The Enel corporate governance system

 

The corporate governance system of Enel SpA (“Enel” or the “Company”) complies with the principles set forth in the Corporate Governance Code for listed companies (the “Corporate Governance Code”), as amended in July 2018, adopted by the Company, and is also inspired by international best practice.
The corporate governance system adopted by Enel and its Group is essentially aimed at creating value for the shareholders over the long term, taking into account the social importance of the Group’s business operations and the consequent need, in conducting such operations, to adequately consider all the interests involved.
In compliance with Italian legislation governing listed companies, the Group’s organization comprises the following bodies:

 

   

Shareholders Meeting 

It is charged with deciding, among other things – in either ordinary or extraordinary session:

  • the appointment and removal of the members of the Board of Directors and the Board of Statutory Auditors and their compensation and undertaking any stockholder actions;
  • the approval of the financial statements and the allocation of profit;
  • the purchase and sale of treasury shares;
  • remuneration policy and its implementation;
  • share ownership plans;
  • amendments to the bylaws;
  • mergers and demergers;
  • the issue of convertible bonds.

   

Board of Directors

14 meetings held by the Board in 2019, in 8 of which they addressed issues connected with climate and their impact on strategies, operations and sustainability

  • It is charged with managing the Company and is therefore vested by the bylaws with the broadest powers for the ordinary and extraordinary management of the Company, and specifically has the power to carry out all the actions it deems advisable to implement and achieve the corporate purpose.
  • With regard to the issue of sustainability(1), including climate change, it is responsible for examining and approving the corporate strategy, including the Group’s annual budget and business plan, which incorporate the main objectives and actions that the Company plans to undertake to lead the energy transition and tackle climate change, promoting a sustainable business model that creates long-term value.
  • it also performs a policy-setting role and provides an assessment of the adequacy of the internal control and risk management system (the ICRMS), determining the nature and level of risk compatible with the strategic objectives of the Company and the Group. The ICRMS consists of the set of rules, procedures and organizational structures designed to enable the identification, measurement, management and monitoring of the main risks to which the Company and its subsidiaries are exposed. These risks include those that could arise in a medium- to long-term perspective, including the risks associated with climate change.

(1) Sustainability comprises issues connected with climate change, atmospheric emissions, managing water resources, biodiversity, the circular economy, health and safety, diversity, management and development of employees, relations with communities and customers, the supply chain, ethical conduct and human rights.

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In compliance with the provisions of the Italian Civil Code, the Board of Directors has delegated part of its management duties to the CEO and, in accordance with the recommendations of the Corporate Governance Code and applicable legislation, has appointed the following committees from among its members to provide recommendations and advice:

 

Corporate Governance and Sustainability Committee

8 meetings held by the Committee in 2019, in 5 of which it addressed issues connected with climate and their impact on strategies, operations and sustainability

  • It assists the Board of Directors in assessment and decision-making activities concerning, among other things, sustainability, including any relevant climate issues connected with the operations of the Group and its interaction with all stakeholders.
  • A majority of its members are independent directors and in 2019 was composed of a chairman and two independent directors.
  • With regard to sustainability issues, it examines:
    • the guidelines of the Sustainability Plan, including the climate objectives set out in the plan;
    • the general structure of the Sustainability Report, which includes the Non-Financial Statement, and the approach to disclosures on climate change adopted in those documents, issuing a prior opinion to the Board of Directors, which is responsible for approving these documents.

     

Control and Risk Committee 

12 meetings held by the Committee in 2019, in 6 of which it addressed issues connected with climate and their impact on strategies, operations and sustainability

  • It supports the Board of Directors in performing its duties regarding internal control and risk management, as well as evaluating the periodic financial reports.
  • It is composed of non-executive directors, the majority of whom (including its Chairman) are independent. In 2019 it was made up of four independent Directors.
  • It also examines the content of the Annual Report and the Sustainability Report, which includes the Non-Financial Statement relevant for the purposes of the ICRMS and contains corporate disclosures on climate issues, issuing a prior opinion on these aspects to the Board of Directors, called to approve those documents.

   

Nomination and Compensation Committee

8 meetings held in 2019

 
  • It supports the Board of Directors in decisions concerning the size and composition of the Board itself, as well as the remuneration of executive directors and key management personnel.
  • It is composed of non-executive directors, the majority of whom (including its Chairman) are independent. In 2019, it was made up of four independent directors.
  • In 2019, it confirmed the establishment of performance targets connected with sustainability issues for the short- and long-term variable remuneration of top management.

   

Related Parties Committee

1  

meeting held by the
Committe in 2019

  • It performs the functions provided for in the relevant CONSOB regulations and in the specific Enel procedure for transactions with related parties, issuing in particular a reasoned opinion on the transactions governed by the procedure.
  • It is composed of independent, non-executive directors. In 2019, it was made up of four independent directors.

   

     

Board of Statutory Auditors

17 

meetings held by
the Board in 2019

It is charged with overseeing: 

  • (compliance with the law and the bylaws, as well as compliance with the principles of sound administration in carrying out corporate activities;
  • the financial reporting process and the appropriateness of the organizational structure, the internal control system and the administrative-accounting system of the Company;
  • the statutory audit of the annual accounts and the consolidated accounts, as well as the independence of the Audit Firm;
  • the approach adopted in implementing the corporate governance rules envisaged by the Corporate Governance Code.

   

Chairman of the Board of Directors

 
  • The Chairman is vested by the bylaws with the powers to represent the Company and to sign on its behalf.
  • Presides over Shareholders’ Meetings.
  • Convenes the meetings of the Board of Directors, establishes the agenda and presides over its proceedings, ensuring that sufficient information on the issues being addressed in the agenda is provided in a timely manner to all members of the Board of Directors and the Board of Statutory Auditors.
  • Ascertains that the Board’s resolutions are carried out.
  • Pursuant to a Board resolution of May 5, 2017, the Chairman has been vested with a number of additional non-executive powers.
  • In the exercise of the function of stimulating and coordinating the activities of the Board of Directors, the Chairman plays a proactive role in the process of approving and monitoring of corporate and sustainability strategies, which are sharply focused on the decarbonization and electrification of energy consumption.
  • In addition, during 2019 the Chairman also chaired the Corporate Governance and Sustainability Committee.

   

Chief Executive Officer

  • Like the Chairman of the Board of Directors, the CEO is vested by the bylaws with the powers to represent the Company and to sign on its behalf, and in addition is vested by a Board resolution of May 5, 2017 with all powers for managing the Company, with the exception of those that are otherwise assigned by law or the bylaws or that the aforesaid resolution reserves for the Board of Directors.
  • In the exercise of these powers, the CEO has defined a sustainable business model, delineating a strategy to lead the energy transition towards a low-carbon model.
  • The CEO reports to the Board of Directors and the Board of Statutory Auditors on the activities performed in the exercise of the powers granted to him, including business activities consistent with Enel’s commitment to address climate change.
  • The CEO has also been designated as the director responsible for the ICRMS.
  • He represents Enel in various initiatives that deal with sustainability, holding positions of leadership in world-renowned institutions such as the United Nations Global Compact and the Global Investors for Sustainable Development (GISD) Alliance launched by the United Nations in 2019.

   

Statutory audit of the accounts

This is performed by a specialized firm entered in the appropriate register of auditors, which is appointed by the Shareholders’ Meeting on the basis of a reasoned proposal from the Board of Statutory Auditors.

 

Good corporate governance practices

  • In 2019, the Company also organized a special induction program to provide the directors with an understanding of the sectors in which the Group operates, including issues related to climate change and the related impact on industrial strategy and corporate operations.
  • At the end of 2019 and during the first two months of 2020, the Board of Directors carried out, with the assistance of a specialized independent advisor, an assessment of the size, composition and functioning of the Board and its committees (the “board review”), in line with the most advanced corporate governance practices accepted at the international level and incorporated within the Corporate Governance Code. This board review also analyzed specific aspects concerning the assessment of sustainability issues by the Board of Directors. The board review was carried out using a “peer review” approach, i.e. evaluating not only the operation of the body as a whole, but also the style and substance of the contribution made by each of its members. The results of the board review confirmed an extremely positive overall picture of the operation of Enel’s Board of Directors and Board committees, indicating that these bodies operate effectively and transparently, in strict compliance with national and international best practice in the field of corporate governance, as confirmed by the advisor.

 

For more detailed information on the corporate governance system, please see the Report on Corporate Governance and Ownership Structure of Enel, which has been published on the Company’s website (www.enel.com, in the “Governance” section).

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