Role of the Board of Directors

The Company’s Board of Directors holds a crucial role in its organization. It has strategic and organizational functions and responsibilities with respect to the Company and the Group. It is also responsible for verifying that the necessary controls are in place to monitor the performance of the Company and its subsidiaries.

In addition to exercising the powers that are attributed to it by the Law, the Company’s Bylaws (Article 21.1), according to the law, attributes the Board the competence to resolve on issues pertaining to the Shareholders’ Meeting that can determine amendments to the Bylaws as previously described in “Bylaws amendments.” Within the limits as per Article 2381 of the civil code, the Board of Directors may delegate its tasks to an executive committee and/or to one or more of its members (Article 22.1 of the Bylaws).

In this context and in compliance with the Law and the provisions of specific resolutions, and considering the provisions of Article 1 of the Governance Code, the Board of Directors carries out the following:

  • delegates and revokes powers to one or more Directors, defining the content, limitations and methods of such powers.
    The current structure of the Board of Directors provides for only one CEO. The powers currently assigned to him give the CEO the widest powers for the administration of the Company, except for those assigned by the Law or the Bylaws or reserved for the Board of Directors by its resolutions (Article 1.C.1, letter c) of the Governance Code);
  • receives, similarly to the Board of Statutory Auditors, constant and exhaustive updates from the CEO on activities performed during the year in compliance with powers, through specific quarterly reports. In particular, with respect to all significant transactions carried out by the Company and its subsidiaries (including any related party transactions of lesser importance as identified in the specific Procedure adopted by Terna, and which are not exempt from application of the same, which do not require approval by the Board of Directors) the CEO reports to the Board of Directors on the (i) characteristics of the transactions, (ii) the parties involved and their relationship with the Company or its subsidiaries (Article 1.C.1, letter c) of the Governance Code);
  • on the basis of the proposals by the specific Committee, approves Company Policy concerning remuneration of members of administration bodies, general directors and executives with strategic responsibilities, which is then submitted to the Shareholders’ Meeting for an advisory vote, and after having heard the Board of Statutory Auditors, determines the remuneration of the CEO and of other Directors covering special offices (Article 1.C.1, letter d) of the Governance Code) which it indicates annually in a specific report;
  • evaluates the adequacy of the general organizational, administrative and accounting structure of the Company and its subsidiaries that hold strategic importance (in compliance with the Board’s Resolution of February 22, 2007, these are: a) subsidiaries listed on regulated markets and b) subsidiaries that have a significant foreign market share in the Group’s core business), with specific reference to the Internal Control System, whose guidelines are defined by the Board, and to the management of conflicts of interest (Article 1.C.1, letter b) of the Governance Code). The adequacy and actual operation of the Terna Group’s Internal Control System is reviewed at least on an annual basis. With regard to this matter, reference should be made to section XI;
  • examines and approves strategic, business and financial plans. In this respect, the current structure of Company powers provides that, in particular, the Board of Directors approves the Company’s annual budget and long-term plans (which include the combined annual budgets and long-term plans of the subsidiaries) (Article 1.C.1, letter a) of the Governance Code);
  • defines the Corporate Governance system within the Company, provides for the appointment, role definition and rules of the Board’s Internal Committees (Article 1.C.1, letter a) of the Governance Code);
  • examines and approves transactions with a significant impact on the Company’s financial position and results, especially if they are related party transactions or could otherwise give rise to a potential conflict of interest. In particular, the following transactions, inter alia, are submitted to the Board of Directors in advance “significant transactions” carried out also through subsidiaries (i) for which the underlying item, consideration, method or timing could have an impact on safeguarding the Company assets or the completeness and accuracy of Terna’s accounting and other information which require Terna to disclose to the public an informative document in compliance with the supervisory authorities of financial markets and/or (ii) transactions for more than 50 million euros, except for those approved in the budget and in financial plans as well as in agreements relating to dispatching and all other related services. Furthermore: subscription of loans, granted and received, of any type, medium and long term, for an amount exceeding 100 million euros that were not included in the approved budget and financial plans and not aiming at implementing measures that were already approved by the Board in the Electricity Transmission Grid’s Development Plan and/or in the Strategic Plan (Article 1.C.1, letter f) of the Governance Code);
  • resolves regarding the establishment of new companies, the purchase and transfer of shares in companies, namely in companies or company branches with a value exceeding 30 million euros (Article 1.C.1, letter a) of the Governance Code);
  • assesses the general performance of Company operations, with specific reference to situations of conflict of interest, on the basis of the information received from the CEO and the Internal Control Committee, periodically checking that planned results have been achieved (Article 1.C.1, letter e) of the Governance Code);
  • at least once a year, evaluates the size, composition and performance of the Board of Directors and its committees (Article 1.C.1, letter g) of the Governance Code);
  • reports to the shareholders during the meeting.

The activities of the Board of Directors are coordinated by the Chairman. The latter summons the Board’s meetings, sets the agenda upon request by the CEO and guides meeting’s running, making sure that the Directors are timely provided with the documentation and the necessary information so that the Board can consciously express on the matters submitted to examination. Moreover, he verifies compliance with resolutions, chairs the meeting and – in the same way as the CEO – has powers of legal representation of the Company.