Board committees

The Board of Directors comprises three committees which have powers of investigation, consultation and proposal: Risk Management and Internal Control Committee, Appointments Committee, Remuneration Committee.

Risk Management and Internal Control Committee

The Risk Management and Internal Control Committee is responsible for supporting the Board of Directors in making assessments and decisions concerning the Risk management and internal control system and concerning the approval of the periodic financial reports based on preliminary analyses.

It must be composed of non-executive directors, the majority of whom are independent. At least one member of the Committee, and in any case the President, must possess sufficient experience in accounting and financial matters or in risk management.

The current Risk Management and Internal Control Committee is made up of five directors, all independent and possessing the knowledge, skills and experience required to fully understand and monitor the Bank’s strategies and risk guidelines.

The Risk Management and Internal Control Committee provides its preliminary opinion to the Board of Directors on:

  • The guidelines of the internal audit and risk management system;
  • The suitability of the risk management and internal control system with respect to the company’s characteristics and the risk profile assumed, and its effectiveness;
  • The work plan prepared by the Head of the internal audit department;
  • The main characteristics of the internal control and risk management system and its suitability;
  • The results presented by the external auditor in the letter of recommendations, if any, and in the report on the main issues which came up during external audit.

The Risk Management and Internal Control Committee provides its favourable prior opinion (which is binding) regarding the appointment and dismissal of the Head of the internal audit department and the allocation of adequate resources by the Board of Directors.

When assisting the Board of Directors, the Risk Management and Internal Control Committee:

  • Assesses, together with the Financial Reporting Officer, and having heard the opinion of the external auditor and the Board of Statutory Auditors, the correct application of accounting standards and their uniformity for the purpose of preparing the consolidated financial statement;
  • Expresses opinions on specific aspects regarding the identification of the main business risks;
  • Examines the periodical reports covering the evaluation of the internal audit and risk management system, and those of particular significance prepared by the internal audit department;
  • Monitors the autonomy, suitability, effectiveness and efficiency of the internal audit department;
  • May ask the internal audit department to carry out checks on specific operational areas, notifying the President of the Board of Statutory Auditors at the same time;
  • Examines the annual plans of the control functions and the reports on their implementation;
  • Identifies and proposes, with the contribution of the Appointments Committee, the heads of the company control functions to be appointed;
  • Contributes, through assessments and opinions, to defining the company’s policy on any outsourcing of company control functions;
  • Ensures that all company control functions correctly in accordance with the indications and guidelines approved by the Board of Directors and assists the latter in developing the coordination document for the control functions and for the company/group internal audit and risk management system in general.

With particular reference to tasks relating to risk management and control, the Risk Management and Internal Control Committee performs support functions for the Board of Directors:

  • In defining and approving strategic risk management guidelines and policies. As part of the Risk Appetite Framework [RAF], the Committee carries out assessments and makes proposals so that the Board of Directors can define and approve the risk objectives and the tolerance threshold;
  • In verifying the correct implementation of strategies, risk management policies and the RAF;
  • In defining the evaluation policies of business activities, including verifying that the price and terms of transactions with customers are in line with the business model and risk strategies.

The President of the Board of Statutory Auditors – or another auditor designated by the President on a case-by-case basis – assists the work of the Committee. Whenever deemed appropriate, the Risk Management and Internal Control Committee and the Board of Statutory Auditors hold joint meetings.

The Risk Management and Internal Control Committee, composed of only Independent Directors, carries out its work regarding Related-Party transactions and/or transactions with Associated Persons.

During 2019, the Committee met 24 times, six of them jointly with the Board of Statutory Auditors, one jointly with the Appointments Committee, the Remuneration Committee and the Board of Statutory Auditors and one jointly with the Appointments Committee and Remuneration Committee only.

The participation of the directors was on average 93%.

The average duration of the meetings was around two hours and thirty-six minutes.

Appointments Committee

The Appointments Committee supports the Board of Directors in the processes relating in particular to the appointment or co-opting of directors, in assessment of the optimal qualitative and quantitative composition of the optimal qualitative and quantitative composition of the Board of Directors, in the self-assessment of the self-assessment of the Board of Directors and in definition of the succession plans for top management.

The Appointments Committee must be made up of at least three members chosen from among the non-executive members, the majority of whom are independent. The members must have the powers required to perform the tasks attributed to the Committee.

The current Appointments Committee is made up of three members, all independent.

The Appointments Committee assists the Board of Directors and other corporate bodies in the following processes:

  • Appointing or co-opting directors:
    • The Committee gives advice during the advance identification phase regarding the optimal size and qualitative-quantitative composition of the Board of Directors, including in terms of professionals whose presence on the Board is deemed to be appropriate. The Committee also gives advice after the appointment process has taken place, checking that the optimal composition of the Board identified prior to this process have been met by the appointment process;
    • In the event that independent directors are to be replaced through co-option, the Committee proposes candidates to the Board.
  • Self-assessment of the company’s bodies. Specifically, the Committee submits proposals to the President of the Board of Directors regarding the staff tasked with the self-assessment process of company bodies with strategic supervision and management functions;
  • Verifying that those individuals with accounting, management and control roles possess the requisites of professionalism, integrity and independence, in accordance with Article 26 of (It.) Legislative Decree no. 385/1993 (TUB);
  • Defining succession plans for senior management positions (Chief Executive Officer and General Manager) due to expiry of mandates or for any other reason, in order to ensure business continuity and to avoid economic and reputational damage.

Furthermore, the Committee:

  • Assists the Risk Management and Internal Control Committee in finding and proposing suitable candidates to the Board of Directors to be appointed as heads of company control bodies;
  • Gives its opinion to the Board of Directors on limits to the total number of posts that Directors and Statutory Auditors can hold and on any derogations from the non-competition clause pursuant to Article 2390 of the (It.) Civil Code.

During the financial year 2019, the Appointments Committee met 5 times, of which two were joint meetings with the other Committees and, on the occasion of one of these meetings, also jointly with the Board of Statutory Auditors.

The participation was on average 89%.

The average duration of the meetings was forty-seven minutes.

Remuneration Committee

The Remuneration Committee assists the Board of Directors in defining the remuneration and incentive policies of the group and in monitoring the decisions adopted by the Board in this regard.

The Remuneration Committee must be made up of three members chosen from among the non-executive directors, the majority of whom are independent (including the President of the Committee).

The Remuneration Committee:

  • Provides advice and submits proposals to the Board of Directors on the remuneration and incentive plans of corporate officers (including executive directors and other directors assigned specific tasks), of executives with strategic responsibilities and of the heads of the parent company’s internal control departments and those of other group companies, and establishes performance targets related to the variable component of remuneration;
  • Provides advice on determining the remuneration criteria for the remaining “key personnel” identified within the parent company and other group companies in compliance with current supervisory provisions;
  • Directly oversees the correct application of the remuneration rules for managers of the parent company’s and other group companies’ internal control functions, in close collaboration with the Board of Statutory Auditors;
  • Prepares documentation to be submitted to the parent company’s Board of Directors for its decisions;
  • Collaborates with the other internal committees, in particular with the Risk Management and Internal Control Committee;
  • Ensures the parent company’s Internal Audit, Human Resources, Strategic Planning, Risk Management and Compliance and Anti-Money Laundering units are involved in the process of preparing and monitoring the group’s remuneration policies and practices;
  • Monitors implementation of the decisions adopted by the Board of Directors regarding remuneration and, in particular, voicing opinion, using information received from corporate facilities, on reaching performance targets linked to incentive plans and on verifying the other remuneration payment conditions envisaged;
  • Expresses an opinion on the results of the key personnel identification process;
  • Submits proposals to the parent company’s Board of directors regarding the criteria for allocating stock options or shares to directors and group employees;
  • Regarding the last point, if possible, provides interpretation on controversial cases and rectifies the allocation conditions of each tranche, as well as regulates the exercise of emerging rights for any transactions of an extraordinary nature on the parent company’s capital (mergers, increases in capital for free or against payment, fractioning or grouping of shares, etc.).

Furthermore, the Committee assesses, at least annually, the adequacy, overall consistency and effective application of the Group’s remuneration policies, and reports to the Parent Company’s Shareholders’ Meeting on the activities carried out.

During the 2019 financial year, the Committee held 17 meetings and the members took part in all of them (except for one member who took part in 10 of the 11 meetings held during the new administration, starting from 19 April 2019).

The Chief Executive Office attended most of the meetings, where issues not pertaining to him were due to be discussed. The President of the Board of Statutory Auditors also attended more than half the meetings and, on several occasions, the other Standing Auditors also attended.

The average duration of the meetings was around an hour.