Policy

Remuneration policy tools and guidelines

TIM Group’s remuneration policy is designed to support the achievement of the objectives set out in the Company’s strategic Plan, while ensuring the Company’s competitiveness on the labor market and its ability to attract, retain and motivate personnel.

The remuneration policy aims at:

adopting an appropriate balance between the performance parameters of the short-term and long-term incentive schemes to achieve the Company’s strategic objectives
making the Company attractive in the labor market, with particular reference to young people
supporting people's engagement
safeguarding the principles of internal equality, including with respect to gender
safeguarding coherence at Group level, while considering the diversity of the markets of reference

The definition of the remuneration policy is supported by the analysis of market practices in terms of both remuneration levels and composition of remuneration packages, taking as reference both companies in the Telco sector at an international level (peer group Industry TLC) and Italian companies, comparable in terms of size and/or stock market capitalization (peer group FTSE MIB).T

The components of individual remuneration are:

Fixed remuneration (which is the only form of remuneration provided for the Directors without specific positions, the Chairman and the Statutory Auditors)
Short term variable remuneration
Long term variable remuneration
Benefits and welfare.

The integration of the various compensation components allows to appropriately balance the monetary and nonmonetary tools, with the aim of increasing the satisfaction of recipients at a sustainable cost.

Activities of the Nomination and Remuneration Committee

The Nomination and Remuneration Committee ensures the implementation of the remuneration policy approved by the Shareholders' Meeting and defines the policy guidelines for the following year.

Among the Committee’s activities, the following may be mentioned:

review of the results of the shareholders' vote on the remuneration policy
fine tuning of the Peer Group adopted as a reference for the definition of the remuneration policy and the updating of the remuneration benchmarks
analysis for the definition of the Remuneration Policy for the following year (short and medium/long-term variable incentive systems)
engagement with leading institutional investors and proxy advisors
finalization of the results of the previous year's performance objectives.

The Committee also deals with issues related to

young people and generational turnover in TIM, monitoring the incentive system for millennials in critical roles
gender gap and inclusion, through analysis and monitoring activities.

Top management

Non-Executive President

The remuneration package for the Chairman only consists of a fixed component, as determined by the Board of Directors on 28 April 2021 (upon the proposal and with the approval of the Nomination and Remuneration Committee) and is set at the gross amount of 600,000 euros per annum. The Chairman does not receive any remuneration for the office of Director or member of the Sustainability Committee (pursuant to Art. 2389, subsection 1 of the Italian Civil Code). The Chairman does not enjoy any severance treatment nor benefits; he is entitled to the reimbursement of the expenses incurred in the performance of his duties, in accordance with the Bylaws.

Chief Executive Officer

Please find below a description of the remuneration package attributed to the Chief Executive Officer and General Manager, as established by the Board of Directors (upon the proposal and with the approval of the Nomination and Remuneration Committee) with reference to the position of General Manager and to the office of Chief Executive Officer.

Fixed component

The fixed remuneration for the Chief Executive Officer is set at a gross annual amount, divided between the remuneration for the executive position and the remuneration for the office of Chief Executive Officer.

The Chief Executive Officer does not receive remuneration for the office of Director, nor as a possible member of Committees.

Short-term variable component

For each financial year, the Chief Executive Officer is assigned a short-term variable component (MBO), linked to the achievement of the objectives set annually by the Board of Directors, corresponding to a target of 100% of the fixed remuneration; each objective is measured individually, with a parametric scale.

Long-term variable component

The Chief Executive Officer is a beneficiary of the 2022-2024 Stock Option Plan. For further details, please see the relevant information document.

Severance payment

As per policy, in the event of termination of the Chief Executive Officer position without just cause or resignation for just cause, anticipated with respect to the natural expiration of the directorship relation, or in the event of a change of control (i.e. any extraordinary operation involving a change of control of the Company pursuant to Article 2359 of the Civil Code), the CEO is entitled to an indemnity equal to the remuneration due for the office will be paid until the natural expiration of the mandate, with a maximum of 24 months' salary (calculated as the sum of fixed and MBO components).With respect to the withdrawal by the Company from the employment contract in the absence of just cause or resignation for just cause or in the event of a change of control (i.e. any extraordinary operation involving a change in control of the Company pursuant to Article 2359 of the Italian Civil Code), the CEO, in the position as General Manager, will be entitled to the severance payment established by the law and by the applicable CCNL (National Labour Contract), with recognition of additional monthly payments up to a maximum of 24 (calculated on the fixed component)

Clawback

In the three years following the payment of the bonus of the variable remuneration components, a clawback clause for the amounts paid may be activated, as per policy.

Benefits and welfare

In relation to their managerial role, the Chief Executive Officer enjoys the benefits specified for the management of the Company (health insurance cover through the TIM Group Executives supplementary healthcare assistance; supplementary pension cover through membership of the TIM Group Executive complementary pension fund; insurance cover for work-related and non-work-related accidents, life and invalidity benefit due to illness; a company car for mixed use; check-up). The Chief Executive Officer also benefits of the "professional risks insurance policy" entered into by the Company and applying to all Directors & Officers. Coverage of housing costs at the workplace is also envisaged for the entire duration of the employment relationship.

Key Managers with strategic responsibilities

The structure of the remuneration package for Key Managers with Strategic Responsibilities, excluding the Chief Executive Officer, is set out as follows:

Fixed component

Fixed remuneration of the Key Managers is in line with the market median, with the possibility of targeting even higher values, with selective adjustment criteria

Short-term variable component (MBO)

Key Managers benefit of an annual incentive plan, with a target pay opportunity equal to 50% of their fixed remuneration.

For further details, please refer to the Report on remuneration and compensation paid published yearly by the Company.

Long-term variable component

The Key Managers with Strategic Responsibilities were beneficiaries of the 2022-2024 Stock Option Plan described in the Remuneration Report. For further details, please see the relevant information document and the Report on remuneration and compensation paid published yearly by the Company.

Severance and Non-competition package, benefits and lump sum

The treatments provided for by the law and the CCNL are applied. The additional allowances may not exceed 24 months’ salary (calculated as the sum of the gross annual pay and the MBO).

In the event of termination of the employment relationship without just cause for dismissal or – for some managers – in the event of a change of control (or any extraordinary operation involving a change of control of the Company pursuant to Article 2359 of the Italian Civil Code), the Chief Executive Officer will be responsible for identifying the managers that – due to the importance and strategic nature of the role covered – may receive severance pay, to which a non-competition agreement may be associated, depending on the importance and strategic nature of the role covered, equal to their salary for a maximum period of one year, calculated on the fixed remuneration.

Key Managers enjoy benefits similar to those envisaged for general corporate management: a company car for mixed use, insurance cover for work-related and non-work-related accidents, life and invalidity benefit due to illness;), supplementary health coverage, supplementary pension fund and check-up. The Company is also covered by a "professional risk policy" for all its Directors & Officers.

The assignment of bonuses unrelated to performance objectives is excluded. The Company exceptionally reserves the right to pay lump sums during the hiring phase in order to facilitate the acquisition of resources possessing specific skills deemed essential for the achievement of the strategic business objectives and who have accrued the right to specific remuneration treatments delayed by their previous employers.

Directors

The overall annual remuneration of the Board of Directors pursuant to art. 2389(1) of the Italian Civil Code was established by the Shareholders’ Meeting on 23 April 2024 in a maximum gross amount of 1,300,000 euros.

The Board of Directors held on 24 April 2024 allocated such remuneration, assigning a gross fixed annual amount of 100,000 euros to each Director (excluding the President and the Chief Executive Officer; please see the relevant sections of TIM’s website. There is no remuneration linked to the Company’s results, nor severance pay.

The Board of Directors has also established the remuneration for the Directors’ participation to the Committees; the related composition is described in the relevant section of TIM’s website.

The remuneration policy, intended as the set of principles and tools adopted to define the compensation packages of Directors and Key Managers involves the following Company’s Bodies.

Shareholders' Meeting

It determines the remuneration of the Board of Directors as a whole, with the exception of the Directors holding special offices, the Statutory Auditors and the Chairman of the Board of Statutory Auditors
It casts a binding vote on the first section and a non-binding vote on the second section of the Remuneration Report
It approves remuneration plans based on the assignment of financial instruments.

Board of Directors

It defines and updates the remuneration policy over time, approving the relevant derogations when exceptional circumstances arise
It resolves on the allocation of the remuneration assigned by the Shareholders' Meeting to the Board of Directors (when a total amount is established for the Board as a whole)
It determines the remuneration of Directors holding specific offices
It defines the performance targets and objectives of the Executive Directors and assesses their achievement, for the purposes of the short and long-term incentive systems
It defines the remuneration of the Heads of the corporate Control Departments (Audit and Compliance)
It makes proposals to the Shareholders' Meeting on the remuneration plans providing for the assignment of financial instruments
It prepares the Report on the Remuneration Policy and compensation paid.

In order to ensure that the resolutions regarding remuneration are appropriately instructed, the Board of Directors is supported by the Nomination and Remuneration Committee.

Nomination and Remuneration Committee

It proposes to the Board of Directors the criteria for the allocation of the total remuneration established by the Shareholders’ Meeting for the Board of Directors as a whole and the remuneration of Directors holding specific offices
With the support of the competent corporate functions, it reviews the remuneration policy for managers and, in particular, Key Managers
It examines proposals made to the Board of Directors for remuneration plans based on financial instruments
It assesses the appropriateness, practical application and consistency of the remuneration policy, also with reference to actual corporate performance, making suggestions and proposals for any corrective measures
It establishes the architecture of the objectives and of the performance targets linked to the variable incentive system and assesses the level of achievement of the variable short and long-term incentive targets by the CEO, applying the measurement criteria determined when such targets were assigned
It issues proposals for temporary derogations from the remuneration policy when exceptional circumstances arise.
It follows the evolution of the relevant regulatory framework and market best practices in the field of remuneration, collecting insights for the design and improvement of the remuneration policy.

Board of Statutory Auditors

It expresses the opinions required by current legislation on the proposed remuneration of Executive Directors holding specific offices.
In accordance with the Company’s Corporate Governance Principles, it expresses its opinion on the remuneration of the Heads of the corporate Control Departments, which is determined by the Board of Directors upon the opinion of the Control and Risk Committee.

Annex n. 7 ter to the Report on remuneration policy and compensation paid, published yearly by the Company, sets out the shareholdings held by all the individuals who held, during the preceding financial year, or a part thereof, the position of member of the Board of Directors, member of the Board of Statutory Auditors, or key manager with strategic responsibilities (for this last category the information is shown in aggregate form).