629202004

Remuneration

The Report on remuneration policy and remuneration paid is prepared by the Remuneration Committee and is approved by the Board of Directors.

The Report, approved by the Board of Directors on April 1st, 2021, as per the recommendation of the Remuneration Committee, in accordance with applicable legal and regulatory requirements, defines and illustrates:

  • in the first section, the Policy adopted by Eni SpA for the remuneration of Directors, Statutory Auditors and Managers with strategic responsibilities, for the whole term 2020-2023, following its approval by Shareholders’ held on May 13, 2020 (binding vote), with over 95% of favourable votes. Since the Remuneration Policy for the 2020-2023 term has already been approved by the Shareholders’ Meeting of May 13, 2020 and no changes are expected, the Report is not subject to the vote of the 2021 Shareholders’ Meeting.
  • in the second section, the implementation of the 2020 Policy with information on the assessment of the results, as well as the remuneration paid and shareholdings held in 2020 by Eni Directors, Statutory Auditors, Chief Executive Officer and General Manager, Chief Operating Officers and, in aggregate form, other Managers with strategic responsibilities.

The Remuneration Policy described in the first section has been prepared in line with the recommendations on remuneration of the Italian Corporate Governance Committee and the Corporate Governance Code for listed companies, in the version last approved in July 2018, in force at the time of its definition and approval. The Policy also takes account, where specified, of Principles and Recommendations contained in the revision of the Code as approved in January 2020, formally adopted by Eni on December 23, 2020.

The two sections of the Report are preceded by an Executive Summary in order to provide the market and investors with an easily accessible overview of the key elements of the Policy approved for the new term, information on Eni’s strategies, on 2020 Company’s results, information on sustainability indicators and on pay for performance as well as on the results of the vote on the Remuneration Report at recent Shareholders’ Meetings.

Finally, the Report illustrates how the 2020-2022 Long Term Incentive Plan has been implemented in 2020, in accordance with applicable regulation.

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For further information on the contents of Eni's Report and Remuneration Policy:

Strategy, sustainable development and remuneration

Eni’s business model is focused on creating value for its stakeholders through a strong presence along the whole energy value chain. Eni aims at contributing, directly or indirectly, to achieve the Sustainable Development Goals (SDGs) of the UN 2030 Agenda, supporting a just energy transition, responding through concrete and economically sustainable solutions to the challenge of combating climate change and giving access to energy resources for all in an efficient and sustainable way.

The 2020-2023 Long Term Equity based Incentive Plan and the guidelines of the Strategic Plan support such model by providing a specific goal on environmental sustainability and energy transition (with an overall weight of 35%), made up of targets related to decarbonization, energy transition and circular economy.

Alignment with Strategic Plan

The remuneration policy supports the achievement of the goals set in the Company’s Strategic Plan by promoting, through a balanced use of performance measures in the short and long-term incentive systems, the alignment of senior management’s interests with the priority of creating sustainable value for shareholders over the medium to long term.

Our governance practices

Our governance practices regarding executive remuneration are shown below.

Safety and environmental sustainability indicators

According to what is reported on page 11 of the Report on Remuneration Policy and remuneration paid (2021), in 2020, as shown in chart 2, the Severity Incident Rate (SIR) improved over the previous year, where the Total Recordable Injury Rate (TRIR) was essentially unchanged at an especially low level that outperforms both the average for Oil & Gas peers (1.08 in 2019) and the second “best in class” after Eni (i.e. Chevron, which posted a TRIR of 0.75 in 2019).

In terms of GHG emission intensity in the upstream sector, 2020 performance posted a slight improvement compared with the previous year due to the decrease in production connected with the health emergency, which mainly affected areas associated with a low emission impact. The increase was partially contained due the optimisation of the management of some assets, with measures to reduce emissions from flaring/venting and methane fugitives.

Pay for performance analisys

According to what is reported on page 19 of the Report on Remuneration Policy and remuneration paid (2021), the chart compares developments in Eni TSR and total CEO/GM remuneration for 2015-2020.

The Eni Remuneration Policy is approved by the Board of Directors, following a proposal by the Remuneration Committee, which is entirely made up of Non-executive, independent Directors.

It is defined in accordance with the corporate governance model adopted by the Company as well as with the recommendations of the Italian Corporate Governance Code.

Following the approval by the Shareholders’ Meeting of May 13, 2020, the Remuneration Policy presented in the first section of the Report provides the Remuneration Policy Guidelines for Directors, Statutory Auditors and other Managers with strategic responsibilities for the 2020-2023 financial years, i.e. coinciding with the term of Eni’s corporate bodies.

On March 18, 2020, the Board of Directors approved the aforementioned Policy Guidelines, acting on a proposal of the Remuneration Committee, following a preliminary analysis of the relevant regulatory framework, as regards in particular new requirements resulting from the transposition of the SRD II Directive, market practices in Italy and abroad as well as remuneration benchmark analysis carried out with the support of international advisors.

The 2020-2023 Policy Guidelines were also defined taking into due account the views expressed by the shareholders on the 2019 Policy (which received a favourable vote from 96.78% of the participants), thus retaining the same structure and potential maximum remuneration levels for the Chairwoman and CEO, as well as for non-executive Directors in relation to their participation in Board Committees.

Finally, the 2020-2023 Policy Guidelines also contain, in accordance with the provisions of the law transposing the SRD II, specific recommendations on the remuneration of the Chairwoman and other members of the Board of Statutory Auditors for the entire duration of their term, which were determined at the Shareholders’ Meeting on the occasion of their appointment.

The summary of the 2020-2023 Policy Guidelines for the CEO and other Managers with strategic responsibilities is shown in the following table. 

REMUNERATION POLICY SUMMARY 2020-2023*

Market benchmarks and fixed remuneration

REMUNERATION STRUCTURE AND MARKET BENCHMARKS
PURPOSE AND CONDITIONS Attract and retain individuals of high managerial standard, and motivate them to achieve sustainable long-term objectives
CRITERIA AND PARAMETERS Remuneration Policy for the 2020-2023 term retains the same maximum amount as in the 2017-2020 Policy (adjustable).
Chief Executive Officer:
Eni Peer Group (Apache, BP, Chevron, ConocoPhillips, Equinor, ExxonMobil, Marathon Oil,Occidental, Shell e Total) also used for measuring the performance of the LTI Share Plan.
Managers with strategic responsibilities (MSRs):
Roles of the same level of managerial responsibilities in industrial corporations at national and international levels.
FIXED REMUNERATION
PURPOSE AND CONDITIONS Reward skills, experience and responsibility
CRITERIA AND PARAMETERS Chief Executive Officer:
Maximum fixed remuneration is set at the same level as in the 2017-2020 term, and can be reduced based on delegated powers assigned over the term, positionsheld and type of employment relationship, in line with professional profile and experience of the candidate.
Managers with strategic responsibilities (MSRs):
Fixed remuneration is based on the role assigned potentially adjusted to median market remuneration level.
MAXIMUM AMOUNTS CEO: Max. fixed remuneration: €1,600,000

Short-term and long-term incentive plans

SHORT-TERM INCENTIVE PLAN(PLANS WITH MALUS/CLAWBACK MECHANISMS)
PURPOSE AND CONDITIONS Motivate managers to achieve annual budget targets in a perspective of medium/long-term sustainability
CRITERIA AND PARAMETERS 2021 targets for CEO:
1) Economic and financial results: EBT (12.5%) and Free cash flow (12.5%)
2) Operating results and sustainability of economic results: hydrocarbon production (12.5%) and incremental renewable installed capacity (12.5%)
3) Environmental sustainability and human resources: GHG emissions intensity Scope1 and Scope 2 - equity (12.5%) and Severity Incident Rate (12.5%)
4) Efficiency and financial strength: ROACE (12.5%) e Debt/EBITDA (12.5%)
2021 targets for MSRs:
Business and individual targets set on the basis of those assigned to the CEO/GM and the responsibilities assigned to them.
Assessment
• performance scale: 70 ÷ 150 points (target=100)
• below 70 points the performance is considered to be equal to zero
• the minimum incentive threshold is equal to overall performance of 85 points
• 1.1 multiplier applicable to overall performance score in the event of un-budgeted portfolio transactions of strategic relevance within the limit of 150 points
Incentives
• Incentive base: defined as a percentage of fixed remuneration, and differs depending on the level of assigned role
• Incentive vested: between 85% and 150% of incentive base, made up of a portion paid annually (65%) and a deferred portion (35%) determined as a function of the average of Eni annual performance results over the three-year deferral period, between 28% and 230% of the awarded deferred portion.
MAXIMUM AMOUNTS CEO:
• Incentive base: max amount equal to 150% of fixed remuneration.
Payable annual amount:
• threshold 83% of fixed remuneration
• target 98% of fixed remuneration
• max. 146% of fixed remuneration.
Payable deferred portion:
• threshold 38% of fixed remuneration
• target 68% of fixed remuneration
• max 181% of fixed remuneration.
MSRs:
• Incentive base: up to a max amount equal to 100% of fixed remuneration.
• Payable annual amount: up to a maximum amount equal to 98% of fixed remuneration.
• Payable deferred portion: up to a maximum amount equal to 121% of fixed remuneration.
2020-2022 LONG-TERM EQUITY-BASED INCENTIVE PLAN (PLANS WITH MALUS/CLAWBACK MECHANISMS)
PURPOSE AND CONDITIONS Encourage long-term value creation for shareholders and sustainability
CRITERIA AND PARAMETERS Number of shares awarded
Determined by the ratio between the monetary value and the price of the award, calculated as the average of the daily prices recorded in the four months before the month in which the Board approves the award.
Performance parameters over a 3-year period
1) 25% Market objective: linked to the Total Shareholder Return (relative)
2) 20% Industrial objective: Net Present Value of proven reserves (relative)
3) 20% Economic-financial objective: organic Free Cash Flow (absolute)
4) 35% Environmental Sustainability and Energy Transition objectives, as follows:
4.1) 15% Decarbonisation objective (absolute): CO2 Emission Intensity upstream Scope 1 and Scope 2 equity (absolute)
4.2) 10% Energy Transition objective: development of electricity generation from renewables (absolute)
4.3) 10% Circular Economy objective: Important projects in bio-fuels (absolute)
Performance measurement over a 3-year period
• Relative parameter (TSR, NPV): compared with Peer Group
• Absolute parameters (FCF, Decarbonisation, Energy transition and Circular economy): measured against targets set in the Strategic Plan
Number of shares granted at the end of the vesting period
Determined as a function of performance over 3 years applying a variable multiplier between 40% (threshold) and 180% of the number of awarded shares.
Restriction period
For managers still in service, 50% of the shares granted at the end of the vesting period are to remain restricted for one year from the granting date.
MAXIMUM AMOUNTS CEO:
• Value of awarded shares: up to a max amount equal to 150% of total fixed remuneration.
• Value of granted shares:
- threshold 60% of fixed remuneration
- target 174.75% of fixed remuneration
- max 270% of fixed remuneration.
MSRs:
• Value of awarded shares: depending on the level of the role, up to 75% of fixed remuneration.
• Value of granted shares: depending on the level of the role, up to 135% of fixed remuneration.
N.B.: the monetary values are net of the impact of any changes in the stock price.

Other treatments

NON-MONETARY BENEFITS
PURPOSE AND CONDITIONS Retain managers in the Company
CRITERIA AND PARAMETERS Benefits, mainly insurance and welfare related, defined in national collective bargaining agreement and in supplementary Company-level agreements (including GM and MSRs).
• Supplementary pension scheme
• Supplementary healthcare scheme
• Insurance
• Automobile for business and personal use
PAYMENTS DUE IN THE EVENTOF TERMINATION OF OFFICE OR EMPLOYMENT
PURPOSE AND CONDITIONS Protect the Company from potential litigation and/or competitive risks associated with terminations without just cause
CRITERIA AND PARAMETERS Payments due in the event of termination of the CEO office or the employment relationship as GM/MSRs
To be defined based on position and work relationship, according to the following criteria:
• administrative office (CEO) – an indemnity in the event of non-renewal of the office or early termination without just cause, as well as resignation prior to the expiry of the term justified by a reduction of delegated powers;
• executive employment relationship (GM/MSRs) – an indemnity in the event of consensual termination set in accordance with the Company parameters and policy, within the limits of the protections laid down by national collective bargaining agreement** for senior managers.
Indemnities are not due in the event of dismissal for “just cause” and resignation not justified by a reduction of delegated powers.
Non-compete agreement CEO
Optional agreement to protect the Company’s interests, with payment based on the extension of period and commitments undertaken.
Non-compete agreement MSRs
Only for cases of termination presenting high-competitive risks relating to the nature of the position; payment based on current remuneration levels and the extension of period and commitments undertaken.
MAXIMUM AMOUNTS Indemnity CEO/GM:
• CEO: max 2 years of fixed remuneration;
• Possible executive work relationship GM: max 2 years of fixed remuneration and short term incentive.
Possible payment for non-compete agreement CEO:
• Fixed component: max 1 year of fixed remuneration;
• Variable component: function of average performance of the three previous years: 0 for below the target performance; €500,000 for on target performance; €1,000,000 for max performance.
The fee for the option cannot be higher than €300,000.
Indemnity MSRs: payments defined within the limits of the protection laid down by national collective bargaining agreements**.

(*) The implementation of 2020-2023 Guidelines for the new Directors is described in Section II of the Remuneration Report.
(**) In cases of termination not due to just cause, protections laid down by national collective bargaining agreements provide for up to a maximum of 36 months of total remuneration (fixed remuneration, short and long term variable incentives, benefits), including the amount due by way of notice indemnity (equal to a minimum of 6 months, up to a maximum of 12 months, depending on seniority).

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In compliance with the provisions of the new Issuers Regulation, the table below reports the remuneration accrued in 2020 by Directors, Statutory Auditors, the Chief Executive Officer and General Manager and other Chief Operating Officers, and, in aggregate form, Managers with strategic responsibilities. The remuneration received from subsidiaries and/or associates, except that waived or paid to the Company, are shown separately. All parties who filled these roles during the period are included, even if they only held office for a fraction of the year.


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In this section, according to the provisions of current legislation, the Remuneration Reports of previous years as well as the Consob information documents relating to the share-based incentive plans.

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