Functions and powers of the Board of Directors

The Board of Directors plays a central role in the strategic guidance of the Company and the Group as well as in supervising the overall business activities, with powers of guidance in overall administration and of direct intervention in decisions necessary or useful to the pursuit the business purpose.

The Board of Directors is the competent body designated to take the most important decisions in economic/strategic terms or in terms of structural impact on operations or impact on control and guidance of the Company and the Group.

The Board of Directors provides the management of the company and is, to this end, invested in all the broader powers of administration, except for those that, according to law or by the Bylaws, belongs to the Shareholders' Meeting.

In particular, the Board of Directors is solely responsible for the competence in relation to most important economic and strategic decisions and in terms of structural incidence on the management, or functional to the exercise of the Company's monitoring and management activities, including - taking into account the decision to transfer the powers to the Chief Executive Officer of 31 August 2017 - the powers relating to the transaction with the following types, with reference to both Pirelli and any other company (also foreign, provided that it does not have shares listed on a regulated market) that is subject to the direction and coordination of Pirelli (with the exception of intra-group transactions), provided that the approval of operations below is reserved to the exclusive competence of the Board of Directors not only when the value of the thresholds indicated for each matter is exceeded but also if the items from (i) to (ix) are considered as a single action if considered as a series of coordinated actions (executed in the context of a common executive program or of a strategic project) exceed the value indicated in the business plan and / or the annual budget or (limited to the matters from (i) to (viii)) in case they are not include in the business plan or the annual budget:

(i) assumption or granting of loans of over Euro 200,000,000 and of a duration of more than 12 months;

(ii) issuing of financial instruments for listing on a European or extra European regulated market for a total value of more of Euro 100,000,000 and / or revoke of the listing of such instruments;

(iii) granting guarantees in favor of or in the interest of third parties for amounts for a total value of more than Euro 100,000,000;

(iv) subscription of derivative contracts (a) with a notional value of over Euro 250,000,000, and (b) other than those having sole and / or exclusive effect the coverage of corporate risks (eg, hedging against interest rate risk, coverage from exchange rate risk, risk coverage from the commodity market);

(v) the purchase or sale of controlling or linking shares in other companies for a value greater than Euro 150,000,000 when this entails entry or exit from geographic markets and / or commodities;

(vi) the purchase or sale of equity investments other than those described in (v) for a value exceeding Euro 250,000,000;

(vii) the purchase or sale of companies or branches of strategic importance or, in any case, of a value exceeding Euro 150,000,000;

(viii) the purchase or sale of assets or other assets of strategic importance or, in any case, of a total value exceeding Euro 150,000,000;

(ix) performing major transactions with related parties, meaning those that meet the conditions set out in Annex 1 of the "Transactions with Related Parties Procedure" approved by the Board of Directors of the Company on 31 August 2017, confirming the deliberations taken on 28 July 2017 by the outgoing Board of Directors;

(x) defining the remuneration policy of the Company;

(xi) determining, in compliance with the Company's internal policies and the applicable regulations, the remuneration of the directors and the directors who hold special offices and, where required, the allocation of the total remuneration of the members of the Board of Directors, shareholders' meeting pursuant to Article 2389, paragraph 3, of the Italian Civil Code;

(xii) approval of strategic, industrial and financial plans by Pirelli and the Pirelli Group;

(xiii) adoption of corporate governance rules of the Company and definition of Pirelli Group's corporate governance guidelines;

(xiv) defining guidelines for the internal control system, including the appointment of an administrator responsible for overseeing the internal control system, defining its tasks and powers;

(xv) any other matter to may be remitted to the Board of Directors of a company listed by the Self-Regulatory Code of the Borsa Italiana, as amended from time to time;

(xvi) approving of the budget and of the business plan of the Company and of the Pirelli Group, as well as any significant changes to such documents;

(xvii) Any resolution relating to industrial partnerships or strategic joint ventures of which Pirelli and / or Pirelli Group companies are parties.

Last revised: 4 Oct 2017 7:00 am