Corporate Governance

Ansaldo STS adopts a corporate governance system that is based on the highest business management transparency and fair practice standards. This corporate governance system is compliant with the provisions of law and with the regulatory provisions of CONSOB and Borsa Italiana. It is also in line with the contents of the code of conduct for listed companies adopted by Borsa Italiana S.p.A. - which Ansaldo STS has implemented - and the international best practices. The corporate governance system is aimed at maximising value for shareholders, monitoring business risks, transparency with the market and reconciling the interests of all shareholders, with particular attention to smaller shareholders.

Ansaldo STS’ corporate governance system is based on a traditional model, and includes:

  • shareholders’ meetings;
  • the board of directors, which includes the following committees:
    • the risk and control committee;
    • the appointments and remuneration committee;
  • the board of statutory auditors;
  • the independent auditors.

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

  • by laws;
  • code of ethics;
  • organisational, management and control model pursuant to Legislative decree no. 231/01;
  • shareholders’ meeting regulations;
  • board of directors’ regulations;
  • risk and control committee regulations;
  • appointments and remuneration committee regulations;
  • related party transactions - procedure adopted pursuant to article 4 of Consob regulation no. 17221 of 12 March 2010;
  • procedure for the handling of privileged information;
  • internal dealing code of conduct.

BOARD OF DIRECTORS

Ansaldo STS’ board of directors has the widest powers for the management of the company, with the power to take any and all suitable action to achieve the company purpose, except for those reserved for the shareholders. The current board of directors was appointed by the shareholders during the ordinary meeting held on 5 April 2011, and the term of office will expire on the date of the shareholders’ meeting called to approve the financial statements as at and for the year ended 31 December 2013.

On 5 March 2013, Alessandro Pansa informed the board of directors and the Chairman of the board of statutory auditors that he would be resigning from the offices of Chairman and member of the board of directors of Ansaldo STS S.p.A., with effect from the end of the shareholders’ meeting called to approve the financial statements as at and for the year ended 31 December 2012.

To replace Mr. Pansa, during the ordinary meeting on 6 May 2013, the shareholders of Ansaldo STS appointed Luigi Calabria as the new Chairman and member of the board of directors. His term of office as director will end along with that of the other directors, i.e., with the shareholders’ meeting called to approve the financial statements as at and for the year ended 31 December 2013.

With respect to the composition of the board of directors, during the board meeting held on 11 December 2013, Sergio De Luca informed the board of directors and Chairman of the board of statutory auditors that he would resign from the offices of CEO and Director responsible for the internal control and risk management system, as well as company manager, with effect from 1 January 2014 for all the positions. His resignation was given due to his appointment as General Manager of Operations from 1 January 2014 at the parent Finmeccanica S.p.A..

Also on 11 December 2013, Luigi Calabria announced he would resign from the office of Chairman of the company’s board of directors with effect from 1 January 2014. Furthermore, Deputy Chairman Grasso resigned from the offices of Deputy Chairman and Director, also with effect from 1 January 2014.

In the light of the above, after having consulted with the board of statutory auditors, the board of directors co-opted, pursuant to article 2386.1 of the Italian Civil Code, Stefano Siragusa as new member of the board of directors and appointed him CEO and General Manager with effect from 1 January 2014.

During the same meeting, Mr. Siragusa was also appointed Director responsible for the internal control and risk management system. Stefano Siragusa’s term of office will end along with that of the other directors, i.e., with the shareholders’ meeting called to approve the financial statements as at and for the year ended 31 December 2013.

Finally, on 11 December 2013, the board of directors appointed (i) Mr. De Luca Chairman of the company’s board of directors, replacing Luigi Calabria, and (ii) Luigi Calabria Deputy Chairman of the company’s board of directors, replacing Giancarlo Grasso. These appointments took effect from 1 January 2014.

The following table illustrates the composition of the board of directors in 2013.

BOARD OF DIRECTORSRISK AND CONTROL COMMITTEEAPPOINTMENTS AND REMUNERATION COMMITTEE
OfficeMembersIn office sinceIn office untilList (M/m) Exec. Non-exec. Indep. under the CodeIndep. under the Cons. fin. act(%) ** Number of other offices*** **** ** **** ** 
Chairman ALESSANDRO PANSA  5 April 2011(1)  6 May 2013(6)  X(11)  - - - 100  - - - -
Chairman LUIGI CALABRIA  6 May 2013  Shareholders’ meeting approving the 2013 financial statements(7)  -(9)  - X - - 100  - - - -
Deputy Chairman GIANCARLO GRASSO  5 April 2011  31 December 2013(8)  - X - - 91.66  - - - -
CEO SERGIO DE LUCA  5 April 2011(2)  31 December 2013(8)  X - - - 100  - - - - -
Director  GIOVANNI CAVALLINI  5 April 2011  Shareholders’ meeting approving the 2013 financial statements  - X X X 100  - - X 100
Director  MAURIZIO CEREDA  5 April 2011(3)  Shareholders’ meeting approving the 2013 financial statements  - X X X 91.66  X 100 Chairman 100
Director  PAOLA GIRDINIO  5 April 2011  Shareholders’ meeting approving the 2013 financial statements  - X X X 100  - X 100 - -
Director  BRUNO PAVESI  7 May 2012(4)  Shareholders’ meeting approving the 2013 financial statements  -(10) - X X X 91.66  - - - X 100
Director  TATIANA RIZZANTE  5 April 2011  Shareholders’ meeting approving the 2013 financial statements  - X X X 83.33  2 - - - -
Director  ATTILIO SALVETTI  5 April 2011(5)  Shareholders’ meeting approving the 2013 financial statements  - X X X 100  - Chairman 100 - -

(1) Appointed for his first term of office on 21 November 2005 and subsequently confirmed by the shareholders on 1 April 2008.
(2) Co-opted by the board of directors pursuant to article 2386 of the Italian Civil Code on 14 June 2007 and subsequently confirmed by the shareholders on 1 April 2008. On 11 December 2013, Mr. De Luca resigned from the office of CEO and was appointed Chairman of the board of directors with effect from 1 January 2014.
(3) Appointed for his first term of office on 14 June 2006 and subsequently confirmed by the shareholders on 1 April 2008.
(4) Co-opted by the board of directors on 30 March 2012, replacing Director Filippo Milone, and subsequently confirmed by the shareholders on 7 May 2012.
(5) Appointed for his first term of office on 24 March 2006 and subsequently confirmed by the shareholders on 1 April 2008.
(6) Mr. Pansa was member and Chairman of the board of directors until 6 May 2013.
(7) Mr. Calabria was appointed by the shareholders on 6 May 2013 as member and Chairman of the board of directors, replacing Mr. Pansa. On 11 December 2013, Mr. Calabria stepped down from the office of Chairman with effect from 1 January 2014.
(8) On 11 December 2013, Mr. Grasso resigned from the office of member and Deputy Chairman of the board of directors with effect from 1 January 2014.
(9) Mr. Calabria is not on any of the lists presented for the shareholders’ appointment of the board of directors on 5 April 2011.
(10) Mr. Pavesi is not on any of the lists presented for the shareholders’ appointment of the board of directors on 5 April 2011.
NOTE
* This column indicates M/m, showing whether the member was elected from a majority (M) or minority (m) list.
** This column indicates the percentage of director participation in board and committee meetings respectively during the period considered (no. of meetings attended/no. of meetings held during the term of office).
*** This column indicates the number of offices of director or statutory auditor that the person holds in other companies listed on regulated markets, including those abroad, in financial, banking, insurance or significantly large companies. These companies are listed for each director in paragraph 4.1.7 of this report (“Other offices of director or statutory auditor held by Ansaldo STS directors”).
**** This column shows an “X” if the board member is on the committee.

BOARD OF DIRECTORS BY AGE AND GENDERMENWOMEN
< 40 - -
40-50 1 1
51-60 2 1
> 60 3 -

Appointment of the board of directors

The company is managed by a board of directors consisting of at least seven and not more than 13 members. Before electing the board each time, the shareholders decide what the number of members will be within this range. The directors are appointed for a period of time not exceeding three years and can be re-elected pursuant to article 2383 of the Italian Civil Code.

In line with the amendments to the Consolidated finance act introduced by Law no. 120 of 12 July 2011, the current by laws – following the most recent changes made by the shareholders at the extraordinary meeting of 6 May 2013 – provide for mechanisms to ensure a balance of men and women on the boards of directors and statutory auditors, which will be applied upon the first three renewals of the board of statutory auditors after one year following the date when the aforementioned law takes effect (i.e. after 12 August 2012).

The directors are appointed by the shareholders during an ordinary meeting by voting for lists.

Each list must include two candidates who meet the independence requirements provided for by law, indicating them separately and placing one at the top of the list.

Furthermore, lists with a number of candidates equal to or more than three must include candidates of different genders, in accordance with the notice of call of the shareholders’ meeting, so that the new board of directors is comprised of members of the least represented gender, in accordance with current legislation. In the event of fractions, the number is rounded up. If these obligations are not met, the list is considered as not having been submitted.

In order to ensure the effective participation of non-controlling owners in corporate management and the transparency of the selection and appointment process for directors, the by laws explicitly enable each shareholder to submit or participate in the submission of one list only, that each candidate can be presented in one list only or will be considered ineligible and that each rightful voter can vote for one list only.

The shareholders elect the Chairman of the board of directors, selecting the Chairman from among the members of the board. If the shareholders do not elect the Chairman, the Chairman is elected by the board itself. The board can also elect a Deputy Chairman, replacing the Chairman when the Chairman is absent or unable to chair the board.

For additional information on the appointment of the board of directors during the ordinary shareholders’ meeting of 5 April 2011, reference should be made to the following page on the company’s website10.

Directors’ requirements and duties

Under the by laws, in order to take office as director, one must not only meet the requirements of honourableness provided for by current legislative and regulatory provisions (or any similar requirements established by equivalent provisions), but must also meet the specific requirements of professionalism indicated in the by laws.

In particular, candidates may not be appointed director of the company, and if they have been appointed, their term of office is considered immediately terminated, if they do not have at least three years of overall experience in the following:

  • administration or supervision activities or managerial duties with companies with a share capital of at least €2 million;
  • professional activities or university teaching as a full professor of legal, economic, financial or technical/scientific subjects closely related to the company’s business activity; or
  • senior management functions with public bodies or administrations active in the credit, financial and insurance sectors or, in any case, in industries which are closely related to the company’s business activity.

This experience can be assessed on the basis of the candidates’ curriculum vitae, which should contain exhaustive information on the personal and professional characteristics of each candidate and be available to the public, along with each list pursuant to article 144-octies.1 for the Issuers Regulation. The board of directors verifies that these requirements are met by each of its members.

Non executive directors

The board of directors is mainly comprised of non executive members (who have not been assigned any operating powers and/or management functions within the company) to guarantee, given the number of such directors and their degree of authority, that their judgment significantly influences board decisions.

Non executive directors bring their specific expertise to the table in board discussions, to support the examination of the matters considered from a different perspective and to encourage the adoption of well-pondered resolutions, in line with the company’s interests. At present all members, except for the CEO and Chairman, are non executive.

Independence of directors

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

Subsequently, on 13 December 2011, 18 December 2012 and 16 December 2013, on the basis of the documentation submitted by each independent director, the board reviewed whether they still met the independence requirements provided for by the current legislative and regulatory provisions and pursuant to article 3 of the Code.

In their review, the board applied all Code criteria.

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

The independent directors met on 4 November 2013. The main purpose of the meeting was to examine the relationship between the Transportation Sector strategies of Finmeccanica, which manages and coordinates Ansaldo STS, and the company’s strategic plan.

Board of directors' activities and assessment of its functioning

In 2013, the board held 12 meetings. Any absences were duly justified. Twelve meetings are already scheduled for 2014. Since the start of 2014, the board met on 29 January 2014, 20 February 2014 and 7 March 2014.

The average length of the board’s meetings in 2013 was approximately three hours.

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

In 2013, the secretary of the company’s board of directors participated in board meetings and the Corporate Affairs & Group Insurance function manager, the lawyer Grazia Guazzi, participated in all board meetings in that role.

In accordance with the by laws, the board of directors meets whenever the Chairman, or another member in his place, deems it necessary, or upon the written request of the majority of board members.

In 2013, Ansaldo STS’ board of directors conducted the third evaluation of the board and committees of its mandate, which was the eighth time the board’s evaluation process was carried out.

The evaluation process was carried out in accordance with the recommendations of article 1.C.1.g) of the Borsa Italiana’s Code of Conduct for listed companies, and in line with international best practices. For 2013, the board decided to draw on the professional assistance of an advisory company that has not had any current or recent professional or business relationships with Ansaldo STS, based on the belief that the assistance of an external, independent and specialised advisory company can encourage better discussion with directors and offer other best practice perspectives.

The evaluation was carried out through a series of personal interviews with each board member, the Chairman of the board of statutory auditors and the Secretary of the board of directors, as well as by participating in several meetings of the board of directors and those of its internal committees. In addition, the minutes of the meetings of the board and its committees in 2013 and early 2014 were analysed. Furthermore, the evaluation entailed comparison with Italian and foreign companies with similar ownership structures to Ansaldo STS.

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

10. http://www.ansaldo-sts.com/it/governance/consiglio-amministrazione/nomina

COMMITTEES

In order to increase the efficiency and effectiveness of the work of the board of directors, the risk and control committee and the appointments and remuneration committee have been established within the board and in accordance with the criteria of the code of conduct that the company has implemented.

In this respect, following the approval of the new Code of Conduct in December 2011, the company approved the adoption of the principles in the updated Code, thereby updating its corporate governance system to meet the new provisions.

Specifically, on 18 December 2012, the company decided, inter alia: (i) to set up an appointments committee, grouping it together with the previously established remuneration committee and naming the new committee - vested with the dual function - the “appointments and remuneration committee,” approving its regulation; and (ii) modifying and redefining the duties and functions of the different parties involved in the company’s internal control and risk management system, also aligning their names with the new code of conduct. In this context, in particular, the board named the internal control committee the “risk and control committee” and approved its regulation.

Risk and control committee

The risk and control committee currently in office is comprised of three directors, who are all executive and independent. They are the directors Attilio Salvetti (Chairman), Maurizio Cereda and Paola Girdinio. The committee, initially appointed by the board of directors on 5 April 2011, was confirmed by the board on 18 December 2012 when the committee adopted the new Code of Conduct. Pursuant to the Code, at the time of the appointment, the board of directors examined the accounting and financial experience of the committee’s Chairman, Attilio Salvetti, and the members Maurizio Cereda and Paola Girdinio, and deemed adequate Maurizio Cereda’s experience.

The committee meetings are managed by an internal regulation which was last modified by the board on 18 December 2012, in accordance with the new Code of Conduct dated December 2011. The regulation, in its updated version, is available on the company’s website11.

The risk and control committee has advisory, proposal and preliminary preparation functions on behalf of the board of directors, mainly in relation to the definition of guidelines for the internal control and risk management system and the periodic evaluation of the adequacy and effective functioning of the organisational structure of such system.

Specifically, the committee is responsible for verifying the functioning and adequacy of the internal control and risk management system, as well as the effective compliance with procedures and internal directives adopted to both ensure sound and efficient management and identify, prevent and manage, insofar as possible, financial, operational and fraud risks to the detriment of the company.

Appointments and remuneration committee

In accordance with the provisions of article 37 of the market regulation, all members of the appointments and remuneration committee are non executive and independent.

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

In accordance with article 6.P.3 of the Code of Conduct, when the committee members were appointed, the company’s board of directors verified and certified that the directors Maurizio Cereda and Giovanni Cavallini had accounting and financial expertise and experience.

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

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

At present, the appointments and remuneration committee is therefore composed of the independent directors Maurizio Cereda (Chairman), Giovanni Cavallini and Bruno Pavesi.

The committee’s activities are managed by a regulation in line with the code of conduct. The board approved the regulation on 29 January 2007 and it was later modified on 12 May 2008, 5 March 2012 and 16 December 2012. The regulation is available on the company’s website12.

With respect to the code of conduct committee’s functions for both its role in the appointment of directors and remuneration, reference should be made respectively to articles 5 and 6 of the code, which can be found on the Borsa Italiana S.p.A. website13.

Directors’ remuneration

Information on the remuneration of key managers is given in the remuneration report, which is prepared pursuant to articles 123-14ter of the Consolidated finance act and 84-quater of the Issuers’ regulation, published on the company’s web site and made available to the public in the other ways provided for by current legislation. On 5 March 2013, the company’s board of directors, with the prior approval of the appointments and remuneration committee, approved the company’s remuneration policy for 2013 and Ansaldo STS’ remuneration report, prepared pursuant to article 123-ter of the Consolidated finance act. The first section of the report illustrates the company’s remuneration policy and the procedures followed to adopt and implement this policy and it was therefore put to a non-binding vote by the shareholders on 6 May 2013, in accordance with article 123-ter.6. The shareholders approved the report.

Furthermore, on 20 February 2014, upon the proposal of the appointments and remuneration committee, the board of directors approved the remuneration policy for 2014.

The 2014 remuneration policy is substantially the same as the 2013 remuneration policy, with only the following changes:

  • it now considers the creation of the position of General Manager in the company’s organisational chart and the assignment of this office to the CEO;
  • in line with the proposed resolution to be submitted for the shareholders’ approval during the meeting scheduled for 15 April 2014, there is a provision for the CEO’s remuneration pursuant to article 2389.3 of the Italian Civil Code to be determined in accordance with the provisions of article 23-bis of Law no. 201/2011 on the reduction in the fees of directors with duties in listed companies controlled by public administrations. Moreover, the company had already implemented this adjustment when the CEO and General Manager, Mr. Siragusa, was appointed with effect from 1 January 2014;
  • except in cases of dismissal for just cause or voluntary resignation, an end-of-office indemnity and/or non-renewal indemnity equal to not more than 24 months of total remuneration, considering the various circumstances, is provided for the offices of CEO and General Manager.

Furthermore, on 20 February 2014, considering the opinion of the appointments and remuneration committee, the board of directors also provided for a new identification of key managers, determining that they are the company’s Chief Operating Officer and the managers of the “mass transit and railway” and “freight” activities. Accordingly, they are also included in the remuneration policy approved by the board.

Finally, on 7 March 2014, the board of directors approved, with the prior approval of the appointments and remuneration committee, the remuneration report pursuant to article 123-ter of the Consolidated finance act. In accordance with the aforementioned article 123-ter.6 of the Consolidated finance act, at the ordinary shareholders’ meeting to be called to approve the draft financial statements at 31 December 2013, the shareholders will be asked to express their favourable or unfavourable opinion on the first section of the remuneration report, provided for by article 123-ter.3, illustrating the remuneration policy for members of the board of directors and key managers for 2014 and the procedures followed to adopt and implement the policy.

With respect to the remuneration of Ansaldo STS’ directors for 2013, reference should be made to the second section of the remuneration report approved by the board of directors on 7 March 2014, available on the company’s web site15.

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

11. http://www.ansaldo-sts.com/sites/ansaldosts.message-asp.com/files/downloadspage/7_regolamento_comitato_controllo_e_rischi_clean.pdf 12. http://www.ansaldo-sts.com/sites/ansaldosts.message-asp.com/files/downloadspage/5_regolamento_comitato_nomine_e_remunerazione_clean.pdf 13. http://www.borsaitaliana.it/borsaitaliana/regolamenti/corporategovernance/codicecorpgov2011clean_pdf.htm. 14. http://www.ansaldo-sts.com/it/governance/assemblea-azionisti/assemblea-azionisti-2014 15. http://www.ansaldo-sts.com/it/governance/assemblea-azionisti/assemblea-azionisti-2014

BOARD OF STATUTORY AUDITORS

The statutory auditors are appointed by the shareholders during an ordinary meeting by voting for lists. In line with the amendments to the Consolidated finance act introduced by Law no. 120 of 12 July 2011, the current by laws – following the most recent changes made by the shareholders at the extraordinary meeting of 6 May 2013 – provide for mechanisms to ensure a balance of men and women on the boards of directors and statutory auditors, which will be applied upon the first three renewals of the board of statutory auditors after one year following the date when the aforementioned law takes effect (i.e. after 12 August 2012).

As with the presentation of lists of candidates for the appointment of members of the board of directors, if a list of candidates for the office of statutory auditor is not submitted within the above term, the lists will be considered as not having been submitted.

The lists include the names of one or more candidates, and their number may not exceed the number of members to be elected. Each candidate can be presented in one list only or will be considered ineligible.

Lists are divided into two sections: one for candidates for the office of standing statutory auditor and one for candidates for the office of substitute statutory auditor. The first candidate in each section must be registered with the roll of certified auditors and have at least three years of experience in the performance of legally-required audits.

Furthermore, the lists that, considering both sections, include a number of candidates equal to or greater than three must also include, for both the first two candidates on the list for standing statutory auditors and the first two candidates on the list for the replacement statutory auditors, candidates of different genders.

The Chairman of the board of statutory auditors appointed is the standing statutory auditor elected by the minority, unless only one list is voted for or no list is submitted. In these cases, the shareholders appoint the Chairman of the board of statutory auditors according to the legal majorities.

The agenda for the ordinary shareholders’ meeting called to approve the financial statements as at and for the year ended 31 December 2013 will include, inter alia, the appointment of the board of statutory auditors for the 2014-2016 three-year period.

To date, the company’s board of statutory auditors consists of three standing statutory auditors and two substitute statutory auditors. It was appointed by the shareholders on 5 April 2011, in accordance with the by laws in effect at that time.

The statutory auditors currently in office are Giacinto Sarubbi, Renato Righetti and Massimo Scotton.

During the year, the board held 15 meetings. It held three meetings between the start of 2014 to the date of this report.

The following table provides information on the attendance of each statutory auditor at the meetings of the board of statutory auditors and the board of directors in 2013:

MEMBERSBoard of statutory
auditors attendance
Board of directors
attendance
Giacinto Sarubbi 15/15 12/12
Renato Righetti 14/15 11/12
Massimo Scotton 13/15 11/12

The board of statutory auditors is responsible for monitoring:

  • compliance with the law and by laws;
  • compliance with the policies of correct administration;
  • the adequacy of the company’s organisational structure in the areas for which it is responsible, the adequacy of the internal control system and the administrative/accounting system, and the latter’s reliability in correctly reflecting operations;
  • the actual implementation method of the corporate governance rules established by the codes of conduct prepared by the companies that manage regulated markets or trade associations, with which the company is required to comply through public disclosure;
  • the adequacy of the company’s instructions to its subsidiaries pursuant to article 114.2 of the Consolidated finance act;
  • the financial disclosure process;
  • the efficiency of internal control, internal audit and risk management systems;
  • the legally-required audit of the annual separate and consolidated financial statements;
  • the independence of the independent auditors or independent audit company, particularly with respect to the provision of non-audit services to the company;
  • the compliance of the company’s related party-transaction procedures with the policies of the related-party regulation and their compliance, reporting to the shareholders in this respect pursuant to article 153 of the Consolidated finance act.