cosidered (FTSE MIB compaies with: capitalisatio of more tha 3 billio, total miority shareholders preset at the meetig of more tha 15%). Eve the average of votes i favour cast by miority iterests (93,83%) cofirms the high level of approval obtaied (source: Georgeso). Sam 2017 Remueratio Report

10 9 Sectio I 2017 Remueratio Policy

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12 11 Itroductio This Report, approved by the Board of Directors o 6 March 2017 at the proposal of the Remueratio Committee, i compliace with the existig legislative ad regulatory obligatios 1, defies ad illustrates: i the first sectio, the Policy adopted by Sam S.p.A. for 2017 (hereiafter Sam or the Compay ) for the remueratio of Directors ad Maagers with Strategic Resposibilities 2, specifyig the geeral aims pursued, the bodies ivolved ad the procedures used for the adoptio ad implemetatio of the Policy. The geeral priciples ad guidelies defied i the Sam Policy also idetify the establishmet of the remueratio policies of the compaies directly ad idirectly cotrolled by Sam; i the secod sectio, compesatio paid i 2016 to amed Sam Directors, Auditors, ad, i total, to Maagers with Strategic Resposibilities. The remueratio policy illustrated i this Report was also adopted by the Compay, as laid dow by Cosob Regulatio 17221/2010 o related-party trasactios, also pursuat to ad i accordace with Article 10.6 of the Trasactios i which directors ad statutory auditors have a iterest ad relatedparty trasactios Procedure ( Related-Parties Procedure ) approved by the Board of Directors o 30 November 2010 ad later ameded. The Policy described i the first sectio of the Report was prepared i lie with the recommedatios o remueratio i the Italia Code of Corporate Goverace approved by the Corporate Goverace Committee (hereiafter the Code of Corporate Goverace ), as ameded i the July 2015 editio to which Sam adheres. The text of this Report is available to the public at the registered office, o the Compay s website 3 ad o the website of Borsa Italiaa by the twety-first day prior to the date of the Shareholders Meetig called for the approval of the 2016 fiacial statemets ad called to express o-bidig approval of the first sectio of said Report, i accordace with existig legislatio 4. 1 Article 123-ter of Legislative Decree 58/98 ad Article 84-quater of the Cosob Issuers Regulatio (Resolutio 11971/99 ad later amedmets ad supplemets). 2 The defiitio of maagers with strategic resposibilities pursuat to Article 65, paragraph 1-quater, of the Issuers Regulatio, icludes parties who have power ad resposibility, directly ad idirectly, for the plaig, maagemet ad cotrol of Sam. The followig are Sam maagers with strategic resposibilities, other tha Directors ad Auditors, at the approval date of this Report: Chief Commercial, Regulatio & Developmet Officer; Chief Idustrial Assets Officer; Chief Iteratioal Assets Officer; Chief Fiacial Officer; Geeral Cousel; Executive Vice Presidet Huma Resources & Orgaizatio ad Chief Corporate Services Officer. 3 The text is published i the Ethics ad Goverace sectio of the Compay s website ( 4 Article123-ter of Legislative Decree 58/98, paragraph six. Itroductio

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14 13 Sectio I 2017 Remueratio Policy 1. Goverace of the remueratio process The process of defiig the Sam Remueratio policy ivolves may parties i lie with the regulatory ad statutory provisios ad with the Compay s goverace model. 1.1 Shareholders Meetig With regard to remueratio, the Shareholders Meetig: decides o the pay of members of the Board of Directors, at the time of appoitmet ad for the etire term of office; resolves, at the proposal of the Board of Directors, o pay plas based o the allocatio of fiacial istrumets; takes a o-bidig vote o the first sectio of the Remueratio Report. 1.2 Board of Directors With regard to remueratio, the Board of Directors, i lie with the Sam corporate goverace system ad rules 1 : decides, o a proposal from the Remueratio Committee ad havig listeed to the opiio of the Board of Statutory Auditors, the remueratio of Directors vested with specific duties ad the remueratio for beig o board committees; defies the remueratio policy for directors, geeral maagers ad executives with strategic resposibility of the Compay ad its Subsidiaries, as well as the relevat compesatio systems, upo recommedatio from the Remueratio Committee; defies the remueratio of the Iteral Audit Maager cosistet with the Compay s remueratio policies after checkig with the Remueratio Committee; implemets the compesatio plas based o shares or fiacial istrumets resolved upo by the Shareholders Meetig; approves the Remueratio Report to be preseted to the Shareholders Meetig; assesses, followig cosultatio with the Remueratio Committee, the cotets of the vote o the Remueratio Report carried out by the Shareholders Meetig ad the proposals of the Committee o the adequacy, overall coherece ad applicatio of the Remueratio Policy adopted for Directors ad Maagers with strategic resposibilities. I compliace with the recommedatios of the Code of Corporate Goverace, the Board of Directors is supported, as far as remueratio is cocered, by a committee of o-executive directors, the majority of whom are idepedet (Remueratio Committee) with proposal ad advisory fuctios. 1 For more iformatio o Sam s corporate goverace system, refer to the Report o corporate goverace ad owership structure published i the Ethics ad Goverace sectio of the Compay s website ( Sectio I 2017 Remueratio Policy

15 Compositio, appoitmet ad powers 1.3 Remueratio Committee The Remueratio Committee, first established by the Board of Directors i 2002, is composed, i lie with the recommedatios of the Code of Corporate Goverace, of three o-executive directors, the majority of whom are idepedet, with the Chairma chose from the idepedet directors. At least oe member of the Committee has adequate kowledge ad experiece i fiacial matters or remueratio policies, as assessed by the Board of Directors at the time of the appoitmet. O 11 May 2016, the Board of Directors idetified the Chairma (Moica de Virgiliis) as a member who possesses adequate kowledge ad experiece of fiacial issues ad remueratio policies. Sice 11 May 2016, the Remueratio has bee composed of the followig Directors: Member Moica de Virgiliis Alessadro Toetti Role Idepedet o-executive director (1) - Chairma No-executive director Elisabetta Oliveri Idepedet o-executive director (1) (1) Idepedet pursuat to the idepedece requiremets set out by the TUF ad the Code of Corporate Goverace. The Executive Vice Presidet Huma Resources & Orgaizatio of Sam performs the role of Secretary to the Committee ad helps the Chairma i carryig out his/her fuctios. The compositio, tasks ad operatig methods of the Committee are govered by dedicated regulatios 2, approved by the Board of Directors ad most recetly updated o 11 May The Committee makes proposals ad provides advice to the Board of Directors: it submits the Remueratio Report for the approval of the Board of Directors, with particular regard to the remueratio Policy for directors ad maagers with strategic resposibilities, so that it may be preseted to the Shareholders Meetig called to approve the fiacial statemets withi the time limits set by law; it reviews the vote o the Remueratio Report take by the Shareholders Meetig i the previous fiacial year ad expresses a opiio to the Board of Directors; it prepares proposals regardig the remueratio of the Chairma ad the Chief Executive Officer, with regard to the various forms of compesatio ad ecoomic treatmet; it makes proposals cocerig the compesatio of members of the Board Committees; 2 The regulatios of the Remueratio Committee are available i the Ethics & Goverace sectio of the Compay s website. Sam 2017 Remueratio Report

16 15 it examies iformatio reported by the CEO ad proposes: - the geeral criteria for the remueratio of maagers with strategic resposibilities; - geeral guidelies for the remueratio of other maagers of Sam ad its Subsidiaries; - aual ad log-term icetive plas, icludig share-based plas; it proposes the defiitio of performace targets, the aggregatio of compay results, the defiitio of claw-back clauses related to the implemetatio of icetive plas ad the determiatio of the variable remueratio of directors with powers; it proposes the defiitio, with regard to Directors with powers: i) of the compesatio to be paid i the case of termiatio of employmet; ii) of o-compete agreemets; it moitors the applicatio of decisios made by the Board; it periodically evaluates the suitability, compliace ad soud applicatio of the Policy adopted, expressig proposals to the Board i this regard; it performs ay duties that may be required by the procedure cocerig related-party trasactios carried out by the Compay; it reports o the exercisig of its fuctios to the Shareholders Meetig coveed to approve the separate fiacial statemets for the year, through the Chairma of the Committee or aother member appoited by the latter. I accordace with the Board s decisio, the Remueratio Committee also aually reviews the remueratio structure of the Seior Vice Presidet of Iteral Audit ad esures that it is cosistet with the geeral criteria approved by the Board for maagers, idicatig the above to the Chairma of the Cotrol ad Risk Committee for the purposes of the opiio which he must express o this matter at the Board meetig. The Remueratio Committee reports to the Board at least every six moths o the activities carried out before the deadlie for the approval of the fiacial statemets ad the half-year report, at the board meetig idicated by the Chairma of the Board of Directors; followig each of its meetigs, the Committee updates the Board of Directors, at its first meetig, with regard to the subjects dealt with ad the observatios, recommedatios ad opiios formulated. I additio, the Committee reports o the operatig methods of its fuctios to the Shareholders Meetig called for the approval of the fiacial statemets for the period, via the Chairma of the Committee, i accordace with the provisios of its Regulatios, i compliace with the Code of Corporate Goverace ad with the aim of establishig a dedicated chael of commuicatio with shareholders ad ivestors. I order to perform its aalytical ad prelimiary fuctios effectively, the Remueratio Committee makes use of the competet Compay structures ad ca, through the latter, take advatage of the support of exteral cosultats who are ot i a positio to compromise the idepedece of the advice. Sectio I 2017 Remueratio Policy

17 Cycle of activities of the Remueratio Committee The activities of the Committee implemet a aual programme which breaks dow ito the followig stages: verifyig the adequacy, overall cosistecy ad cocrete applicatio of the Policy adopted i the previous year, with regard to the results achieved ad the remueratio bechmarks from highly specialist providers; defiig the remueratio Policy proposals ad the proposals relatig to performace targets coected to short- ad log-term icetive plas; makig proposals regardig the implemetatio of existig short- ad logterm variable icetive plas, after verifyig the results achieved for the performace targets set out i said plas; preparig the Remueratio Report to be submitted, aually, followig the approval of the Board of Directors, to the Shareholders Meetig. FIGURE 1 - CYCLE OF ACTIVITIES OF THE REMUNERATION COMMITTEE October - November December Jauary Jauary - February I-depth examiatio of issues of cocer to the shareholders ad proxy advisors July Implemetatio of Log-Term Icetive Pla (ILT) November October September February March April Periodic assessmet of Policies adopted i the previous year Defiitio of Remueratio Policy Fialisatio of results ad defiitio of objectives relatig to Variable Icetive Plas Aalysis of results of Shareholders Meetig vote o the Remueratio Report August July Jue May Implemetatio of Aual Moetary Icetive Plas (IMA) Preparatio of Remueratio Report March - April Presetatio of Remueratio Report to the Shareholders Meetig Activities carried out ad plaed Activities carried out i 2016 I 2016, the Remueratio Committee met 10 times i all. Attedace by members stood at 100%. The Chairma of the Board of Statutory Auditors regularly atteded the Committee meetigs. The Committee focused its activities for the first part of the year: o the preparatio of the guidelies of the Remueratio Policy ad the 2016 Remueratio Report; o the fial balace of the 2015 compay results a o the defiitio of the 2016 performace targets for the purpose of the variable icetive plas; o the defiitio of a remueratio proposal for the o-executive directors, the Chairma ad the ewly appoited CEO. Sam 2017 Remueratio Report

18 17 The followig subjects were dealt with i the secod part of the year: the results of the vote o the 2016 Remueratio Report ad a i-depth look at the topics that the shareholders ad proxy advisors focused their attetio o; implemetatio of the log-term variable icetive plas; texts for the way-out agreemets for the CEO; remueratio structure of the Seior Vice Presidet of Iteral Audit for whom a proposal for discussio at the board meetig was defied. Mai subjects dealt with i 2016 Jauary 1. Remueratio proposal for the positio of Geeral Maager February 1. Evaluatio of 2015 Remueratio Policy 2. Evaluatio of remueratio of Iteral Audit Maager Remueratio Policy Guidelies Remueratio Report (first draft) 5. Defiitio of 2016 corporate objectives 6. Board of Directors Half-Year Report corporate objectives fial balaces 8. Aual Moetary Icetive Proposal for the CEO March Remueratio Report May 1. Remueratio proposal for a. No-executive directors (compesatio for participatio i board committees) b. Chairma c. CEO July 1. Aalysis of the result of the Shareholders Meetig vote o the 2016 Remueratio Report 2. Adjusted et profit fial balace ad Total Shareholders Retur for the Log-Term Moetary Icetive plas Deferred Moetary Icetive Pla a. Regulatio b allocatio proposal for the CEO 4. First hypothesis o cotets of way out agreemets for the CEO 5. Board of Directors Half-Year Report Sectio I 2017 Remueratio Policy

19 18 September Log-Term Moetary Icetive Pla a. Regulatio b allocatio proposal for the CEO November Remueratio Report (iitial cosideratios) December 1. Remueratio proposal for the positio of Seior Vice Presidet of Iteral Audit The resolutios passed by the Board of Directors i 2016 regardig remueratio came uder the exemptio cases pursuat to poit 10, umber 6) of the Related- Parties Procedure takig ito accout that, as already set out i Article 13 of the Regulatio cotaiig provisios o related-party trasactios (adopted by Cosob through resolutio of 12 March 2010 ad later ameded through resolutio of 23 Jue 2010): (i) the Compay adopted a remueratio policy; (ii) the Remueratio Committee was ivolved i the defiitio of the remueratio policy; (iii) the remueratio policy was put to a advisory vote at the Shareholders Meetig; (iv) the cosistecy of the remueratio with this policy was verified every time Activities plaed for 2017 The Committee has scheduled eight meetigs for As at the date of the approval of this Report, the first five meetigs cocetratig o the followig subjects had already bee held: regular evaluatio of the remueratio policies implemeted i 2016 for the purpose of defiig the 2017 Policy proposals; revisio of the medium-/log-term icetive system; examiatio of this Report for later approval by the Board of Directors; fial balaces of the 2016 compay results ad defiitio of the 2017 performace targets for the purpose of the variable icetive plas Approval process for the 2017 Remueratio Policy I exercisig its powers, the Remueratio Committee defied the structure ad the cotets of the Remueratio Policy, for the purpose of preparig this Report, specifically at the meetig of 6 March 2017, i lie with the recommedatios of the Code of Corporate Goverace. I makig its decisios, with a view to cosistecy, the Committee took ito accout the decisios take by the Shareholders Meetig of 27 April 2016 ad by the Board of Directors i The above-metioed activities were coducted followig a evaluatio of the regulatory framework regardig remueratio, as well as the practices i the preparatio of the remueratio report i a atioal ad iteratioal cotext. Sam 2017 Remueratio Report

20 19 The Sam 2017 Remueratio Policy for Directors ad Maagers with Strategic Resposibilities was the approved by the Board of Directors, at the recommedatio of the Remueratio Committee, at the meetig of 6 March 2017, at the same time as the approval of this Report. The implemetatio of the remueratio policies defied cosistet with the guidelies of the Board of Directors, is carried out by the delegated bodies, with the support of the competet corporate fuctios. Iformatio o the remueratio of the Directors ad maagemet is also esured through the updatig of the pages specially dedicated to these subjects i the Ethics ad Goverace sectio of the Compay s website. 1.4 Board of Statutory Auditors With regard to remueratio, the Board of Statutory Auditors, which regularly atteds the meetigs of the Remueratio Committee through the Chairma or a Stadig Auditor desigated by him/her, expresses opiios required by the applicable law with referece, specifically, to the remueratio of Directors vested with specific duties, pursuat to Article 2389 of the Italia Civil Code, also verifyig cosistecy with the geeral policy adopted by the Compay. 2. Aims ad geeral priciples of the remueratio policy 2.1 Aims The Sam Remueratio Policy was defied i lie with the goverace model adopted by the Compay ad with the recommedatios of the Code of Corporate Goverace, i order to attract ad retai people with a high professioal ad maagerial profile ad to alig the iterests of maagemet with the prime objective of creatig value for shareholders i the medium-/log-term. Uder the scope of the Policy adopted, the variable compoet liked to the results achieved, through icetive systems related to achievig ecoomic/fiacial targets, the developmet of the busiess ad operatios, defied from a perspective of sustaiability of results, cosistet with the Compay s Strategic Pla, takes o particular importace. Specifically, Sam s Remueratio Policy cotributes to the realisatio of the missio, corporate values ad strategies, through: i) promotig actios ad behaviour i lie with the culture of the Compay, i compliace with the priciples of pluralism, equal opportuities, developig peoples kowledge ad professioalism, equality ad o-discrimiatio as set out i the Sam Code of Ethics ad the Corporate System Framework; ii) recogisig the resposibilities assiged, the results achieved ad the quality of the extesive professioal iput, takig ito accout the cotext ad the referece remueratio markets. 2.2 Geeral priciples To implemet the above-metioed aims, the remueratio of Directors ad Maagers with Strategic Resposibilities was defied i lie with the followig priciples ad criteria: remueratio structure capable of attractig, retaiig ad motivatig people with high-quality professioal skills; pay of o-executive directors commesurate with the commitmet required i relatio to attedace at Board committees, with the differetiatio of the pay of the Chairma compared Sectio I 2017 Remueratio Policy

21 20 with the members of each Committee, takig ito cosideratio their role of coordiatig operatios ad likig up with compay bodies ad corporate fuctios; remueratio structure, for the Chairma, cosistig of fixed pay i lie the positio held; remueratio structure for the CEO ad Maagers with Strategic Resposibilities adequately balaced betwee a fixed compoet cosistet with regard to the powers ad/or resposibilities assiged ad a variable compoet defied withi the maximum limits ad aimed at tyig i the remueratio with the performace defied; cosistecy of the overall remueratio, i relatio to the referece markets applicable for similar offices or positios of a similar level i terms of resposibilities ad complexity, uder the scope of the corporate pael comparable with Sam, through specific remueratio bechmarks created with the support of major cosultig firms; variable remueratio for executive positios broke dow ito a short-term compoet ad a medium-/log-term compoet, featurig adequate deferral of the icetives, through the provisio of a vestig period of at least three years; sigificat impact, for executive positios ad those which have a great ifluece over compay results, of the log-term variable compoet, also share-based, from a perspective of the sustaiability of results ad the creatio of value for shareholders i the medium-/log-term; pre-determied targets coected to variable remueratio that ca be measured ad defied i order to esure the remueratio of performace over both a short ad a medium-/log term period through: i. the idetificatio of the targets i the short-term icetive plas based o a balaced scorecard which brigs out the best busiess ad idividual performace, i relatio to the specific targets i the area of resposibility, ad i lie, as far as the maagers of the iteral cotrol fuctios are cocered, with the tasks assiged to them; ii. the idetificatio of the targets i the log-term icetive plas i accordace with methods which allow the evaluatio of compay performace i the medium-/log-term with referece to the core busiess ad the creatio of value takig ito cosideratio the strategic guidelies ad sustaiability; evaluatio of the performace targets assiged excludig the effects of exteral variables resultig from the developmet of the referece sceario, i order to develop effective idividual cotributios i achievig the assiged performace targets; adoptio of claw-back mechaisms aimed at the recovery of the variable part of pay which is ot due because it is received o the basis of targets reached followig wilful miscoduct or grossly egliget coduct or o the basis of figures that subsequetly prove to be maifestly icorrect; beefits i lie with the practices of referece remueratio markets ad cosistet with existig regulatios, i order to complete ad ehace the overall remueratio package takig ito accout the roles ad/or resposibilities assiged, prioritisig the pesio ad healthcare compoets; ay supplemetary severace pay, for executive positios characterised by the fixed-term ature of the employmet or featurig greater risks of competitive attractio, cosistet with the remueratio; possible use of o-compete agreemets pursuat to Article 2125 of the Italia Civil Code iteded to protect the iterest of the compay if employmet with the Compay comes to a ed, with the provisio of pealties for o-compliace. Sam 2017 Remueratio Report

22 Remueratio Policy Guidelies I the light of the ew challeges ad the ew owership structure, the 2017 Remueratio Policy Guidelies iclude the developmet of the existig variable remueratio systems i order to stregthe the coectio betwee the actios of maagemet ad the value created for shareholders. Specifically, there are plas for the itroductio of a ew share-based Log-Term Icetive Pla (ILT) for the CEO ad a limited umber of Executives (a maximum of 20), who hold the positios which have a greater impact o the creatio of wealth or of strategic importace for the purpose of achievig Sam s multi-year targets. The pla, subject to approval at the Shareholders Meetig 3, ivolves the gratig of the Compay s ordiary shares if performace targets measured over a period of three years are reached. The maximum umber of aual shares to service the pla is 3,500,000. This ew share pla replaces the previous medium-/log-term variable remueratio tools for beeficiaries (IMD ad IMLT) ad guaratees a direct coectio with stock performace. The 2017 Remueratio Policy guidelies were defied i lie with the aims ad geeral priciples stated ad were evaluated, by the Remueratio Committee, to be cosistet with the applicable market bechmarks. The remueratio istrumets are summarised ad explaied i the followig diagram: FIGURE 2 REWARD POLICY Icludes all aual fixed pay (Gross Aual Remueratio, pay as directors, pay for specific duties, etc.) Fixed remueratio Moetary pla based o short-term targets KPI Free cash flow, Ivestmets, Developmet of o- regulated activities, Operatioal efficiecy, Sustaiability Log-term Reward Policy Aual Moetary Icetive Share pla with aual gratig ad three-year vestig period KPI EBITDA, Adjusted et profit, Sustaiability Icetive 3 The pla will be submitted for the approval of the Shareholders Meetig called for 11 April The coditios of the Pla are described i detail i the iformatio documet available to the public of the Compay s website, implemetig the existig legislatio (Article 114-bis of Legislative Decree 58/1998 ad the Cosob implemetig regulatio). Sectio I 2017 Remueratio Policy

23 Remueratio for the positio ad powers ad other terms 3.1 Chairma Based o the provisios of the Board of Directors at the meetig of 31 May 2016, the remueratio of the Chairma of the Board of Directors icludes a aual gross fixed paymet for the positio of 270,000, icludig the aual fixed pay for Directors established by the Shareholders Meetig, i additio to the refudig of expeses icurred i relatio to the positio. With regard to the ature of the positio, there is o provisio for: i) short-or log-term variable icetive compoets; ii) agreemets cocerig severace pay; iii) beefits Shareholders Meetig remueratio 3.2 No-executive directors At the meetigs of 23 February ad 14 March 2016, the Remueratio Committee aalysed the remueratio positio of No-executive directors, through a specific bechmark with FTSE MIB compaies ad preseted the results to the Board of Directors o 16 March The Shareholders Meetig of 27 April 2016 approved the aual gross pay for the office of 70,000, plus the refudig of expeses icurred i relatio to the positio. I the light of the recommedatios of Article 6 C.4 of the Code of Corporate Goverace, the remueratio of No-executive directors is ot liked to the fiacial results achieved by the compay or are they recipiets of the sharebased icetive plas. There is o distictio i terms of remueratio for Idepedet directors Compesatio for participatio i board committees The Remueratio Committee, havig aalysed the positio of No-executive directors at the meetig of 26 May 2016 with regard to pay for attedig board committee meetigs, usig a special bechmark with FTSE MIB compaies, submitted a proposal to the Board of Directors o positioig for all Committees o the media market bechmarks. Based o what the Board of Directors resolved o 31 May 2016, i lie with cotiuity with the previous resolutios of 27 July ad 19 December 2011, provisio was made for the followig aual pay: for the Cotrol ad Risks Committee, with regard to the icreasigly importat role exercised i the oversight of compay risks, 30,000 for the Chairma ad 20,000 for the other members; for the Remueratio Committee, the Appoitmets Committee ad the Sustaiability Committee 20,000 for the Chairma ad 15,000 for the other members Severace pay There are o agreemets for severace pay for No-executive directors or compesatio i the evet of dismissal or termiatio of employmet without just cause or if their employmet is termiated followig a takeover bid. Sam 2017 Remueratio Report

24 Chief Executive Officer Fixed remueratio The Remueratio Committee, havig aalysed the remueratio positio of the CEO, at the meetig of 26 May 2016, through specific bechmarks with peer compaies comparable with Sam i terms of size ad complexity 4, reported to the Board of Directors o 31 May 2016 that the positio was below the market media values, both with regard to the fixed remueratio compoet ad to total remueratio. The fixed pay for the CEO was therefore defied at 970,000, takig ito cosideratio: the pay established by the Shareholders Meetig for Directors; the pay approved by the Board with regard to the powers delegated, equal to 150,000; the aual gross pay for the positio of Geeral Director, equal to 750,000. I the capacity of a Sam seior maager, the CEO receives the compesatio due for travel expeses, domestically ad abroad, i lie with the provisios of the atioal collective agreemet ad supplemetary compay agreemets Short-term variable icetives The aual variable compoet (Aual Moetary Icetive Pla - IMA) is calculated with referece to a target icetive level (performace = 100) ad a maximum level (performace = 130) respectively equal to 50% ad 65% of the fixed remueratio, i coectio with the results achieved by Sam i the previous year compared with the targets defied. A threshold level is set (performace = 85) below which the short-term icetive is ot delivered. The 2017 targets approved by the Board of Directors o 2 February 2017 were focused o the ecoomic, fiacial ad operatig performace of the Compay, o ivestmets, o the developmet of o-regulated activities ad o sustaiability issues. 4 Paels used for remueratio bechmarks are described at page 27 (figure 4) Sectio I 2017 Remueratio Policy

25 24 FIGURE 3 - Aual Moetary Icetive Targets compared with Free Cash Flow 30% Free Cash Flow 30% Ivestmets 30% Ivestmets 20% Operatioal Efficiecy 30% Operatioal Efficiecy 30% Developmet of o-regulated activities CNG 10% Sustaiability - accidet frequecy idex ad DJSI ad FTSE4GOOD idexes 10% Sustaiability - accidet frequecy idex ad DJSI, FTSE4GOOD ad VigeoEurope idexes 10% The Free Cash Flow is the (moetary) flow of cash produced by operatioal maagemet ad o-operatioal maagemet. The objective of ivestmets breaks dow ito two items: spedig o ivestmets, to achieve i relatio to the budget (weightig of 15%) ad the percetage of milestoes reached for the mai ivestmet projects (weightig of 5%). The operatioal efficiecy objective is measured through the decrease i fixed costs that ca be cotrolled i relatio to the budget. The objective relatig to the developmet of o-regulated activities - CNG is measured i terms of milestoes to be reached durig the course of the year. Lastly, sustaiability breaks dow ito two objectives: the accidet frequecy idex for employees ad cotractors, measured i terms of the umber of accidets that are recorded for every millio hours worked durig the year; the cofirmatio of the iclusio ad improvemet of Sam s positio i relatio to the Dow Joes Sustaiability Idex, FTSE4GOOD ad VigeoEurope sustaiability idexes Log-term variable icetives The Log-Term Icetive Pla (ILT), for maagerial positios with a greater impact o compay results, ivolves the aual gratig of free shares up to a maximum value of 210% of fixed remueratio after three years (vestig period) to a extet coected with the results achieved i relatio to the followig parameters: EBITDA (60%), Adjusted Net Profit (30%), Sustaiability (10%). Performace i terms of EBITDA ad Adjusted et profit is calculated with referece to budget figures, while the sustaiability objective is measured based o aually defied targets. At the ed of the vestig period there are plas for a additioal umber of shares to be grated, defied as divided equivalet, calculated as the value of the divideds ot received i relatio to the actual umber of vested shares. The pla also icludes a two-year lock-up period o 20% of the shares. Sam 2017 Remueratio Report

26 Severace pay For the CEO, who is also a Sam Executive, i additio to the termiatio of employmet idemity established i the atioal collective agreemets, coditios are beig defied for severace pay agreemets, also takig market practices ito cosideratio. The effects of ay termiatio of the CEO s employmet o the rights assiged uder the scope of existig log-term icetive plas are described i the allocatio regulatios Beefits I lie with the provisios of atioal agreemets ad supplemetary compay agreemets for Sam seior maagemet, the CEO comes uder the supplemetary pesio (FOPDIRE) 5, the supplemetary healthcare beefits scheme (FISDE) 6 ad life ad disability isurace cover, as well as a compay car for persoal ad busiess use. 3.4 Maagers with Strategic Resposibilities Fixed remueratio The fixed remueratio is calculated based o the positio ad resposibilities assiged takig ito cosideratio the average remueratio levels o the market for positios with similar levels of resposibility ad maagerial complexity i large atioal compaies ad ca be regularly adjusted uder the scope of the aual salary review which ivolves all maagemet. Takig ito cosideratio the referece cotext, curret market treds ad i cotiuatio of 2016, the 2017 Guidelies iclude selective criteria while maitaiig high levels of competitiveess ad motivatio. Specifically, the proposed actios ivolve adjustmet measures directed at those i positios where the scope of resposibility has bee exteded or i positios ot higher tha the market media refereces. I additio, i the capacity of Sam seior maagers, Directors with Strategic Resposibilities receive compesatio due for travel expeses, domestically ad abroad, i lie with the provisios of the atioal collective agreemet ad supplemetary compay agreemets Short-term variable icetives The Aual Moetary Icetive Pla (IMA) icludes pay calculated with referece to the results of Sam ad of idividuals with a target icetive level (performace = 100) ad a maximum level (performace = 130) differetiated accordig to the level of the positio held up to a maximum of respectively 40% ad 52% of the fixed remueratio. A threshold level is set (performace = 85) below which the shortterm icetive is ot delivered. For Maagers with Strategic Resposibilities, the aual variable icetive is calculated partly (50%) o the compay results compared with the targets assiged to the CEO by the Board of Directors o 2 February 2017, ad partly (50%) o a series of idividual targets (focused o the ecoomic/fiacial, operatig ad busiess performace, iteral efficiecy ad sustaiability) assiged i relatio to the scope of resposibility of the positio held, i lie with the provisios of the Compay s performace Pla. 5 Defied-cotributio ad idividual capitalisatio egotiated pesio pla, 6 Fud that refuds healthcare expeses to seior maagers i office or retired, ad their families, There is also other health isurace (Geerali/Previge), to supplemet the FISDE. Sectio I 2017 Remueratio Policy

27 Log-term variable icetives I lie with the provisios for the CEO, Maagers with Strategic Resposibilities are part of the shared-based Log-Term Icetive Pla (ILT) for maagerial roles which have a great impact o compay results. This Pla has the same performace coditios ad characteristics as the Pla for the CEO. For Maagers with Strategic Resposibilities the icetive assiged is differetiated by the level of the positio up to a maximum of 150% of the fixed remueratio. The umber of shares grated at the ed of the three-year (vestig) period is calculated i relatio to the results achieved Terms i the case of termiatio of office or employmet For Maagers with Strategic Resposibilities the provisios iclude the termiatio of employmet terms established by the atioal collective agreemet ad ay supplemetary terms agreed idividually at the time of termiatio i accordace with the criteria established by Sam. The effects of ay termiatio of employmet for Maagers with Strategic Resposibilities o the rights assiged uder the scope of log-term icetive plas are described i the allocatio regulatios. Specifically, i order to foster the retetio of resources, it is provided that, i the case of the mutual termiatio of employmet durig the vestig period, the beeficiary keepig the right to the icetives reduced i relatio to the period elapsed betwee the allocatio of the based icetive ad the occurrece of this evet. No provisio is due i cases of uilateral termiatio by the Compay or for volutary resigatio or for just cause or if due to achievig objectively iadequate results Beefits I cotiuatio of the Policy implemeted i 2016 ad the provisios of atioal agreemets ad supplemetary compay agreemets for Sam seior maagemet, Maagers with Strategic Resposibilities come uder the supplemetary pesio (FOPDIRE), the supplemetary healthcare beefits scheme (FISDE) 7 ad life ad disability isurace cover, as well as a compay car for persoal ad busiess use. 3.5 Seior Vice Presidet of Iteral Audit For the Seior Vice Presidet of Iteral Audit, the Remueratio Committee i cojuctio with the Cotrol ad Risks Committee, has draw up: a MBO model with exclusively fuctioal targets that ca be measured, excludig ecoomic ad fiacial targets; the aual moetary icetive is calculated exclusively based o the results relatig to this model; the assigig of miimum/target/maximum performace levels ad the evaluatio of the results achieved is carried out by the Cotrol ad Risks Committee; the uiformity of the other forms of icetives ad beefits paid out, compared with the etire maagerial structure. 7 There is also other health isurace (Geerali/Previge), to supplemet the FISDE. Sam 2017 Remueratio Report

28 Claw-back mechaisms A claw-back clause was itroduced i 2014 for variable icetive systems, through which the Compay, withi the statute of limitatios (te years), ca oce agai possess the sums provided if it is cofirmed that that the achievemet of the targets is attributable to the wilful miscoduct or grossly egliget coduct or, i ay evet, i violatio of the regulatios. I 2015, the Remueratio Committee prepared a documet that illustrates the process ad the resposibilities associated with the activatio of this clause. The Committee has esured that this documet has bee circulated to all recipiets of the icetive plas i coectio with future icetive allocatios or pledges. 3.7 Market bechmarks ad pay mixes The preparatio of the guidelies ad the evaluatio of the policies implemeted are carried out with the support of highly specialist idepedet advisors usig specific remueratio bechmarks (Mercer ad Willis Towers Watso). The remueratio bechmarks used for the various types of positios are idicated i the table: FIGURE 4 - PANELS USED FOR REMUNERATION BENCHMARKS Mercer Willis Towers Watso No-Executive Directors Chief Executive Officer Pael of compaies belogig to the FTSE MIB deemed comparable with Sam i terms of dimesios (25). Withi this pael a sub-group has also bee idetified composed of idustry sector compaies (15). Pael of Italia ad Europea compaies, comparable with Sam i terms of turover, capitalisatio, busiess complexity, stock exchage segmet (23) Chairma Pael defied as havig the same logics as that of the Directors, excludig compaies where the role of Chairma is ot comparable (16 geeral ad 7 idustry) Maagers with strategic resposibilities Pael of compaies of the Mercer Executive Remueratio Guide comparable with Sam i terms of dimesios (14) The 2017 Remueratio Policy guidelies create a pay mix cosistet with the maagerial positio held, with a greater weightig for the variable compoet for roles which have a greater impact o compay results. Sectio I 2017 Remueratio Policy

29

30 29 Sectio II Pay ad other iformatio 1. Implemetatio of 2016 remueratio policies Below is a descriptio of the remueratio measures implemeted i 2016 i favour of the Chairma of the Board of Directors, the No-executive directors, the CEO ad Maagers with Strategic Resposibilities. The implemetatio of the 2016 Remueratio Policy, i accordace with what was verified by the Remueratio Committee durig the regular evaluatio laid dow by the Code of Corporate Goverace, remaied i lie with the geeral priciples i the resolutios adopted by the Board of Directors. Based o the evaluatio made by the Committee, the 2016 Policy was essetially i lie with the market bechmarks. 1.1 Fixed pay I 2016, No-executive directors received, pro-rata, the fixed paymets approved by the Shareholders Meetigs of 26 March 2013 ad 27 April As far as the Chairma is cocered, the paymets approved by the Board of Directors at the meetigs of 26 October 2012 ad 31 May 2016 were delivered. The CEO received the fixed paymet approved by the Board of Directors at the meetigs of 27 February 2013 ad 31 May 2016 for the powers ad tasks coferred, which icludes the paymets as a director approved by the Shareholders Meetig. For Maagers with Strategic Resposibilities, uder the scope of the aual salary review for all Seior Maagemet, selective adjustmets were made i 2016 to the fixed remueratio, i cases of promotio to more seior positios, or with regard to the eed for adjustmets of remueratio levels i relatio to market bechmarks. The amouts relatig to fixed pay are specified i the respective item i Table 1 o page 34. I the otes to this table, as far as remueratio for employees is cocered, ay compesatio required by the atioal collective agreemet ad supplemetary compay agreemets is specified. 1.2 Compesatio for participatio i board committees With regard to participatio i Board Committees, i 2016 No-executive directors received additioal paymets approved by the Board of Directors i the meetigs of 30 July 2013 ad 31 May The amouts relatig to these paymets are specified i the respective item i Table 1 o page 34. Sectio II - Pay ad other iformatio

31 Short-term variable icetives 1.3 Variable icetives The icetive for the 2016 aual pla was paid out, as far as the previous CEO was cocered, followig a compay performace evaluatio i relatio to the achievemet i 2015 of the objectives defied i lie with the Strategic Pla ad the aual budget i terms of: FIGURE 5 - Achievemet of Aual Moetary Icetive Objectives FINAL TARGETS FOR 2015 Targets Weight Fial target Level of target achievemet Free Cash Flow 30% 771 millio Ivestmets 30% 1,272 millio Operatioal efficiecy 30% 482 millio Sustaiability - Employee ad cotractor accidet frequecy idex 10% 1.59 below target o target above target For Maagers with Strategic Resposibilities, the variable icetive paid out i 2016 was calculated as the weighted sum of 50% of Sam s performace score ad 50% of the score achieved with regard to the idividual objectives related to the positio held, determied previously i the 2015 Sam Performace Pla. Sam s results for 2015, evaluated o a costat basis ad approved by the Board, o the recommedatio of the Remueratio Committee at the meetig of 16 March 2016, led to the calculatio of a performace score of 128 poits (130 i 2014) o the measuremet scale used, which icludes a miimum level, target ad maximum level equal, respectively, to 70, 100 ad 130 poits, with a threshold level of 85. For the purpose of the variable remueratio to be paid, the actual performace score resulted i: for the CEO, a icetive paymet of 550,000 equal to 64% of the fixed remueratio, takig ito accout the target icetive level (50%) ad the maximum level (65%) assiged; for Maagers with strategic resposibilities icetive paymets calculated i relatio to the specific performace achieved, i accordace with differetiated icetive levels depedig o the positio held. Sam 2017 Remueratio Report

32 31 The icetive paymets to Maagers with Strategic Resposibilities are specified i the item No-equity/bous variable paymets ad other icetives i Table 1 o page 34 with details i Table 3 o page Deferred Moetary Icetive Pla I the meetig of 16 March 2016, the Board of Directors, havig verified the proposal of the Remueratio Committee, approved the achievemet of the 2015 EBITDA result which is betwee the target value ad the maximum value. The Board therefore defied the allocatio of the 2016 basic icetive i favour of the CEO at 339,500 (35% of the fixed remueratio). For Maagers with Strategic Resposibilities the icetive amouts assiged were differetiated by the level of the positio up to a maximum of 25% of the fixed remueratio. The basic icetives assiged to Maagers with Strategic Resposibilities are specified i the item Deferred year bouses i Table 3 o page 39. The Deferred Moetary Icetive assiged i 2013 was vested i At the meetig of 16 March 2016, based o the Sam EBITDA results achieved i the three-year period , the Board of Directors, o the recommedatio of the Remueratio Committee, approved the multiplier to be applied to the basic icetive assiged for the purpose of calculatig the amout to be paid out, at 130% o the icetive scale of 0-170% (i the three-year period the multiplier was 143%). The amouts paid out to Maagers with Strategic Resposibilities are specified i the item Bouses for previous years that ca be paid out/were paid out i Table 3 o page Log-Term Moetary Icetive Pla The Board of Directors, o the recommedatio of the Remueratio Committee, to implemet the provisios of the 2016 Remueratio Report, approved the assigmet of the 2016 basic icetive for the CEO at 485,000 (50% of the fixed remueratio). For Maagers with Strategic Resposibilities the amouts assiged were calculated usig a icetive target, differetiated by the level of the positio up to a maximum of 35% of the fixed remueratio. The basic icetives assiged to Maagers with Strategic Resposibilities are specified i the item Deferred year bouses i Table 3 o page 39. I 2016, the 2013 Log-Term Moetary Icetive Pla was vested. I the meetig of 26 July 2016, based o Sam s Adjusted et profit results for the three-year period ad measured i terms relatig to the peer group (Eagas, Natioal Grid, Red Electrica, Sever Tret, Tera, Uited Utilities), the Board of Directors, o the recommedatio of the Remueratio Committee, approved the multiplier to apply to the basic icetive assiged, at 105% o the icetive scale of 0-130% (i the three year period the multiplier was 46.7%). The amouts paid out to Maagers with Strategic Resposibilities are specified i the item Bouses for previous years that ca be paid out/were paid out i Table 3 o page 39. Sectio II - Pay ad other iformatio

33 32 FIGURE 6 - Sam rakig compared with peer group - Adjusted Net Profit 2013 vs vs vs st 1 st 1 st 2 d 2 d Sam 2 d Sam 3 rd 3 rd 3 rd 4 th Sam 4 th 4 th 5 th 5 th 5 th 6 th 6 th 6 th 7 th 7 th 7 th 4 th Place = 85% 2 d Place = 115% 2 d Place = 115% Sam Sam Attribuzioe 2013 Score 2013 =105% = 1.4 Severace pay or termiatio of employmet I 2016, severace paymets were made to the previous CEO, Carlo Malacare, as set out i the collective agreemet as well as the amouts due based o the severace pay agreemets siged, as illustrated i the item severace pay or termiatio of employmet i Table 1 o page Beefits Table 1 o page 34 gives the values of beefits paid i 2016, i accordace with a tax liability criterio; specifically, these values refer to the followig beefits: i) aual cotributio to the FOPDIRE supplemetary pesio scheme, ii) aual cotributio to the FISDE supplemetary healthcare scheme, iii) cotributio to car for persoal ad busiess use for a three-year period (value excludes the recipiet s cotributio). Sam 2017 Remueratio Report

34 33 2. Compesatio paid i 2016 Table 1 Compesatio paid to Directors, Auditors ad Maagers with Strategic Resposibilities The table below lists the paymets made to Directors, Auditors ad, at aggregate level, to Maagers with Strategic Resposibilities 1. Details of the paymets passed o by Sam to other compaies are provided; details of other paymets received by subsidiaries ad/or associates are ot give because they are passed o i full to the Compay. Persos who have held these positios, eve for a portio of the year, are icluded. I particular: - the colum Fixed paymets icludes fixed paymets ad remueratio of employees due i 2016 before the deductio of social security ad tax cotributios. Refuds for flat-rate expeses ad attedace fees are excluded as o provisio is made. The ote gives details of the paymets as well as separate iformatio about ay employmet related idemity or paymets; - the colum Compesatio for participatio i Committees lists the paymets due to Directors for participatio i Committees established by the Board. The ote gives separate details of paymets for each committee the director participates i; - the colum No-equity variable paymets lists, i the item Bouses ad other icetives, the icetives for the year followig the vestig of the rights after the verificatio ad approval of the performace results by the competet corporate bodies, i accordace with the specificatios, with more details give i the Table Moetary icetive plas for Directors ad Maagers with Strategic Resposibilities ; - the colum No-moetary beefits gives the values of the frige beefits awarded; - the colum Total gives the sum of the previous items; - the colums No-equity variable paymets/profit sharig, Other paymets, Fair Value of equity paymets do ot cotai ay figures as there are oe for 2016; - the colum Severace pay or termiatio of employmet lists the paymets vested for termiatios that took place durig the course of the year or i relatio to the ed of the madate ad/or employmet. 1 The prerequisites required by existig legislatio for disclosure o a idividual basis do ot exist. Sectio II - Pay ad other iformatio

35 34 TABLE 1 - Remueratio paid to directors, statutory auditors ad maagers with strategic resposibilities (amouts i thousads) No-equity variable compesatio First ame ad surame Notes Post Term of office Expiry of office Fixed remueratio Compesatio for Committee membership Bouses ad other icetives Profit-sharig No-moetary beefits Other compesatio Total Fair Value of equity compesatio Severace idemities for ed of office or termiatio of employmet Board of Directors Lorezo Bii Smaghi (1) Chairma (a) 2 (b) 131 Chairma (a) 184 Carlo Malacare (2) CEO (a) 1,751 (b) 6 8,553 6,161 (c) CEO (a) Marco Alverà (3) COO (a) 165 (b) Alberto Clò (4) Director (a) 3 (b) 16 Adrea Novelli (5) Director (a) 10 (b) 23 Elisabetta Oliveri (6) Director (a) 36 (b) 96 Fracesco Gori (7) Director (a) 23 (b) 83 Pia Saraceo (8) Director (a) 10 (b) 23 Yupeg He (9) Director (a) 10 (b) 70 Sabria Bruo (10) Director (a) 32 (b) 92 Moica de Virgiiis (11) Director (a) 22 (b) 70 Lucia Morselli (12) Director (a) 22 (b) 70 Alessadro Toetti (13) Director (a) 19 (b) 67 Board of Statutory Auditors Massimo Gatto (14) Leo Amato (15) Chairma (a) 19 Stadig auditor (a) 41 Stadig auditor (a) 13 Chairma (a) 54 Stefaia Chiaruttii (16) Stadig auditor (a) 13 Maria Luisa Moscoi (17) Stadig auditor (a) 41 Maagers with strategic resposibilities (18) 1,305 (a) 1,676 (b) 50 3,031 Grad Total 3, , ,698 6,161 Sam 2017 Remueratio Report

36 35 1 Lorezo Bii Smaghi - Chairma of the Board of Directors The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro-rata, the aual fixed pay established by the Shareholders' Meetig of 26 March 2013 ( 40,000) ad the aual fixed pay for the awards approved by the Board o 26 October 2012 ( 360,000). (b) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro-rata, the aual paymet ( 7,000) for participatio, as a member, of the Appoitmets Committee. 2 Carlo Malacare - Chairma of the Board of Directors / CEO (a) The amout of 184,000 for the period from 27 April 2016 to 31 December 2016, icludes, pro-rata, the aual fixed pay established by the Shareholders' Meetig of 27 April 2016 ( 270,000). The amout of 633,659 correspods, pro rata, to the gross aual salary of 860,000 (established by the Board of Directors at the meetig of 27 February 2013) ad absorbs the paymet of 40,000 established by the Shareholders' Meetig of 26 March 2013 for the positio of Board Member. Added to this amout are the paymets due for travel expeses, domestically ad abroad, i lie with the provisios of the collective agreemet ad the supplemetary compay agreemets, ad other fees attributable to the employmet for a total of 352,201. (b) The amout icludes the paymet of 550,000 relatig to the 2016 aual moetary icetive ad 1,201,250 relatig to the amouts due from rights that have accrued uder the scope of medium/log-term icetive plas awarded i the period (c) The amout icludes 4,981,754 for idemity for termiatio of employmet, 860,000 for the o-compete agreemet, 314,569 for legallyrequired severace pay, as well as 5,000 for the ovatio agreemet. 3 Marco Alverà - CEO / Geeral Maager (a) The amout of 700,000 for the period from 27 April 2016 to 31 December 2016, correspods, pro rata, to the gross aual salary of 970,000 (established by the Board of Directors at the meetig of 31 May 2016 for the positio of CEO) ad absorbs the paymet of 70,000 established by the Shareholders' Meetig of 27 April 2016 for the positio of Board Member. Added to this amout are the paymets due for travel expeses, domestically ad abroad, i lie with the provisios of the collective agreemet ad the supplemetary compay agreemets totallig 4,709. The amout of 133,000 correspods, pro rata, to the gross aual salary of 550,000 (established by the Board of Directors at the meetig of 8 Jauary 2016 for the role of Geeral Maager). Added to this amout are the paymets due for travel expeses, domestically ad abroad, i lie with the provisios of the collective agreemet ad the supplemetary compay agreemets totallig 1,020. (b) The amout icludes the paymet of 165,000 as a etry bous (established by the Board of Directors at the meetig of 8 Jauary 2016). 4 Alberto Clô - Director The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, correspods, pro rata, to the aual fixed paymet established by the Shareholders' Meetig of 26 March 2013 ( 40,000). (b) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro-rata, the aual paymet for participatio, as Chairma, i the Appoitmets Committee ( 10,000). 5 Adrea Novelli - Director The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro rata, the aual fixed paymet established by the Shareholders' Meetig of 26 March 2013 ( 40,000). The amout is paid to the affiliated compaies (Cassa Depositi e Prestiti S.p.A.). (b) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro rata, the aual fixed paymets for participatio, as a member, i the Remueratio Committee ( 10,000) ad participatio, as a member, i the Cotrol ad Risks Committee ( 20,000). The paymets are made to Cassa Depositi e Prestiti S.p.A. 6 Elisabetta Oliveri - Director The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro rata, the aual fixed paymet established by the Shareholders' Meetig of 26 March 2013 ( 40,000); for the period from 27 April 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 70,000). (b) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro rata, the aual fixed paymets for participatio, as Chairma, i the Remueratio Committee ( 15,000) ad participatio, as a member, i the Appoitmets Committee ( 7,000); for the period from 11 May 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymets for participatio, as Chairma, i the Cotrol ad Risks ad Related-Party Trasactios Committee ( 30,000) ad participatio, as a member, i the Remueratio Committee ( 15,000). 7 Fracesco Gori - Director The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, correspods, pro rata, to the aual fixed paymet established by the Shareholders' Meetig of 26 March 2013 ( 40,000); for the period from 27 April 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 70,000). (b) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro-rata, the aual paymet for participatio, as Chairma, i the Cotrol ad Risks Committee ( 30,000); for the period from 11 May 2016 to 31 December 2016, icludes, pro-rata, the aual paymet for participatio, as Chairma, i the Appoitmets Committee ( 20,000). Sectio II - Pay ad other iformatio

37 36 8 Pia Saraceo -Director The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, correspods, pro rata, to the aual fixed paymet established by the Shareholders' Meetig of 26 March 2013 ( 40,000). (b) for the period from 1 Jauary 2015 to 26 April 2016, icludes pro rata the aual fixed paymets for participatio, as a member, i the Cotrol ad Risks Committee ( 20,000) ad participatio, as a member, i the Remueratio Committee ( 10,000). 9 Yupeg He - Director The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro rata, the aual fixed paymet established by the Shareholders' Meetig of 26 March 2013 ( 40,000); for the period from 27 April 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 70,000). The amout is paid to State Grid Iteratioal Developmet Limited. (b) for the period from 11 May 2016 to 31 December 2016, icludes, pro-rata, the aual fixed paymet for participatio, as Chairma, i the Sustaiability Committee ( 15,000). 10 Sabria Bruo - Director The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, correspods, pro rata, to the aual fixed paymet established by the Shareholders' Meetig of 26 March 2013 ( 40,000); for the period from 27 April 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 70,000). (b) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro-rata, the aual fixed paymet for participatio, as Chairma, i the Cotrol ad Risks Committee ( 20,000); for the period from 11 May 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymets for participatio, as Chairma, i the Sustaiability Committee ( 20,000) ad for participatio, as a member, i the Cotrol ad Risks ad Related-Party Trasactios Committee ( 20,000). 11 Moica de Virgiliis - Director The amout: (a) for the period from 27 April 2016 to 31 December 2016, correspods, pro rata, to the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 70,000). (b) for the period from 11 May 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymets for participatio, as Chairma, i the Remueratio Committee ( 20,000) ad participatio, as a member, i the Appoitmets Committee ( 15,000). 12 Lucia Morselli - Director The amout: (a) for the period from 27 April 2016 to 31 December 2016, correspods, pro rata, to the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 70,000). (b) for the period from 11 May 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymets for participatio, as a member, i the Cotrol ad Risks ad Related-Party Trasactios Committee ( 20,000) ad participatio, as a member, i the Sustaiability Committee ( 15,000). 13 Alessadro Toetti - Director The amout: (a) for the period from 27 April 2016 to 31 December 2016, correspods, pro rata, to the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 70,000). (b) for the period from 11 May 2016 to 31 December 2016, icludes, pro rata, the aual fixed paymets for participatio, as a member, i the Remueratio Committee ( 15,000) ad participatio, as a member, i the Appoitmets Committee ( 15,000). 14 Massimo Gatto - Board of Statutory Auditors The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, icludes, pro-rata, the aual fixed paymet established by the Shareholders Meetig of 26 March 2013 ( 60,000) for participatio, as Chairma, i the Board of Statutory Auditors; for the period from 27 April 2016 to 31 December 2016, icludes, pro-rata, the aual fixed paymet established by the Shareholders Meetig of 27 April 2016 ( 60,000) for participatio, as Stadig Auditor, i the Board of Statutory Auditors. 15 Leo Amato - Board of Statutory Auditors The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, correspods, pro-rata, to the aual fixed paymet established by the Shareholders Meetig of 26 March 2013 ( 40,000) for participatio, as Stadig Auditor, i the Board of Statutory Auditors; for the period from 27 April 2016 to 31 December 2016, icludes, pro-rata, the aual fixed paymet established by the Shareholders Meetig of 27 April 2016 ( 80,000) for participatio, as Chairma, i the Board of Statutory Auditors. Sam 2017 Remueratio Report

38 37 16 Stefaia Chiaruttii - Board of Statutory Auditors The amout: (a) for the period from 1 Jauary 2016 to 26 April 2016, correspods, pro-rata, to the aual fixed paymet established by the Shareholders Meetig of 26 March 2013 ( 40,000) for participatio, as Stadig Auditor, i the Board of Statutory Auditors. 17 Maria Luisa Moscoi - Board of Statutory Auditors The amout: (a) for the period from 27 April 2016 to 31 December 2016, correspods, pro-rata, to the aual fixed paymet established by the Shareholders' Meetig of 27 April 2016 ( 60,000) for participatio, as Stadig Auditor, i the Board of Statutory Auditors. 18 Maagers with strategic resposibilities (a) The amout of 1,305,000 paid as Gross Aual Salary ad the paymets due for travel expeses, domestically ad abroad, i lie with the provisios of the collective agreemet ad the supplemetary compay agreemets totallig 12,009. (b) The amout icludes the paymet of 520,000 relatig to the 2016 aual moetary icetive, 363,350 relatig to the deferred moetary icetive awarded i 2013 ad the paymet of 302,925 relatig to the log-term moetary icetive awarded i Sectio II - Pay ad other iformatio

39 38 Table 2 Stock optios grated to Directors ad to Maagers with Strategic Resposibilities The latest share-based pla was grated i 2008 ad the deadlies for the purchase rights expired i 2014, therefore there are o figures to iclude i table 2. Table 3 Moetary icetive plas for Directors ad Maagers with Strategic Resposibilities The table below lists the variable icetives of a moetary ature, short-term ad log-term, for the CEO ad, at aggregate level, for Maagers with Strategic Resposibilities. I particular: - the colum Bous for the year that ca be paid/has bee paid : cotais the Aual Moetary Icetive paid i the year based o the actual performace figures of the competet compay bodies i relatio to the objectives defied for 2015; - the colum Bous for the year - deferred : cotais the basic icetive awarded i the implemetatio year of the Log-Term Moetary Icetive Pla (IMLT); - the colum Defermet period : gives the legth of the vestig period for icetives deferred ad log-term icetives awarded durig the year; - the colum Previous year bouses - that ca o loger be paid : does ot cotai ay iformatio because the coditios for the paymet or partial paymet of the bous were ot verified i accordace with the provisios i the Pla Regulatios; - the colum Previous year bouses - that ca be/have bee paid : cotais the log-term variable icetives paid i the year, which have accrued based o the performace coditios of the vestig period; - the colum Previous year bous - still deferred : cotais the icetives awarded i relatio to existig deferred ad log-term plas ot yet vested; - the colum Other Bouses : does ot have ay iformatio as o other bouses were paid. The Total of the colums Bouses for the year- which ca be/have bee paid ad Previous year bouses - which ca be/have bee paid coicides with the iformatio i the colum Bouses ad the icetives i Table 1. Sam 2017 Remueratio Report

40 39 Table 3 - Moetary icetive plas for the Directors, Geeral Maager Operatios ad other maagers with strategic resposibilities (amouts i thousads) Yearly bous Bouses for previous years First ame ad surame Post Pla payable/ paid deferred deferral period o loger payable payable/paid (2) still deferred Other bouses Marco Alverà CEO (1) 2016 Deferred Moetary Icetive Pla BoD 26/07/ Log-Term Moetary Icetive Pla BoD 27/09/ three-yearly three-yearly Total Aual Moetary Icetive Pla BoD 16/03/ Deferred Moetary Icetive Pla BoD 26/07/ Log-Term Moetary Icetive Pla BoD 27/09/ three-yearly three-yearly Maagers with Strategic Resposibilities 2015 Deferred Moetary Icetive Pla BoD 28/07/ Log-Term Moetary Icetive Pla BoD 27/10/ Deferred Moetary Icetive Pla BoD 29/07/ Log-Term Moetary Icetive Pla BoD 30/10/ Deferred Moetary Icetive Pla Award: BoD 30/07/2013 Paymet: BoD 16/03/ Log-Term Moetary Icetive Pla Award: BoD 29/10/2013 Paymet: BoD 26/07/ Total ,593 TOTAL 520 1, ,593 (1) From 1 Jauary 2016 to 26 April 2016, the positio of CEO was held by Eg. Carlo Malacare. Aual Moetary Icetive Pla (IMA 2016) was paid off i March 2016 while Deferred Moetary Icetive Pla (IMD) ad Log-Term Moetary Icetive Pla (IMLT) were paid off i May 2016 with severace pay. (2) Disbursemet relatig to: - the deferred moetary icetive awarded i 2013 i relatio to EBITDA performace i the three-year period the log-term moetary icetive awarded i 2013 i relatio to the adjusted et profit result, i relative terms with respect to a peer group, achieved i the three-year period Sectio II - Pay ad other iformatio

41 40 3. Equity ivestmets held The table below, pursuat to Article 84-quarter, paragraph four of the Cosob Issuers Regulatio, gives details of the equity ivestmets i Sam S.p.A. held by Directors, Auditors ad Maagers with Strategic Resposibilities, as well as their spouses who are ot legally separated, ad childre below the age of majority, directly or via subsidiaries, trustees or omiees, as per the Shareholder Register, commuicatios received ad other iformatio acquired from them. Persos who have held these positios, eve for a portio of the year, are icluded. The umber of shares (all ordiary ) is idicated for Directors ad Auditors ad i a aggregate format for Maagers with Strategic Resposibilities. The persos idicated hold the equity ivestmets. TABLE 4a - shareholdigs held by directors ad Statutory Auditors First ame ad surame Post Etity Number of shares held at 31 December 2015 Number of shares acquired i 2016 Number of shares sold i 2016 Number of shares held at 31 December 2016 Carlo Malacare Chairma Sam 160, ,000 Marco Alverà CEO Sam 0* 85, , ,000 * umber of shares at 15 Jauary 2016 (hirig date) TABLE 4b - shareholdigs held by maagers with strategic resposibilities Etity Number of shares held at 31 December 2015 Number of shares acquired i 2016 Number of shares sold i 2016 Number of shares held at 31 December 2016 Maagers with strategic resposibilities* Sam 37,550 42, ,175 * the compositio of Maagers with strategic resposibilities has chaged durig the year followig the demerger of Italgas, which led to a corporate reorgaisatio Sam 2017 Remueratio Report

42

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44 43 Glossary Accidet frequecy idex based o stadard UNI 7249 it is icluded amog the idicators for measurig workplace safety. The above stadard establishes that the idex is calculated as the umber of accidets which take place for every millio hours worked i a give period ad/or i a give settig ad at corporate level. Adjusted et profit this is the et profit obtaied excludig special items, the warehouse profit/loss, as well as, i calculatig the et profit of busiess segmets, the fiacial expese/icome related to the et fiacial debt, that relatig to o-hedgig derivative fiacial istrumets other tha those for commodities ad foreig exchage differeces. Appoitmets Committee it is composed of two idepedet o-executive directors (oe of whom is the Chairma) ad oe o-executive director ad has cosultative ad advisory fuctios with regard to the Board of Directors. The mai tasks iclude: proposig cadidates for the office of director if the office of oe or more directors is vacated durig the year, esurig compliace with the provisios for the miimum umber of idepedet directors ad the quotas for the less represeted geder; it puts forward cadidates to the Board of Directors for the compay bodies of the subsidiaries icluded i the scope of cosolidatio ad of strategic foreig ivestee compaies. It develops ad proposes, amog other thigs, the aual self-evaluatio procedures of the Board ad its Committees. Balaced Scorecard this is the istrumet uderlyig the short-term variable icetive system supportig the achievemet of the compay objectives through the traslatio of the compay strategy ito a collectio of performace metrics that ca be measured for each eligible party. Beefits these are the elemets icluded i the o-moetary compoet of the remueratio aimed at improvig the idividual ad family wellbeig of employees from a ecoomic ad social profile. This category icludes all resources iteded to satisfy the pesio ad healthcare requiremets (supplemetary pesio, healthcare, isurace cover) but also the so-called prerequisites, which cosist of goods ad services that SNAM S.p.A. places at the disposal of its employees. Code of Corporate Goverace as defied by Borsa Italiaa, it is the Code of corporate goverace of listed compaies approved by the Corporate Goverace Committee. The documet, i lie with the experiece of the mai iteratioal markets, idicates the best practices of corporate goverace recommeded by the Committee for listed compaies, to be applied i accordace with the comply or explai priciple which requires a explaatio of the reasos for ay failed compliace with oe or more recommedatios i the applicatio priciples or criteria. Glossary

45 44 Cotrol, Risk ad Related-Party Trasactios Committee it is composed of three idepedet o-executive directors ad makes proposals ad provides advice to the Board of Directors makig suitable equiries to support decisios cocerig the iteral cotrol ad risk maagemet system, as well those relatig to the approval of fiacial reports. Cosolidated Fiace Act (TUF) the Cosolidated Act of provisios o fiacial itermediatio is Legislative Decree 58 of 24 February 1998 (ad later amedmets). The TUF itroduced legislatio o fiacial matters for priciples, which at primary regulatory level oly dictates geeral guidelies, deferrig the defiitio of detailed rules to the Regulatory Authorities (e.g. CONSOB). Corporate System Framework this is a Sam Group iteral documet, approved by the Board of Directors, which is desiged to provide descriptios ad illustratios with regard to Sam S.p.A. ad its subsidiaries o: (i) the Sam Group (ii) the orgaisatioal ad goverace model; (iii) the corporate maagemet system; (iv) the Group operatig model. EBITDA (Earigs before iterest, tax, depreciatio ad amortizatio) also defied as gross operatig margi is a profitability idicator which is a measure of the compay s gross operatig performace, before iterest (fiacial maagemet), tax (fiscal maagemet), depreciatio of assets ad amortisatio (Earigs Before Iterest, Taxes, Depreciatio ad Amortisatio). EBIT (Earigs Before Iterest ad Taxes) also defied as the Operatig Profit. It is a idicator of profitability which is obtaied by subtractig amortisatio ad provisios from the EBITDA (see EBITDA). Executive directors they are directors vested with specific duties by the Board of Directors. Fair Value of equity paymets also defied as fair value. Iteratioal Fiacial Reportig Stadard 2 (IFRS 2) defies fair value as The cosideratio at which a asset ca be exchaged, or a liability extiguished, or a istrumet represetig the capital assiged, i a free trasactio betwee iformed ad willig parties. Fixed Remueratio this icludes all aual fixed paymets, before the deductio of tax ad pesio expeses for the part the employee is resposible for, ot therefore icludig aual bouses, other bouses, idemities, frige beefits, refud of expeses, ad ay other form of remueratio of a variable or occasioal ature. Sam 2017 Remueratio Report

46 45 Free Cash Flow is the (moetary) flow of cash produced by operatioal maagemet ad o-operatioal maagemet. Idepedet directors Sam directors i possessio of the requiremets of idepedece laid dow by the Code of Corporate Goverace to which Sam adheres to. Issuers Regulatio this is CONSOB Regulatio of 14 May 1999 cotaiig the rules for etities issuig fiacial istrumets. Lock up idicates the period of time durig which the shares grated are subject to restrictios regardig their sale ad/or trasfer. Log-term variable icetives this refers to the Log-Term Share-Based Pla ILT, which gives the right, for the parties ivolved, to receive a pre-defied umber of shares i relatio to the results achieved at the ed of the vestig period (see vestig). Maagers with strategic resposibilities based o IAS 24 they are parties which have the power ad resposibility, directly or idirectly, for the plaig, maagemet ad cotrol of the etity s assets. I SNAM S.p.A. there were 6 parties at the approval date of this Report, listed withi this documet. No-compete agreemets based o Article 2125 of the Italia Civil Code it is the agreemet through which ivolvemet i the activities of the employer are restricted i the period followig the termiatio of the agreemet. No-executive directors they are directors ot vested with specific duties by the Board of Directors ad do ot have idividual powers delegated to them. Pay Mix it is the percetage of fixed remueratio ad short-term ad log-term variable icetives paid. Pay policy this is the collectio of remueratio programmes i terms of fixed ad variable remueratio implemeted at compay level i order to support the reachig of the strategic targets. Glossary

47 46 Performace Pla this is the istrumet that defies the targets based o the short-term variable icetives system. Proxy Advisors A compaies, used by istitutioal ivestors, that issue specific recommedatios, based o shareholders meetig documets ad their votig policies, which ca have a sigificat weightig i directig the vote o the Remueratio Report. Related-Party Trasactios the Trasactios i which directors ad statutory auditors have a iterest ad related-party trasactios procedure, adopted pursuat to ad i accordace with Article 2391-bis of the Italia Civil Code ad the Regulatio cotaiig provisios o related-party trasactios (adopted by Cosob through resolutio of 12 March 2010, later ameded through resolutio of 23 Jue 2010) which establishes the priciples ad rules that Sam ad its compaies, directly or idirectly, cotrolled should adhere to i order to esure the essetial ad procedural trasparecy ad correctess of trasactios with Related Parties ad Stakeholders ad directors ad auditors of Sam, realised by Sam ad its subsidiaries, also takig ito accout the aim of avoidig the risk of depletig the compay s assets. Remueratio Committee it is composed of two idepedet o-executive directors (oe of whom is the Chairma) ad oe o-executive director ad has cosultative ad advisory fuctios with regard to the Board of Directors o the subject of the remueratio of directors ad maagers with strategic resposibilities. Specifically, the Committee submits the aual remueratio report to the Board for approval ad formulates proposals relatig to the remueratio of directors with powers ad members of Board Committees. The Remueratio Committee, pursuat to the Trasactios i which directors ad statutory auditors have a iterest ad related-party trasactios procedure, issues a opiio with regard to trasactios ivolvig the remueratio of Sam directors ad maagers with strategic resposibilities. Salary review it is the review process for the aual fixed remueratio for all eligible maagers. Severace pay the moetary amout to be paid to the director at the time they o loger hold that positio. Short-term variable icetives this refers to the Aual Moetary Icetive Pla - IMA, which gives the right, for the parties ivolved, to receive a aual cash reward based o results achieved i the previous year i relatio to defied objectives. Sam 2017 Remueratio Report

48 47 Stock Optio fiacial istrumet through which the compay grats beeficiaries the right to subscribe or acquire shares i the actual compay or aother compay that is part of the same group at a strike price. Sustaiability Committee the Committee is composed of three o-executive directors the majority of whom are idepedet, icludig the Chairma. The Sustaiability Committee carries out proposal ad cosultatio fuctios with regard to the Board of Directors o matters of sustaiability, uderstood as the processes, iitiatives ad activities iteded to oversee the commitmet of the Compay to sustaiable developmet alog the value chai. Sustaiability idexes Dow Joes Sustaiability World Idex, FTSE4GOOD ad VigeoEurope are the stock exchage idexes made up of listed compaies selected iteratioally from those which have achieved the best performaces i terms of sustaiability ad Corporate Social Resposibility. Target level i the short-term icetive, it is the stadard achievemet level of the target which gives the right to receive 100% of the icetive. Termiatio of employmet idemity the moetary amout to be paid to the employee at the time of the termiatio of their employmet as a seior maager. Threshold level represets the miimum level to be reached below which the Pla makes o provisio for the assigmet of ay icetive. Variable remueratio it is composed of the short-term variable icetives ad the log-term variable icetives (see the defiitios i this glossary). Vestig (vestig period) period betwee the allocatio ad the completio of the owership of the right to receive the reward. Glossary

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50 49 Subject idex (CONSOB Resolutio 18049, SECTION I) CONSOB Resolutio A B C D E F G H I J K Iformatio requested Bodies or parties ivolved i the preparatio ad approval of the remueratio policy, specifyig the respective roles, as well as the bodies or parties resposible for the correct implemetatio of this policy Ay itervetio by a remueratio committee or other competet committee, describig the compositio (with a distictio betwee o-executive ad idepedet directors), expertise ad operatig methods The appoitmet of idepedet experts who may have bee ivolved i the preparatio of the remueratio policy The aims pursued through the remueratio policy, the uderlyig priciples ad ay chages to the remueratio policy compared with the previous fiacial year Descriptio of the policies o fixed ad variable remueratio compoets, with special referece to the weightig i the overall remueratio ad makig a distictio betwee the short-term ad medium-/log-term variable compoets The policy followed with regard to o-moetary beefits With referece to the variable compoets, a descriptio of the performace targets based o which they are assiged, distiguishig betwee short-term ad medium-/log-term variable compoets, ad iformatio o the coectio betwee the chage i results ad the chage i remueratio The criteria used for the evaluatio of the performace targets uderlyig the gratig of shares, optios, other fiacial istrumets or other variable remueratio compoets Iformatio aimed at highlightig the cosistecy of the remueratio policy with the pursuit of the compay's log-term iterests ad with the risk maagemet policy, where formalised The vestig periods of the rights, ay deferred paymet systems, with a idicatio of the defermet periods ad criteria used for calculatig these periods ad, if there is provisio, the ex-post correctio mechaisms Iformatio o ay provisio of clauses for keepig the fiacial istrumets i the portfolio after their acquisitio, with details of the periods ad the criteria used for calculatig these periods Referece L The policy relatig to the terms if the office is vacated or the employmet is termiated, specifyig which circumstaces create the right ad ay possible coectio betwee these terms ad the performace of the compay M Iformatio o the presece of ay isurace cover, or healthcare or pesios, other tha the madatory oes Subject Idex

51 50 N (i) The remueratio policy followed with regard to idepedet directors N (ii) Ay remueratio policy followed with referece to participatio o committees N (iii) O Ay remueratio policy followed with referece to holdig specific positios (Chairma, Vice Chairma, etc.) Iformatio regardig the use of remueratio policies i other compaies as a bechmark, if it is positive, the criteria used for selectig these compaies Sam 2017 Remueratio Report

52 51 Glossario