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 Control and Risks Committee supports, with adequate preliminary activity, 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 periodic financial reports.

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 control and risk management system;
  • The adequacy of the internal control and risk management system with respect to the characteristics of the company characteristics and the risk profile assumed, as well as its effectiveness;
  • The work plan prepared by the head of the internal audit function;
  • The main features of the internal control and risk management system and its adequacy;
  • The results presented by the statutory auditor in any letter of suggestions and in the report on the fundamental issues that emerged during statutory 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:

  • Together with the Manager in charge of preparing the corporate accounting documents, after consulting the statutory auditor and the Board of Statutory Auditors, it assesses the correct use of the accounting principles and their consistency for the purposes of preparing the consolidated financial statements;
  • It expresses opinions on specific aspects relating to the identification of the main business risks;
  • Examines the periodic reports, concerning the assessment of the internal control and risk management system, and those of particular importance prepared by the internal audit function;
  • Monitors the autonomy, adequacy, effectiveness and efficiency of the internal audit function;
  • May ask the internal audit function to carry out checks on specific operational areas, simultaneously notifying the Chairman of the Board of Statutory Auditors;
  • Examines the annual plans of the control functions and the reports on their implementation;
  • Identifies and proposes, with the help of the Appointments Committee, the heads of the corporate control functions to be appointed;
  • Contributes, by means of evaluations and opinions, to the definition of the company policy of any outsourcing of corporate control functions;
  • Verifies that all corporate control functions correctly comply with the indications and guidelines approved by the Board of Directors and assists the latter in the preparation of the coordination document of the control functions and in general of the internal control system of the company and of group.

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 guidelines and risk governance 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 governance policies and the RAF;
  • In defining the policies and processes for evaluating corporate activities, including verifying that the price and conditions of transactions with customers are consistent with the business model and risk strategies.

The Chairman of the Board of Statutory Auditors – or another statutory auditor designated by the Chairman from time to time – attends 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 2020 the Committee met 21 times, including five times jointly with the Board of Statutory Auditors; the average duration of meetings was approximately two hours and forty-five 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 carries out preliminary, propositional and consultative functions to support the Board of Directors and other corporate bodies in the following processes:

  • Appointment or co-option of 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 corporate 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;
  • Verification of the existence of the requisites of professionalism, integrity and independence of the persons who perform administrative, management and control functions in accordance with the provisions of Article 26 of Legislative Decree no. 385/1993 (TUB);
  • Definition of succession plans in top executive positions (Chief Executive Officer, General Manager), in the event of termination due to expiry of the mandate or for any other reason, in order to ensure business continuity and avoid economic and reputational repercussions.

Furthermore, the Committee:

  • Supports the Risk Management and Internal Control Committee in identifying and proposing to the Board the heads of the corporate control functions to be appointed.

In the 2020 financial year, the Appointments Committee met 4 times and the average duration of meetings was about thirty 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 has the following duties:

  • Provide advice and submit proposals to the Board of Directors for the remuneration and incentives of corporate officers (including executive directors and other directors vested with special duties), executives with strategic responsibilities and the heads of the internal control functions of the parent company and of the other group companies, as well as on setting performance objectives related to the variable component of this remuneration;
  • Provide advice on determining the remuneration criteria for the remaining “key” personnel identified within the Parent Company and other group companies in compliance with the supervisory provisions in force;
  • Directly supervise correct application of the rules relating to the remuneration of the heads of the internal control functions of the parent company and the other group companies, in close collaboration with the Board of Statutory Auditors;
  • Prepare the documentation to be submitted to the Board of Directors of the parent company for the relative decisions;
  • Collaborate with the other internal board committees, in particular with the Risk management and Internal Control Committee;
  • Ensure the involvement of the Internal Audit Department, Human Resources, Strategic Planning, the Risk Management Function and the Compliance and Anti-Money Laundering Function of the parent company when drawing up and controlling the group’s remuneration policies and practices;
  • Monitor application of the decisions adopted by the Board of Directors regarding remuneration, and in particular voice an opinion, also using the information received from company structures, on achievement of the performance objectives to which the incentive plans are linked and on assessment of other remuneration payment conditions envisaged;
  • Express an opinion on the results of the key personnel identification process;
  • Submit proposals to the Board of Directors of the parent company regarding the criteria for allocation of stock options or of shares to directors and employees;
  • On this latter point, where possible, provide interpretation on the controversial cases and rectify the conditions of assignment of each tranche as well as regulate the exercise of emerging rights for any extraordinary transactions on the capital of the parent company (mergers, free or against payment, splitting 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.

In the 2020 financial year, the Committee met 11 times and the members attended all the meetings.

The Chief Executive Officer attended 2 meetings, where the discussion of issues concerning him was not envisaged. 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.