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Role of the Board of Directors

Board meetings in 2008: 10 (of which 8 subsequent to the election of the new board by the shareholders’ meeting on April 14, 2008)

Average length of meetings: 3 hours
Attendance rate (new board): 93.5% (100% for the independent directors)
Number of meetings planned for 2009: 7

Telecom Italia’s Self-Regulatory Code reserves an active role to the Board of Directors both in the strategic guidance of the Company and in the control of operations, with the full Board empowered to formulate strategy and responsible for intervening directly in decisions having the greatest impact on the activity of the Company and the Group. In particular, the tasks of the Board of Directors include:

  • examining and approving strategic, business and financial plans and the budget;
  • examining and approving strategic transactions;
  • verifying the adequacy of the organizational, administrative and accounting structure, with special reference to the internal control system;
  • preparing and adopting the Company’s corporate governance rules and drawing up the Group’s governance guidelines;
  • specifying the limits to delegated powers, the manner of exercising them and the frequency with which bodies with such powers must report on the activity performed in exercising them;
  • nominating the persons who are to hold the offices of Chairman and CEO in strategic subsidiaries;
  • assessing the overall performance of operations and periodically comparing the results achieved with those planned.

The strategic transactions to be submitted to the Board for its prior approval include:

  • agreements with competitors of the Group that, owing to the subject, the commitments, the conditionings and the limits capable of deriving from them, have a lasting influence on the freedom of strategic business choices;
  • deeds and transactions that entail the entry into (or exit from) geographical and/or product markets;
  • business investments and disinvestments exceeding euro 250 million;
  • purchase and sale deeds referring to companies or business units that are of strategic significance in the overall framework of the business or exceed euro 250 million;
  • purchase and sale deeds of controlling or affiliation shareholdings exceeding euro 250 million or (even if less) in companies carrying out activities included in the core business of the Group, and the conclusion of contracts for the exercise of rights attaching to such shareholdings;
  • the taking out of loans and the granting of loans and guarantees in favour of non-subsidiary companies for amounts exceeding euro 250 million;
  • transactions referred to above to be carried out by unlisted subsidiaries of the Group, except for subsidiaries of listed subsidiaries;
  • the listing on (delisting from) European and non-European regulated markets of financial instruments issued by the Company or companies belonging to the Group;
  • the instructions to be given to listed subsidiaries (and their subsidiaries) in the performance of the Parent Company’s direction and coordination function in relation to the carrying out of transactions having the characteristics referred to above.

In light of the effective Group operations, the Board of Directors meeting of February 27, 2009 amended its Self Regulatory Code increasing the threshold for the Board’s decision on the receiving of loans and guarantees to Euro 500 million.

The assessment of the performance of operations is based on a continuous flow of information coordinated by the Chairman of the Board of Directors and directed towards the non-executive directors and the members of the Board of Statutory Auditors. Assessments are made at intervals in the various meetings, notably with a comparison of the results achieved with those budgeted during the examination of the financial reports.

The Board of Directors assesses the adequacy of the organizational, administrative and accounting structure of the Company on the basis of information made available by the management and, with specific reference to the internal control system, in light of the results of the investigations carried out by the Internal Control and Corporate Governance Committee. In performing its function as the body primarily responsible for the internal control system, the Board of Directors also avails itself of:

  • the person responsible for internal control, chosen from within the internal auditing function, which is entrusted to the consortium company Telecom Italia Audit & Compliance Services;
  • with reference to internal controls in relation to financial reporting, the manager responsible for preparing the Company’s financial reports.

Pursuant to the Self-Regulatory Code, related-party transactions carried out by the Company, directly or via subsidiaries, including intragroup transactions, must comply with criteria of substantial and procedural correctness. The Board of Directors monitors this compliance through the Internal Control and Corporate Governance Committee.

In its meeting on March 6, 2008 the Board of Directors adopted a set guidelines (consultable in the Governance section of the Company’s website www.telecomitalia.it), which − on the basis of predefined qualitative and quantitative criteria − assign the preliminary verification of such transactions directly to the management, a special management committee or the Internal Control and Corporate Governance Committee.

The annual board assessment has shown directors to be generally satisfied, but with some matters indicated for analysis and discussion with a view to putting forward constructive suggestions.

As regards the composition of the Board of Directors, the assessment saw the expression of an opinion in favour of an increase in the number of independent directors (currently 5 out of 15). The recommendation is directed towards the shareholders and confirms the belief in the positive contribution that such directors can make to discussions within the Board and to the latter’s external credibility. As to the functioning of the Board of Directors, some suggestions were made for improvement, essentially in connection with the preparation of meetings. In this respect all the directors considered the information received before meetings to be adequate, but, although noting an improvement, several directors recommended that the documents in question should be distributed earlier.