CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE …Pursuant to Article 1, paragraph 1, letter...

CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE REPORT

2019

pursuant to Article 123-bis of the Consolidated Finance Act

(traditional administration and control model)

(approved by the BOD of March 13, 2020)

LA DORIA S.P.A.

www.gruppoladoria.it

2 Corporate governance and ownership structure report - Year 2019

CONTENTS

GLOSSARY ................................................................................................................................... 4

INTRODUCTION ..................................................................................................................................... 5

1. COMPANY PROFILE .................................................................................................................. 5

2. INFORMATION ON THE OWNERSHIP STRUCTURE AT 31/12/2019 (as per Article 123-bis,

paragraph 1, CFA) ................................................................................................................................. 6

a) Shareholders (as per Article 123-bis, paragraph 1, letter a), CFA) ................................................... 6

b) Restriction on the transfer of shares (as per Article 123-bis, paragraph 1, letter b), CFA) .............. 6

c) Significant holdings (as per Article 123-bis, paragraph 1, letter c), CFA) .......................................... 6

No. of shares ..................................................................................................................................... 6

d) Shares which confer special rights (as per Article 123-bis, paragraph 1, letter d), CFA) ................. 7

e) Shares which confer special rights (as per Article 123-bis, paragraph 1, letter d), CFA) .................. 7

f) Voting restrictions (as per Article 123-bis, paragraph 1, letter f), CFA) ............................................ 7

g) Shareholder agreements (as per Article 123-bis, paragraph 1, letter g), CFA) ................................. 7

No. of shares conferred ..................................................................................................................... 7

h) Change of control clause (as per Article 123-bis, paragraph 1, letter h), CFA) and statutory

provisions concerning Public Purchase Offers (Article 104, paragraph 1-ter and 104-bis, CFA) .......... 8

i) Power to increase the Share Capital and authorisation to purchase treasury shares (as per

Article 123-bis, paragraph 1, letter m), CFA) ........................................................................................ 8

l) Direction and co-ordination activities (as per Article 2497 and subsequent of the Civil Code) ........ 9

m) Other information. ........................................................................................................................... 9

3. COMPLIANCE (as per Article 123-bis, paragraph 2, letter a), CFA) ................................................. 9

4. BOARD OF DIRECTORS ............................................................................................................. 9

4.1 APPOINTMENT AND REPLACEMENT OF DIRECTORS (as per Article 123-bis, paragraph 1,

letter l), CFA) ......................................................................................................................................... 9

4.2 COMPOSITION (as per Article 123-bis, paragraph 2, letters d) and d) bis), CFA) ......................... 11

4.3 ROLE OF THE BOARD OF DIRECTORS (pursuant to Article 123-bis, paragraph 2, letter d), CFA) . 14

4.4 EXECUTIVE BOARDS ...................................................................................................................... 17

4.5 OTHER EXECUTIVE DIRECTORS ...................................................................................................... 19

4.6 INDEPENDENT DIRECTORS ............................................................................................................ 19

4.7 LEAD INDEPENDENT DIRECTOR ..................................................................................................... 20

5. PROCESSING OF CORPORATE INFORMATION ............................................................................... 21

6. INTERNAL COMMITTEES TO THE BOARD (as per Article 123-bis, paragraph 2, letter d), CFA) ... 22

7. APPOINTMENTS COMMITTEE ........................................................................................................ 23

8. REMUNERATION AND APPOINTMENTS COMMITTEE ................................................................... 25

9. REMUNERATION OF DIRECTORS .................................................................................................... 25


10. CONTROL, RISKS AND SUSTAINABILITY COMMITTEE ................................................................. 25

11. CONTROL AND RISK MANAGEMENT SYSTEM ............................................................................. 29

11.1 EXECUTIVE IN CHARGE OF THE CONTROL AND RISK MANAGEMENT SYSTEM ........................... 33

11.2 INTERNAL AUDIT MANAGER ....................................................................................................... 33

11.3 ORGANISATION MODEL AND ETHICS CODE AS PER LEGISLATIVE DECREE 231/2001 ................ 34

11.4 INDEPENDENT AUDIT FIRM ......................................................................................................... 36

11.5 EXECUTIVE RESPONSIBLE FOR THE PREPARATON OF CORPORATE ACCOUNTING

DOCUMENTS ....................................................................................................................................... 36

11.6 COORDINATION BETWEEN THE PARTIES INVOLVED IN THE INTERNAL CONTROL AND RISK

MANAGEMENT STSTEM ...................................................................................................................... 37

12. DIRECTORS’ INTERESTS AND RELATED PARTY TRANSACTIONS .................................................. 37

13. APPOINTMENT OF STATUTORY AUDITORS ................................................................................. 38

14. COMPOSITION AND OPERATION OF THE BOARD OF STATUTORY AUDITORS (as per Article

123-bis, paragraph 2, letter d) CFA) ................................................................................................... 39

15. RELATIONS WITH SHAREHOLDERS ............................................................................................... 41

16. SHAREHOLDERS’ MEETINGS (as per Article 123-bis, paragraph 2, letter c), CFA) ..................... 42

17. FURTHER CORPORATE GOVERNANCE PRACTICES (as per Article 123-bis, paragraph 2, letter

a), CFA) ................................................................................................................................................ 45

18. CHANGES SUBSEQUENT TO THE YEAR-END ................................................................................ 45

19. CONSIDERATIONS ON THE LETTER OF DECEMBER 19, 2019 OF THE CHAIRPESRON OF THE

CORPORATE GOVERNANCE COMMITTEE .......................................................................................... 45

Annexes: tables ................................................................................................................................... 46

TABLE 1: INFORMATION ON THE SHARE OWNERSHIP ...................................................................... 47

TABLE 2: STRUCTURE OF THE BOARD OF DIRECTORS AND COMMITTEES ....................................... 49

TABLE 3. STRUCTURE OF THE BOARD OF STATUTORY AUDITORS.................................................... 51

ATTACHMENT 1 .................................................................................................................................. 52

List of offices held in other listed companies on regulated markets (including overseas markets),

in financial, banking, insurance or significantly sized companies (companies not belonging to the

La Doria Group) at 31.12.2019.


GLOSSARY

Code/Self-Governance Code: the Self-Governance Code of listed companies approved in July

2018 by the Corporate Governance Committee and promoted by Borsa Italiana S.p.A., ABI, ANIA,

Assogestioni, Assonime and Confindustria.

Civ. cod/ c.c.: the Italian civil code.

Board/BoD: the Board of Directors of La Doria.

RCSC: Internal Control, Risks and Sustainability Committee

RAC: Remuneration and Appointments Committee

SB: Supervisory Board

Company/Issuer: La Doria S.p.A.

Year: 2019

Consob Issuers’ Regulation: the Regulation issued by Consob Resolution No. 11971 of 1999 (as

subsequently amended).

Consob Market Regulation: the Market Regulations issued by Consob Resolution No. 20249 of

2017.

Consob Related Parties Regulation: the Regulation issued by Consob Motion No. 17221 of

March 12, 2010 (as subsequently amended) regarding related party transactions.

Report: the corporate governance and ownership structure report which the company must

prepare as per Art. 123-bis CFA.

Consolidated Finance Act/CFA: Legislative Decree No. 58 of February 24, 1998.


INTRODUCTION

The La Doria S.p.A. (hereafter the “Company” or “La Doria”) Corporate Governance system is

based on a set of regulations, conduct and processes formulated to guarantee efficient and

transparent corporate governance and effective functioning of the corporate boards and control

systems.

The Company complies with the principles and applicable criteria contained in the Self-

Governance Code for listed companies, issued by Borsa Italiana, in the manner outlined in the

present report.

The governance model adopted by La Doria ensures correctness and transparency in

management and in information, the protection of the interests of shareholders and the

creation of value in the medium/long-term for all stakeholders, in line with national and

international best practices.

For further information on the Company’s Corporate Governance system, reference should be

made, in addition to this Report, to the By-Laws in force at December 31, 2019 and the

documentation available on the website www.gruppoladoria.it, in the Corporate Governance

section.

The following information refers to the year 2019 and, with regard to specific matters, is up to

date as at March 13, 2020, the date of the Board of Directors' meeting which

approved this Report, published at the above address.

1. COMPANY PROFILE

La Doria is a leading producer of tomato-based products, fruit juices and beverages, canned

pulses and ready-made sauces, principally for private labels. The Company also produces under

its own brands and for large branded companies. The Company has a global presence and is

particularly strong abroad, with a consolidated presence in Northern Europe, Germany, Japan

and Australia.

La Doria is the leading European producer of processed pulses and peeled and chopped

tomatoes on the retail channel and among the leading Italian producers of fruit juices and

beverages. The Company is also the leading producer in Europe of private label ready-made

sauces. The Company’s mission is to be the leader in the Major Distribution and Supermarket

Chain Markets, ensuring the provision of a superior quality product at competitive prices,

alternative to brand products.

The company qualifies as an "SME" pursuant to Article 1, paragraph 1, letter w-quater.1) of the

CFA, on the basis of the criterion of consolidated revenues amounting to Euro 687.9 million in

2018, while the capitalisation value is lower than the regulatory threshold of Euro 500 million

(Euro 375.5 million in 2018).

Pursuant to Article 1, paragraph 1, letter w-quater.1) of the CFA, small-medium-size enterprises,

issuers of listed shares, qualify as an "SME" when revenues, also before admission to trading,

are under Euro 300 million, or have a market capitalisation of under Euro 500 million.

For more comprehensive information on the Group's activity and market scenario, reference

should be made to the Financial Statements at December 31, 2019 and the information

available on the Company's website at www.gruppoladoria.it.


2. INFORMATION ON THE OWNERSHIP STRUCTURE AT 31/12/2019 (as per Article 123-bis,

paragraph 1, CFA)

a) Shareholders (as per Article 123-bis, paragraph 1, letter a), CFA)

The Share Capital, amounting to Euro 46,810,000, is fully paid-in and consists of 31,000,000

ordinary shares, each with a nominal value of Euro 1.51, listed on the Italian Stock Exchange,

Star segment, organised and managed by Borsa Italiana S.p.A.

All shares are attributed equal rights and obligations. For shares held by the company, the

limitations set out by article 2357 and subsequent of the Civil Code are applied (hereinafter

“C.C.”).

Other financial instruments which attribute the right to subscribe to newly issued shares were

not issued.

No share based incentive plans are in place.

b) Restriction on the transfer of shares (as per Article 123-bis, paragraph 1, letter b), CFA)

There are no restrictions on the transfer of shares, except as described in letter g) below.

c) Significant holdings (as per Article 123-bis, paragraph 1, letter c), CFA)

The significant holdings, on the basis of communications issued in accordance with Article 120

of the CFA and the information at the disposal of the Company, are the following:

Holdings in excess of 5% of the share capital

Shareholder No. of shares % on total ordinary voting

share capital

Ferraioli Antonio

3,151,301

10.1654%

Ferraioli Andrea

2,959,062

9.5454%

Ferraioli Rosa

2,684,491

8.6596%

Ferraioli Iolanda

2,684,088

8.6583%

Ferraioli Giovanna

2,683,686

8.6570%

Ferraioli Raffaella

2,683,686

8.6570%

Ferraioli Teresa Maria Rosaria

2,683,686

8.6570%

Kempen Capital Management N.V.

2,050,000

6.613%

Global Portfolio Investments S.L.

1,672,304

5.395%


d) Shares which confer special rights (as per Article 123-bis, paragraph 1, letter d), CFA)

There are no securities which confer special control rights.

e) Shares which confer special rights (as per Article 123-bis, paragraph 1, letter d), CFA)

There is no share participation programme for employees.

f) Voting restrictions (as per Article 123-bis, paragraph 1, letter f), CFA)

There are no restrictions on voting rights.

g) Shareholder agreements (as per Article 123-bis, paragraph 1, letter g), CFA)

The company is aware of the following significant shareholder pact as per Article 122 of the CFA:

- Shareholder pact signed by seven shareholders on 25.09.1995 and updated on 4.03.2016. The

agreement governs the restriction on the transfer of shares held by the parties to the

agreement in addition to the exercise of voting rights. The aim of the agreement is to ensure

cohesion within the shareholder structure and the operational continuity of the business. This

is ensured through the provision of a pre-emptive right on the shares of each of the parties in

favour of the other shareholders and through the exercising of voting rights in line with the

resolutions assumed at the meetings of those belonging to the Shareholder Pact. Parties

belonging to the agreement:

No. of shares conferred

% on total ordinary voting

share capital

Ferraioli Antonio

3,151,301

10.1654%

Ferraioli Andrea

2,959,062

9.5454%

Ferraioli Rosa

2,684,491

8.6596%

Ferraioli Iolanda

2,684,088

8.6583%

Ferraioli Giovanna

2,683,686

8.6570%

Ferraioli Raffaella

2,683,686

8.6570%


2,683,686

8.6570%

TOTAL 19,530,000 63.00%

None of the parties are able to individually exercise, through the agreement, control over the

Company.

For the duration of the blocking pact, the parties cannot sell or cede to third parties, under any

form, the restricted shares and those which may be assigned free or from a paid-in share capital

increase.

The restricted shares in the Pact are transferable to spouses or descendants in a direct line.


The restricted shares are also transferable between the Participants through direct agreement

between the relevant Participants. In this case the other Members will have pre-emption right

on the purchase of a percentage of the shares equal to that conferred by them to the

agreement in terms of the total of the above-indicated shares, less the sellers quota. In the case

of revocation of the purchase by any of the Participants, the relative pre-emptive right is

attributed pro-quota to the other Participants.

In the case of a free increase of the share capital, the Participants are obligated to restrict share

movement to within the Shareholder Pact. In the case of a paid-in share capital increase, the

Participants are obligated to assign within the Pact the new shares subscribed.

In the case in which any of the Participants, in relation to a share capital increase, intends to

cede, in part or totally, the option right, they must make a timely pre-emptive pro-quota offer

to the other Participants.

In the case of non-exercise of the pre-emptive right by the Participants, the interested parties

can cede the option rights to third parties.

The duration of the Pact is until 30.06.2020 with a possibility of renewal for a further two years

each time if no Participants have communicated the wish to rescind the agreement at least one

year before expiry.

In the case of the withdrawal of one or more parties, the Pact will remain in place between the

remaining Parties at the same conditions, although the residual shares must represent at least

40% of the share capital of the Company.

h) Change of control clause (as per Article 123-bis, paragraph 1, letter h), CFA) and statutory

provisions concerning Public Purchase Offers (Article 104, paragraph 1-ter and 104-bis, CFA)

No agreements were signed by the Company or by its subsidiaries with change of control

clauses.

i) Power to increase the Share Capital and authorisation to purchase treasury shares (as per

Article 123-bis, paragraph 1, letter m), CFA)

The Board does not have powers to increase the share capital pursuant to article 2443 of the

Civil Code or issue equity financial instruments.

On June 11, 2019, the Shareholders’ Meeting authorised the Board of Directors to purchase and

sell treasury shares in accordance with Articles 2357 and subsequent of the Civil Code, Article

132 of the CFA and Article 144-bis of the Consob Issuers' Regulation. Authorisation is aimed at

intervening, in compliance with applicable legislative and regulatory provisions, to support the

share’s liquidity and/or stabilisation, amid anomalous trading fluctuations, also related to

excessive volatility or a lack of liquidity.

Specifically, the BoD was authorised to purchase, including continuously or on one or more

occasions, within 12 months from the Shareholders' Meeting, ordinary shares at a unitary price

not lower or higher than 10% of the share price quoted on the stock exchange on the day prior

to each single purchase operation, as well as to dispose of the shares acquired at a unitary price

not lower than 15% of the average cost, in execution of the authorisation requested.

Treasury share purchases are carried out in compliance with legislative and regulatory (including

European) provisions and according to the means permitted by applicable regulations as per


Article 132 of the CFA, Article 144-bis of Consob Issuers’ Regulation No. 11971 of 14/05/1999

and subsequent amendments and supplements, Regulation (EU) 596/2014 and Delegated

Regulation (EU) 2016/1052, in addition to applicable market practices.

For further information on the authorisation to purchase treasury shares, reference is made to

the Directors’ Report prepared in accordance with Article 73 of the Issuers’ Regulation, available

on the website www.gruppoladoria.it, in the Investor Relations/For shareholders/Shareholders'

Meeting section.

At 31.12.2019, the Company held 233,000 treasury shares in portfolio.

l) Direction and co-ordination activities (as per Article 2497 and subsequent of the Civil Code)

La Doria is not subject to management and co-ordination pursuant to Article 2497-bis of the

Civil Code.

m) Other information

It should be noted that:

a) the information required by article 123-bis, first paragraph, letter i) of the CFA (“agreement

between the company and the Directors which provides indemnity in the case of resignation or

dismissal without just cause or if the working relationship ceases following a public purchase

offer”) was not included in the present Report due to the fact that the Corporate Governance

system of the Company does not deal with any of the matters covered;

b) the disclosures required by Article 123-bis, paragraph 1, letter l) of the CFA - applicable

regulations concerning the appointment and replacement of Directors, in addition to the

amendment of the by-laws if differing from applicable law and regulations - are illustrated in the

Board of Directors section (paragraph 4.1). As regards the amendments to the By-Laws, these

were approved by the Shareholders' Meeting in accordance with the Law and the By-Laws.

Nevertheless, Article 23 of the Company By-Laws empowers the Board of Directors to resolve on

adapting the By-Laws to legislative provisions.

3. COMPLIANCE (as per Article 123-bis, paragraph 2, letter a), CFA)

The Corporate Governance model of the Company is aligned with the principles and application

criteria of the Self-Governance Code, which the Company has adhered to since its first version in

2002.

This model has undergone successive adjustments over time in order to incorporate the

applicable guidelines set out in the Code, which is available to the public on the Borsa Italiana

website at: http://www.borsaitaliana.it/comitato-corporate-governance/codice/codice.htm

4. BOARD OF DIRECTORS

4.1 APPOINTMENT AND REPLACEMENT OF DIRECTORS (as per Article 123-bis, paragraph 1,

letter l), CFA)

The appointment and replacement of Directors is governed by applicable law, as transposed and

supplemented, within permitted limits, by the statutory provisions, drawn up in compliance

with the provisions of the CFA.


The Directors are elected based on slates of candidates presented by shareholders who hold,

separately or together with other shareholders, at least 2.5% of the share capital, in accordance

with article 144.4 of the Issuers’ Regulation.

At least one member of the Board of Directors will be taken from the minority slate that obtains

the highest number of votes.

For the Directors to be elected, consideration is not taken of the slates which have not obtained

at least half of the votes required for the presentation of the slate as previously indicated.

The slates presented by shareholders, together with the professional and personal information,

must be filed at the registered office of the company at least 25 days before the date fixed for

the Shareholders’ Meeting in first call.

Declarations in which the candidates individually accept their candidacy and attest, on their own

responsibility, that there are no grounds for ineligibility, and that they meet the requirements

prescribed by law and the

by-laws must be filed together with the slates within the time limit specified above.

Those with voting rights may vote on only one slate.

The procedure for electing the Directors shall be as follows:

a) from the slate that obtained the majority of votes from shareholders, the number of Directors

equal to the number of members of the entire Board less one, in the order in which they are

listed, are elected;

b) from the minority slate that obtains the highest number of votes, one Director is elected;

c) where, for whatever reason, for the appointment of the entire Board, it is not possible to

adopt the procedure at letters a) and b) and therefore also in the case of the presentation of a

single slate or in the absence of slates, the Directors are elected by statutory majority;

d) in the case of parity between two slates, the Directors are appointed based on seniority of

age.

If the Board of Directors is composed of more than seven members, at least two of them must

be independent in accordance with article 148, paragraph 3 of Legislative Decree No.58 of

February 24, 1998. The holding of the office of independent Director is based on the

requirements for independence contained in the conduct code prepared by the Management

Company of the regulated markets.

The Directors elected as independent relinquish the office whenever the independence

requirements are no longer fulfilled. All the members of the Board of Directors must hold the

honour requisites established by Justice Ministry Regulation in accordance with article 148,

paragraph 4 of Legs. Decree No. 58 of Feb. 24, 1998.

In accordance with Article 18 of the By-Laws, the provisions of Article 2386 of the Civil Code are

applicable for the replacement of Directors.

Succession plans

With regard to the recommendations to assess the adoption of succession plans for Executive

Directors, in the meeting of March 14, 2019, the Board of Directors, also on the basis of

investigations carried out by the Remuneration and Appointments Committee in the meeting of

February 1, 2018 and of February 26, 2019, considered that the "Regulation governing the entry

and development of the third generation into the La Doria Group" adopted latterly on

20.04.2015, is a suitable tool to pursue stability objectives and business management continuity

through the regulation of the replacement process of Executive Directors. The recent gradual


entry of two members of the third generation of the Ferraioli family, the company majority

shareholder, and the office of Director conferred to them, is aimed specifically at ensuring the

company's business continuity and long-term sustainability. The entry of third generation

members takes place on the basis of merit-based criteria and stringent requirements in terms of

training and work experience of at least four years in companies outside of the La Doria Group.

The regulation also provides for specific training courses and career development programmes

for gradual professional growth.

On December 5, 2019 and January 28, 2020, the Remuneration and Appointments Committee

examined the evolution of the Group's organisation structure from a perspective of top

management succession, formulating its considerations and expressing, in the meeting of

12.03.2020, the hope that it would also submit the matter of the adoption of a Contingency Plan

for strategic Senior Managers to the attention of the Board of Directors, with a constant focus

on business continuity.

4.2 COMPOSITION (as per Article 123-bis, paragraph 2, letters d) and d) bis), CFA)

According to the by-laws, the Board of Directors must consist of a minimum of three and a

maximum of nine members. The Directors remain in office for three years and may be re-

elected.

The current Board comprises 9 members, of which 3 Executive Directors (majority shareholders

belonging to Shareholder Agreement as per paragraph 2, letter g), 3 Non-Executive and

Independent Directors as per Article 3 of Self-Governance Code of Borsa Italiana, Article 147-ter

of the CFA and as per Article 19 of the By-Laws, 1 Director (Vice Chairman), non-executive and

qualifying as independent only as per Article 147-ter of the CFA and Article 19 of the By-Laws, 2

Non-Executive and Non-Independent Directors, close family members of the majority

shareholders.

The presence of three female Directors ensures the presence of both genders, as recommended

by the Code and Law No. 120/2012 of July 12. As the second mandate for which Law 120/2011

is applied, the under-represented gender is reserved at least one third of Directorship positions,

rounded upwards in the case of fractions.

As regards the ages of the Directors , one is under 35, one is under 40, one is under 50, one is

under 60, four are under 70 and one is over 70 years of age.

The Board of Directors in office has managerial and professional expertise, including of an

international nature.

In terms of seniority of office, 4 Directors have been in office for more than 9 years.

The members of the Board of Directors in office at 31.12.2019 were appointed by the

Shareholders’ Meeting of April 16, 2017, which also established the number of its members, and

will remain in office until the approval of the financial statements for the year ended December

31, 2019. On January 28, 2020, the Board of Directors co-opted Ms. Teresa Maria Rosaria

Ferraioli as a new Non-Executive and Non-Independent member, replacing Ms. Iolanda Ferraioli,

who resigned as a Non-Executive and Non-Independent Director on January 7, 2020 for personal

reasons. This co-option also ensures compliance with the gender equality rules.

For the co-option of the new member of the Board, which will remain in office until the next

shareholders' meeting of the Company, the slate voting mechanism could not be applied as

there are no additional “unelected” candidates from the only Slate presented by the majority


shareholders at the Shareholders’ Meeting of 16/06/2017, which appointed the new Board of

Directors.

For further information on the curriculum vitae of the Directors in office and their educational

and professional profile, reference should be made to the slate presented by shareholders

belonging to the Shareholder Pact on the nomination of June 2017, and to the CV of the

Director appointed by co-option. These are available on the website www.gruppoladoria.it,

Investor Relations/For Shareholders/Shareholders’ Meeting section, as well as in the Corporate

Governance section.

For the composition and other information relating to the Board of Directors in office at

31/12/2019, reference should be made to Table No. 2 attached to this Report.

Diversity criteria and policies

Legislative Decree No. 254/2016 concerning non-financial disclosure, implementing Directive

2014/95/EU, which entered into force on January 25, 2017, amended Article 123-bis, paragraph

2, letter d-bis of the CFA. This Decree introduced the obligation for listed companies to disclose,

in the Corporate Governance Report relating to financial years commencing at January 1, 2017,

detailed information on diversity policies "applied to the composition of administration,

management and control boards in terms of aspects such as age, gender composition and

training and professional programmes, as well as a description of the objectives,

implementation methods and results of these policies".

The diversity policy relating to the Corporate Boards of La Doria aims to describe, in accordance

with the rights that Shareholders are entitled to during the designation and appointment of

members of Management and Control Boards, the optimal characteristics of the composition of

the Board so that it may exercise its duties in the most effective manner, by taking decisions

that can tangibly benefit from the contribution of a plurality of qualified and heterogeneous

points of view, and capable of examining matters under discussion from different perspectives.

The company's adoption of By-Law rules, compliance with legislative and self-regulating

provisions and the Diversity Policy ensure a sufficiently high level of diversification in diversity

profiles within management and control boards for each of the elements indicated in Article

123-bis, paragraph 2, letter d-bis of the CFA (age, gender, training and professional

programmes).

Specifically, La Doria pursues diversity objectives in the composition of the Board of Directors

relating to aspects such as gender, managerial and professional expertise, including of an

international nature, the presence of different age groups and seniority of office, so as to create

a set of skills and experiences that are mutually diverse and complementary.

To guarantee gender balance, the company ensures that at least a third of the Board is

comprised of Directors from the under-represented gender. A balanced presence of

independent members is also guaranteed, in compliance with legal provisions.

Diversity criteria, including gender criteria, were applied in line with the priority objective of

ensuring sufficient skills and professionalism in all Board members.

La Doria also applies diversity criteria to the composition of the Board of Statutory Auditors and

the company organisation in its entirety.

The Diversity Policy for Corporate Boards forms part of a broader "Diversity Policy" approved by

the Board of Directors in the meeting of January 23, 2019, on the proposal of the Remuneration

and Appointments Committee and the Control, Risks and Sustainability Committee. Among


others, it promotes equal treatment and opportunities between genders within the entire

company organisation in line with the Self-Governance Code.

Maximum number of offices held in other companies

In relation to the applicative criteria 1.C.3. of the Code, in accordance with which the Board

expresses its opinion on the maximum number of offices of Director or Statutory Auditor in

listed companies on regulated markets, in financial, banking, insurance or large companies,

which may be considered compatible with the effective fulfilment of the office of Director of the

Company, the Board of Directors approved on February 5, 2009 a document which identified

the general criteria differentiated based on the commitment for each role (Executive Director,

non-executive or independent), also in relation to the nature and size of the companies in which

the offices are held, taking into consideration any holding in such companies. The document

stipulates that:

a) the Executive Directors may not hold other executive roles or offices of control in other listed

companies.

Other executive offices in other significant public interest companies or of significant size and/or

in Public or Private Entities must not be held. Non-executive or roles not involving control may

be held in a maximum four other public interest and/or significant size companies however.

b) the Non-Executive Directors, whether independent or not, may assume roles of

administration or control in companies and/or Bodies of significant size up to a maximum of 6

such entities.

Based on the updated communications received by the Company, at 31.12.2019 all the

Directors held a number of offices that are consistent with the guidelines issued by the Board.

The list of positions of Director or Statutory Auditor held by each Director in other listed

companies in regulated markets, in financial, banking and insurance companies, and in other

significantly sized companies, is shown in Annex 1 of this Report.

Induction Programme

The Chairman of the Board of Directors did not propose during the year specific initiatives in

provision to Directors of “adequate training on the Company’s sector or company dynamics and

developments”, since, with regards in particular to segment disclosure, the Chairman presents

periodic information on the market and business performance at the Board meetings. In

addition, it was considered that the majority of Directors of the company have, on the basis of

professional experience or years in office, adequate knowledge of the sector and of the

company and that extensive discussions in this regard at meetings of the Board of Directors

provide appropriate knowledge on the above-stated issues.

In this regard, at the board meeting of 23.01.2019, also as a result of the recommendations that

emerged from the Board's annual self-assessment carried out on 14.11.2018, the Chairman, as

part of the Budget review, presented a scenario and market analysis and, together with the

entire Board, initiated discussions on the Company’s objectives and strategy. These topics were

discussed in further detail by the Board at the meeting of 14.03.2019 during the definition and

approval of the new 2019-2021 projections.


In 2019, induction activities were carried out for Directors and the members of the Board of

Statutory Auditors on the Organisation, Management and Control Model as per Legislative

Decree 231, on Whistleblowing as per Law No. 179 of 30.11.2017 and on ESG Risk Disclosure.

In addition, other induction programmes shall be planned on the proposal of the Remuneration

and Appointments Committee, also as a result of the suggestions and areas for improvement

emerging from the Board's self-assessment process indicated in the paragraph below.

With regards to direct initiatives for the improvement of knowledge upon the regulatory and

self-regulatory framework, at the board meetings, the Investor Relations/Corporate Affairs

Manager is called to outline specific matters and illustrate any updates concerning the particular

type of governance required for listed companies and in particular the regulatory and self-

regulatory framework concerning Corporate Governance.

4.3 ROLE OF THE BOARD OF DIRECTORS (pursuant to Article 123-bis, paragraph 2, letter d),

CFA)

The Board of Directors has a central role in La Doria’s Corporate Governance System, tasked

with strategic and organisational management, as well as with the effective functioning of the

internal systems for control and the management of risks which may assume importance for

Company operations.

The activities exclusively undertaken by the Board of Directors are determined in accordance

with the civil code, the by-laws and the board resolutions.

It is vested with the widest powers for the Company's ordinary and extraordinary administration

and, in particular, may carry out any and all acts it deems appropriate for attaining corporate

scopes, with the sole exclusion of those attributed exclusively to the Shareholders’ Meeting.

Irrespective of the provisions set forth under Article 2380-bis of the Civil Code, the Board of

Directors has the following exclusive powers by resolution:

a) acquisition and disposal of equity investments;

b) exercise of voting rights during the Shareholders’ Meetings of investee companies, with

proxy ad personam granted as the occasion arises;

c) granting of loans and guarantees to third parties;

d) granting of financing to non-employee third parties;

e) stipulation of loans receivable and payable;

f) purchase and sale of fixed assets;

g) purchase and sale, also by license, of trademarks, patents, etc.;

h) approval of economic, financial and capital expenditure budgets.

In addition, the Board of Directors, in application of the provisions of Article 1 of the Self-

Governance Code of Borsa Italiana S.p.A.:

a) reviews and approves the strategic, industrial and financial plans of the company and

defines the corporate governance system and structure of the Group of which it is the

parent company;

b) defines the nature and level of risk compatible with its strategic objectives, including

risks considered significant with regard to the sustainability of medium/long-term

operations;


c) evaluates the adequacy of the organisational, administration and accounting system of

the company and of its strategically-important subsidiaries, with particular reference to

the internal control and risk management system.

d) establishes the timing, however not greater than quarterly, with which the Corporate

Boards report to the Board of Directors concerning activities carried out in related to

their delegated duties;

e) on the proposal of the Remuneration and Appointments Committee, establishes the

remuneration of Directors and Senior Executives;

f) determines, after consultation with the Board of Statutory Auditors and on the

proposal/opinion of the Remuneration and Appointments Committee, the remuneration

of the Executive Directors and those that cover specific roles;

g) evaluates the general performance of operations, particularly taking into account the

information received from the Chief Executive Officers and from the Internal Control

Committee, as well as periodically comparing actual results with the budget;

h) examines and approves transactions that have a significant economic, equity and

financial impact;

i) defines the guidelines of the internal control and risk management system;

j) examines the key business risks identified by the Director in charge of the internal

control and risk management system;

k) examines the work plan prepared by the Internal Audit Manager;

l) evaluates the functioning, size and composition of the Board itself and of its committees.

m) discloses, in the corporate governance report, on the means of application of the Self-

Governance Code.

n) adopts a procedure for the internal management and external communication of

documents and information relating to the Company, with particular regard to inside

information.

Reference should be made to the Self-Governance Code for the other matters exclusively

reserved for the Board of Directors, in line with the Code’s recommendations.

In fulfilment of the provisions of the above Code, on May 14, 2019, the Board of Directors

carried out the annual assessment and considered the organisational, administrative and

accounting structure of the Company to be suitable for the pursuit of corporate objectives,

particularly with regards to the internal control and risk management system, also on the basis

of the preparatory work carried out by the Control, Risks and Sustainability Committee and the

information provided by the Committee during the Board.

At the meeting of March 14, 2019, the Board also approved, having examined the proposals of

the Remuneration and Appointments Committee and after consultation with the Board of

Statutory Auditors, the annual variable remuneration of the Chief Executive Officers and,

established performance objectives.

In 2019, the Board also assessed the general performance of operations during the approval of

the financial statements for the period (separate and consolidated annual accounts at

31.12.2018, the Half-Year Financial Report and First and Third Quarter Interim Report),

particularly taking into account the information received from the Chairman and the Chief

Executive Officer and comparing the results with the budgets.


The Board has not resolved on any specific document which identifies the operations of

strategic, economic, equity and/or financial significance for the Company, considering that such

are included in the powers exclusively reserved to the Board of Directors.

Board Review

In the meeting of November 14, 2019, the Board of Directors carried out, in accordance with

application criterion 1.C.1., letter g) of the Code, the annual evaluation on its functioning and

that of its Committees, and also in relation to their size and composition, taking account also of

the professional qualifications, experience - also of a managerial nature - and the gender of its

members, in addition to their seniority of service, also in relation to the diversity criteria as per

Article 2.P.4 of the Code.

As recommended by the Corporate Governance Committee in the Letter of 13.12.2017 and

recalled in the letter of 21.12.2018, the assessment also included the effective functioning of

the Board, particularly considering the Board's contribution to the definition of strategic plans,

the monitoring of operating performance and the adequacy of the internal control and risk

management system.

The Remuneration and Appointments Committee oversaw the Board evaluation process with

the support of the Investor Relations and Corporate Affairs Function.

The assessment was conducted through a questionnaire prepared by the aforementioned

Department, with a focus on the areas of interest indicated by the Self-Governance Code.

Specifically, Directors were requested to fill out the questionnaire and to return it to an

independent Director who subsequently sent it to the company anonymously.

The results of the compiled questionnaires were discussed in the meeting of the Remuneration

and Appointments Committee of 14.11.2019 and in the meeting of the Board of Directors held

on the same date.

The Board Review process resulted in an overall positive assessment of the Board and of the

Committees and, generally, an adequate opinion both in relation to the size and composition.

With regard to the latter, the result was a substantially positive assessment on Diversity, that is,

on the diversification of professionalism, expertise and experience, including managerial, within

the Board, as well as on the under-represented gender and age groups.

The opinion was also to consider the Board as adequate, also in relation to its functioning with

respect to operating and organisational needs, the size and activities of the company.

Notwithstanding the predominantly positive opinion, the results of the self-assessment process

highlighted certain areas for improvement. These included the strengthening of certain areas of

expertise such as the international dimension, strategic and market orientation, sector

experience and the need for greater insight and involvement of the Board on the positioning

and future strategies of the Group. To this end, at the board meeting of 28.01.2020, during the

presentation of the Budget, the Chairman, in accordance with the recommendations of the

Board review of the previous year, presented a market overview and competitor analysis and,

together with the entire Board, initiated discussions on the possible development strategies of

the Company. These topics were discussed in further detail by the Board at the meeting of

14.03.2020 during the definition and approval of the new 2020-2022 projections.

Suggestions emerging from the Board's self-assessment process also drew attention to the

identification of programmes, as part of the Induction activity, to strengthen the knowledge,

expertise and experience of Directors relating to the topics and issues of interest to the

company. Among other matters, the introduction of training on sustainability and sector


dynamics was suggested. In the latter regard, during the same meeting, the Lead Independent

Director gave a presentation to provide deeper insight into development trends in the food

sector and the challenges for the food industry.

It should be noted that on 13.03.2020, in view of the Shareholders' Meeting called to appoint

the corporate boards, the outgoing Board, including through the results of the self-assessment

process, provided its opinion on the qualitative/quantitative composition which it considers to

be optimal for the new Board. Specifically, the Board expressed its opinion on the opportunity

to add to the Board persons who have gained experience in listed companies and have specific

expertise in strategic development and in control and risk management systems.

The Shareholders’ Meeting did not authorise any general or specific exceptions to the

competition restrictions envisaged by Article 2390 of the Civil Code. (Applicative criteria 1.C.4.).

In 2019, six meetings of the Board of Directors were held with an average duration of 2 hours.

Each Director’s attendance at Board meetings is shown in Table 2.

The meetings scheduled for 2020 number seven, of which three, including today's meeting,

have already been held.

Pre-Board information

The timeliness and completeness of pre-Board information is ensured by the Chairman through

the distribution of detailed supporting documentation to Directors and Statutory Auditors to

facilitate the discussion of items on the agenda of board meetings

The generally accepted notice for the sending of documentation for Board meetings, in order to

provide additional information on the matters to be resolved, is 3 days in respect of the date set

for the meeting. This is usually respected.

During the Board's last self-assessment process which took place in October 2019 and whose

results were evaluated by the Board of Directors of 14.11.2019, all Members also expressed a

positive opinion, among others, on the suitability and timeliness of pre-board information.

The Company is evaluating new methods for access to pre-Board information, that is, to make

supporting documentation available through a special dedicated IT platform, to further

safeguard the need for confidentiality in the flows of information prior to Board meetings.

As per the New Self-Governance Code, the Company will adopt a regulation on the functioning

of the board. This will regulate procedures to ensure the timeliness and completeness of pre-

Board information and the safeguarding of the confidentiality of data and the information

provided to Directors.

The Administration and Finance Director and the Investor Relations/Corporate Affairs Manager

attend the BoD meetings.

4.4 EXECUTIVE BOARDS

Executive Officers

In the Board of Directors’ meeting of June 16, 2017, the office of Chief Executive Officer was

conferred to the Chairman Antonio Ferraioli and to the Director Andrea Ferraioli.


The Chief Executive Officers can carry out, severally, all duties of ordinary administration,

excluding those expressly reserved for the Board of Directors through Law, the By-laws, or

through Board resolutions.

Specifically, for the purposes of non-exhaustive example, the Executive Directors may:

1) appoint proxies for single acts or categories of acts within the limits of the power attributed;

2) open bank current accounts, agree and define credit lines with financial and credit

institutions;

3) act in the protection of the interests of the company, before the institutional bodies for the

management and control of the property market and before expert boards;

4) cede receivables, also as guarantees, to banks and private parties;

5) collect receivables for the company for any amount;

6) make payments, issue and endorse cheques, issue credit notes, withdraw from current

accounts and credit lines available, pay credit instruments, receive bank advances and from

factoring companies, on contracts, bank orders, with limits on the amount;

7) carry out any derivative financial operation, such as swaps and options, although directly for

the hedging of exchange and financial risks related to commercial or financial operations

carried out by the Company;

8) purchase, sell or exchange plant and machinery and accessory parts, equipment, fittings,

calculation machines, auto vehicles, carrying out where necessary operations with the public

registries and other competent offices, within the limits of the investment budget, annual or

long-term, approved by the Board of Directors;

9) rent from third parties premises for offices, warehouses, storage, agencies and for other

needs connected with the corporate objectives, without amount limits;

10) purchase goods, raw materials, semi-finished and finished products within the corporate

objectives, committing the company to all the rights and obligations deriving thereof,

without limitations of amount;

11) sell on the national market and for export, also through on-going contracts, the company’s

products, fixing prices, terms, conditions, allowing reductions and discounts; sign the relative

deeds without limits of amount;

12) participate in tenders, auctions, solicitations of private companies, public entities and the

government and every other public administration;

13) sign contracts with insurance companies, sign the relative policies with the faculty to carry

out any act relating or settlement of damage or indemnity;

14) sign deposit and forwarding contracts, also maritime, agreeing terms and conditions;

15) sign employment contracts or trade union agreements;

16) hire, promote, suspend, dismiss managers, blue collar and white collar employees and

amend the conditions of employment;

17) represent legally the Company before ordinary and administrative magistrates of every type

and grade.

Within the powers conferred, it was not considered necessary to fix the quantitative limits in

consideration of the operational needs of the Company as well as the limits contained within the

company’s operational procedures and in the Internal Control System.

The Chief Executive Officers report to the Board of Directors and to the Board of Statutory

Auditors, at least once every three months and in any case during the Board meetings, on the


activities carried out, on the operating performance of the Company and on the outlook, as well

as on the significant transactions.

The Chief Executive Officers are considered the persons most responsible for the management

of the Company. They do not hold any office in other issuers (application criteria 2.C.5).

Chairman of the Board of Directors

The Shareholders' Meeting of 16.06.2017 appointed Mr. Antonio Ferraioli as Chairman of the

Board of Directors. On the same date, the Board conferred to him the office of Chief Executive

Officer. The Chairman is also a shareholder of the Company and a party to the Shareholder Pact

as per Article 122 of the CFA referred to in the Article 2, letter g) above.

Executive committee (as per Article 123-bis, paragraph 2, letter d), CFA)

An executive committee was not set up.

Reporting to the Board

The Executive Bodies report to the Board concerning the activities carried out during the year at

least bi-monthly.

4.5 OTHER EXECUTIVE DIRECTORS

On 31.12.2019, there are no other Executive Directors in accordance with Applicative Criteria

2.C.1 of the Code, apart from those indicated in table No.2 at point 4.2. (Mr. Antonio Ferraioli,

Mr. Andrea Ferraioli, Ms. Iolanda Ferraioli). It should be noted that Mr. Antonio Ferraioli holds

the office of Chairman and Chief Executive Officer, respectively, in two subsidiaries. Mr. Andrea

Ferraioli holds office as Chief Executive Officer in one of the subsidiaries.

On 7.01.2020, the Executive Director Ms. Iolanda Ferraioli resigned. For further details,

reference should be made to point 4.2.

4.6 INDEPENDENT DIRECTORS

The Shareholders' Meeting of June 16, 2017 appointed a Board of Directors composed of three

Directors who meet the requisites of independence as per Article 147-ter and Article 148,

paragraph 3 of the CFA, Article 19 of the By-Laws, as well as in accordance with application

criteria 3.C.1 of the Code: Michaela Castelli, Elena David e Michele Preda.

The Independent Directors, as recommended by the aforementioned applicative criterion 3.C.1

of the Code, do not undertake with the Company, with its subsidiaries, with the Executive

Directors or with shareholders that control the Company, significant economic relations that

would impair their independent judgement. Also, they must not hold, directly or indirectly, or

on behalf of third parties, shareholdings that would permit them to exercise any form of control

over the company, or participate in agreements with other shareholders for the control of the

company.

On May 14, 2019, in accordance with application criterion 3.C.4. of the Self-Governance Code,

the Board assessed the existence of Directors' independence requirements according to the


assessment criteria indicated in application criteria 3.C.1. of the Self-Governance Code and in

accordance with Article 147-ter, paragraph 4 of the CFA. From the review of independence

declarations issued by the Board of Directors Ms. Elena David, Ms. Michaela Castelli and Mr.

Michele Preda, as well as from the assessment of information gathered and available to the

company, the Board ascertained that there are no risk situations with regard to the above-

mentioned Members that could compromise their independent judgment.

Specifically, there were no situations as identified by the Corporate Governance Committee that

could prejudice independence (continuance in office for more than nine years, particularly high

remuneration and assuming other offices in the company).

In accordance with application criteria 3.C.5 of the Code, the Board of Statutory Auditors

verified the correct application of the assessment criteria and procedures adopted by the Board

to evaluate the independence of its members.

Taking account of the recommendations made by the Corporate Governance Committee with

the letter of December 19, 2019, and the guidelines of the new Self-Governance Code, the

Company will adopt a policy to evaluate the independence of Directors. This policy will define,

among other things, the qualitative-quantitative criteria to evaluate the significance of the

relationships being assessed.

The Independent Directors meet formally at least once a year and minutes are taken. They also

meet frequently at the BoD and Board Committee meetings.

Two of the Independent Directors are also members of the Internal Control and Risks

Committee and the Remuneration and Appointments Committee. One of these Independent

Directors is also a member of the Supervisory Board. They therefore have access to further

information and documentation than that ordinarily available at the Board of Directors’

meetings. This enables constant synergy in the activities they perform.

In the meetings of the Independent Directors, general management considerations are

undertaken and particular matters to be brought to the attention of the CEO and the BOD

identified. Independent Directors held a meeting on November 13, 2019 and, in particular,

examined matters relating to the results of the Board evaluation process, the functioning of the

Board of Directors and the induction activity.

At the meeting of November 14, 2019, the Independent Directors were called upon by the

Remuneration and Appointments Committee to express their observations and considerations

with regard to the aforementioned matters.

4.7 LEAD INDEPENDENT DIRECTOR

Given the undertaking of the roles of Chairman and CEO by a single individual, on 16.06.2017

the Board of Directors, in accordance with the recommendations of the Code Criteria 2.C.4.

appointed as Lead Independent Director, the Independent Director Michele Preda.

In accordance with criteria 2.C.4 of the Code, the Lead Independent Director:

- acts as a point of reference and coordination of the contributions of the Non-Executive

Directors and, in particular, of the Independent Directors as per article 3 of the Code;

- works with the Chairman of the Board of Directors in order to guarantee that the Directors

be fully and immediately informed.


The Lead Independent Director, among others, has the right, on his own initiative or upon the

request of the other Directors, to summon meetings of the Independent Directors in order to

discuss issues that are considered relevant regarding the functioning of the Board of Directors

or corporate management.

5. PROCESSING OF CORPORATE INFORMATION

In accordance with applicable legislative and self-governance regulations, the Company has long

adopted specific provisions for the internal management and outside communication of inside

information and for regulating information flows towards the market in relation to transactions

concerning shares issued by the Company.

In 2019, the Company updated the aforementioned provisions in order to incorporate the

amendments which occurred in the national and Community legislative and regulatory

framework, particularly with the entry into force on 3.07.2016 of the provisions of EU

Regulation 596/2014 of the European Parliament and of the Council concerning market abuse

(MAR).

Inside Information

At the meeting of 4.09.2019, the Board of Directors approved the new Regulation for the

internal management and outside communication of inside information and the relative

Organisational Policy governing:

a) the internal management and external disclosure of information regarding La Doria S.p.A.

and its subsidiaries, with particular reference to inside information, as per Article 7 of

the MAR, with the identification of the roles and responsibilities of internal

organisational units and the parties involved in the management process of price

sensitive information;

b) the establishment and maintenance of an Insider List as per Article 18 of the MAR.

The Regulation and the Policy aim to ensure compliance with the laws and regulations in force

and to guarantee, through the necessary organisational controls, the maximum confidentiality

and privacy of inside information or, in any case, information that may become such (Significant

Information), in order to prevent the selective, incomplete or inadequate disclosure of such

information, documents and information regarding the Company and the Group. The Regulation

and the Procedure are adopted to safeguard investors as aiming to prevent speculative

transactions that are harmful to their interests through the exploitation of information

asymmetries or the dissemination of false or misleading information, and also to protect the

Company against any liability for crimes committed by persons connected to the Company.

The full text of the Regulation for the internal management and outside communication of inside

information is available on the website www.gruppoladoria.it, Corporate

Governance/Regulations and Policies section.

Internal Dealing

The Board of Directors of the Company approved the new Internal Dealing Conduct Code on

September 4, 2019.

The new Code aims to regulate the transparency and consistency of disclosures to the market

and conduct and disclosure requirements in relation to the Company, the Consob and the public


as regards transactions made, also through intermediaries, on shares of the Company and

related financial instruments, carried out by Covered Persons and by Connected Persons closely

associated with the Covered Persons.

Covered Persons include (i) the members of the Board of Directors and the standing members of

the Board of Statutory Auditors of the Company, as well as Executives who, while not members

of the above boards, have regular access to inside information and have decision-making

powers which may impact the future development and prospects of the Company, (ii)

shareholders who directly or indirectly hold at least 10% of the company share capital.

The Code contains the provision for black-out periods, that is, specific periods in the year where

there is an obligation of abstention from carrying out transactions on the financial instruments

issued by the Company. In particular, Covered Persons and Connected Persons may not carry

out, directly or through intermediaries, the acquisition, sale, subscription or exchange of the

Shares or Related Financial Instruments during the 30 calendar days preceding the meeting of

the Board of Directors called to approve the annual financial statements, the half-year report or

the forecast results. In the case of additional periodic financial information (Interim Reports),

the aforesaid prohibition is valid in the 15 calendar days preceding the meeting of the Board of

Directors.

The full text of the Internal Dealing Conduct Code is available on the website

www.gruppoladoria.it, Corporate Governance/Regulations and Policies section.

List of persons having access to inside information or Insider List

Pursuant to Article 18 of EU Regulation 596/2014, the Company established the Insider List of

those persons who, as a result of their work or the professional activities or duties they

performed, have access to inside information.

6. INTERNAL COMMITTEES TO THE BOARD (as per Article 123-bis, paragraph 2, letter d), CFA)

Two Committees were set up within the Board of Directors with investigative, consultative and

propositional functions to support the Board in fulfilling its role: the Remuneration and

Appointments Committee and the Control, Risks and Sustainability Committee.

A single Committee was therefore set up to perform the functions of remuneration and

appointments. No committees were set up, other than those envisaged by the Code.

The Remuneration and Appointments Committee is assigned the duty of assisting and

supporting the Board of Directors in its assessments and decisions concerning the size and

composition of the Board of Directors and the remuneration of the Directors and Senior

Executives.

The remit of the Control, Risks and Sustainability Committee is principally to support the Board

of Directors in the assessments and decisions concerning the Internal Control and Risk

Management System, the approval of periodic financial reports and non-financial declarations,

and with regards to sustainability.


The composition, duties and functioning of the Committees are governed by the Board of

Directors, in special Regulations, in line with the guidelines of the Self-Governance Code,

available on the website www.gruppoladoria.it, Corporate Governance/Regulations and Policies

section.

For the composition and the functioning of the Committees, reference should be made to points

7, 8 and 10 below.

7. APPOINTMENTS COMMITTEE

On June 16, 2017, the newly constituted Board established, for three years until the date of

approval of the Financial Statements at 31.12.2019, a Committee for the proposal of

appointments of Directors to the Remuneration Committee, in accordance with Article 5. P.1 of

the Self-Governance Code.

The Remuneration and Appointments Committee currently in office comprises three Non-

Executive Directors, the majority of whom are independent: Mr. Michele Preda, Chairman

(independent), Mr. Sergio Persico, Ms. Michaela Castelli (independent).

The Committee is also assigned the following duties with regards to appointments:

a) to draw up opinions for the Board of Directors in relation to the size and composition of

the Board and express recommendations on the professional roles whose presence on

the Board of Directors is considered beneficial;

b) to express recommendations on the maximum number of offices of Director or

Statutory Auditor in other companies on regulated markets, in financial, banking and

insurance companies and companies of a significant size which can be considered

compatible with a current undertaking of the office of Director of the Company;

c) expresses recommendations with regards to the general and prior authorisation by the

Board of exceptions to the prohibitions on competition applied to Directors as per Article

2390 of the Civil Code and compliance with any issues arising;

d) to propose to the Board of Directors candidates for the office of Director in the cases of

co-option, or to replace Independent Directors;

e) where the Board of Directors intends to adopt a succession plan for Executive Directors,

to carry out the necessary preparatory work;

f) to assist the Board of Directors with the annual self-assessment process of the Board and

its Committees, pursuant to the Self-Governance Code;

g) to oversee the process for the entry of members of the majority shareholding Family’s

third generation into the company, in compliance with the applicable “Regulation upon

the policies for the entry and development of third generation management personnel

to the La Doria Group”;

h) to review during the recruiting phase the profiles of the Senior Executives so as to assess

their expertise and experience, in compliance with the prerogatives of the Chief

Executive Officers in choosing and hiring candidates.


In the carrying out of its functions, the Investments Committee has full access to the

information and to the relevant departments necessary for the carrying out of its remit.

The Remuneration and Appointments Committee met 6 times during 2019, twice for activities

performed in relation to appointments. In the current year 2020, at the date of this Report's

approval, 2 Committee meetings had been held in relation to matters falling within the

Committee's competence.

The Board of Statutory Auditors and the Investor Relations and Corporate Affairs Manager

attended the meetings. The Human Resources Director, the Chairman of the Board of Directors

and the Chief Executive Officer were invited to attend certain meetings.

The minutes of Committee meetings were regularly taken.

Activities carried out in 2019

In the meetings of January 21, 2019 and February 26, 2019, the Committee examined the

communication of the Corporate Governance Committee dated 21.12.2018 and the

recommendations contained therein for matters falling within its competence and, on March 13,

2019, it undertook the prior examination of the Corporate Governance Report's sections that

pertain to it, and expressed a favourable opinion in relation to the Board of Directors.

At the meeting of January 21, it also preliminarily examined the Diversity and Inclusion Policy

proposal, expressing a favourable opinion in relation to the Board of Directors.

In October 2019, the Committee initiated and oversaw the Board evaluation process and on

November 14, 2019, it examined the results of this process in support of the Board of Directors

with regard to the annual assessment carried out by it on the size, composition and functioning

of the Board and its Committees. In the same meeting, it reviewed in advance the proposal for

the Regulation of the Remuneration and Appointments Committee to be submitted for the

Board's approval;

At the meeting of May 14, 2019, the Committee reviewed the assessment report on the

professional development of a number of third generation members of the Ferraioli Family, a

majority shareholder, as envisaged by the "Regulation on the policies for the entry and

development of third generation members to the La Doria Group". On December 5, the

Committee formulated certain considerations on the possible evolution of the Group's

organisational structure from a perspective of top management succession.

In the meeting of January 28, 2020, the Committee reviewed the proposal for the co-option

appointment of the Director Teresa Maria Rosaria Ferraioli, following the resignation of Director

Iolanda Ferraioli, as explained above in detail. In the same meeting, the Committee examined,

for all matters falling within its competence, the recommendations of the Corporate

Governance Committee dated 19.12.2019 and on March 13, 2020, it undertook the prior review

of the 2019 Corporate Governance Report, expressing a favourable opinion. At the meeting of

13.03.2020, the Committee expressed the hope that the adoption of a Contingency Plan for

strategic senior managers would be submitted for the attention of the Board of Directors, with a

constant view to business continuity. It also examined the professional profile established by

the Company to cover the role of Operations Director, as a Senior Executive.


8. REMUNERATION AND APPOINTMENTS COMMITTEE

Composition and Operation of the Remuneration Committee (as per Article 123-bis,

paragraph 2, letter d) CFA)

For information concerning the present section, reference should be made to the Remuneration

Report of the Directors and Senior managers with strategic responsibility, published in

accordance with Article 123-ter of the CFA.

9. REMUNERATION OF DIRECTORS

For information concerning the present section, reference should be made to the Remuneration

Report of the Directors and Senior managers with strategic responsibility, published in

accordance with Article 123-ter of the CFA.

10. CONTROL, RISKS AND SUSTAINABILITY COMMITTEE

Composition and operation of the Control, Risks and Sustainability Committee (as per Article

123-bis, paragraph 2, letter d) CFA)

In 2019, the Control, Risks and Sustainability Committee (hereinafter, also "Committee") held

eight meetings of an average duration of two hours and fifteen minutes. The Board of Statutory

Auditors (application criteria 7.C.3), the Internal Audit Manager, the Investor Relations and

Corporate Affairs Manager, the Legal Affairs Manager and certain Senior Managers/Executives

also attended the meetings in relation to their respective roles. It is envisaged that the Control

and Risks Committee will meet six times in 2019. Two meetings have already been held at the

reporting date.

The Committee in office, appointed on June 16, 2017, is made up of three Non-Executive

Directors, of whom 2 are independent, including the Chairman (application criteria 7.P.4).

One member of the Committee has extensive accounting and financial experience, considered

adequate by the Board of Directors on their appointment (Principle 7.P.4.).

On the invitation of the Committee itself, certain Directors/Senior Managers with specific roles

and responsibility attended the meetings of the Control and Risks Committee, in relation to the

individual matters under examination.

Control, Risks and Sustainability Committee functions

The Committee provides consultation and recommendations and supports, through appropriate

investigative activities, the evaluations and decisions of the Board of Directors relating to:

A. the internal control and risk management system (Principle 7.P.3);

B. the approval of the periodic financial reports (Principle 7. P. 3);

C. the approval of the non-financial declarations as per Legislative Decree 254/2016

aimed at ensuring an understanding of the company’s business, its performance,

results and impact in terms of environmental, social, diversity policy, human

rights and bribery and corruption issues.


A) In accordance with application criteria 7.C.1., and also as envisaged by the Committee

Regulation approved by the Board of Directors on September 4, 2019, the above Committee

expresses its prior opinion:

� on the internal control system guidelines, set by the Board, within which the principal

corporate risks are identified and managed;

� on the evaluation, at least annually, of the adequacy of the internal control and risk

management system with the particular characteristics of the company and the risk profile

assumed, as well as its efficacy;

� on the approval, at least annually, of the plan prepared by the Group Internal Audit

Manager;

� on the description, in the Corporate Governance Report, of the main characteristics of the

internal control and risk management system and on its assessment on its overall adequacy,

supporting the Board in relation to the implementation of the guidelines contained in the

Self-Governance Code in this regard;

� on the evaluation of the results of the independent audit firm’s letter of recommendations

and of the report on fundamental questions arising during the audit of the accounts;

� on the appointment and revocation of the Group Auditing Manager, previously the internal

audit manager as per Article 150 of Legislative Decree 58/1998), on the allocation of

adequate resources for the execution of his/her responsibilities, on the definition of his/her

remuneration in line with company policies.

B) In accordance with application criteria 7.C.2. of the Code, and the aforementioned

Regulation, the Control and Risks Committee:

� evaluates, together with the person responsible for the preparation of the corporate

accounting documents, having consulted the Independent Audit Firm and the Board of

Statutory Auditors, the correct utilisation of the accounting principles applied and their

uniformity in the preparation of the consolidated financial statements (Applicative criteria

7.C0.2, letter a);

� expresses opinions on specific aspects concerning the identification of the principal

corporate risks (Applicative criteria 7.C.2., letter b);

� examines the periodic reports, concerning the evaluation of the internal control and

management of risks system, and those of particular size, prepared by the internal audit

department (Applicative criteria 7.C.2., letter c);

� monitors the independence, adequacy, efficacy and efficiency of the internal audit

department (Applicative criteria 7.C.2, letter d);

� requests the internal audit department, where considered beneficial, to carry out

verifications on specific operational areas, simultaneously communicating such to the

Chairman of the Board of Statutory Auditors (Applicative criteria 7.C.2, letter e);

� reports at least every six months, on the approval of the annual and half-yearly reports, on

the work carried out and the adequacy of the internal control system (Applicative criteria

7.C.2, letter f);

� supports, with appropriate investigative activities, the evaluations and decisions of the

Board of Directors concerning the management of risks from events of which the Board of

Directors becomes aware (application criterion 7.C.2. letter g).


C) On January 23, 2019, the Board of Directors also assigned duties concerning sustainability

to the Committee. As indicated in Article 3.3 of the Regulation, the aforementioned

Committee, therefore, carries out consultative and propositional functions towards the

Board, assisting it in the definition of policies, guidelines and initiatives concerning:

� the promotion of a strategy which integrates sustainability into business processes so as to

create value over time for the shareholders and for all other stakeholders;

� the implementation and monitoring of the Group's Sustainability Policy in the long-term;

� the implementation, application and monitoring of the Group's Sustainability Plan, which

reports

� strategic priorities, commitments and objectives, including of a quantitative nature, for the

development of the company's economic, environmental and social responsibility;

� the monitoring of the company’s positioning with financial markets on sustainability issues;

� the examination and assessment of the Consolidated Non-Financial Declaration as per

Legislative Decree 254/2016 and its integration into economic and financial reporting;

� the introduction of sustainability objectives in the MBO system in collaboration with the

remuneration and appointments committee;

� the dissemination of the sustainability culture among employees, shareholders, users,

clients and stakeholders in general;

� the evaluation of environmental, economic and social impacts deriving from company

activities in the regions;

� the implementation and promotion of structured methods to benchmark against the

regions in which the Group operates, including through the implementation of initiatives

involving all stakeholders;

� the implementation and monitoring of actions proposed on the involvement of

stakeholders;

� the development of relations with institutions, organisations and research centres with

recognised expertise on sustainability.

� monitoring the adequacy of the Ethics Code and its effective implementation.

In relation to the "Transactions with Related Parties" - the subject of a special Consob regulation

(adopted with Resolution No. 17221 of March 12, 2010 and subsequent amendments and

supplements) and the recent amendment to the Civil Code (see Article 2391-bis) - it should be

noted that the Board of Directors of September 4, 2019, updated the relative policy.

The latter provides that, in the case of less significant transactions, as better described in point

12 below, the Committee is required to formulate a non-binding reasoned opinion (except

where otherwise established).

The meetings of the Control and Risks Committee are minuted (Application Criterion 5.C.1.,

letter d).

In carrying out their functions, the Control and Risks Committee may access all information and

departments necessary for the undertaking of their duties (Application Criterion 4.C.1., letter d).

Sustainability Governance

The issue of sustainability, as stated above, is within the scope of the Control, Risks and

Sustainability Committee, which undertakes proposal and consultative functions for the Board


of Directors with regards to the drafting of objectives, actions and guidelines to promote a

strategy which integrates sustainability into business processes, so as to create value over time

for the shareholders and for all other stakeholders. In the gradual process of integrating

sustainability into business strategies, a systematic process was created for reporting by

formalising a procedure and defining sustainability policies on significant aspects (sustainability,

human rights, diversity and the new Ethics Code). The material aspects subject to reporting

were identified in a workshop with the Directors of the various areas, aimed at the definition

and updating of the materiality matrix. The matrix was submitted for the review of the CRSC and

the approval of the BoD of November 14, 2019. A further step for the integration of

sustainability into strategy, an objective requested by the Chairman of the Corporate

Governance Committee, was undertaken with the drafting of a 2020-2022 Three-Year

Sustainability Plan, whose objectives are linked to those set out in the Industrial Plan, to the

United Nations 2030 Agenda and organised into operational objectives and specific targets.

The Committee has the duty of implementing and monitoring the Policy, as amended at the

beginning of 2020, so that a culture of sustainability and dialogue with the stakeholders is

promoted at all levels - two crucial commitments in pursuing the objective of integrating

sustainability into company strategies. In 2019, work in this area concentrated on the one hand

on raising internal awareness of sustainability issues through training courses on Specific

training (Human Rights, Whistleblowing, Model 231 and the Ethics Code) for all employees, and

on the other by extending the Stakeholder Engagement process to customers and suppliers.

The importance of this issue was demonstrated in 2018 by the setting up of a “Sustainability

Reporting” Function, with the duty of co-ordinating and aggregating data, information and

projects regarding Social and Environmental Responsibility, which reports directly to the

Chairperson of the Board of Directors. This Function reports to the Control, Risks and

Sustainability Committee on activities undertaken regarding non-financial reporting: the Plan,

the policies, the objectives, the initiatives, the materiality analysis and Stakeholder Engagement.

Main activities carried out by the Control and Risks Committee in 2019

In 2019, the Committee expressed a favourable opinion with regard to:

a) the definition of the guidelines of the internal control and risk management system;

b) the assessment, at least on an annual basis, of the suitability of the internal control and

risk management system;

c) the work plan prepared by the internal audit manager;

d) for the description, in the corporate governance report, of the main characteristics of the

internal control and risk management system and the manner of co-ordination between

parties involved, expressing its assessment on the overall adequacy;

e) e) for the evaluation, after consultation with the Board of Statutory Auditors, of the

results of the independent audit firm’s letter of recommendations;

The CRSC also assisted the BoD in relation to:

f) the correct utilisation of the accounting standards applied and their uniformity in the

preparation of the consolidated financial statements;

g) the activities performed - upon approval of the Half-Year Report on the areas taken into

consideration in the last twelve months;


h) the coordination and collaboration with the Supervisory Board set up pursuant to

Legislative Decree 231/01, through the exchange of information flows;

With specific reference to sustainability, the Committee has:

i) assessed and proposed to the Board the assignment of investigative, propositional and

consultative functions to this Committee, in order to support the Board evaluations and

decisions concerning sustainability;

j) examined and shared the materiality matrix proposal for the Non-Financial Declaration

pursuant to Legislative Decree 254/2016;

k) expressed a favourable opinion in relation to the definition of policies, guidelines and

initiatives concerning the examination and assessment of the Consolidated Non-Financial

Report as per Legislative Decree 254/2016 and its integration into economic and

financial reporting;

l) examined the "ERM" project to refine the risk identification and assessment

methodology, also in relation to sustainability aspects.

The Committee - in addition to having a Regulation for its own functioning (submitted to the

Board which then approved it) - also examined and assessed:

m) the impairment test procedures on the 2018 financial statements;

n) the state of advancement of the compliance project, Law 262/05, of the company and of

its subsidiary LDH (La Doria) Ltd;

o) the Three-Year Interventions Plan defined following the results of the IT Risk Assessment

carried out by a specialised consultancy firm;

p) the updating of the corporate policies and regulations on market abuse in order to adapt

them to the national and EU legislative and self-regulatory amendments subsequent to

the previous review of 30.06.2016;

q) the new corporate policy for safeguarding confidential information, the internal dealing

conduct code and the new policy for transactions with related parties;

r) the state of advancement of the "Privacy Project" relating to compliance with the

European Regulation on personal data protection (GDPR);

s) the contractual conventions with subsidiaries;

11. CONTROL AND RISK MANAGEMENT SYSTEM

The control and risk management system is the overall rules, procedures and organisational

structures implemented by management and all company personnel aimed at permitting,

through an adequate process of identification, measurement, management and monitoring of

the principal risks, a safe, correct and efficient management of the company.

Internal control is therefore an integrated ‘process’ with the business processes in that it is

carried out through actions focused on minimising the risks of not reaching the corporate

objectives within these same processes.

The Company wished to adopt an effective Control and Risk Management System, ensuring with

reasonable security the reaching of the following corporate objectives:

� efficacy and efficiency of operations;

� reliability of financial disclosure;


� safeguarding of company assets;

� compliance with law and regulations.

The drawing up of the internal control system of the Company was carried out in line with the

model adopted by the CoSO Report ("Internal Control - Integrated Framework” published by the

Committee of Sponsoring Organizations of the Treadway Commission), whose members operate

both at the organisational level and at the operational process level, as better described below

in relation to financial disclosure.

The Internal Control and Risk Management System is the focal point of Corporate Governance

and unique even though several persons appointed to it have numerous roles. The goal is to

achieve real Corporate Governance which allows the coverage of risks to the greatest degree

possible and therefore based on the capacity to integrate the considerations of all parties.

At the meeting of February 13, 2007, the Board of Directors, as the institutional body authorised

to establish the guidelines for the Control and Management of Risks and to verify their

efficiency through the Chief Executive Officer and the Control and Risks Committee, resolved:

a) to approve the guidelines for the Internal Control System (now called the Internal Control and

Risk Management System);

b) to appoint the Chief Executive Officer as the Director in charge of the creation and

maintenance of an effective internal control and risk management System;

c) to appoint the Internal Audit Manager, appointed to verify that the internal control and risk

management system is functional and adequate (formerly called the Internal Control Manager);

The main scope of the guidelines of the Internal Control and Risk Management System is to

define the principles, responsibilities and methods of implementation and management of the

ICRMS. They provide the guiding elements for the various actors in the System so as to ensure

that the principal risks concerning the La Doria Group are correctly identified, as well as

adequately measured, managed and monitored; they clearly identify duties and responsibilities

in such a way as to foster coordination between the principal parties involved in the ICRMS.

The Risk Management System

La Doria’s Risk Management Process (Enterprise Risk Management - ERM) is structured to

identify, assess and manage all the risks affecting its business. It aims to ensure that the Board

of Directors makes informed decisions with sufficient consideration of the current and

prospective risks, including medium and long-term risks. This is characterised by a structured

and systematic approach inspired by best practices and based on a top-down approach. The risk

management process is the set of activities which aim to support, through the analysis of risk

effectively assumed by the Company and its possible evolution, the definition by the Board of

Directors of the nature and level of risk compatible with defined objectives.

At the end of 2019, an ERM (Enterprise Risk Management) project was finalised. The project

aims to perfect the methodology used to identify, assess, and subsequently prioritise risk.

The methodology adopted for the assessment of business risks is that of self-assessment. This

consists of an auto-diagnostic process carried out by managers in individual areas of operation,

and seeks to provide an estimate of the probability and impact of potential damaging events.

This estimate is based on the perceived risk that the Managers of the Departments/Functions

associate with the processes under their control.

The Director responsible for ICRMS directs management activities on the principal corporate

risks, including all the risks that can be of relevance to the sustainability of business activities in


the long term, and taking account of corporate objectives and the specificities of Group business.

The Board of Directors, on the proposal of the Director in charge and after prior consultation

with the Control, Risks and Sustainability Committee, determines the level of risk considered

compatible with the strategic objectives of the Group and assesses the containment measures

that have been taken or are to be taken to control these risks.

The frequency of the Enterprise Risk Management process, correlated with strategic objectives,

is on an annual basis, as is the monitoring of risk management activities. In order to ensure a

suitable methodological approach, a Risk Management Policy was formalised as a key guiding

document to support the risk management process, capable of providing the necessary tools to

identify, assess and manage these risks. This methodology provides the catalogue of risks by

classifying them into the following categories: external and compliance, strategic, financial,

operating and reputational; the drivers to be utilised in the assessment of inherent and residual

risk and a summary table to enable prioritisation.

Internal control system on financial reporting

The Internal Control over Financial Reporting (ICFR) system is an integral, essential part of the

wider internal control system. This system introduced by La Doria S.p.A., concerns an analysis of

the internal control system which oversees the preparation of the financial statements, the

interim financial statements and all financial disclosure.

This system, prepared by the Executive Officer and the Internal Audit Function, aims to

guarantee that the administrative – accounting procedures adopted and their application are

adequate to ensure, with reasonable certainty, the correctness, the reliability of the financial

disclosures and the appropriateness of the financial statement preparation process in producing

reliable and timely accounting and financial information, in accordance with applicable

accounting standards. The analysis of the internal control system was carried out in line with the

Committee of Sponsoring Organisations principles and incorporated the principles outlined in

the publication “internal control for reliable financial reporting”. The analysis of the internal

control system within the IT processes, with particular reference to those put in place to support

the financial reporting processes, was conducted according to the principles laid out in the

“Control Objectives for Information and related Technology” (“COBIT”) model. In 2019, the

updating continued on the defined control matrix and testing. This activity was also extended to

the strategic subsidiary LDH, which in 2019 updated its control design, appointing a leading

consultancy firm.

A description of the principal characteristics of the risk management and internal control system

in place in relation to Group financial disclosure follows.

a. risk management and internal control system phases

For the completion of the system, a risk assessment was undertaken in order to identify and

evaluate the risk areas which could arise such as to compromise the reliability of the financial

disclosure.

The approach taken for the analysis of the system is broken down into 5 phases, each of which

relating to a specific element of the Internal Control System (control environment, risk

assessment, control activity, information systems and communication flows and monitoring

activities) as defined by the benchmark framework in order to guarantee the completeness of

the analysis and provide adequate support to the Executive Responsible and the Chief Executive

Officer for the declarations required by Article 154 of the CFA.

The approach was broken down into 5 phases:


� Identification of financial statement accounts and of the processes analysed

(“Scoping”): in this phase the financial statement accounts and the “significant”

processes related to them are identified.

� Analysis of the principles relating to operational controls (“Entity level controls”): once

the intervention priorities are defined (so-called “Top down risk based” approach), the

internal control principles which operate at entity level to cover the components of

internal control such as Control Environment, Information and Communications and

Monitoring are recorded.

� Recording and verification of relative controls of processes subject to analysis: in this

phase, beginning with the identification of risks, defined as potential events, accidental

or due to fraud, which may compromise the reaching of the System objectives (accuracy,

completeness, reliability and trustworthiness of the financial disclosure), the control of

processes subject to analysis were recorded. In this phase, the adequacy of the control

documentation is evaluated, identifying the controls which are inadequate or which

must be improved and identifying the critical areas and the relative corrective actions.

� Tests on the effectiveness of controls centre on:

- key controls identified;

- control frequency;

- the category of control (preventive or subsequent);

- the method of control (automatic or manual);

The test plan and the type of test to be carried out in order to verify the effectiveness of

the controls in place have been drawn up.

A “Remediation Plan” was subsequently prepared, in which the areas to be improved,

the relative corrective actions to be taken and the ambit of responsibility for such are

reported.

� Preparation and release of the declaration:

Based on the documentation and verification of the effectiveness of the controls and the

analysis of the critical areas and the status of the corrective actions, the Executive Officer,

supported by internal certifications, releases the declaration in accordance with article

154 of the CFA.

b. maintenance of the System and Roles and Responsibility

In order to maintain over time the effectiveness of the controls, both from the formulation and

operational viewpoints, the controls are subject to monitoring on the one hand by the Manager

responsible for significant processes/activities (line monitoring) and on the other by the Internal

Audit Department (independent monitoring activities) based on the predefined Activity Plan;

this monitoring establishes a process of “continuous improvement”, creating an increasingly

reliable control system for financial disclosure.

The Internal Audit Manager supports the Executive Responsible for the preparation of the

corporate accounting documents, preparing reports for the Senior Management on the

adequacy of the System through the Report to the Control and Risks Committee, indicating the

deficiencies uncovered, the corrective actions to be taken and the relative responsibility.

Reporting to the Executive Responsible is based on a system of internal certifications to ensure

adequate internal formalisation of responsibilities for the adequacy and effective application of

administrative and accounting procedures.

Each year the Group’s subsidiary, which is within the scope of application of the 262 audits,

sends the Executive Responsible for the preparation of La Doria’s corporate accounting


documents a certification letter, signed by the CFO, attesting to the reliability and proper

application of financial reporting processes and the accuracy and completeness of the financial

data in the reporting package.

On May 14, 2019 the Board of Directors verified the adequacy and effective functioning of the

internal control and risk management system.

11.1 EXECUTIVE IN CHARGE OF THE CONTROL AND RISK MANAGEMENT SYSTEM

In accordance with article 7.P.3, letter a), (i) of the Code, the BoD has identified the Chief

Executive Officer Antonio Ferraioli as the Executive Director responsible for overseeing the

functioning of the Internal Control and Risk Management System. His duty is to implement the

guidelines formulated by the Board of Directors and in particular:

- identify the main business risks (strategic, operating, financial, external, compliance and

reputational), taking into account the characteristics of the activities undertaken by the

Company and by its subsidiaries, and periodically presents them for examination to the Board of

Directors;

- implement the guidelines defined by the Board of Directors, and supervises the planning,

realisation and management of the internal control and risk management system, constantly

verifying its overall adequacy, efficiency and effectiveness;

- adapt the system to the operating conditions and the regulatory and legislative environment;

- propose to the Board of Directors the appointment, revocation and the remuneration of the

Internal Audit Manager, as the person appointed to verify whether the internal control and risk

management system is functional and adequate;

In 2018, the Chief Executive Officer carried out his appointed duties and, in particular, as

established by application criteria 7.C.4., letter a) of the Self-Governance Code, provided

detailed documentation containing the mapping of the principal corporate risks, broken down

by category and by process and highlighting the so-called critical risks. The document was

presented and approved at Board of Directors’ meeting of February 27, 2019.

The Chief Executive Officer has, in addition, requested from the internal audit department the

carrying out of verifications on specific operational areas, communicating such to the Control

and Risks Committee.

11.2 INTERNAL AUDIT MANAGER

The Board of Directors, in the meeting of February 13, 2008, on the proposal of the Director in

charge of the control system and with the approval of the Control and Risks Committee

appointed Ms. Elena Maggi, Internal Audit Manager, as the person appointed to verify that the

control and risks management system is functional and adequate, establishing the remuneration

in compliance with the company remuneration policies (application criteria 7.C.1., second part).

The Internal Audit Manager is also responsible for Sustainability Reporting. This choice is

motivated by deep knowledge company data reporting processes. The CNFR preparation

process is regulated by the PGE3.4 formalised procedure and is subject to limited assurance by

the Independent Audit Firm Deloitte & Touche, which annually issues a report in compliance

with the requirements of Articles 3 and 4 of Legislative Decree 254/2016 and International


Reporting Standards (GRI). Regarding the status, taking into account the legislative framework,

of the scope of activities performed by the Internal Audit Manager in this area and the role of

the external auditor, the responsibility for Sustainability Reporting entrusted to the I.A.

Manager is not considered to compromise his/her independence.

The Internal Audit Manager hierarchically reports to the Chairman of the Board of Directors

(application criteria 7.C.5., letter b) and during the year, had direct access to all the information

necessary to execute the role (application criteria 7.C.5., letter c).

In 2019 the Internal Audit Manager verified the functionality and suitability of the Control and

Risk Management System through an audit plan which was approved by the Board of Directors

on January 28, 2019. In 2019, the ERM (Enterprise Risk Management) project was finalised. The

project aims to refine the methodology used to identify, assess and subsequently prioritise risk

for the creation of a risk-based Audit Plan (application criteria 7.C.5., letter a). In the period of

reference, the Internal Audit Manager performed the following main activities:

a. prepared periodic reports containing information on activities, the manner of risk

management, in addition to an evaluation on the suitability of the Internal Control and

Risk Management System (applicative criteria 7.C.5., letter d), sending the above-stated

documents and reporting such to the Board of Statutory Auditors, to the Control and

Risks Committee, to the Chairman of the Board of Directors and to the Director in charge

of the Control and Risk Management System (applicative criteria 7.C.5., letter f);

b. performed the audits on the request of the Chairman of the BoD and of the Executive

responsible for the preparation of the corporate accounting documents, in addition to

those envisaged by the Plan;

c. prepared reports at the end of the audit activities and requested the Recipient

Departments to draw up plans to deal with the critical issues identified, with the

definition of the Persons Responsible and the timeframes for the implementation of

corrective actions;

d. supported the Supervisory Board in the audits pursuant to Legislative Decree 231/01;

e. collaborated in defining corporate training and informative activities on the aspects of

the internal control and risk management system;

f. monitored the implementation of remedial actions through follow-up activities;

g. verified in the audit plan the reliability of the IT accounting systems, including the

accounting systems;

h. supported the Director in charge of the internal control and risk management System in

identifying the main business risks and in formalising the Risk Management Policy;

i. prepared the report on the suitability of the internal control system and communicated

it to the Internal Control, Risks and Sustainability Committee, the Board of Statutory

Auditors and the Responsible Director.

11.3 ORGANISATION MODEL AND ETHICS CODE AS PER LEGISLATIVE DECREE 231/2001

The Board of Directors, having consulted with the Control and Risks Committee, approved the

organisation, management and control model as per Legislative Decree 231/01 with Board

motion of March 28, 2008. In light of the additional offences, the Special Part of the Model was

updated annually following the introduction of offences against industry and commerce,

Environmental Offences, “Undue influence or accessory offences”, “Corruption between private

parties” and offences concerning “the employment of illegal aliens” and the amendment of the


false corporate communications offence. The Supervisory Board, established pursuant to

Legislative Decree 231/01, has full and autonomous powers of initiative and control with regard

to the functioning, efficiency, suitability and compliance of the Model, in order to prevent the

risk of offences which might give rise to administrative liability for the Company. The

Supervisory Board in office, appointed by the BoD on June 16, 2017 is composed of three

members: the Chairperson, Ms. Michaela Castelli, a Non-Executive Independent Director, Mr.

Sergio Persico, a Non-Executive and Non-Independent Director and the Internal Audit Manager

Ms. Elena Maggi, who also carries out the duties of secretary. This composition was adopted in

order to allow the presence of all the technical knowledge and professional experience

necessary to guarantee the correct and efficient carrying out of the supervisory activities of the

Model. The two Directors on the Supervisory Board are also members of the Control and Risks

Committee and this allows improved control synergies.

The preparation of the Organisational Model is based on the Confindustria Guidelines.

The La Doria Model comprises a General Section and a Special Section, broken down into seven

sub-sections:

� section 1: Public Administration offences;

� section 2: corporate offences;

� section 3: market abuse offences;

� section 4: culpable homicide and serious injury offences, and serious injury

� in violation of safety regulations and hygiene and workplace safety protection

regulations;

� section 5: offences against industry and commerce;

� section 6: environmental offences;

� Section 7: offences concerning the employment of illegal aliens.

For the various types of offence set out in Legislative Decree 231/01, the areas at direct crime

risk and those supporting them were identified, as were the relative methods of commission

and the controls aimed at reducing the crime risk.

The Ethics Code, approved with the BoD motion of 28.03.2008, is an integral part of the Model.

The Code's latest version was approved at the end of 2019.

The General Section of the Model and the Ethics Code are available on the company website

www.gruppoladoria.it in the Corporate Governance/Organisation Model and Corporate

Governance/Ethics Code section, respectively.

The Organisational Model has been adopted also by Italian Subsidiary Eugea Mediterranea.

Specifically, the Model was approved by the Board of Directors of the Company on May 12,

2011, along with the appointment of its Supervisory Board.

The Supervisory Board met six times in 2019. In order to verify the effective implementation of

the Organisational, Management and Control Model, the Supervisory Board approved the

Supervisory Plan in the meeting of January 21, 2019. Based on the approved Plan, operational

audits were carried out with the support of the Internal Audit Department, in relation to the

areas considered in the Special Sections of the Organisational Model. At the meeting of May 14,

2019, the Supervisory Board presented the Annual Report on its activities in 2018. The

supervisory activities on the model were carried out through an analysis of the issues

established by the Supervisory Board, an analysis of the information contained in the periodic

Reports sent to the Supervisory Board by the internal managers of the risk areas identified and

based on the meetings with the area and/or department managers with sensitive activities in

accordance with Legislative Decree 231/01.


11.4 INDEPENDENT AUDIT FIRM

Deloitte & Touche S.p.A. is the Independent Audit Firm appointed on June 10, 2016 for the audit

of the separate and consolidated Financial Statements and the limited audit of half-year results.

The nine-year appointment conferred on the proposal of the Board of Directors will expire with

the approval of the financial statements at 31.12.2024 by the Shareholders' Meeting.

11.5 EXECUTIVE RESPONSIBLE FOR THE PREPARATON OF CORPORATE ACCOUNTING

DOCUMENTS

In accordance with article 154-bis of the Consolidated Finance Act, the Board of Directors in the

meeting of 11.05.2007, on the proposal of the Chairman and with the approval of the Board of

Statutory Auditors, appointed Mr. Alberto Festa, Finance and Administration Director of the

Company, as Executive Responsible for the preparation of the corporate accounting documents.

In accordance with article 28-ter of the By-Laws, this latter holds adequate professional

requirements, consisting of over ten years’ experience at managerial level in the accounting,

administrative, finance, accounts and tax fields. In accordance with the same article of the By-

Laws, the Executive Responsible is attributed the functions and the powers as laid out in article

154-bis of Legislative Decree No. 58 of February 24, 1998.

The Executive Responsible has the responsibility for the internal control system in relation to

financial disclosure and to that end must, in collaboration with the internal auditor, prepare

adequate administrative and accounting procedures for the compilation of the periodic

accounting documentation and every other financial communication as per Law 262.

The Executive Responsible and the Chief Executive Officer must declare in the relative report,

attached to the consolidated and separate financial statements and the half-year report, the

efficiency and effectiveness of the application of procedures in accordance with the third

paragraph of article 154-bis of the CFA, as well as, the correspondence of the underlying

financial results with the correct representation of the balance sheet, income statement and

financial results of the Company and the companies included in the consolidation.

The Executive Responsible must also declare the compatibility of the documented results, to the

underlying accounting records and communications of the Company in accordance with Law

and the market, and with the information and data on the economic, balance sheet and

financial situation of the company, also on an interim business.

The Executive Responsible reports annually to the Control and Risks Committee on the correct

utilisation of Accounting Standards applied and their uniformity in the preparation of the

consolidated financial statements.


11.6 COORDINATION BETWEEN THE PARTIES INVOLVED IN THE INTERNAL CONTROL AND RISK

MANAGEMENT STSTEM

The Internal Control and Risk Management System, the pillar on which Corporate Governance is

based, is a central element for the parties and departments, each within their own remit,

contributing to the running of the enterprise in a sound and correct manner and in line with the

risk management objectives.

The coordination between the various parties involved in the internal control and risk

management system is achieved through the sharing among the parties of all significant

information concerning the system.

The sharing of this information takes place in an institutional manner through the participation

of the principal actors of the internal control and risk management system at the meetings of

the Control and Risks Committee, at the quarterly audits of the Board of Statutory Auditors and

at the meetings of the Supervisory Board. The Director in charge of the Internal Control and Risk

Management System meets on a weekly basis with the Internal Audit Manager, discussing any

significant issues in relation to the carrying out of the audit plan.

The Executive Responsible holds periodic meetings with the Internal Audit Manager, particularly

in relation to the processes underpinning the preparation of the financial disclosure.

The composition of the Supervisory Board (Internal Audit Manager and two members of the

Control and Risks Committee), guarantees synergy in the control activities and in the

information flows, which facilitates and ensures the efficacy of the supervisory activities as per

Legislative Decree 231/01.

Also to coordinate on issues of common interest, the Board of Statutory Auditors and the

Independent Audit Firm organised and held during the year various joint meetings, in addition

to those annually required by the applicable regulation.

12. DIRECTORS’ INTERESTS AND RELATED PARTY TRANSACTIONS

Related party transactions

With Legislative Decree 49/2019, the Italian legislator implemented Directive 2017/828 of the

European Parliament and of the Council which amends Directive 2007/36/EC as regards

fostering the long-term commitment of shareholders. Legislative Decree 49/2019, in turn, led to

changes in the Civil Code, including to Article 2391-bis entitled "Transactions with Related

Parties" ("TRP") envisaging, in short, that Consob identifies: a) the significant thresholds; b)

procedural and transparency rules; c) the cases for abstention from voting or safeguard

measures to protect the interests of the company.

Pending Consob's update of Resolution No. 17221/2010 ("Regulation on Transactions with

Related parties" - hereinafter also "Regulation"), the Company's Board meeting of November 14,

2019, reviewed the existing regulation and abandoned the simplified procedure in favour of a

system which provides, in summary:

A) A distinction between transactions:

i) significant transactions;

ii) minor transactions;

iii) less significant transactions


that is, respectively: i) transactions in which the significance threshold of the value, asset and

liability (as defined by the Regulation) are higher than 5%; ii) transactions with a value not

exceeding Euro 50,000; iii) transactions other than those in i) and ii) above;

B) The definition of Related Parties and their identification, which takes place through half-

yearly monitoring by the Legal Affairs Manager, a function which is also responsible for

updating the List;

C) The management of the TRP according to the following criteria:

i) in the case of less significant transactions, the formulation of a non-binding reasoned

opinion by the CRSC, except where otherwise established;

ii) in the case of significant transactions, the setting up of an ad hoc Committee made up of

three Independent Directors who are not related to the transaction. These Independent

Directors are required to formulate a justified binding opinion. The Board of Directors may

approve the transaction even in the presence of an unfavourable opinion of the

Competent Committee, provide that the transaction is authorised by the Shareholders’

Meeting.

For further information on the Policy concerning the governance of transactions with related

parties, reference is made to the full text available on the website www.gruppoladoria.it,

Corporate Governance/Regulations and Policies section.

Directors’ Interests

As regards the management of Directors' conflicts of interest, in accordance with Article 2391

and as per the Consob Regulation concerning related parties, the matter is sufficiently regulated

in the aforementioned Policy for transactions with related parties.

Specifically, when a transaction involves the interests, on their own behalf or on behalf of third

parties, of La Doria Directors, the Director in the position of related party concerning the

transaction must inform in a timely and exhaustive manner the Board of Directors and the

Board of Statutory Auditors on the existence of interests in accordance with Article 2391 of the

Civil Code, abstaining from the resolution. If the Board of Directors considers it beneficial to

attend the discussion and the vote of related party Directors, they may allow, having heard the

opinion of the Board of Statutory Auditors, attendance of the interested Director at the

discussion and also at the voting phase concerning the transaction.

Where the Transaction involves the interested party, personally or on behalf of third parties,

they must abstain from the transaction, delegating such to the Board of Directors.

For further information on the Policy regulating transactions with related parties, reference is

made to the full text available on the website www.gruppoladoria.it, in the Corporate


13. APPOINTMENT OF STATUTORY AUDITORS

The appointment of the Board of Statutory Auditors is expressly governed by article 28 of the

Company By-Laws.

The Statutory Auditors and the Alternate Auditors are appointed by the Shareholders’ Meeting

based on slates presented by the shareholders. The appointment of one standing member and

one alternate member is reserved to the minority shareholders.


Only those shareholders who, alone or together with other shareholders, represent at least

2.5% of the shares with voting rights at ordinary shareholders' meetings shall be entitled to

present slates.

Each slate, composed of two sections, can contain a maximum of four candidates, two for the

office of Statutory Auditor and two for the office of Alternate Auditor.

The slates presented by shareholders, together with the professional and personal information,

must be filed at the registered office of the company at least 25 days before the date fixed for

the Shareholders’ Meeting in first call.

Declarations in which the candidates individually accept their candidacy and attest, on their own

responsibility, that there are no grounds for ineligibility, and that they meet the requirements

prescribed by law and the by-laws must be filed together with the slates within the time limit

specified above.

Candidates who already hold offices in a greater number of companies than that permitted by

Consob Issuers’ Regulation article 144 may not be presented. Those with voting rights may vote

on only one slate.

The procedure for electing Statutory and Alternate Auditors shall be as follows:

a) from the slate which obtained the majority of votes from shareholders, two Statutory

Auditors and one Alternate Auditor are elected, in the order in which they are listed;

b) from the minority slate which obtained the highest number of votes after the first, in the

order in which they are listed, one Statutory Auditor and one Alternate Auditor are elected;

c) the chair of the Board of Statutory Auditors is resolved in conformity with article 148 of

Legislative Decree No.58 of February 24, 1998 - therefore the Statutory Auditor elected from

the minority slate;

d) where for whatever reason, for the appointment of the Board of Statutory Auditors, the

procedure at letters a) and b) cannot be adopted, and therefore also in the case of a

presentation of a single slate or in the absence of slates, the Statutory Auditors and the

Chairman will be elected by statutory majority;

e) in the case of a tie between two slates receiving the highest number of votes, the two

Statutory Auditors and the Alternate Auditor are appointed based on seniority of age,

considering them therefore from the same majority slate.

If the tie involves further slates, or where no minority slate exists, the age criterion extends to

the entire Board of Statutory Auditors. In the case of a tie between two or more minority slates,

the most senior in terms of age is elected as Statutory Auditor and the Alternate Auditor is

elected as the first candidate listed in the same slate;

f) in the case of replacement of a Statutory Auditor, belonging to the majority or minority slate,

the Alternate Auditor indicated in the majority slate or the Alternate Auditor from the minority

slate are deemed elected. In the case of replacement of the Chairman, the most senior

Statutory Auditor in terms of age assumes the chair.

The appointment of Statutory Auditors to fill vacancies in the Board of Statutory Auditors in

accordance with article 2401 of the Civil Code is resolved by the Shareholders’ Meeting in the

manner established above.

14. COMPOSITION AND OPERATION OF THE BOARD OF STATUTORY AUDITORS (as per Article

123-bis, paragraph 2, letter d) CFA)

The Board of Statutory Auditors consists of three standing and two alternate members.


The members are chosen from the Auditors’ Register at the Ministry for Justice and for the

duration of the appointment must possess the honour requisites established by the Regulation

adopted in accordance with article 17, paragraph 3 of Law No.400 of August 23, 1998 of the

Ministry for Justice and restated in article 148 of Legislative Decree No.58/1998.

The Statutory Auditors also satisfy the requisites of independence established by Article 148,

paragraph 3 of Legislative Decree No.58 of February 24, 1998 (CFA), as well as the requisites of

independence indicated in application criteria 8.C.1. of the Self-Governance Code.

For further information on the curriculum vitae of the Board of Statutory Auditors, reference is

made to the slate presented during the appointment by the shareholders belonging to the

Shareholder Pact, available on the website www.gruppoladoria.it, Investor Relations section.

The office expires at the date of the shareholders’ meeting called for the approval of the

financial statements relating to the third year of the office held.

The current Board, appointed by the Shareholders’ Meeting of June 16, 2017 will remain in

office until the approval of the financial statements at December 31, 2019.

No change occurred in 2019 and in the period from 2019 year-end and today.

For the composition and the other information related to the current Board of Statutory

Auditors, reference is made to Table No.3 attached to the present Report.

In 2019, 7 meetings of the Board of Statutory Auditors - with an average duration of 2 hours -

were held. 7 meetings are scheduled for 2020, with 2 already held at the Reporting Date.

Role of the Board of Statutory Auditors

The Board of Statutory Auditors oversees compliance with Law and the By-Laws, with the

principles of correct administration, the adequacy of the structure in terms of the aspects within

its scope, of the internal control system and of the administrative-accounting system, in

addition to the reliability of this latter to reflect the operating events.

The Board of Statutory Auditors also oversees, in accordance with Article 149, paragraph 1,

letter c-bis) of the CFA, the implementation methods of the corporate governance regulations

under the Self-Governance Code with which the company complies and the adequacy of the

instructions provided by the Company to its subsidiaries in accordance with Article 149,

paragraph 1, letter d) of the CFA.

In addition, as per Article 19 of Legislative Decree No. 39/2010 (“Consolidated Audit Act”, as

amended by Legislative Decree 135/2016, the Board of Statutory Auditors carries out the duties

allocated to it as “Internal Control and Audit Committee”, in relation to the financial reporting

process; efficiency of the internal control system, internal audit, where applicable, and risk

management; audit of the separate and consolidated annual accounts; independence of the

Auditor, in particular in relation to non-audit services by the party providing audit services.

Finally, Legislative Decree No. 254/2016 concerning non-financial information assigned to the

control board the task of monitoring compliance with the provisions established therein and to

report it in the Annual Report to the Shareholders' Meeting.


The Board obtains the information for the carrying out of its duties on operating activities from:

- the meetings of the Board of Directors, those of the Internal Control and Risks Committee, the

Remuneration and Appointments Committee (this latter for matters relating to remuneration

and other benefits) and those of the Supervisory Board;

- through direct and on-going dialogue with the Internal Audit Manager. The Board, in the

undertaking of its activities may request the internal audit department to carry out specific

verifications on operating areas and company transactions;

- the periodic verifications carried out;

- the Managers of the various departments;

- through the exchange of data/information with the Audit Firm.

Specifically, in carrying out its activities the Board of Statutory Auditors liaises with the Internal

Audit Manager and the Internal Control and Risks Committee, exchanging timely information

that is relevant for the execution of their respective duties and attending the meetings of the

Committee, as discussed above.

As per criteria 3.C.5 of the Code, the Board of Statutory Auditors verified the correct application

of the assessment criteria and procedures adopted by the Board to evaluate the independence

of its members, as indicated previously.

On 13.03.2020, the Board of Statutory Auditors, as per the new “Conduct rules for the Boards of

Statutory Auditors of listed companies” published on May 2, 2018 by the Italian Accounting

Profession (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (“CNDCEC”)),

Article 8 of the Self-Governance Code and the applicable regulation, assessed the suitability of

its members and the composition of the board, with reference to the requirements of

professionalism, expertise, standing and independence required by the regulation.

In light of the profiles on the Board and the functioning of the Control Body, the Board of

Statutory Auditors considered the exercise of its control function as adequate, considering the

role carried out in terms of the legal, regulatory and by-law rules on correct administration, the

adequacy of the organisational and accounting structure of the company, in addition to the

functioning of the internal controls system overall.

As per Application criterion Q.1.1. of the stated “Conduct rules for the Boards of Statutory

Auditors of listed companies”, the Self-Assessment Report of the Board of Statutory Auditors for

2019, reporting upon the execution and results of the self-assessment process, was sent to the

Board of Directors, which, as per Article 8.C.1 of the Self-Governance Code, notes its content in

this Corporate Governance Report.

15. RELATIONS WITH SHAREHOLDERS

Continuous dialogue with shareholders, institutional investors and with all stakeholders is

considered by the Company to be a fundamentally important objective, including for the

purposes of building a relationship of trust with the financial market.

Therefore, since listing on the Stock Exchange, an Investor Relations/Corporate Affairs Manager

role was created, who reports to the Chairman of the Board of Directors and operates closely

with the Administration and Finance Department.


The Investor Relations/Corporate Affairs function manages relations with the shareholders,

institutional and retail investors, financial analysts and with the media. Ms. Patrizia Lepere is

the department manager.

In line with best practice and the Code, the Investor Relations department promotes on-going

dialogue with the various actors, ensuring equality of information and transparent, timely and

accurate communication, in order to support the correct understanding of the company.

Investor Relations activities focus on increasing the interest and awareness of business activities,

strategies and the company’s outlook and allow the market to correctly interpret its true value

and the attractiveness of investing in the business.

A range of communication tools and channels are used for this purpose, such as meetings with

analysts and investors, roadshows at the major stock exchanges, presentations organised by

Borsa Italiana, conference calls, in addition to press releases and institutional documentation

(financial statements, interim reports and corporate presentations).

The Company, in addition, has created on its website www.gruppoladoria.it a Corporate

Governance section to provide significant information to the shareholders, in order to ensure

that these latter can exercise their rights in a knowledgeable manner. Among others, this

Corporate Governance Report, the other reports, notices and all of the Shareholders’ Meeting

documentation are published in this section.

In order to foster dialogue with all financial market operators, the Company has also made the

economic-financial documentation (Annual and half-year financial reports and Interim Reports),

the presentations to the financial community and the press releases published by the Company,

available on its website in the Investor Relations section.

The information is published both in Italian and English.

In 2019, the Company participated in various meetings with the financial market (financial

analysts, institutional investors and representatives of the financial community) and organised

several conference calls.

16. SHAREHOLDERS’ MEETINGS (as per Article 123-bis, paragraph 2, letter c), CFA)

The Shareholders’ Meetings represent all of the shareholders and the resolutions adopted in

conformity with law and the By-Laws bind all shareholders.

The Shareholders' Meeting, governed by Articles 11 and subsequent of the Company By-Laws, is

called through a notice containing the date, time and the place of the meeting and the list of

matters to be discussed, in addition to all other information established by the applicable

regulations and, in particular, Article 125-bis of Legislative Decree No.58 of February 24, 1998.

The notice is published on the company’s website and according to the methods established by

Consob at least 30 days before the date of the meeting. In the case of the shareholders’ meeting

called for the election of the members of the corporate boards, the time for the publication of

the call notice is fixed at 14 days before the shareholders’ meeting.

Ordinary and extraordinary shareholders' meetings shall be held at the Company's registered

office, unless otherwise decided by the Board of Directors, who can fix the place of the meeting,


as long as within Italy.

The Shareholders’ Meeting resolves:

a) in ordinary session, in relation to the approval of the annual accounts, the allocation of the

result, the appointment and revocation of office of the members of the Board of Directors

and the determination of relative remuneration, the appointment of the Board of Statutory

Auditors and the Chairman of the Board of Statutory Auditors and the determination of

relative remuneration, the appointment of the Independent Audit Firm and the

determination of relative remuneration, the approval of the Shareholders’ Meeting

regulations, as well as every other deliberation established by law;

b) in extraordinary session, in relation to the modifications to the By-Laws and the

extraordinary operations such as share capital increases, mergers and spin-offs and every

other matter expressly attributable by law and not attributed to the Board. In accordance

with article 2365, paragraph 2 of the Civil Code, the By-Laws attribute decisional powers on

merger operations established by article 2505 and 2505 of the civil code to the Board.

The Ordinary Shareholders’ Meeting is correctly constituted, in first convocation, with the

presence of shareholders representing at least half of the share capital; in second convocation,

the share capital represented by those present is sufficient. In both first and second call the

ordinary shareholders’ meeting resolves by absolute majority.

The extraordinary shareholders’ meeting, in first convocation, is valid with the presence of

shareholders that represent at least half of the share capital and resolutions are passed with the

favourable vote of those representing at least two-thirds of the share capital. The second

convocation is valid with the presence of shareholders that represent at least one-third of the

share capital and resolutions are passed with the favourable vote of those representing at least

two-thirds of the share capital.

The proceedings of the Ordinary Shareholders' Meetings must be reported in minutes signed by

the Chairman and the Secretary; the minutes of the Extraordinary Shareholders’ Meetings must

be prepared by a Notary.

The resolutions are validity counted by a show of hands, unless the majority request for voting

by balloting of members.

Attendance at the shareholders’ meeting is governed by Art.2370 of the Civil Code, by Art. 83.6

of Legislative Decree No.58 of February 24, 1998 and by Article 12 of the by-laws.

The right to attend the Shareholders’ Meeting and the right to vote requires communication to

the issuer by an intermediary, as per the accounting records, in favour of the party with the

right to vote, based on the facts at the conclusion of the seventh trading day before the date

fixed for the Shareholders’ Meeting in first or single call (record date). The right to attend and

vote at the Shareholders’ Meeting remains valid if the communication is sent to the Company

outside the above-stated time period, although by the beginning of the Shareholders’ Meeting.

Each shareholder who has the right to attend the Shareholders’ Meeting may be represented by

others, also non-shareholders, through written proxy, or electronically, in accordance with the

applicable regulation. In this latter case, the delegation of proxy can be notified through

certified e-mail to the Company email address indicated in the call notice.

The Company may not appoint a representative to receive proxies and the relative instructions


to vote.

The Shareholder Meetings shall be chaired by the Chairman of the Board of Directors or by

another person designated by the meeting.

Shareholders’ meetings, wherever the minutes are not prepared by a Notary, appoints a

Secretary, also a non-shareholder, and may choose two tellers from among those present.

In accordance with the applicative criteria 9.C.3 of the Code, the Shareholders’ Meetings are

governed by a Regulation approved by the Shareholders’ Meeting on 18.01.2011. The regulation

establishes, with regard to the By-Laws, an independent regulatory framework in charge of

overseeing the workings of the Shareholders’ Meetings, from calling and attending meetings to

the functioning relating to the involvement and participation in the discussions and resolutions

on matters included in the business agenda, respecting the right of all shareholders to request

clarification of the matters on the agenda, to express their opinions and to formulate proposals.

The principal aim of the Regulation is to ensure the ordered and correct functioning of the

shareholders’ meeting.

Specifically, the Regulation, in compliance with the By-Laws, expressly provides with regard to

the chairmanship of the Shareholders’ Meeting that the Chairman establishes the proper

constitution of the meeting, the right to attend, conformity of the resolutions with applicable

law and the identity and legitimacy of those present. The Regulation also provides that the

Chairman governs the proceedings of the Shareholders’ Meeting, certifies the results of voting,

and manages the shareholders right to intervene on the matters on the Agenda.

Normally, the members of the Board of Directors will attend the shareholders’ meeting in line

with the Self-Governance Code considering the shareholders’ meeting as an important time to

initiate a continuous dialogue between the shareholders and the Board of Directors. Normally

the members of the Board of Statutory Auditors will also attend the shareholders’ meeting, as

will some members of the audit firm.

The Remuneration Committee decided not to report to the Shareholders’ Meeting upon the

means of exercise of its functions, considering that this information has already been outlined in

the Remuneration Report made available to the shareholders before the Shareholders’ Meeting.

For further information on the functioning mechanisms of the Shareholders’ Meeting, reference

should be made to Article 11 and subsequent of the By-Laws and the Shareholders’ Meeting

Regulations, both available on the website www.gruppoladoria.it, Corporate


In accordance with the requirements of criteria 9.C.2. of the Self-Governance Code, during the

annual Shareholders’ Meeting with an Agenda to approve the financial statements, the Board

of Directors, in the person of the Chairman and Chief Executive Officer, the Vice Chairman and

the Chief Executive Officer who covers the role of General Manager, reports on the activities

undertaken and planned in order to provide shareholders with adequate information useful for

their decision-making and with full knowledge of the facts.


During the year 2019, no particularly significant variation occurred in shareholder structure. In

terms of market capitalisation, the average capitalisation of the Company decreased from Euro

357.5 million in 2018 to Euro 263.6 million in 2019.

17. FURTHER CORPORATE GOVERNANCE PRACTICES (as per Article 123-bis, paragraph 2, letter

a), CFA)

In accordance with article 123-bis, paragraph 2, letter a) of the CFA, in relation to 2019, the

Company did not carry out any further corporate governance activities other than those

indicated in the present Report.

18. CHANGES SUBSEQUENT TO THE YEAR-END

No changes have been made to the Corporate Governance structure since year-end.

19. CONSIDERATIONS ON THE LETTER OF DECEMBER 19, 2019 OF THE CHAIRPESRON OF THE

CORPORATE GOVERNANCE COMMITTEE

With the letter of December 19, 2019 addressed to the Chairpersons of the Board of Directors,

the Executive Directors and the Chairpersons of Control Bodies of listed Italian companies, the

Chairman of the Corporate Governance Committee, drawing on the publication of the 2018

Annual Reports and the relative Report on the application of the Self-Governance Code,

outlined certain areas for improvement in terms of which he called upon the company to better

adhere to the Code's recommendations, both with regard to the compliance profile and the

quality of information profile.

In the letter, issuers were invited to submit the recommendations contained therein to the

examination of the Board of Directors and of the competent Committees and to report their

considerations and any initiatives undertaken in this regard, in this Corporate Governance

Report.

On January 2, 2020, the Letter and the Report were firstly brought to the attention of the

Chairman of the Board of Directors, the Chief Executive Officer and the Chairman of the Board

of Statutory Auditors (the parties they were addressed to), and then forwarded to all the other

members of the Board of Directors and the Board of Statutory Auditors of the company.

The above communication was reviewed by the Board of Directors and by the Internal

Committees to the Board. The recommendations were analysed, for the areas falling within

their competence, by the Control, Risks and Sustainability Committee in the meetings of January

27 and March 13, 2020, by the Remuneration and Appointments Committee in the meetings of

January 28 and March 12, 2020, and by the Board of Directors which specifically addressed

them during the preparation and approval of this Report in the meeting of March 13, 2020.

Furthermore, as part of the self-assessment process undertaken for the year in October 2019,

the results of which were examined in the board meeting of November 14, 2019, the


questionnaire used as the tool for conducting this process provided for Members' assessment of

the appropriateness of certain matters underlying the recommendations contained in the

above-mentioned letter. In the above meeting of March 13, 2020, the Board of Directors

acknowledged the company's high level of adherence to the Code, confirming constant

attention to the quality of its governance and its commitment in monitoring compliance with

the recommendations contained therein, both under the substantive profile of choices and

governance solutions, and from the transparency of information perspective.

References and considerations are being reported below in relation to the recommendations

and suggestions expressed by the Corporate Governance Committee in the said communication

of 19.12.2019.

1. As regards the invitation to the Board of Directors to integrate the sustainability of business

activity into the definition of remuneration strategies and policy, including on the basis of an

analysis of the significance of the factors that may influence the generation of value in the long-

term, reference should be made to point 10 (Sustainability Governance) in this Report.

Insofar as more closely pertaining to the Remuneration Policy, it should be noted that at the

meeting held on March 13, 2020, pending the adaptation by Consob of the regulatory

framework to the new provisions of the CFA, the Board of Directors reserved the right to define

a new Remuneration Policy for the Company that links a portion - between 5% and 10% - of the

variable remuneration for Executive Directors and Senior Executives to non-financial

performance objectives in 2021.

2. With regard to the recommendation, including in the regulations of board proceedings, to see

to adequate management of the flow of information to the Board of Directors, ensuring that

confidentiality requirements are met without compromising the completeness, accessibility and

timeliness of information, reference should be made to point 4.3.

3. With reference to the invitation extended to the administrative boards to more rigorously

apply the independence criteria set out by the Code, placing greater attention on the

assessment of the significance of the relationships subject to examination and to this end, to

establish in advance the quantitative and/or qualitative criteria to be used to assess the

significance of the relationships subject to examination, reference should be made to point 4.6.

4. As regards the recommendation to the administrative boards - and the related committees

responsible for remuneration matters - to verify that the structure of compensation paid to

Non-Executive Directors and to members of the control body is adequate to the competency,

professionalism and commitment required of their office, it should be noted that in the coming

months, the Company, with the assistance of the Remuneration and Appointments Committee,

will carry out a pay gap analysis taking account of remuneration practices that are widespread in

the reference sectors and in companies of a similar size.

On behalf of the Board of Directors

The Chairman

Antonio Ferraioli

Annexes: tables


TABLE 1: INFORMATION ON THE SHARE OWNERSHIP

SHARE CAPITAL STRUCTURE

Number of Shares % of share capital Listed Rights and obligations

Ordinary shares

31,000,000

100%

Listed on the Italian

Stock

Exchange organised

and managed by

Borsa

Italiana S.p.A. - Star

Segment

As per law

Shares with limited

voting rights

/ / / /

Shares without

voting rights

/ / / /


SIGNIFICANT SHAREHOLDINGS

Shareholder

% of ordinary

share capital

% of voting share

capital

Ferraioli Antonio

10.1654%

10.1654%

Ferraioli Andrea

9.5454%

9.5454%

Ferraioli Rosa

8.6596%

8.6596%

Ferraioli Iolanda

8.6583%

8.6583%

Ferraioli Giovanna

8.6570%

8.6570%

Ferraioli Raffaella

8.6570%

8.6570%


8.6570%

8.6570%

Kempen Capital Management NV

6,613%

6,613%

Global Portfolio Investments S.L.

5,395%

5,395%


TABLE 2: STRUCTURE OF THE BOARD OF DIRECTORS AND COMMITTEES

BOARD OF DIRECTORS IN OFFICE AT 31.12.2019 RCSC RAC Office Members Year of

birth

In office from

In office

until

Slat

e

*

Exe

c.

Non-

exec.

Independe

nt in

accordanc

e with

Article

3.C.1 of

the Code

Independent

in accordance

with Article

147-ter of the

CFA

(*) No.

Offices

held

(***)

(*) (**) (*) (**)

Chairman &

Chief Executive

Officer•◊

Antonio

Ferraioli

1954 16/06/2017 6/2020 M X 6/6 0

Vice Chairman Sergio

Persico

1938 16/06/2017 6/2020 M x x 5/6 4 7/8 M 6/6 M

Chief Executive

Officer◊

Andrea

Ferraioli

1957 16/06/2017 6/2020 M X 5/6 0

Director Iolanda

Ferraioli

1959 16/06/2017 6/2020 M X 2/6 0

Director Elena David

1961 16/06/2017 6/2020

M

x x x 6/6 1 8/8 P

Director○ Michele

Preda

1953 16/06/2017 6/2020 M x x x 5/6 3 5/6 P

Director Enzo

Diodato

Lamberti

1981 16/06/2017 6/2020 M x 6/6 0


Director Michaela

Castelli

1970 16/06/2017 6/2020 M x x x 6/6 5 8/8 M 6/6

M

Director Diodato

Ferraioli

1987 16/06/2017 6/2020 M x 4/6 0

Number of meetings held in 2019 B.o.D. RCSC RAC

6 8 6

Note:

• This symbol indicates the Director in charge of the internal control and risk management system.

◊ This symbol indicates the main person responsible for the Issuer’s operative management (Chief Executive Officer or CEO).

○ This symbol indicates the Lead Independent Director (LID).

*M indicates that the member was elected from the majority slate

(*) This column indicates the Directors' attendance in meetings, in relation to the total number of BoD and Committee meetings, respectively,

held during their period in office.

(**) This column indicates the position of the Director on the Committee: “C”: chairperson; “M”: member;

(***) This column indicates the number of offices a Director or Statutory Auditor holds in other companies listed on regulated markets, including

overseas markets; for the complete list of other offices, including those in financial, banking, insurance or significantly sized companies, reference

should be made to the list in Annex 1 of this document.


TABLE 3. STRUCTURE OF THE BOARD OF STATUTORY AUDITORS

Office Members Year of

birth

In office

from

In office

until

Slate

*

Independent in

accordance

with Article

8.C.1 of the

Code

(*) No. other

offices

(**)

Chairperson Ottavia Alfano 1971 16/06/2017 6/2020 M X 7/7 16

Statutory

Auditor

Adele

Caldarelli

1962 16/06/2017 6/2020 M X 7/7 3

Statutory

Auditor

Maurizio

D’Amore

1962 16/06/2017 6/2020 M X 7/7 1

Alternate

Auditor

Stefano

Capasso

1964 16/06/2017 6/2020 M X

Alternate

Auditor

Emanuela

Saggese

1965 16/06/2017 6/2020 M X

Number of meetings held in 2019

7

Note:

* M indicates that the member was elected from the majority slate

(*) This column indicates the attendance of Statutory Auditors in the meetings of the Board of Statutory Auditors, in relation to the total number

of meetings held during their period in office.

(**) This column indicates the number of offices of Director or Statutory Auditor in accordance with Article 148 bis of the CFA and the relative

enacting provisions in the Consob Issuer Regulations. The complete list of offices held is published by Consob on its website pursuant to Article

144-quinquiesdecies of the Consob Issuers’ Regulations.


ATTACHMENT 1

List of offices held in other listed companies on regulated markets (including overseas markets), in financial, banking, insurance or

significantly sized companies (companies not belonging to the La Doria Group) at 31.12.2019.

DIRECTOR COMPANY OFFICE

Sergio Persico Feger di Gerardo Ferraioli S.p.A. Chairman Board of Statutory Auditors

GDA S.p.A. Chairman Board of Statutory Auditors

Kimbo S.p.A. Chairman Board of Statutory Auditors

Orizzonti Holding S.p.A. Chairman Board of Statutory Auditors

Michaela Castelli Acea S.p.A. Chairperson

Sea Aeroporti Milano S.p.A. Chairperson

Nexi S.p.A. Chairperson

Recordati S.p.A. Director

Autogrill Italia S.p.A. Statutory Auditor

Elena David Fideuram S.p.A. Director

Michele Preda FCC S.p.A. Vice Chairman

Finlabo SIM S.p.A. Director

Fiocchi Munizioni S.p.A. Director

CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE …Pursuant to Article 1, paragraph 1, letter...

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