The Group remuneration policy is established in such a way as to guarantee the necessary levels of competitiveness of the company on the employment market. Competitiveness translates into supporting the strategic objectives, pursuing sustainability of results in the long-term and striking a correct balance between the unitary needs of the Group and the differentiation of the various reference markets. What follows is a remuneration structure that by way of priority seeks to guarantee a correct balance of the fixed and variable components and the short and long-term aspects, alongside benefit systems and other instruments such as the Broad-Based Share Ownership Plan (SOP).

More specifically, the fixed component reflects the breadth and strategic nature of the role performed, measured against the market, and appraises the distinctive subjective characteristics and strategic skills of the employee. The short term variable remuneration (MBO) on the other hand aims to establish a transparent link between pay and the degree of fulfilment of annual targets. To this end, the targets are fixed according to qualitative and quantitative indicators that represent and are consistent with the strategic priorities and business plan, measured according to pre-established and objective criteria. Following on from 2014, the “gate” mechanism was confirmed for 2015 as the threshold applied only to the company’s targets: if the “gate” target is not achieved, this mechanism prevents the bonus associated with the Company’s other targets from being accrued.

Unlike in 2014, each beneficiary of the MBO will be set a target with a weight of 20% based on the overall result of the assessment made through the new Performance Management system (see Development and skills paragraph).

The long-term variable component aimed at achieving consistency between the interests of management and those of shareholders, by sharing in the business risk, with positive effects on the 2014-2016 stock option plan, which involved the Chief Executive Officer, the Top Management and a selection of managers1.

In 2015, the implementation of Total Rewarding principles is confirmed and extended for the purpose of allow the flexible use of multiple instruments, which are no longer only monetary but include welfare, training, professional and development paths. The 2015 remuneration policy therefore intends to consolidate the process that began in 2014, making flexible use of five pillars, the first two of a financial nature, the remaining ones associated with a broader system of rewards: salary increases, bonuses, cars, job levels and training. Finally, possible instruments of the remuneration policy include the SOP (Broad-based Share Ownership Plan), a system for sharing in the risks and profits of the company, aimed at supporting employee motivation and reinforcing a sense of belonging. In June 2014, the Company launched a PAD under which all permanent employees of Telecom Italia S.p.A and its subsidiaries with registered office in Italy could buy shares with a 10% discount on the market price. In August 2015, one year after allocation, if ownership of the shares had been retained and the owner remained in employment, one free share (bonus share) was awarded for every three shares subscribed.

Below are the main types of objectives connected with sustainability present in the company MBO system.

  Reference stakeholders  Targets subject to incentives% of managers (to whom the target applies)
  • Customer satisfaction
  • Quality of the service delivered
  • Quality of the service perceived by consumer and business customers
  • Quality of the service perceived by other national fixed and mobile telephony operators
Human Resources
  • Health and safety of employees
  • Programmes of training and professional growth
  • Welfare activities (People Caring) and the wellbeing of employees
  • Consumption of materials, energy
Shareholders and Institutions
  • QualityandspeedofCompany information delivery
The Community
  • Organisation of corporate events
  • Quality of corporate initiatives/projects

Details on the remuneration required by standard [G4-LA13] are given in the Appendix to this chapter.

1 In order to provide a correct indication of the relationship between remuneration paid to Top Management and the rest of the company’s employees [G4-54], [G4-55], according to the “Policy for Classifying and Managing Information in accordance with confidentiality requirements”, Telecom Italia provides some indications for calculation purposes in the customary tables of the Remuneration Report (page 24) of the Annual Financial Report (page 283). The continuation of the process implementing the guidelines GRI G4 will, also on a sector level, enable the assessment of the various methods of representation.