Annual Accounts and Report as at 30 June 2011 Draft - Mediobanca

At a Board meeting held on 24 June 2011, in exercise of the powers granted tothem, the Directors of Mediobanca revised the stock option scheme to bring it inline with the Instructions, making provision for performance conditions toexercise in addition to those of a purely temporal nature, thereby effectivelytransforming into a performance stock option scheme.The essential characteristics of the scheme, which is for staff with key rolesto the achievement of the Group’s objectives, are: a vesting period of three yearsfrom the award date, subject to the performance conditions being met; an exerciseperiod of up to the end of year 8 (three years’ vesting plus five years’ exercise); aholding period of at least 18 months for Mediobanca shares corresponding to atleast half of the capital gain achieved, irrespective of any tax issues, for certainparticipants in the scheme who perform significant roles. Stock options awardedcan be exercised based on the performance conditions for each of the three yearsof the vesting period being met. In each year the performance conditions must bemet for one-third of the stock options awarded. Failure to meet the performanceconditions in any one year will result in the relevant share being cancelled. Theperformance conditions are identified in the remuneration policies in force at thetime.i. Remuneration structure for staff employed in control and supportcapacitiesThe remuneration package for the Head of company financial reporting, theheads of the internal control units (Internal audit, Compliance and Riskmanagement), the head of Human Resources and the most senior staff in theareas referred to above is structured so as to ensure that the majority of thecompensation is fixed, with a small variable component to be revised on a yearto-yearbasis in view of quality and efficiency criteria. The remuneration of theheads of these offices (with the fixed component comprised in a range frombetween 75% and 85% of their total compensation), which may be reviewedannually, is approved by the Board of Directors subject to the RemunerationsCommittee’s favourable opinion.In general the remuneration of individuals employed in staff and supportareas is determined based on positioning relative to the reference market(gradated according to the value of the staff, their role and the retention strategiesin place). The variable component for such staff, which is normally of modestproportions, tends to increase on the basis of the quality of individualperformance rather than in relation to the Group’s earnings.– 503