The corporate governance system of the Enel Group complies with the principles set forth in the Corporate Governance Code for listed companies, in the most recently updated version from July 2015, and is inspired by Consob’s recommendations on this matter and, more generally, international best practice. The corporate governance system is essentially aimed at creating value for the shareholders over the medium-long term, taking into account the social importance of the Group’s business operations and the consequent need, in conducting such operations, to adequately consider all the interests involved.
Board of Statutory Auditors
It is responsible for overseeing: compliance with the law and bylaws, compliance with the principles of correct administration in undertaking corporate activities; the process of financial disclosure, as well as the adequacy of the organizational structure, the internal control system and the Company’s administrative and accounting system; the audit of the annual accounts and the consolidated accounts, as well as the independence of the independent auditors; and, finally, the concrete implementation of the corporate governance rules envisaged by the Self-Regulation Code.
The audit is entrusted to a specialist company which is listed in the specific register and is nominated by the Shareholders’ Meeting on the basis of a proposal from the Board of Statutory Auditors.
Board of Directors
After being appointed by the Ordinary Shareholders’ Meeting of May 22, 2014, at December 31, 2016 the Board consisted of nine members. During 2016 the Board met 13 times, dealing at 12 meetings with issues linked to governance, sustainability, the Code of Ethics and the 231 Compliance Program. The Board has set up the following four committees internally:
- Nomination and Compensation Committee: supports, through proper enquiry, the assessments and decisions of the Board of Directors relating to the size and composition of the Board itself, as well as to the compensation of executive directors and key executives;
- Control and Risks Committee: supports, through an adequate review process, the assessments and decisions of the Board of Directors relating to the internal control and risk management system as well as those relating to the approval of the periodic financial reports;
- Corporate Governance and Sustainability Committee: assists with preliminary functions, also by providing advice and proposals, the Board of Directors in its assessments and decisions relating to the corporate governance of the Company and of the Group, and oversees sustainability issues connected to the Company’s business and to the trends in the Company’s interaction with all the stakeholders;
- Related Parties Committee: it provides reasoned opinions on Enel’s interest – as well of companies that are directly and/or indirectly controlled as necessary – in undertaking transactions with related parties, expressing a judgment on the substantial expediency and correctness of the related conditions, after receiving timely and adequate information flows.
During 2016 the Board of Directors completed its assessment regarding the succession plans for executive directors, following the hopes expressed on the outcome of the Board review in 2014. In particular, in September 2016 the Board of Directors, at the proposal of the Nomination and Compensation Committee formulated together with the Corporate Governance and Sustainability Committee, shared the contents of a specific contingency plan aimed at regulating the actions to be taken to ensure the Company’s regular management should the Chief Executive Officer leave the position early compared to the ordinary deadline for their mandate (a crisis management situation).
Enel’s remuneration policy is consistent with the recommendations of the Corporate Governance Code and aims to (i) attract, motivate and keep those persons that have the skills to manage the Company successfully, (ii) incentivize the achievement of the strategic objectives and the sustainable growth of the Company, (iii) align the interests of management to the primary objective of creating sustainable value for shareholders in the long term and (iv) promote the corporate mission and values. In defining the policy adopted by Enel SpA on remuneration for the members of the Board of Directors, the Chief Executive Officer/General Manager and Executives with strategic responsibilities in reference to 2017, the Nomination and Compensation Committee took account of the recommendations contained in the Corporate Governance Code, best national and international practice and the indications that emerged from the approval by the Shareholders’ Meeting in 2016 of the remuneration report.
In particular, the variable remuneration for the Chief Executive Officer/General Manager is made up of:
- a short-term variable component (MBO) which considers both internal financial indicators (such as consolidated net income from continuing operations, the ratio between operating cash flows (FFO – Funds from Operations) and net financial debt, and value of consolidated cash cost), and non-financial indicators (such as occupational health and safety);
- a long-term variable component (LTI) which considers both Enel’s average TSR (Total Shareholder Return) compared to the average TSR of the EURO STOXX Utilities EMU index over a 3-year period, and the Group’s accumulated ROACE (Return on Average Capital Employed) for the same 3-year period.
In addition, the bonus plan envisages the deferment of the payment of long-term variable remuneration. Specifically, 30% of the total is paid during the year subsequent to the 3-year performance period, the so-called control year, while the payment of the remaining part, 70% of the total, is deferred by two years compared to the 3-year period, thus making de facto completion of the plan last over a 5-year time horizon.
LTI Plan (Long-Term Incentive)
Finally, the Company has the right to ask for the return of variable remuneration paid (both short and long term) or to withhold the variable remuneration which is being deferred, should such remuneration be paid on the basis of data which later proves manifestly wrong (clawback and malus clauses).
For further details see the remuneration report available on www.enel.com.