Overview

Eni Rome office

In detail:

  • remuneration, benefits, treatments and market references for the chairman
  • remuneration, incentives, benefits, indemnities and market references for the chief executive and general manager
  • remuneration, incentives, benefit, treatments and market references for managers with strategic responsibilities
  • compensation, treatments and market references for non-executive directors

Remuneration Policy Guidelines 2018

Eni’s Remuneration Policy is  deliberated by the Board of Directors, following a proposals by the Remuneration Committee and defined in accordance with the corporate governance model adopted by the Company as well as with the recommendations of the Italian Corporate Governance Code.  The 2018 Remuneration Policy does not contain substantial changes compared with the policy approved in 2017, with specific reference  to the overall architecture of variable incentive system, and it also describes  the remuneration approved for the 2017-2020 term, for Chairman and Chief Executive Officer, in line with the 2017 Remuneration Policy Guidelines and with the conditions of the 2017-2019 Long-Term Incentive Plan, taking also into  account the  end of the previous restrictions concerning the reduction of remuneration for directors with delegated powers of listed companies controlled, directly or indirectly, by government entities  and the results of comparative remuneration analyses with similar panels.

This page provides guidelines relating to the Remuneration Policy 2018 as applied to the Managers with strategic responsibilities and Non-Executive Directors, in relation to their participation on Board Committees.

Remuneration components purposes, terms and conditions for CEO/GM and for the other managers with strategic responsibilities

Fixed remuneration
Purpose:
Reward the skills, experience and contribution required by the assigned role.
Terms and Conditions:
Verification of the positioning of remuneration is carried out on the basis of benchmarks consistent with the characteristics of Eni and the assigned roles.

 

Short-Term Incentive Plan with deferral - STI
Purpose:
Motivate managers to achieve of annual budget targets in a perspective of medium/long-term sustainability using a three-year deferral mechanism.
Terms and Conditions:
Total incentive assigned as a percentage of fixed remuneration, based on role, and paid annually in the amount of 65% of the amount accrued on the basis of performance achieved the previous year.
Three-year deferral of the remaining 35% of the accrued incentive to ensure sustainability of annual performance over a medium-term time horizon, with payment based on the average of the annual performance figures achieved over the three-year period.
Each target is predetermined and measured in accordance with a performance scale of 70-150 points (target=100), in relation to the weight assigned to each (a score below 70 points implies a performance multiplier of zero). For purposes of the total incentive award, the minimum overall performance is 85 points. Total incentive is calculated using the following formula:

 Short-Term Incentive Plan with deferral - STI

 

where “ITarget“ is the incentive percentage at target performance level.
The Plan conditions state that the total incentive is divided into two portions:

1) a portion paid annually (Iannual) equal to 65% of the total incentive.

 Short-Term Incentive Plan with deferral - STI

 

2) a deferred portion (Ideferred) equal to 35% of the total incentive, subject to further performance conditions during a three-year vesting period, as shown in the diagram below.

 Short-Term Incentive Plan with deferral - STI

 

The deferred portion payable at the end of the vesting period is determined by multiplying the initial deferred portion by the payment multiplier given by the average of the annual multipliers recorded over the three-year period in relation to the performance achieved based on the chart of annual Eni objectives.
The Deferred Incentive (Ideferred) payable at the end of the three-year deferment period is calculated using the following formula:

 Short-Term Incentive Plan with deferral - STI

 

Long-Term Share Incentive Plan 2017/2019 - LTI
Purpose:
Align the behavior of managers critical to the business with shareholder interests and encourage sustainability and long-term value creation.
Terms and Conditions:
The Plan provides for three annual awards of Company shares at the end of a three-year vesting period for each award.

Long-Term Share Incentive Plan 2017/2019 - LTI

The Plan is subject to performance conditions during the three-year vesting period, in accordance with the following parameters and related weightings:

  1. The difference between the TSR of Eni Shares and the TSR of the FTSE MIB index of Borsa Italiana, adjusted by the Eni Correlation Coefficient, compared with the equivalent adjusted TSR measure for each company in the Peer Group, as shown in the following formula (50% weighting):

Long-Term Share Incentive Plan 2017/2019 - LTI

where:
TSRco: TSR of Eni or of one of the companies of the Peer Group;
TSRIDX: TSR of the reference stock market index of the company to which TSRco applies;
ρco,IDX: Correlation coefficient between the financial return of the share and the financial return of the reference market (FTSE MIB, S&P 500, FTSE 100, CAC 40, AEX, OBX)

 

  1. Net Present Value (NPV) of proven reserves vs the Peer Group, measured in terms of the annual percentage change, calculating the average annual performance over the three-year period(50% weighting).

 

The reference Peer Group is described in the section “Market references and Peer Group” section (Anadarko, Apache, BP, Chevron, ConocoPhillips, ExxonMobil, Marathon Oil, Shell, Statoil and Total).
The Plan conditions provide for the annual award of shares for a value equivalent to a definite percentage of the fixed remuneration, using the following formula.

 Long-Term Share Incentive Plan 2017/2019 - LTI

Where the price of the award (PriceAttr) is calculated as the average of the daily official prices (source: Bloomberg) recorded in the four months before the date of the Board of Directors meeting that annually approves the plan rules and the award to the Chief Executive Officer & General Manager.
The granting of shares at the end of the three-year vesting period is determined using a final multiplier to be applied to awarded shares (calculated as the weighted average of the multipliers of each parameter) determined over the vesting period in relation to the position reached in the peer group.
Each multiplier may be between zero and 180%, with a threshold set at median level, in accordance with the scale shown below.

 Long-Term Share Incentive Plan 2017/2019 - LTI


Grantable shares are calculated using the following formula:

 Granted shares

 

For executives 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.


Non monetary Benefits

Purpose:
Retain managers in the company with a total reward approach.
Terms and Conditions:
Defined in national collective bargaining processes and in supplementary Company-level agreements.


Payments due in the event of termination of office or employment

Purpose:
Protect the Company from potential litigation associated with terminations.
Terms and conditions:
Such clauses provide for possible supplementary payments in the event of termination of office or employment for executives defined as up to a specific amount or a specific number of years of annual remuneration, consistent with the remuneration received and the performance achieved, as also governed by the recommendation in application criterion 6.C.1. , letter g, of the Italian Corporate Governance Code.


Non-competition agreements

Purpose:
Safeguard the Company from competitive risks
Terms and conditions:
Non competition clauses for cases of termination presenting high competitive risks relating to the nature of the position, determined on the basis of the remuneration received and the duration and the scope of the agreements.

Chairman of the Board of Directors

Market references

Positioning of remuneration is assessed by comparing similar roles in the Top Italy Panel, which is composed of the main companies listed on the FTSE MIB (Assicurazioni Generali, Atlantia, Enel, Intesa Sanpaolo, Leonardo, Luxottica, Mediaset, Mediobanca, Poste Italiane, Snam, Terna, TIM and Unicredit).

 

Fixed Remuneration

Remuneration defined in line with the decisions taken by the Shareholders’ Meeting on 13th April 2017 and the Board of Directors on 19th June 2017, taking account of the outcome of the comparative analyses of remuneration related to median levels in the benchmark market and the complexity of the position, and totally equal to €500,000 gross, which includes €90,000 gross for the position and for remuneration for exercise of delegated powers of €410,000 gross.

 

Provides also for a life insurance policy and a permanent disability insurance policy covering injury or illness contracted in the workplace or elsewhere.

 

Payments due in the event of termination of office or employment

No specific severance payments are envisaged for the Chairman, nor do any agreements exist for indemnities in the case of early termination of office.

Chief Executive Officer and General Manager

Market references

Positioning of the Company’s remuneration is assessed by comparing similar roles only in the international Oil & Gas sector, with regard to upstream activities in particular and in line with the company’s strategy to increase its focus on this segment of the business. More specifically, the comparator group includes the main listed companies in the Oil & Gas sector, which are Eni’s competitors at the international level and possess comparable business characteristics (Anadarko, Apache, BP, Chevron, ConocoPhillips, ExxonMobil, Marathon Oil, Shell, Statoil and Total).

 

Fixed remuneration

Annual fixed remuneration approved by the Board of Directors on 19th June 2017 for the position of Chief Executive Officer and General Manager totals €1,600,000 gross, which includes: i) annual remuneration of €600,000 gross for the position of Chief Executive Officer, including annual remuneration of €80,000 gross for the position of member of the Board as approved by the Shareholders’ Meeting of 13 April 2017; ii) a base salary of €1,000,000 gross for the executive employment relationship as General Manager. This remuneration encompasses any emoluments due for participation in the meetings of the boards of directors of other Eni subsidiaries and/or shareholdings.

Short-Term Monetary Plan with deferral

Target level of share of incentive payable in the year (65%) is equal to 98% of fixed remuneration (min 83% and max 146%); target level of the deferred portion (35%) of the total incentive is equal to 68% of fixed remuneration (min 38% and max 181%).

 

2018 targets for CEO/GM:

  1. Financial performance (25%): EBT and free cash flow
  2. Operating performance and sustainability of financial performance (25%): hydrocarbon production and exploration resources
  3. Environmental sustainability and human capital (25%): CO2 emissions and Severity Incident Rate (SIR)
  4. Financial efficiency and strength (25%): ROACE and Debt/EBITDA

 

2018 targets for 2019 short term incentive plan with referral

 

 

Long-Term Performance Share Plan

Participation in Long Term Share Incentive Plan 2017-2019 (LTI) with three annual awards starting in 2017:

  • annual award of shares for a value equivalent to 150% (Itarget) of total fixed remuneration;
  • granting of shares at the end of each three-year vesting period, determined using a final multiplier to be applied to awarded shares (calculated as the weighted average of the multipliers of each parameter) determined over the vesting period in relation to the position reached in the peer group; each multiplier may be between 0 and 180%, with a threshold set at median level.

 

                With reference to long-term incentives, in the event of early termination for the Chief Executive Officer and General Manager, due to resignation and not justified by a substantial reduction in powers or of dismissal for cause, all rights to the award and payment of incentives shall lapse. In the event of termination related to expiry of the term on the Board of Directors without renewal, the long-term incentives awarded during the term shall vest in accordance with the terms and conditions established by the respective regulations.

 

Non monetary Benefit

- Supplementary pension scheme

- Supplementary healthcare scheme

- Insurance

- Automobile for business and personal use

 

Payments due in the event of termination of office or employment

As  more in detail described in the Remuneration Report 2018, in case of the event of termination of office or employment,  the following payments are envisaged:

  • An indemnity for the administrative relationship in the event of dismissal without cause and/or non-renewal of the office, including in the event of resignation due to a substantive reduction of delegated powers. This indemnity has been set at two years of fixed remuneration for the position, for a total of € 1,200,000, in accordance with European Commission Recommendation no. 385 of 30 April 2009;
  • An indemnity in the event of the consensual termination of the executive employment relationship, defined equal to two years of annual fixed and variable remuneration for the General Manager position, excluding the Long-Term Share Incentive Plan, in accordance with the company parameters and policies, taking due account of the provisions of the appropriate national collective bargaining agreement.
    In reference to criterion 6.C.1.g of the Italian Corporate Governance Code, this indemnity is not due in the event of dismissal for “just cause” under Art. 2119 of the Italian Civil Code, or in the event of resignation as Chief Executive Officer prior to the expiry of the term in office, not justified by a reduction of delegated powers, or in the event of death as governed by Art. 2122 of the Italian Civil Code and dismissal from the role of Chief Executive Officer for just cause.
  • In order to safeguard the company’s interests from potential competitive risk, a non competition agreement has been maintained, which can be activated at the sole discretion of the Board throughout the exercise of an option right,  with payment defined in a fixed and in a variable component, based on current remuneration levels, on period of validity (12 months post termination) and on the extension of restricted markets and Countries : i) fixed component in the amount of €1,800,000; ii) variable component to be determined by the Board of Directors, based on a recommendation by the Remuneration Committee, in line with the average annual performance over the previous three years, as follows: for performance below the target, this component will be equal to zero; for performance on target, it will be €500,000; and for maximum performance, it will be €1,000,000. The average annual performance shall be calculated on the basis of annual performance achieved under the Short-Term Monetary Incentive Plan.


CEO/GM Pay Mix


Pay Mix

Managers with strategic responsibilities

Market references

The positioning of remuneration is assessed by comparing roles with the same level of managerial responsibility and complexity in national and international panels of companies within the industrial sector.

 

Fixed remuneration

Fixed remuneration is based on roles and responsibilities assigned taking into consideration a graduated and a generally median to below-median positioning versus national and international executive markets for comparable roles. It may be updated periodically, during the annual salary review for all managers.

Given current market comparators and trends, the 2018 Guidelines provide for a selective approach to salary reviews, while maintaining appropriate levels to ensure competitiveness and motivation.

 

Short-Term Monetary Plan with deferral

Business and individual targets are consistent with those assigned to the CEO/GM, consistent with the responsibilities of the role and the provisions of the Company’s Strategic Plan. Target levels of incentive for Short-Term Variable Incentive Plan differ depending on the role’s level of responsibility and complexity (up to a maximum of 100% of fixed remuneration), with a maximum incentive level payable for the annual and deferred portions of 98% and 121% of fixed remuneration, respectively.

 

Long-Term Performance Share Plan

Participation in Long-Term Incentive Plan ILT 2017-2019, with  the value of the shares to be awarded each year differs depending the level of their role and is limited to a maximum of 75% of fixed remuneration, with the maximum award corresponding to 135% of fixed remuneration, calculated with reference to the award price of the shares.

 

Non monetary Benefit

- Supplementary pension scheme

- Supplementary healthcare scheme

- Insurance

- Automobile for business and personal use

 

Payments due in the event of termination of office or employment

Severance benefits for employment termination established by law and applicable national collective bargaining agreements, together with any termination indemnities agreed on an individual basis, in accordance with the criteria established by Eni for cases of early termination, within the limits of protections envisaged by applicable national collective bargaining agreements and consistent with application criterion 6.C.1, letter g) of the Italian Corporate Governance Code.

 

Non-competition agreements

 For cases of termination that present high competitive risks relating to the nature of the position, agreements may contain additional non-compete clauses with payments defined in relation to remuneration level, scope, duration and effectiveness of the agreements.

Pay mix

Non-Executive Directors

Market references

Positioning of remuneration is assessed by comparing similar roles in the Top Italy Panel, which is composed of the main companies listed on the FTSE MIB (Assicurazioni Generali, Atlantia, Enel, Intesa Sanpaolo, Leonardo, Luxottica, Mediaset, Mediobanca, Poste Italiane, Snam, Terna, TIM and Unicredit).

 

 

Remuneration for participation in board committees      

Adjustment of the additional annual remuneration  for participating on Board Committees in line with the median levels in the reference market, taking due account of the commitment in terms of frequency and duration of meetings:

- for the Control and Risk Committee, remuneration of 70,000 euros for the Chairman and 50,000 euros for other members;

- for the Remuneration Committee and the Sustainability and Scenarios Committee, remuneration of 50,000 euros for the Chairman and 35,000 euros for other members;

- for the Nomination Committee, remuneration of 40,000 euros for the Chairman and 30,000 euros for other members.

 

Payments due in the event of termination of office or employment

No specific severance payments are envisaged, nor do any agreements exist for indemnities in the case of resignation or early termination of office.

Read also

Remuneration: governance, purpose and summary indicators

The role of Shareholders' Meeting, Board of Directors and Remuneration Committee in the remuneration process.

Remuneration: records archive

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