Compensation of Directors

The compensation of the Board of Directors is determined by the Shareholders’ Meeting, while the compensation of the Chairman, the Chief Executive Officer and the Directors who serve on Board Committees is determined by the Board of Directors, upon a proposal by the Compensation Committee and based on the input of the Board of Statutory Auditors.

Initially, the compensation payable to the current Directors was determined by the Shareholders’ Meeting that elected them on April 2, 2008. It consisted of a fixed annual fee payable to each Director and an attendance fee for each meeting attended by each Director. The compensation of Directors that perform special functions or are members of Board Committees was determined by the Board of Directors at its July 25, 2008 meeting.

Later on and as mentioned in last year’s Report on Corporate Governance, at a meeting held on October 30, 2009, the Board of Directors, acting with the consent of the Board of Statutory Auditors, approved a resolution changing the compensation of the Chairman and the Chief Executive Officer, to take into account the impact of the particular economic scenario of the market and current compensation trends. For the Chairman, the Board approved a 10% reduction of his total compensation, while, for the Chief Executive Officer, the Board approved a 10% reduction of his fixed compensation and a 25% reduction of his variable compensation. In turn, the Shareholders’ Meeting of March 23, 2010, voting on a motion by the Board of Directors, approved a resolution to reduce by 10% the annual compensation and attendance fees of the members of the Board of Directors, consistent with the recommendations made by the Compensation Committee based on the results of an analysis performed.

Therefore, starting with the Shareholders’ Meeting convened to approve the 2009 financial statements, the compensation of Directors is as follows:

• Each Director receives an annual fee of 45,000 euros and an attendance fee of 1,800 euros for each meeting of the Board of Directors or a Committee that he/she attends.
• In addition to the Director’s fees mentioned above, the Chairman receives an annual fixed compensation of 630,000 euros.
• In addition to the Director’s fees mentioned above, the Chief Executive Officer was awarded compensation consisting of a fixed annual component of 1,080,000 euros and a variable annual component (of up to 1,350,000 euros per year), tied to the achievement of short-term objectives set by the Board of Directors, upon a proposal by the Compensation Committee (so called annual MBO). As to the 2010 MBO, the objectives chosen as benchmarks include the following: EBITDA level; Group net profit and net financial debt; based on the results achieved with regard to these targets, the bonus awarded (MBO) amounted to 757,000 euros. The Board of Directors also established for the Chief Executive Officer a long-term incentive (LTI) for the period 2009-2010 that will be payable at the end of his current term of office, consistent with management’s LTI Program, based on the achievement of medium-term strategic objectives (credit rating/operating excellence program). The non achievement of the LTI objectives implied that no compensation will be awarded in respect to LTI, both for the Chief Executive Officer and all the Management involved.

Lastly, regarding the compensation in 2010 of Committee members, the Board, at its meeting of April 2, 2008, confirmed the amounts and the approach of the previous three years, whereby all Committee members are awarded, in addition to an attendance fee, the same compensation, but the amounts will be different for each Committee, based on the effort involved. The table below shows the annual compensation owed and paid to the members of each committee in 2010.

The compensation earned in any capacity by each Director in 2010 is shown in the table provided in the section of this Report entitled “Compensation Received by Directors and Statutory Auditors”.