The Board of Statutory Auditors, pursuant to Article 149 of Law Decree No. 58/1998, monitors: compliance to the law and the Articles of Association; that management principles are correctly adhered to; the adequacy of the Company organisational structure, the internal control system and the administrative/accounting system, and the reliability of the latter to clearly reflect the Company’s position; the implementation of corporate governance regulations contained in the Codes of Practice issued by Stock Exchange management companies and/or professional associations, which the Company has made a public declaration to adhere to; the adequacy of directions given by the Company to its subsidiaries. The Board of Statutory Auditors, in its capacity as the Committee for Internal Audit and the Audit of accounts, carries out the duties provided in Article 19 of Legislative Decree No. 39/2010. Pursuant to the latter, the Board of Statutory Auditors submits a documented proposal to the Shareholders’ Meeting concerning the granting of auditing responsibilities as well as remuneration for the external auditors, and, in case of revocation of the external auditors’ mandate by the Shareholders’ Meeting, must be consulted in advance. Whenever a Statutory Auditor has a vested interest, on his own or a third party’s behalf, in a certain transaction entered into by the Issuer, they shall promptly inform the other Statutory Auditors and the Chairman of the Board of Directors detailing the nature, terms, origin and size of their interests. As part of their remit, Statutory Auditors may ask the Internal Audit department to audit specific areas of business and/or Company operations. The Board of Statutory Auditors and the Audit and Risk Committee exchange can rely on a timely and prompt exchange of information they deem relevant in the fulfilment of their duties.
The Board comprises three Statutory Auditors and two Alternate Auditors, appointed by the Shareholders on May 4, 2011. The term of office for Statutory Auditors is three years and will expire at the Shareholders’ Meeting called to approve the Financial Statements at December 31, 2013.
Pursuant to Article 27 of the Articles of Association, Statutory Auditors are appointed from voting lists; one Statutory Auditor and one Alternate Auditor are appointed from the list put forward by the minority Shareholders. The filing, presentation and publication of lists are governed by Article 19 of Articles of Association and Consob regulations vis-à-vis appointments of management and control bodies, the same regulations governing the appointment of members of the Board of Directors.
Lists are structured in two sections: the first comprises candidates for the office of Statutory Auditor, the second candidates for the office of Alternate Auditor. Lists that, considering both sections, present three or more candidates for the appointment of the majority of members to the Board of Statutory Auditors, must include, in the list of Statutory Auditors, candidates of both genders in order to comply with current gender balance legislation. Should the Alternate Auditors’ section feature two candidates, these will have to be of different genders.
Two Statutory Auditors and one Alternate Auditor are selected from the list which receives the majority of votes. The remaining Statutory Auditor and Alternate Auditor are selected by allocating each candidate a ratio, obtained by dividing the votes received by each list by the progressive number of Statutory Auditors still to be appointed. In the event that more than one candidate obtains the same ratio, the candidate on the list with no Auditors yet appointed or on the list with the lowest number of Auditors appointed will be elected. If these lists have yet to elect a Statutory Auditor, or if they have already appointed an equal number of Auditors, the candidate on the list with the highest number of votes will be appointed. In the case of another tie, the Shareholders’ Meeting will vote again, but only amongst the candidates under ballot, and the candidate who receives the majority of votes will be elected.
The Shareholders’ Meeting appoints the Chairman of the Board of Statutory Auditors from the list put forward by the minority Shareholders. Should the procedure for the appointment of Statutory Auditors fail to meet the requirements of regulations on gender balance, the ratio of votes is calculated for each candidate taken from the Statutory Auditors sections of the various lists, by dividing the votes received by each list by the order number of each candidate. The candidate of the most represented gender with the lowest ratio amongst candidates from all lists is replaced, by the candidate from the least represented gender with the higher order number in the same Statutory Auditors section of the list of the replaced candidate, or in the Alternate Auditors section of the same list of the replaced candidate (in this case, the latter replaces as Alternate Auditor who took his place). If by doing so the gender balance legislation is still not met, the candidate is replaced by a person appointed by the Shareholders’ Meeting through a majority vote as required by law, so as to ensure that the composition of the Board of Statutory Auditors is compliant with the law and the Articles of Association. If candidates from different lists obtained the same ratio, the candidate from the list which has appointed the greater number of Statutory Auditors is replaced, or the candidate from the list that obtained the fewest votes, or, if votes are equal, the candidate who obtains the fewest votes by the Shareholders’ Meeting in an ad-hoc ballot.
If, for any reason, Statutory Auditors cannot be appointed by the aforementioned procedures, the Shareholders’ Meeting shall see to the appointments through a majority vote as required by law, so as to ensure that the composition of the Board of Statutory Auditors is compliant with the law and the Articles of Association.
In the event of the replacement of an Auditor from the list that has received the majority of votes, the Alternate Auditor from the same list fills the vacant position; in the event of a replacement of an Auditor from other lists, the Alternate Auditor from those lists fills the vacant position. If the replacement fails to meet gender balance requirements, the Shareholders’ Meeting must be called promptly to ensure compliance with this legislation.
This voting procedure from lists is only applicable whenever the entire Board of Statutory Auditors is replaced. Pursuant to Article 144-quater, letter b) of Issuers’ Regulations, lists may be presented by Shareholders who, individually or with others, hold shares amounting at least to 1% of the share capital.
Lists enclose declarations by each candidate stating that they meet the integrity and independence requirements (see Article 148, paragraph 3 of Law No. 58/1998) provided by law alongside their professional résumé.
The Shareholders’ Meeting convened on May 4, 2011, appointed a new Board of Auditors comprising of the Chairman Mario Busso, the Statutory Auditors Fabrizio Gardi and Adriano Propersi and the Alternate Auditors Giulio Gamba and Paolo Sfameni. On December 6, 2011 the Alternate Auditor Giulio Gamba, following the death of Fabrizio Gardi, had taken over the office of Statutory Auditor. The General Shareholders’ Meeting held on April 27, 2012, in compliance with regulations on gender balance in Boards of Directors and Control Bodies of listed companies (Law No. 120 of July 12, 2011, and Consob Regulation No. 18098 of February 8, 2012) effective from August 12, 2012, through amendments of Articles 19 and 27 of Articles of Association and the introduction of Article 31 (transitory clause), appointed Anna Gervasoni as Statutory Auditor and Giulio Gamba as Alternate Auditor.
Article 27 of the Articles of Association states that Statutory Auditors must be in possession of the requisites as per current legislation, in particular Decree No. 162/2000; in compliance with the decree, the Articles of Association provide that the following fields are pertinent to the Company’s activities: commercial law, business administration and management, the engineering and geology sectors. All of Saipem’s Statutory Auditors are members of the Register of Certified Auditors.
In compliance with the provision of the Corporate Governance Code aimed at ensuring that Statutory Auditors meet the independence requirements following their appointment (a similar provision applies also to Board Directors), the Board of Statutory Auditors assesses annually, through their own declarations, that all its members meet the independence requirements.
Statutory Auditors are provided in advance with documents pertaining to items to be discussed and/or resolved on at Board meetings. For this purpose, amongst others, the Board of Statutory Auditors has a Secretary. This role was held by Alessandro Riva, who is currently responsible for Saipem Integrated Risk Management project. In 2013, he was replaced by Simone Negri, a Saipem employee. The Board of Statutory Auditors ensured the independence of the external auditors, ascertaining that they met all legal requirements and evaluating the nature and size of services other than accounting audits they provided to the Company and its subsidiaries directly, or through associated companies.
The Board of Statutory Auditors liaised closely with the Internal Audit department and the Audit and Risk Committee, attending Committee meetings and inviting the Internal Audit Senior Vice President to its own meetings.
The Chairman of the Board of Statutory Auditors attends the meetings of the Compensation and Nomination Committee.
Meetings of the Board of Statutory Auditors may be held via video or tele-conference link.
The Board of Statutory Auditors of Saipem SpA convened 45 times during 2013, with meetings lasting on average 3 hours and 42 minutes. Meetings were attended by an average of 89% of Statutory Auditors, while Board meetings were attended by an average of 94% of Statutory Auditors.
In 2014, as of the date of this report, the Board of Statutory Auditors has already met on five occasions.
Main activities carried out by the Board of Statutory Auditors in 2013 included:
- review of the Integrated Risk Assessment System organised by the Internal Audit function;
- approval of the Annual Audit Plan;
- review and evaluation of results of Internal Audit activities;
- meetings with the Company’s top financial managers, the partner of the external Auditors to review the main items of the 2012 and 2013 financial statements;
- periodic exchange of information with the external Auditors;
- periodic exchange of information and coordination with Eni’s Audit department, since Saipem is subject to Eni’s direction and control;
- monitoring the development of the Internal Audit operating module;
- acknowledging the measures implemented by the Company to comply with Law Decree No. 231/2001, paying particular attention to the compliance, training and analysis of sensitive processes;
- in-depth review of the risk assessment and management within the Saipem Group and monitoring the implementation of the Integrated Risk Management project;
- acknowledging the organisational structure and power allocation at the basis of the decision-making process within the Saipem Group;
- monitoring the measures undertaken by the Company to adjust accounting processes in accordance with IFRS;
- profile evaluation of the candidate for the role of Officer responsible for preparing the Company’s financial reports and of Chief Financial and Compliance Officer of Saipem;
- checking that the Internal Audit Senior Vice President continues to meet the integrity, professionalism, competence and independence requirements;
- evaluating the performance and adequacy of the fixed and variable remuneration structure of the Internal Audit Senior Vice President;
- analysis, at least quarterly, of reports of issues, even in confidential or anonymous form (whistle blowing), that are received by Saipem, assessing their contents and proposed corrective measures;
- carrying out, with the support of an external consultant, a gap analysis of the internal audit and risk management system against the Corporate Governance Code, to find possible areas of action and improvement;
- reviewing a new Company procedures related to the management of judicial proceedings;
- monitoring the Company’s review of the structure of some anti-corruption procedures;
- reviewing the Company’s new procedure for whistleblowing notifications;
- monitoring the Company’s procedure on related parties’ transactions;
- driving and monitoring initiatives launched by the Company related to the corporate governance of non-Italian subsidiaries;
- constant monitoring of additional initiatives launched by the Company related to the corporate governance and internal control of the Saipem Group;
- implementing a continuous flow of information with Consob vis-à-vis the controls put in place by the Board of Statutory Auditors;
- constant monitoring of ongoing judicial proceedings and internal audits put in place by the Company, even with the support of external consultants where necessary19.
Pursuant to Article 27 of the Articles of Association, Statutory Auditors may hold positions as members of administrative and control bodies at other companies; however, these are limited by Consob’s Issuers’ Regulations, Article 144-terdecies. In any case, pursuant to the aforementioned regulation, candidates already holding the office of Statutory Auditor at five listed companies may not be appointed as Auditors, and if elected, shall forfeit their office.
Fabrizio Gardi (replaced by Anna Gervasoni), Adriano Propersi (Statutory Auditors) and Giulio Gamba (Alternate Auditor) had been nominated by Eni SpA, obtaining 49.08% of voting capital; Mario Busso (Chairman) and Paolo Sfameni (Alternate Auditor) had been nominated by institutional investors, obtaining 28.44% of voting capital.
Based on information received, we list hereafter the other offices (as Board Directors or Statutory Auditor) held by Saipem’s Statutory Auditors in other companies.
Mario Busso (Chairman)
Chairman of the Board of Statutory Auditors of ‘ERSEL Sim SpA’, ‘Tubiflex SpA’, ‘Quasar SpA’, ‘Fondazione PAIDEIA’, ‘Fondazione Renzo Giubergia’; Statutory Auditor of ‘ERSEL Investimenti SpA’, ‘Permicro SpA’, ‘Millbo SpA’, ‘Sporting Circolo della Stampa’; Alternate Auditor of ‘Mediobanca SpA’ (listed company), ‘Sicme SpA’, Chairman and Treasurer of ERotary Torino N.O.’.
Anna Gervasoni (Statutory Auditor)
Board Director of ‘Banca Generali SpA’ (listed company); Independent Director of ‘SOL SpA’ (listed company), of ‘Fondo Italiano d’Investimento’; General Manager of the Italian Private Equity and Venture Capital Association ‘AIFI’; Member of the Advisory Board of ‘Borsa Italiana SpA’; Member of the Board of Auditors of ‘Eni Foundation’; Director of ‘Centro di Ricerca sui Trasporti e le Infrastrutture (CRMT)’; Member of the result evaluation body of the Foundation at ‘Museo della Scienza e della Tecnologia Leonardo Da Vinci’, of the Scientific Committee for the Annual Report of the Italian Financial System of ‘Fondazione Rosselli’, of ‘Consulta Politecnico di Torino - Sistema Socio-Economico’.
Adriano Propersi (Statutory Auditor)
Chairman of the Board of Directors of ‘IMI Fabi SpA’; Board Director of ‘Banca Popolare di Sondrio’ (listed company); Chairman of the Board of Statutory Auditors of ‘Tecnocasa Franchising SpA’, ‘Tecnocasa Partecipazioni SpA’, ‘Kiron Partners SpA’, ‘Tecnomedia Srl’, ‘Trade & Partners SpA’, ‘La Ducale SpA’, ‘Immobiliare Giulini SpA’, ‘BEA Ingranaggi SpA’, ‘Accademia SpA’, ‘Sviluppo Chimica SpA’, ‘Miba Srl’; Statutory Auditor of ‘Feem Servizi Srl’, ‘Atlas Copco BLM Srl’, ‘Roseto Srl’, ‘Abac Aria Compressa SpA’, ‘Fondazione San Carlo Onlus’.
Giulio Gamba (Alternate Auditor)
Chairman of the Board of Statutory Auditors of ‘Pasubio Group SpA’, ‘IFM Ferrara SCpA’ and ‘Servizi Porto Marghera Scarl’; Statutory Auditor of ‘Venezia Tecnologie SpA’, ‘VEGA Parco Scientifico-Tecnologico di Venezia Scarl’; Single Auditor of ‘EZI Inspection Srl’; Alternate Auditor of ‘Syndial SpA’ and ‘F.lli Mazzon SpA’.
Paolo Sfameni (Alternate Auditor)
Board Director of ‘Investitori SGR SpA’ - Allianz Group, of ‘Allianz Bank Financial Advisors SpA’ - Allianz Group, of ‘Italmobiliare SpA’ (listed company); Statutory Auditor of ‘Pirelli & Tyre SpA’, ‘La Fenice Srl’; Member of the Editorial Committee of ‘Rivista delle società’, of ‘Rivista di diritto pubblico comparato’ and of ‘Rivista di diritto societario’; Academic Member of the European Corporate Governance Institute.
(19) See the ‘Directors’ Report’ in the Annual Report 2013.