Remuneration and other information

This section of the Remuneration Report provides a description of the remuneration policies implemented in 2013 for the Chairman of the Board of Directors, the Deputy Chairman, Non-Executive Directors, the CEO, the outgoing Deputy CEO and Senior Managers with strategic responsibilities.

As verified by the Compensation and Nomination Committee during the periodic assessment required under the Corporate Governance Code, implementation of the 2013 Remuneration Policy was in line with the resolutions taken by the Board of Directors. The Committee’s assessment was that the 2013 Policy was consistent with the relevant market benchmarks in terms of both overall positioning and pay-mix.

Fixed remuneration

The Chairman received remuneration for his office as determined by the Board of Directors meeting of June 16, 2011, applying a principle of continuity with the remuneration structure and amounts set in relation to the previous term. This remuneration includes the fixed remuneration for the office of Director approved by the Shareholders’ Meeting of May 4, 2011.

The Deputy Chairman was paid the fixed remuneration voted on by the Board of Directors on September 6, 2013 on a pro-rata basis starting from the date of his appointment. This included the fixed remuneration for the office of Director approved by the Shareholders’ Meeting of May 4, 2011.

Non-Executive Directors were paid the fixed remuneration agreed by the Shareholders’ Meeting of May 4, 2011, which was unchanged with relation to the previous mandate.

The CEO was paid the fixed remuneration agreed by the Board of Directors on January 8, 2013. This included the remuneration for the office of Director approved by the Shareholders’ Meeting of May 4, 2011.

The outgoing Deputy CEO received the remuneration voted on by the Board of Directors on June 16, 2011, which included the remuneration for the office of Director voted on by the Shareholders’ Meeting.

For Senior Managers with strategic responsibilities, the annual salary review carried out for all senior managers brought selective fixed remuneration adjustments in 2013 in relation to promotions to higher positions and in order to align salaries with market benchmarks. Sums for fixed remuneration and allowances provided under the national collective labour agreement for Senior Managers and under supplementary Company agreements are shown in Table No. 1 of the section ‘Remuneration paid in 2013’.

Remuneration for participation on Board Committees

Non-Executive Directors were paid the remuneration agreed by the Shareholders’ Meeting of June 16, 2011 for participation on board committees.

Remuneration for participation on Board Committees is shown in Table No. 1 of the section ‘Remuneration paid in 2013’.

Variable incentives

Annual variable incentives

Saipem results for 2012 evaluated on a constant currency basis and approved by the Board of Directors at the proposal of the Compensation and Nomination Committee in the meeting held on March 13, 2013 generated a performance score of 78.7 points on the measurement scale employed, where 70 points corresponds to a minimum level performance and 130 to a maximum level performance.

No variable incentive pay-out was due to the CEO as in 2012 he was not working for Saipem. As regards the Deputy CEO and Senior Managers with strategic responsibilities, the 2013 Annual Incentive was paid out on the basis of Company results and a series of individual targets pertaining to the specific area of responsibility, in accordance with the Saipem 2012 Performance Plan.

In terms of the variable remuneration paid out, the performance score translated to:

  • award of an incentive of €210,500 to the outgoing Deputy CEO, equal to 39% of fixed remuneration17, based on a target level of 40% and a maximum level of 52%;
  • the award of bonuses to Senior Managers with strategic responsibilities determined in relation to performance achieved and levels of incentive set in accordance with their roles.

The incentives paid out to the outgoing Deputy CEO and Senior Managers with strategic responsibilities are indicated under the item ‘Non-equity based variable remuneration - bonuses and other incentives’ in Table No. 1 and analysed in detail in Table No. 3 of the section ‘Remuneration paid in 2013’.

Deferred Monetary Incentive Plan

On March 13, 2013, EBITDA for 2012 (on a constant currency basis) was determined by the Board of Directors to be below the target level, as verified and proposed by the Compensation and Nomination Committee.

On this basis, the Board determined the award of a 2013 base incentive of €168,000 (28% of fixed remuneration) to the CEO.

The Board determined the award of a 2013 base incentive of €94,500 (17.5% of fixed remuneration) to the outgoing Deputy CEO.

The base incentives awarded to Senior Managers with strategic responsibilities were determined based on target performance levels which varied according to role, up to a maximum of 17.5% of fixed remuneration.

The base incentives awarded to the CEO, the outgoing Deputy CEO and Senior Managers with strategic responsibilities are shown under the item ‘Bonuses for the year - deferred’ in Table No. 3 of the section ‘Remuneration paid in 2013’.

In addition, the deferred monetary incentive awarded in 2010 to the CEO (awarded by Eni), the outgoing Deputy CEO and other managerial resources vested in 2013. On March 13, 2013, the Board of Directors, at the proposal of the Compensation and Nomination Committee, set the factor to be applied to the base incentive, based on the average Saipem EBITDA for the period 2010-2012, at 110%.

The CEO received an incentive of €120,015 (equal to 127% of the award of €94,500 assigned in 2010 by Eni). The percentage used to calculate the pay-out was determined using a weighted average of Eni and Saipem results over the actual periods in the post at the two companies, in accordance with the regulations of the respective plans.

The table shows the performances achieved during the vesting period:

 2010 award (€ thousand)  Performance during vesting period% incentive2013 pay-out 
DMI  2010 2011 2012 (€ thousand) 
  94.5  Eni on tgt  Eni on tgt  Eni on tgt

Saipem <tgt 
127  120 

The amounts paid out to the CEO, the outgoing Deputy CEO and the Senior Managers with strategic responsibilities are indicated under the item ‘Bonuses from previous years - payable/paid out’ in Table No. 3 of the section ‘Remuneration paid in 2013’.

Long-Term Monetary Incentive Plan

On October 28, 2013, the Board of Directors determined the award to the CEO of a base incentive for the Long-Term Monetary Incentive Plan, as verified and proposed by the Compensation and Nomination Committee, of €300,000, applying the criteria and methods determined by the Board on March 13, 2013. The base incentives awarded to the Senior Managers with strategic responsibilities were determined based on incentive levels which vary according to role, up to a maximum of 35% of fixed remuneration.

The base incentives awarded to the CEO and the Senior Managers with strategic responsibilities are shown under the item ‘Bonuses for the year - deferred’ in Table No. 3 of the section ‘Remuneration paid in 2013’.

In addition, the deferred monetary incentive awarded in 2010 to the CEO (awarded by Eni), the outgoing Deputy CEO and other managerial resources vested in 2013. On July 30, 2013, the Board of Directors, at the proposal of the Compensation and Nomination Committee, set the factor to be applied to the base incentive, based on Saipem’s adjusted net profit + D&A for the period 2010-2012, at 110%. The CEO received an incentive of €2,550 (equal to 2% of the award of €127,500 assigned in 2010 by Eni). The percentage used to calculate the pay-out was determined using a weighted average of Eni and Saipem results over the actual periods in the post at the two companies, in accordance with the regulations of the respective plans.

The table shows the performances achieved during the vesting period:

 2010 award (€ thousand)  Performance during vesting period% incentive2013 pay-out 
DMI  2010 2011 2012 (€ thousand) 
  127.5  Eni 7th place Eni 7th place Eni 7th place

Saipem 3th place
2 3

The amounts paid out to the CEO, the outgoing Deputy CEO and the Senior Managers with strategic responsibilities are indicated under the item ‘Bonuses from previous years - payable/paid out’ in Table No. 3 of the section ‘Remuneration paid in 2013’.

Stock options

As of 2009, Saipem no longer implements stock option plans. For additional information with regard to stock option plans currently in force, whose last awards vested in 2011 (see page 14 of the 2012 Remuneration Report), see the documents published in the ‘Corporate Governance’ section of the Company website, as well as the information contained in the ‘Notes to the 2013 consolidated financial statements’.

(17) The fixed remuneration used to calculate the incentive is composed of the total annual remuneration (€447,500) and remuneration for the office of Chairman of Saipem Ltd (€190,000), less the expatriation allowance (€97,500).

Severance indemnities for end of office or termination of employment

On January 27, 2014, the outgoing Deputy CEO, whose term of office ceased on July 30, 2013 and whose employment as COO Drilling and Business Support continued for the remainder of the year, received amounts due by law and contract for the termination of employment, sums calculated in line with company redundancy policies and €250,000 under a one-year non-competition agreement. The effects of the termination by mutual consent of the employment of the outgoing Deputy CEO on monetary incentive plans in force, pursuant to plan regulations, are shown in the notes to Table Nos. 1 and 3 in the section ‘Remuneration paid in 2013’. Amounts paid in relation to the end of office and/or termination of employment are shown under the item ‘Severance indemnities for end of office or termination of employment ‘ in Table No. 1 of the section ‘Remuneration paid in 2013’.

Benefits

Table No. 1 of the section ‘Remuneration paid in 2013’ shows the taxable value of the following benefits paid in 2013: (i) annual contribution to the supplementary pension fund FOPDIRE; (ii) annual contribution to the supplementary healthcare fund FISDE; (iii) assignment of a Company car for business and personal use for a three-year period (the value stated is exclusive of the contribution paid by the assignee). The value of benefits paid in 2013 to the outgoing Deputy CEO relate to the following: (i) annual contribution to the supplementary pension fund Saipem Group Pension Scheme; (ii) annual contribution to supplementary healthcare funds (BUPA - British Union Provident Association and CIGNA - International Employee Healthcare Plan).