Incentives schemes

When the company’s shares were first listed on the Stock Exchange, a new Compensation
was introduced, designed to align the interests of the management with those of the company and its shareholders, and strengthen their relationship, also in terms of continuity over time.

The new short-term incentives scheme was approved by ERG S.p.A.’s Board of Directors at the meeting held on 12 November 2004 and applied with effect from FY2005.

In 2005, the Remuneration Committee (now the Nominations and Remuneration Committee) once again drawing on the services of qualified experts, developed the new long-term incentive scheme, which was approved by ERG S.p.A.’s Board of Directors at its meeting on 5 August 2005.

The short- and long-term incentive schemes are described below.

Short-term incentive scheme

The short-term incentive scheme is based on certain key objectives that can be summarised as follows:

  • introducing a single incentive scheme that includes both company and personal performance;
  • defining a market-related benchmark bonus for each scheme participant;
  • measuring individual performance according to a consistent system of goals and indicators;
  • evaluating company performance in terms of value created/destroyed

Long-term incentive scheme

The key objectives of the long-term incentive scheme, approved, as stated earlier, by the Board of Directors on 5 August 2005, were to:

  • encourage decisions that assure sustainable, enduring value creation
  • avoid risks of “under-investment”
  • increase retention of key people

Considering the fact that the three-year long-term incentive programme illustrated hereinabove had expired (although the options granted under it still remained exercisable), the Nominations and Remuneration Committee, with the assistance of an outside consultant, undertook the study of a possible future long-term incentive plan for the Group's managers.