Remuneration Report 2018 - saipem.com · The purpose of this document is to increase awareness of...

Remuneration Report2018

Approved by the Board of Directors

on March 5, 2018

01-30RelRemSaipem18Ing.qxd 8-04-2018 22:28 Pagina I

MissionOur mission is to implement challenging, safe and innovative projects, leveraging on the competence of our peopleand on the solidity, multiculturalism and integrity of our organisational model.With the ability to face and overcome the challenges posed by the evolution of the global scenarios, we must seizethe opportunities to create economic and social value for all our stakeholders

ValuesInnovation; health, safety and environment; multiculturalism; passion; integrity.

Countries in which Saipem operatesEUROPEAustria, Bulgaria, Croatia, Cyprus, Denmark, France, Greece, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal,Principality of Monaco, Romania, Spain, Sweden, Switzerland, Turkey, United Kingdom

AMERICASArgentina, Bolivia, Brazil, Canada, Chile, Colombia, Ecuador, Guyana, Mexico, Panama, Peru, Suriname, United States,Venezuela

CISAzerbaijan, Georgia, Kazakhstan, Russia, Turkmenistan

AFRICAAlgeria, Angola, Congo, Egypt, Gabon, Ghana, Ivory Coast, Libya, Morocco, Mozambique, Namibia, Nigeria, Uganda

MIDDLE EASTIraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates

FAR EAST AND OCEANIAAustralia, China, India, Indonesia, Malaysia, Singapore, South Korea, Taiwan, Thailand

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Remuneration Report2018

Letter from the Chairman of the Compensation and Nomination Committee 2Foreword 3Overview 4

2018 Remuneration Policy 42017 Remuneration Report (Section I) - Results of vote held at Shareholders’ Meeting 5Pay-mix 6

Section I - 2018 Remuneration Policy 8Governance of the Compensation process 8

Bodies and persons involved 8Saipem Compensation and Nomination Committee 82018 Remuneration Policy approval process 11

Aims and general principles of the Remuneration Policy 11Aims 11General principles 11

2018 Remuneration Policy Guidelines 13Board of Director Policies for 2018-2021 13Chairman of the Board of Directors and non-executive Directors 13Chief Executive Officer-CEO 14Board of Director Policies for 2015-2018 17Policies for Senior Managers with strategic responsibilities 19

Section II - Compensation and other information 22Implementation of 2017 compensation policies 22

Fixed compensation 22Remuneration for service on Board Committees 22Variable incentives 22Benefits 24Accessory remuneration instruments 24

Compensation paid in 2017 25Table 1 - Compensation paid to Directors, Statutory Auditors 25and other Senior Managers with strategic responsibilitiesTable 3A - Incentive plans based on financial instruments other than stock options 27payable to Directors and to other Senior Managers with strategic responsibilitiesTable 3B - Monetary incentive plan for Directors and other Senior Managers with strategic responsibilities 28

Shares held 29Table 4 - Shares held by Directors and other Senior Managers with strategic responsibilities 29

Annex pursuant to Article 84-bis of the Consob Issuers Regulation 30- Implementation for 2016 of the share-based Long-Term Incentive Plan 2016-2018 (LTI)

Table 1 of form 7, Attachment 3A of Regulation No. 11971/1999 30

The Report is published in the ‘Governance’ section of Saipem’s website (www.saipem.com)

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Dear Shareholders,

I am pleased to present the SaipemRemuneration Report for the year 2018, alsoon behalf of the Compensation andNomination Committee and the Board ofDirectors. The purpose of this document is toincrease awareness of our stakeholdersregarding remuneration policies, highlightingtheir consistency with Saipem’s businessstrategy.

2017 was a year full of activities for theCompensation and Nomination Committee,which saw us engaged both in theimplementation of planned policies and in theirfurther development. We have operated with aview to consolidating and adapting existingcompensation tools with a responsible andperformance-oriented approach.

As the main element of innovation, theRemuneration Policy Guidelines for 2018provide for the adoption of a renewed annualvariable incentive system, with a simplifiedarchitecture, in line with the new divisionorganisational model and more in line withmarket practices, oriented towards greaterdifferentiation of the performance of thevarious businesses while ensuring a balancewith Saipem’s overall performance.

This annual incentive plan, together with thelong-term stock-based incentive planlaunched in 2016, represents anotherimportant step in the changes made to thevariable remuneration system promoted bythe Committee during its current mandate.These changes are aimed at simplification andtransparency, as well as strengthening the linkbetween sustainable performance over time,value creation and compensation formanagement.

In the first part of the year the committeefocused on the finalisation of the 2016performance results and on the definition ofobjectives for 2017. In the second part of theyear the Committee launched a review of theRemuneration Policy Guidelines for 2018 toprovide further investigation into contextualevolution and market practices that areapplied nationally and internationally.

In carrying out its duties, the Committee hasmaintained constant focus on an effectiveand transparent dialogue with shareholdersand investors, aimed at receiving indicationsand feedback to maximise consensus on thepolicies presented at the annual meeting.The results of the Shareholders’ Meeting voteon Section I of the 2017 RemunerationReport, which were the subject of specificanalysis by the Committee, have confirmed ahigh appreciation of the policies planned.

Special thanks go to the Directors FedericoFerro-Luzzi and Francesco Antonio Ferruccifor their continuous contribution to the workof the Committee together with a heartfeltappreciation for the role played by Saipem’sstructures and its people. Trusting that theReport submitted for your examination canonce again testify to the constantcommitment assured in recent years by theCommittee, also on behalf of the otherDirectors, I thank you in advance for yoursupport for the Remuneration Policy plannedfor 2018.

March 5, 2018

The Chairman of the Compensation and Nomination Committee

Letter from the Chairman of the Compensation and Nomination Committee

SAIPEM Remuneration Report / Letter from the Chairman of the Compensation and Nomination Committee

Maria Elena Cappello


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The Saipem Remuneration Policy wasapproved by the Board of Directors on March5, 2018 at the proposal of the Compensationand Nomination Committee, which is formedby non-executive independent Directors, andhas been defined in line with the Governancemodel adopted by the Company and therecommendations regarding compensation inthe Corporate Governance Code of ListedCompanies of Borsa Italiana (hereinafterCorporate Governance Code), as found in themost recent version adopted by Saipemwhich was approved in July 20151. In keepingwith the guidelines set out in the company’sStrategic Plan, this policy promotes alignmentof the interests of management with thepriority objective of value creation for theshareholders in the medium-long term.

This Report, in compliance with currentlegislative and regulatory obligations2, hasbeen prepared taking into considerationanalyses and further details regarding theresults of the Shareholders’ Meeting vote, andthe feedback received from the shareholdersand the main Proxy advisors on the Saipem2017 Report, their 2018 Policy indications, aswell as the results of the engagementactivities with the Proxy advisors and themarket practices of the main listedcompanies.Furthermore, the Compensation andNomination Committee has taken theregulatory framework and governance intoconsideration, with the goal of ensuringgreater clarity, completeness and usability ofthe information provided.

Foreword

SAIPEM Remuneration Report / Foreword

(1) For more information on the terms of Saipem’s adoption of the Corporate Governance Code, please refer to the ‘Governance’ section of the Company’swebsite (http://www.saipem.com) and to the document ‘Corporate Governance Report and Shareholding Structure 2017’.(2) Article 123-ter of Italian Legislative Decree No. 58/1998 and Article 84-quater of the Consob Issuers Regulation (No. 11971 and subsequentamendments and additions).


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This 2018 Remuneration Report defines andexplains:- in Section I, the Policy adopted by Saipem

SpA (‘Saipem’ or the ‘Company’) for 2018for the compensation of CompanyDirectors and Senior Managers withstrategic responsibilities3, specifying thegeneral aims pursued, the bodies involvedand the procedures applied for the adoptionand implementation of the Policy.The general principles and the Guidelinesdefined in the first section of this Reportalso apply to the determination of thecompensation policies of Saipem’s direct orindirect subsidiaries;

- in the Section II, the compensation paid in2017 to the Directors, Statutory Auditorsand Senior Managers with strategicresponsibilities of Saipem.

The two sections of the Report are precededby a summary of the main information in orderto supply the market and investors with aneasy-to-read framework for understandingthe key elements of the 2018 Policy.The Report also shows shares held in thecompany by the Directors, Statutory Auditorsand by Senior Managers with strategicresponsibilities and contains informationregarding the implementation in 2017 of the2016-2018 Share-based Long-TermIncentive Plan, in accordance with provisionsin current regulations4.The Report shall be submitted to the BorsaItaliana and shall be made available to thepublic at the Company’s registered office andposted on Saipem’s website twenty-one daysbefore the Shareholders’ Meeting called toapprove the 2017 financial statements and topass a non-binding resolution in favour oragainst the Section I of the Report, inaccordance with applicable legislation5.Information related to financialinstrument-based compensation planscurrently in force is available in the‘Governance’ section of Saipem’s website6.

2018 Remuneration Policy

The goal of Saipem’s Remuneration Policy,which is explained in detail in the first sectionof this Report, is to (i) attract, motivate andretain high profile, professional and managerialpersonnel, (ii) incentivise the achievement ofstrategic objectives and sustainable growth ofthe company, (iii) align the interests ofmanagement with the priority objective ofvalue creation for the shareholders in themedium-long term, and (iv) promote thecompany’s mission and values.The 2018 Remuneration Policy provides for,as the main update to the 2017 policy, therevision of the short-term variable incentivesystem updated with the goal of aligning thesystem with market practices and to the neworganisational structure of the company andthe divisions, further improving the ability toincentivise resources that perform at higherlevels without significantly affecting the overalltotal of incentives.Specifically, the areas for which the proposedchanges to the short-term incentive systemwill be made refer to the balance betweencompany and division performance, thesystem’s ability to provide rewards and thesimplification of the system in order toachieve greater alignment with marketpractices.Finally, it should be noted that the currentBoard of Directors will end its mandate withthe Shareholders’ Meeting called for May 3,2018, for the approval of the financialstatements for the financial year which closedon December 31, 2017.The 2018 Remuneration Policy Guidelines willtherefore be applied by the new Board ofDirectors, which will be responsible for thespecific determination of compensation of theDirectors with executive powers and thecompensation of the non-executive Directorsfor participation in Board committees, in linewith the legislative provisions and companyregulations7.The following table (‘2018 Remuneration Policy‘) shows the main elements of the Guidelinesapproved for the compensation of the ChiefExecutive Officer-CEO, as well as of Managerswith strategic responsibilities (SMSR).

Overview

SAIPEM Remuneration Report / Overview

(3) The term ‘Senior Managers with strategic responsibilities’, as defined in Article 65, paragraph 1-quater of the Consob Issuers Regulation, refers to personswith direct or indirect planning, coordination and control responsibilities. Saipem Senior Managers with strategic responsibilities, other than Directors andStatutory Auditors, are those who sit on the Advisory Committee and, in any case, those that report directly to the Chief Executive Officer-CEO.(4) Article 114-bis of the Consolidated Finance Act and Article 84-bis of the Consob Issuers Regulation.(5) Article 123-ter, paragraph 6 of Legislative Decree No. 58/1998.(6) Website: http://www.saipem.com/sites/SAIPEM_en_IT/area/GOVERNANCE-saipem-governance.page(7) Resolutions regarding the compensation of new Directors will be made public in the 2019 Remuneration Report, in the Section detailing theimplementation of 2018 remuneration policies and compensation paid during the same period.



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2017 Remuneration Report(Section I) - Results of vote heldat Shareholders’ MeetingThe Shareholders’ Meeting of April 28, 2017,in accordance with current legislation (Article123-ter, paragraph 6 of Italian Legislative

Decree No. 58/1998), voted on Section I ofthe 2017 Remuneration Report, with 98.25%of the votes in favour.

Results of vote

F0r against abstain

79.66%

19.40%

92.02%

96.36% 97.95%

98.25% 98.60%

0.27% 0.20% 0.20% 0.70%

2.70% 0.90%

7.71%

1.35% 0.94% 1.55% 1.20%

2013

2014

2015

2016

2012

2017



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Pay-mix

The 2018 Remuneration Policy Guidelines setpay-mixes consonant with managerial roles,with a greater weight given to the variablecomponent (in particular the long-termcomponent) for positions that have a greaterinfluence on company results, as shown in thepay-mix chart shown below, which wascalculated considering the monetisation ofshort and long-term incentives in thehypothesis of both minimum and maximumresults.The pay-mix for the Chief ExecutiveOfficer-CEO is defined on the basis ofmaximum values approved by the Board ofDirectors meeting of March 5, 2018.

2018 remuneration policy

Component

Fixedremuneration

STI - Short-termvariableincentives

LTI - Long-TermIncentive Plan(2016-2018)

Benefits

SeverancePayment andMinimum TermAgreement

Aims andcharacteristics

Values skills, experienceand the contributiondemanded by the roleassigned.

Promote the achievementof annual budgetobjectives.All managerial resourcesare included in the Plan.

Promote the alignment ofmanagement with theinterests of shareholdersand the sustainability ofvalue creation in the longterm. All managerialresources are included inthe Plan.

These supplement thecompensation package in alogic of total rewardthrough benefits in kind,mainly of a health andsocial security nature.Recipients: all managerialresources.

Severance pay to protectthe company frompotential competition risks.Retention and protectiontools for the Group’sknow-how.

Conditions for implementation

Benchmarking of manager compensation consistent to Saipemcharacteristics and assigned roles.

2018 CEO objectives: Adjusted Free Cash Flow (weight 35%);Adjusted EBITDA (weight 35%); New Contracts (weight 15%); HSE& Sustainability (weight 15%).SMSR objectives: broken down on the basis of objectives assigned totop management, in relation to the area of responsibility for the rolecovered.Incentives paid based on the results achieved in the previous yearand evaluated on a performance scale of 70÷130 points1 withminimum threshold to receive the incentive set at 70 points forindividual performance.

Award: free allocation of ordinary Saipem SpA shares for theachievement of performance conditions, differentiated bymanagement role.Performance conditions: TSR (weight 50%) measured at the endofthe three-year period in terms of positioning in relation to a peergroup. Net Financial Position (weight 50%) measured in terms of thethree-year period in question.Three-year vesting period + lock-up period of 2 years for the ChiefExecutive Officer-CEO Three-year vesting period + Co-investment of a further 2 years forstrategic resources only.

Conditions set out in the national collective bargaining contract andin supplementary company agreements applicable to resources withmanagerial qualifications.

CEO: supplemental termination indemnities due to the earlytermination of the 2018-2021 administrative mandate, also due toresignation caused by essential reduction of mandates;non-competition agreement.SMSR: severance pay: agreed to upon consensual termination ofemployment; Severance Payment: cases of change of control whichresult in termination of employment due to resignation or dismissaland/or demotion; non-competition agreements: activated upontermination of the employment relationship.Minimum term agreement to protect know-how.

Amount

CEO: compensation determined by the newBoard of Directors based on proposal by theCompensation and Nomination Committee inrelation to the position and powers conferred,taking into account average salaries in thereference market.SMSR: compensation determined on the basisof the role assigned with possible adjustmentsin relation to competitive positioning targets(average market values).

CEO: maximum incentive level corresponding to150% of fixed remuneration.SMSR: maximum target incentive levelsdifferentiated based on the role assigned, up toa maximum of 58,5% of fixed remuneration.

CEO: maximum incentive level equal to 170%offixed remuneration.SMSR: maximum differentiated incentive levelfor the management role up to a maximum of100% of fixed remuneration, in addition to afurther 25% in shares at the end of theco-investment period (Retention Share).The maximum value at the end of the vestingperiod shall not exceed four times the value ofthe shares at the moment of their allocation.

- Supplementary pension;- Supplementary healthcare;- Supplementary death and disability insurancecoverage;- Company car for business and personal use.

CEO: early termination indemnities: defined in linewith recommendations contained in the CorporateGovernance Code and not more than two years offixed remuneration; non-competition agreement:not more than 12 months’ annual pay for everyyear of the agreement.SMSR: severance pay: established by thecollective labour agreement and internal policies;Severance Payment: maximum of two years’ fixedremuneration; non-competition agreement: 12months’ annual pay for every year of theagreement; minimum term agreement: 12 months’annual pay for every year of the agreement.

(1) Below the minimum threshold (70 points) the performance is considered equal to zero.

Pay-mix CEO

47%

24%

27%

35%

29%38%

ILT Long-term variablecomponent

IBT Short-term variablecomponent

Fixed remuneration

Min Max

47%

21% 36%

40%32%

24%



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Page

Pages 14 and 19

N.B. Forinformation oncompensationfor outgoingdirectors pleaserefer to page 17.

Pages 14 and 19


Pages 15 and 19


Pages 17 and 21


Pages 16 and 21


Risk mitigation factors

Adjustments are in line with market references from internationally recognised providers.

Forecasts of diverse performance targets, predetermined, measurable and complementary,indicative of the company’s and divisions’ annual performance, with forecasts of incentive gateconditions for issuing individual incentives.Definition of maximum incentive levels.Existence of a clawback mechanism that allows for the return of variable components ofremuneration in cases of manifestly incorrect or maliciously altered data and violation of laws andregulations, the Code of Ethics or industry regulations.

Forecasts of diverse performance targets, predetermined, measurable ex post, and complementary,indicative of the company’s performance, and the ability of the latter topursue economic andfinancial performance in the medium-long term and generate share performance levels, as well ascreating value higher than those of major international competitors, providing greater alignment tothe interests of shareholders in the medium to long term.Deferral of a significant portion of the shares matured by two years past the date of verification ofachievement of the performance target level.Definition of a maximum value of shares definitely assignable at the end of the vesting period.Existence of a clawback mechanism that allows the return of definitively allocated shares (ornon-award of deferral shares) in cases of manifestly incorrect or maliciously altered data andviolation of laws and regulations, the Code of Ethics or industry regulations.

Ex-ante determination of the maximum number of months to be paid.Existence of penalties for violating the non-competition agreement.

Scheduling

Annual adjustments as part of the annual salaryreview.

Payout in the year in which the annual objectivewas attained.

Allocation: annual. Vesting period: three years. Co-investment period/lock-up: additional twoyears.

Subject to periodic reviews in cases of rolereassignment.

Activated at the termination of employment orfor retention purposes in continuity ofemployment.Pre-established term limits are provided for.

Pay-mix senior managers with strategic responsibilities

ILT Long-term variablecomponent

IBT Short-term variablecomponent

Fixed remuneration

Min Max

58%13%

21%

44%29%

35%


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Governance of theCompensation process

Bodies and persons involved

The Remuneration Policy for the SaipemBoard of Directors is defined in accordance

with legislation and company regulations andthe Saipem Governance model, which definesthe bodies and persons involved as thefollowing: Shareholders Meeting, Board ofDirectors and Compensation and NominationCommittee.

Section I - 2018 Remuneration Policy

SAIPEM Remuneration Report / Section I - 2018 Remuneration Policy

BODY ROLE AND RELEVANT ACTIVITIES

Bodies and persons involved

Establishes the compensation of the members of the Board of Directors when they are

appointed, for the whole of their term of office.

Shareholders’ Meeting

Provides support to the Board of Directors by proposing and consulting on issues

regarding compensation issues.

Compensation and Nomination

Committee

1. Establishes the compensation for Directors assigned special functions (Chairman* and

Chief Executive Officer-CEO) and for service on Board Committees, having consulted the

Statutory Auditors.

2. Defines performance targets and the approval of results for performance plans used to

establish the variable compensation of the CEO.

3. Approves the general criteria for the compensation of Senior Managers with Strategic

Responsibilities.

4. Defines the compensation of the Internal Audit Manager in accordance with the

company's Compensation policy and having consulted the Audit and Risk Committee and

the Board of Statutory Auditors.

Board of Directors

(*) Where not provided for by the Shareholders’ Meeting.

NAME ROLE

Compensation and Nomination Committee

ChairmanMaria Elena Cappello

MemberFederico Ferro-Luzzi

MemberFrancesco Antonio Ferrucci

11 meetings in 2017: 16; average lenght: 1 hours and 50 minutes; average rate of

participation: 97%.

Saipem Compensationand Nomination CommitteeComposition, appointment and powersThe Compensation Committee, which as ofFebruary 13, 2012, was renamed the‘Compensation and Nomination Committee’, wasestablished by the Board of Directors in 1999.Committee membership and appointments, itstasks and its operating procedures are regulatedby a specific set of rules, which were approved bythe Board of Directors and published on theCompany web site.In accordance with the applicable legislationand the recommendations set out in the newversion of the Corporate Governance Code,of three non-executive, independentDirectors. In line with the CorporateGovernance Code (Article 6, paragraph 3) theRegulations also require that at least onemember of the Committee has adequateknowledge and experience on financial andcompensation matters evaluated by theBoard at the time of appointment.



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The Committee, as of April 30, 2015, has thefollowing non-executive and independentDirectors: Maria Elena Cappello as Chairman,Federico Ferro-Luzzi and Francesco Ferrucci.The Human Resources, Organisation andServices Director, or in his place, theCorporate Head of Human Resources, will actas Committee Secretary.

Role of the CommitteeThe Committee acts in a proposal andadvisory role to the Board of Directors in linewith the recommendations contained in theCorporate Governance Code (Article 6,paragraph 4 and Article 6, paragraph 5):- submits the Remuneration Report and in

particular the Policy regarding theremuneration paid to the Directors andSenior Managers with strategicresponsibilities to the Board of Directors forits approval prior to the report’s presentationto the Shareholders’ Meeting convened toapprove the annual financial statements inaccordance with the applicable legislation;

- periodically checks the adequacy, theoverall consistency and the implementationof the Policy adopted, formulatingproposals to the Board in this regard;

- makes proposals regarding the various formsof compensation and pay of the Chairmanand the Chief Executive Officer-CEO;

- makes proposals regarding thecompensation of the non-executiveDirectors appointed to the Committeesformed by the Board;

- proposes general criteria for thecompensation of Senior Managers withstrategic responsibilities, annual andlong-term incentive plans, includingshare-based incentive plans and the

definition of the performance objectivesand the approval of results of performanceplans used to establish the variablecompensation of Directors vested withexecutive/special powers, taking intoaccount instructions provided by the CEO;

- monitors the implementation of resolutionstaken by the Board regardingcompensation;

- reports to the Board of Directors every sixmonths on the work it has carried out.As part of its duties, the Committee mayalso be asked to provide opinions regardingtransactions with related parties inaccordance with the relevant companyprocedure.

Methods of implementationThe Committee meets as often as necessaryto perform its duties, normally on the datesscheduled on the yearly calendar of meetingsapproved by the Committee itself and isquorate when at least the majority of itsmembers in office are present and decideswith the absolute majority of those inattendance. The Chairman of the Committeeconvenes and presides over the meetings. To fulfil its duties, the Committee has the rightto access the necessary Company informationand departments and to avail of externaladvisors who do not find themselves insituations that could compromise theimpartiality of their opinion, within the limits ofthe budget approved by the Board of Directors.On a yearly basis, the Committee drafts abudget that it submits to the Board of Directorssimultaneously with the annual report.The Chairman of the Board of StatutoryAuditors, or a statutory auditor designated bythe Chairman, may attend Committee

Activities

January

February

March

April

May

JuneJuly

August

September

October

November

December

JANUARY - MARCH• Periodical evaluation

of the Policies adopted

in the previous year

• Definition of the

Compensation Policy

• Analysis of results and definition

of objectives for variable

incentive plans

• Preparation of Remuneration

Report

OCTOBER - DECEMBER • Analysis of market practices

in terms of remuneration

APRIL - JUNE • Presentation

of the Remuneration Report

to the Shareholders’ Meeting

• Analysis of results of voting

on the Remuneration Policy

at Shareholders’ Meetings

JULY - SEPTEMBER• Implementation of the Long-Term

Incentive Plan (LTI)



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meetings. Furthermore, other statutory auditorsmay also participate when the Board is dealingwith matters for which the Board of Directors isobliged in its resolution to take account of theopinion of the Board of Statutory Auditors.At the invitation of the Committee Chairman,other parties may attend the meetings toprovide information and make assessmentswithin their field of competence in relation toindividual agenda items. No Director can takepart in Committee meetings where proposalsare being made to the Board of Directorsconcerning his/her compensation.

Activities of the Compensationand Nomination CommitteeThe Compensation and NominationCommittee carries out its activities accordingto an annual programme which consists of thefollowing phases:- periodic checks of the adequacy, the overall

consistency and the implementation of thePolicy adopted in the previous year inrelation to the results achieved and thecompensation/benchmarks supplied byspecialised providers;

- definition of Policy proposals for thefollowing year and of proposals regardingthe performance targets connected with

short and long-term incentive plans;- definition of proposals regarding the

implementation of the short and long-termvariable incentive plans in place, based onan analysis of the results achieved and theperformance objectives set under the plans;

- preparation of the Remuneration Report tobe submitted annually to the Shareholders’meeting and subject to the approval of theBoard of Directors;

- examination of the results of voting at theShareholders’ Meeting of the Policyapproved by the Board;

- monitoring of developments in theregulatory framework and the voting policyof main proxy advisors, as part of thepreliminary activities planned to support thepolicy proposals for the following year.

Activities carried out and plannedIn 2017, the Committee convened on a totalof 11 occasions, with an average memberattendance of 97%. The Chairman of theBoard of Statutory Auditors or a StatutoryAuditor designated by the Chairman, took partin all the meetings which were duly recorded.The Committee, with reference to only issuesof compensation, specifically focused itsactivities on the following:

main issues discussed/dealt with in 2017

Month Issues

1. Formulation of Saipem 2017 indicators for short and long-term Incentive Plans.January2. Salary Policy: implemmentation assessment 2016.

1. Reporting 2016 Saipem results in order to prepare short and long-term management incentive plans and to proposeobjectives for 2017.

March 2. Annual Monetary Incentive Plan for the CEO, the Internal Audit Manager and other Senior Managers.

3. Review of the 2017 Remuneration Report (Sections I and II).

4. Proposal to purchase treasury shares for the 2016-2018 Long-Term Incentive Plan for allocation in 2017.

May1. Assessment of proposal to review current management short-term incentive system.

2. Analysis of voting results of the 2017 AGM season.

1. Long-Term Incentive Plan 2016-2018: promise of CEO 2017 allocation and determination of number of shares to allocateand approval of 2017 Allocation Regulations.

July2. Position of compensation for the Head of Internal Audit.

3. Analysis of proposals for actions to take on the short-term management incentive system.

September-1. Definition of metrics for the new management short-term incentive system to be submitted for approval by the Board

Octoberof Directors.

2. Approval of the 2018 Compensation and Nomination Committee’s Budget.

November-1. Proposal of Saipem 2018 indicators for short and long-term Incentive Plans.

December2. Proposal of Guideline on the 2018 Remuneration Policy.

3. Analysis of the salary package of the CEO for the new board mandate.

The Committee has scheduled at least ninemeetings in 2018. At the date of approval ofthis Report, the first three meetings hadalready been held. These focused on: (i) anassessment of the compensation policiesimplemented in 2017 with a view to defining a

compensation policy proposal for 2018;(ii) company results in 2017 and the definitionof performance objectives for 2018connected to variable incentive plans; (iii) thedefinition of annual monetary incentives forthe Chief Executive Officer-CEO.



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Successive meetings will be scheduled afterthe renewal of company bodies, by the newCommittee which will first called on toformulate compensation proposals forDirectors with executive powers and thecompensation of the non-executive Directorsfor taking part in Board committees, to besubmitted for approval by the Board ofDirectors, after the Board of StatutoryAuditors had been consulted in accordancewith the Corporate Governance Code (Article6, paragraph 5) and with applicable legislationand company regulations.In the second half of 2018, in line with definedannual activities, the results of the 2018 AGMseason is reviewed and the implementation ofthe LTI Scheme for the Chief ExecutiveOfficer and management resources.Every 6 months the Committee reports,through its Chairman, to the Board ofDirectors and the Shareholders’ Meetingconvened to approve the annual financialstatements on the performance of its duties,in accordance with its own Regulations, therecommendations of the CorporateGovernance Code and with the aim ofestablishing a channel for dialogue with itsshareholders and investors.

2018 Remuneration Policyapproval process

In accordance with its remit, the Committeedefined the structure and content of theRemuneration Policy for the purpose ofpreparing this Report in its meetings ofJanuary 29, February 23 and March 5 inaccordance with the recentrecommendations contained in the CorporateGovernance Code.In reaching its conclusions, the Committeetook account of the results of periodicassessment of adequacy, overall consistencyand concrete application of the 2017 PolicyGuidelines, as well as the resolutions passedin relation to the renewal of the Companybodies:The Saipem 2018 Remuneration policy for theChief Executive Officer-CEO and SeniorManagers with strategic responsibilities wasapproved by the Board of Directors on March5, 2018 at the proposal of the Compensationand Nomination Committee, together with thisReport.In order to prepare this Report, the Committeeavailed itself of compensation benchmarksprepared by independent internationalconsulting companies for the preliminaryanalysis aimed at preparing RemunerationPolicy proposals for 2018. Implementation ofthe compensation policies defined inaccordance with the guidelines provided bythe Board of Directors is done by thecompetent company bodies, with the supportof the relevant company functions.

Aims and general principles of the Remuneration Policy

Aims

The Saipem Remuneration Policy is defined inaccordance with the governance modeladopted by the Company and therecommendations included in the CorporateGovernance Code, with the aim of attractingand retaining highly skilled professional andmanagerial resources and aligning theinterests of management with the priorityobjective of value creation for theshareholders in the medium-long term.The Saipem Compensation Policy contributesto the achievement of the company missionand strategy by:- promoting actions and conduct consistent

with the Company culture and with theprinciples of diversity, equal opportunities,the maximisation and leveraging ofknowledge and skills of personnel, fairness,and non-discrimination as outlined in theCode of Ethics and in the ‘Our people’Policy;

- recognising and rewarding responsibilitiesassigned, the results achieved and thequality of the professional contributionmade, taking into account the specificcontext and compensation benchmarks;

- defining performance-based incentivesystems linked to the attainment of aseries of financial/profit, businessdevelopment and operating and personaltargets set with a view to achievinglong-term sustainable growth in line withthe Company’s Strategic Plan and withresponsibilities assigned.

General principles

In line with the above aims, the compensationpaid to the Directors and the Senior Managerswith strategic responsibilities is defined inaccordance with the following principles andcriteria.

Remuneration of the Chairman and non-executive DirectorsCompensation paid to non-executiveDirectors to be commensurate with theirscope of duties also as a member of BoardCommittees, established in accordance withRegulations, with differentiation of theCommittee Chairman’s compensation withrespect to that of Committee members inrecognition of their duties of coordinatingworks and liaising with company bodies andfunctions.Unless otherwise resolved by theShareholders’ Meeting, the exclusion ofnon-executive Directors from participation invariable incentive plans, includingshare-based plans.



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Compensation of the Chief ExecutiveOfficer-CEO and Senior managerswith strategic responsibilitiesThe compensation structure for the ChiefExecutive Officer-CEO and for SeniorManagers with strategic responsibilitiesshould be a balanced mix of a fixedcomponent commensurate with powersand/or responsibilities assigned and a variablecomponent with a maximum limit designed tolink compensation to targets that are actuallyachieved.

Consistency with market benchmarksOverall consistency of compensationcompared with applicable market benchmarksfor similar positions or roles of a similar levelof responsibility and complexity within a panelof companies comparable to Saipem, usingspecific benchmarks created with the supportof international compensation data providers.

Variable compensationVariable compensation of executive rolesstrongly influencing company results,characterised by a significant incidence oflong-term incentive components through anadequate differentiation of incentives in a timeframe of at least three years, in accordancewith the long-term nature of the businesspursued.

Predetermined, measurableand complementary targetsObjectives related to the variablecompensation for objectives that arepredetermined, measurable andcomplementary to each other, in order torepresent the priorities for the overallperformance of the Company, in line with thestrategic plan and with the expectations ofshareholders and stakeholders, promotingstrong results-based orientation.These objectives are defined in order toensure: (i) assessment of annual, business andindividual performance, based on a balancedscore card defined in relation to the specifictargets of the area of responsibility and in linewith tasks assigned; (ii) definition of long-termincentive plan designed to enable anassessment of company performance both inabsolute terms, with reference to thecompany’s capacity to pursue mid and longterm economic and financial performance,and in relative terms with respect to a peergroup, for its capacity to generate levels ofshare performance and value creation that aresuperior to those of its main internationalcompetitors and to guarantee greateralignment of shareholders’ interests in the midand long term.

Consistency with results achievedIncentives linked with variable compensationpaid following a scrupulous process ofchecking results actually achieved, assessing

performance targets assigned net of theeffects of exogenous variables, with a view tomaximising the actual company performancearising from management action.

Benefits in line with market practicesBenefits, with a preference given to pensionand insurance benefits, in line with marketcompensation benchmarks and compliantwith local regulations to supplement andenhance the compensation package,reflecting roles and responsibilities assigned.

Clawback clauses to hedge risks of errorand for significant violationsAdoption, through a specific Regulationapproved by the Board of Directors, on theproposal of the Compensation and NominationCommittee, of clawback mechanisms thatmake it possible to request the return ofvariable components of compensation alreadypaid, or not to proceed with the final allocationof the shares at the end of the vesting periodor request the return of the correspondingvalue of the shares already paid or to retain thecorresponding value from compensation dueto the beneficiaries, where the maturation tookplace based on data that was later proven to bemanifestly incorrect, or return of all incentives(or shares/corresponding value) relating to theyear (or years) with reference to which (all)fraudulent alteration of the data used tocalculate the results was ascertained in orderto achieve the right to the incentive and/or thecommission of serious and intentionalviolations of laws and/or regulations, of theCode of Ethics or of company rules which arerelevant to or imply an impact within theframework of the employment contract,affecting the related fiduciary relationship, inany case without prejudice to any actionpermitted by the law to protect the interests ofthe Company.

Terms and conditionsfor applying clawbackRegulations provide for revocation ofallocating shares or the recovery of theequivalent monetary value of the shares ofVariable Monetary Incentives within amaximum of three years from the date ofpayment or award of shares, whenever theincentives have been determined on the basisof data relating to the results and/orperformance, which are subsequentlyrevealed to be mistaken.The Regulation also provides for theapplication of recovery measures within amaximum of five years from the correspondingissue or award for persons who are shown tobe responsible for altering, due to misconductor gross negligence, the data used to reportresults for assigned objectives in order toachieve the right to the incentive and/or inviolation of laws and/or regulations, the Codeof Ethics or company rules which are relevant



13

to or imply an impact within the framework ofthe employment contract, and are of suchsignificance as to compromise trust.In such cases, following the outcome of auditscarried out by the relevant companycompliance and control functions regardingthe existence of errors that impact the finalresults, the company must, subject torectification of the data, review the results, andthe relevant company bodies and functionsmust recalculate the incentives, which maylead to the possibility of total or partialrecovery in relation to the results achieved andto the incentives due. For the purposes ofthese Regulations, errors that do not impactthe final determination of the incentive sum areto be considered of no importance.

Severance pay and non-competitionagreements within pre-set limits and to safeguard interestsAdditional severance pay andnon-competition agreements for executivepositions which are subject to a high risk ofcompetition, defined within a specific amountor for a specific number of years of service ornumber of months of salary, in line with levelof compensation received.

2018 Remuneration Policy Guidelines

This section contains the Guidelines forcompensation regarding the new 2018-2021mandate, approved by the Board of Directors

on March 5, 2018 for the Directors who will beappointed in the Shareholders’ Meeting May3, 2018. The new Board of Directors retainsthe prerogative to determine, on the proposalof the Compensation and NominationCommittee, the specific compensation for theassigned powers and for participation inCommittees.The Remuneration Guidelines for Directors inoffice until May 3, 2018 are summarisedbelow. These reflect the decisions alreadytaken by the Board of Directors on May 25,2015 and which are fully described in the2017 Remuneration Report.

Board of Director Policiesfor 2018-2021

The 2018 Remuneration Policy Guidelinesprovide for, in light of the market scenario andthe full implementation of the new divisionstructure, focusing on the definition of theobjectives for 2018 in line with the Company’sstrategic plan and the new organisationalmodel, as well as on the revision of theshort-term incentive system for the ChiefExecutive Officer-CEO and for all Managers, inorder to simplify the mechanisms thatconnect management’s efforts and the valuecreated for the shareholder.For the Chairman, the non-executive Directorsand the Chief Executive Officer-CEO, the2018 Guidelines provide for the definition ofadequate remuneration with respect topowers attributed and to market references.

SALARY PACKAGE

FIXED

Fixed compensation

SHORT-TERMVARIABLE

Short-term variable

Incentives (STI)

LONG-TERMVARIABLE

Share-based

Long-term variable

incentives (ILT)

BENEFITS

Non-monetary

benefits

ANCILLARY INSTRUMENTS

Severance Payment;

Minimum Term

Agreement;

Non-competition

agreement

Market referencesFor the Chairman, the non-executive Directorsand the Chief Executive Officer-CEO, unlessotherwise decided by the new Board ofDirectors, the hypothesis of consideringanalogous roles in the main international andItalian companies that are comparable toSaipem in terms of capitalisation, income,number of employees and geographicalcoverage was discussed.For Senior Managers with strategicresponsibilities the market references areanalogous roles with the same level ofcomplexity and responsibility in large nationaland international companies comparable toSaipem in terms of revenues, capitalisation,

number of employees and geographicalinternational presence in various industrieswith a prevalence of companies that operatein the engineering and construction of largescale works and infrastructures.

Chairman of the Board of Directorsand non-executive Directors

Remuneration for the Chairman of the Board of DirectorsFor the Chairman, who will be appointed for thenew mandate, the Remuneration PolicyGuidelines provide for the definition of



14

remuneration commensurate with thecomplexity of the role, the considerablecommitment required and any additional roles orpowers that may be assigned, in line with theaforementioned general principles and with thedecisions taken by the Shareholders’ Meeting ofMay 3, 2018 and in line with market benchmarks.

Remuneration of non-executiveDirectorsFor non-executive Directors who will beappointed for the new mandate, theRemuneration Policy Guidelines provide forthe definition of remuneration consistent withthe complexity of the role and theconsiderable commitment required, in linewith market benchmarks.

Additional remuneration for serviceon Board CommitteesFor non-executive Directors who will beappointed for the new mandate and who willbe called on to serve on Board Committees,the Remuneration Policy Guidelines providefor the definition of remunerationcommensurate with the complexity of the roleand the considerable commitment required, inline with market benchmarks.

Payment in the event of office expiryor termination of employmentFor the Chairman and non-executiveDirectors, no specific payments are providedfor in the event of expiry of term of office orearly termination.

BenefitsThere are no benefits for the Chairman andfor non-executive Directors.

Chief Executive Officer-CEO

The Policy Guidelines for the Chief ExecutiveOfficer-CEO take into account the specificpowers conferred in accordance with theArticles of Association, the instructionscontained in the chapter ‘Aims and generalprinciples of the Remuneration Policy’, as well

as the remuneration levels and market bestpractices.

Fixed remunerationRemuneration shall be determined by the newBoard of Directors based on proposal by theCompensation and Nomination Committee inrelation to the position and powers conferred,taking into account average salaries in thereference market.The fixed remuneration includes bothcompensation which will be determined by theShareholders’ Meeting of May 3, 2018 for theDirectors and the compensation that may beowed for serving on the Boards of subsidiaryor associated companies.

Annual variable incentivesThe new annual variable incentive plan isassociated with achievement of pre-setperformance results for the previous year andeach is measured according to a 70÷130performance scale, in relation to the weightingassigned to them (a performance below 70points is considered zero). The minimumindividual performance level for incentivepay-out purposes is 70 points.The Plan will be determined based on resultsachieved by Saipem in the previous year,measured on a performance scale consistingof a minimum level performance (70 points), atarget level performance (100 points) and amaximum level performance (130 points),corresponding respectively to 50%, 100%and 130% of the target incentive.Compared to the previous Plan, the incentivecurves were revised to obtain a greaterleverage effect (maximum bonus differentialvs. minimum) and a greater penalty forperformance lower than the target.

PERFORMANCE VS. EXPECTED TARGET

Minimum (70) 50% (*)

Target (100) 100% (*)

Maximum (130) 130% (*)

(*) Percentage of target incentive.

The maximum level of incentive attributed bythe Plan for the Chief Executive Officer-CEO isdefined in relation to fixed remuneration,consistent with the principles laid down in theGuidelines and with market benchmarks up toa maximum of 150% of fixed remuneration,corresponding to achievement of themaximum level of performance (130 point ona performance scale of 70÷130).The 2018 targets resolved by the Board ofDirectors on March 5, 2018 for the annualvariable incentive plan are in line with thebusiness model and strategic guidelines.The structure and weight of differentobjectives are represented in the table below.

0

100%

140%

120%

40%

60%

20%70 100 130

80%

Maximum 130%

Minimum 50%

Target 100%

performance

% in

cen

tiv

e

Incentive curve



15

Long-term variable incentivesThe Share-based Long-Term Incentive Plan(LTI) 2016-2018 (approved by the Board ofDirectors on March 16, 2016 and by theShareholders’ Meeting of April 29, 2016) whichincludes all managerial resources, with threeawards beginning in July 2016, encompassesthe free allocation of ordinary Saipem shares(performance shares) against the achievementof two performance conditions, the first inrelation to a business objective measured overthe three-year vesting period, and the secondlinked to the performance of the Saipem share,both measured at the end of the three-yearperiod of reference.The Plan requires that the performanceconditions be measured on the basis of thefollowing parameters:- Total Shareholder Return (TSR)8 of the

Saipem share, with a weighting of 50%,measured on a three-year basis in terms ofpositioning relative to the peer groupconsisting of the main internationalcompanies operating in the same sector asSaipem. The TSR is measured in relation tothe following peer group: Subsea 7,Petrofac, Hyundai E&C, McDermott

International, Samsung Engineering Co,Aker Solutions, Technip, Tecnicas Reunidas,Noble Corporation, Ensco, NaborsIndustries. The Plan requires that a part ofthe award for the performance conditionmeasured in terms of Saipem’s TSR be atleast equal to the median performance ofthe peer group as illustrated in the table:

2018 Targets for the 2019 Annual variable incentive plan

FINANCIAL TARGETS

Adjusted Free Cash

Flow (1)

(weight: 35%)

FINANCIAL TARGETS

Adjusted EBITDA (1)

(weight: 35%)

STRATEGIC TARGETS

New contracts

(weight: 15%)

HSE & SUSTAINABILITYTARGETS

HSE and Sustainability (2)

(weight: 15%)

1. TRI (weight: 5%)

2. GHGs emissions

(weight: 5%)

3. Global Compact

(weight: 5%)

(1) Adjustment, both for EBITDA and for FCF, refers to so-called ‘special items’, explained in the financial statements and reported to the market through press releases.

(2) The HSE and Sustainability target is focused on issues regarding health, safety and the environment divided among the following indicators:

- Total Recordable Injury Frequency Rate;

- targets regarding the monitoring of Green House Gas emissions;

- the target regarding the ‘Global Compact’ aimed at guaranteeing respect for human rights and labour throughout the entire supply chain through training for Human Rights

and Labour issues, as well as strengthening the control system for vendors during contract execution phases.

0.5

1.0

1.5

2.0

TRIFR Historic trend

2013 2015 2017 2016 20142009 2012 2011

0.51

2010

(8) The Total Shareholder Return (TSR) of Saipem and its peers is calculated over a time period of 3 years, using the average of the closing values of theshare price during the period between December 2017 and January 2018 and the average of the closing share price during the period between December2020 and January 2021.

Total Shareholder Return (TSR)

Performance equal to or greater than average Performance below average

Ranking 1 2 3 4 5 6 7 8 9 10 11 12

Maturation of shares 100% 100% 100% 100% 75% 50% 0% 0% 0% 0% 0% 0%



16

- Net Financial Position (NFP): objective thatmeasures Saipem’s medium to long-termfinancial performance at the end of the three-year reference period, with a 50% weight.

The performance conditions operateindependently of each other. This means that,in the presence of an adequate performancein at least one of the two objectives, a part ofthe award will mature regardless of theperformance achieved in the other objective.

The achievement of the maximum result levelfor each performance condition leads to thepayment of 100% of the shares promised,while an achievement of a threshold result,50% of the shares assigned for the TSR and30% for the NFP will mature. In the event ofperformances below the threshold level, noshares will be issued. The maximum level of incentive attributed bythe Plan for the Chief Executive Officer-CEOwill be defined in relation to fixedremuneration, consistent with the principleslaid down in the Guidelines and with referenceto the market, for a maximum of 170% of fixedremuneration. The maximum value at the endof the vesting period cannot be any more thanfour times the value of the shares at themoment of their allocation.With a view to aligning the Company’s interestswith those of its shareholders over the longterm, and of ensuring the sustainability of theresults obtained, the Plan requires that 25% ofthe shares matured by virtue of theachievement of the above mentioned resultsare to be locked up for a period of two years,during which the Chief Executive Officer-CEOcannot dispose of them.

Clawback clauseAll short- and long-term variable incentivesinclude a clawback clause enabling the recoveryof variable remuneration components found tohave been paid out in error or as the result ofintentional misconduct by beneficiaries,according to the conditions, methods andterms of application described in the ‘Aims andgeneral principles of the Remuneration Policy’section of this Report (page 11).

Accessory remuneration instrumentsThe following payments are envisaged for theChief Executive Officer-CEO, who will beappointed after the next renewal of theexecutive body, in line with the relevantpractices and the provisions of theRecommendation of the EuropeanCommission No. 385 of April 30, 2009, and toprotect the company from potentialcompetition risks:

PERFORMANCE AND VESTING PERIOD LOCK-UP PERIOD

ILT FOR CHIEF EXECUTIVE OFFICER - TIMELINE

Total Shareholders Return and Net Financial Position

Year T T+1 T+2 T+3 T+4 T+5

Promise

of free shares

allocation

Definitive allocation

75% matured shares


25% matured shares

a) Indemnities for termination of office ortermination of employment.- Supplemental termination indemnities due

to early termination of the 2018-2021administrative mandate, also due toresignation caused by essential reductionof mandates. The indemnity for the officefor Directors will be defined in line with therecommendations of the CorporateGovernance Code and not more than twoyears of fixed remuneration. For anyemployment relationship the sameregulations will apply as those provided forin this Report for Managers with strategicresponsibilities. Also with reference to thecriteria for application, Article 6, paragraph1, letter g) of the Corporate GovernanceCode, this indemnity is not paid in thecase of dismissal for ‘just cause’ pursuantto Article 2119 of the Civil Code, or incase of resignation from the position of

0

50%

70%

90%

110%

40%

60%

20%

10%

30%

80%

100%

Thresholdlevel

Maximumlevel

NPF

Net position financial

% m

atu

rED

SH

AR

ES



17

Chief Executive Officer-CEO before theexpiry of the mandate not justified by anessential reduction of mandates, or in thecase of death disciplined by Article 2122of the Civil Code.

b) Non-competition agreements.- Non-competition agreement, to protect

the interests of the company, withcompensation determined in relation tothe fixed remuneration, as well as inrelation to the nature, extent and durationof the commitments made notexceeding 12 months of annualremuneration per year of the agreement.

BenefitsFor the Chief Executive Officer-CEO, thebenefits envisaged for all managers will beapplied (supplementary pensions, health care,insurance coverage, cars for business andpersonal use), as well as any travel allowancesand reimbursement of travel expenses.

Board of Director Policiesfor 2015-2018

Chairman of the Board of Directorsand non-executive DirectorsRemuneration for the Chairman of the Boardof Directors and for non-executive Directorsreflects the resolutions taken by the Board ofDirectors on May 25, 2015 and June 15,2015.For the Chairman in office, the Board ofDirectors Meeting of June 15, 2015, resolvedon an annual fixed remuneration of €278,000,inclusive of €60,000 remuneration for theoffice of Director resolved by theShareholders Meeting of April 30, 2015, in linewith the reference market benchmarks, towhich is added the remuneration of €20,000for the role of Chairman of the CorporateGovernance Committee and Scenarios.An additional annual remuneration willcontinue to be paid out to non-executiveDirectors for service on Board Committees.The fees, resolved by the Board of Directorson May 25, 2015 are determined as follows:- €30,000 for the Chairman of the Audit and

Risk and €24,000 for other the members;- €20,000 for the Chairman of the

Compensation and Nomination Committeeand €15,000 for other members;

- €20,000 for the Chairman of the CorporateGovernance Committee and Scenarios and€15,000 for other members.

Chief Executive Officer-CEOFor the Chief Executive Officer-CEO the 2018remuneration structure reflects theresolutions taken by the Board of Directors onJune 15, 2015 and June 27, 2016. In relationto the mandates assigned, it incorporates theremuneration resolved by the Shareholders’Meeting for the Directors, and theremuneration potentially due for participationon the Boards of Directors of subsidiary orinvested companies.

Fixed compensationIn line with the resolutions of 2017, the grossfixed remuneration of the Chief ExecutiveOfficer-CEO is set at €900,000 per year.The sum was set by the Board of Directors atthe proposal of the Compensation andNomination Committee.

Annual variable incentivesThe annual variable incentive plan 2018, asalready described in the Remuneration Report2017, is associated with achievement of theSaipem performance results for the previousyear and each is measured according to a70-130 performance scale, in relation to theweighting assigned to them (a performancebelow 70 points is considered zero).The minimum individual performance level forannual variable incentive pay-out purposes is85 points. The incentive plan will bedetermined based on results achieved bySaipem in the previous year, measured on aperformance scale consisting of a minimumlevel performance (85 points), a target levelperformance (100 points) and a maximumlevel performance (130 points), correspondingrespectively to 51%, 60% and 78% of fixedremuneration. The 2017 objectives approvedby the Board of Directors on January 27,2017 for the purposes of the 2018 annualvariable incentive plan concerned in particular:(i) Free Cash Flow (weight 35%); (ii) AdjustedEBITDA9 (weight 30%); (iii) Strategic objectivesconnected to the ‘Fit For the Future’programme related to fixed monetary costs(weight 20%) and ‘Fit For the Future 2.0’10

(weight 5%); (iv) Sustainability & HSEobjectives relating to TRI indicators11 (weight5%), the We Want Zero12 programme (weight2.5%) and the Global Compact13 (weight2.5%).

Long-term variable incentivesWithin the framework of the Share-basedLong-Term Incentive Plan (LTI) 2016-2018

(9) The adjustment refers only to reorganisation/restructuring and corporateisation costs.(10) As part of this programme, which aims to define the new Saipem industrial and organisational model with a view to greater organisational agility andcompetitiveness, the two objectives refer to the issue of the division organisational structure and the matrices of the divisions’ powers.(11) Total Recordable Injury Frequency Rate.(12) The ‘We Want Zero’ objective provides for fatal injury prevention programmes for continually reducing the injury rate and achieving the target of zero.(13) Objective relating to the ‘Global Compact’: guaranteeing respect of human and labour rights all along the supply chain, is a consolidated indicatorrelating to the involvement of vendors of goods, materials and services in Human & Labour Rights (HLR) issues, according to the three specific actions ofauditing, training and feedback.



18

(approved by the Board of Directors on March16, 2016 and by the Shareholders’ Meeting ofApril 29, 2016), and in line with contractualagreements stipulated with the ChiefExecutive Officer-CEO in office, the last if thethree annual allocations is provided for,reduced by comparison with previousallocations.The Plan encompasses the free allocation ofordinary Saipem shares (performance shares)against the achievement of two performanceconditions, the first in relation to a businessobjective (measured over the three-yearvesting period), and the second linked to theperformance of the Saipem share, bothmeasured at the end of the three-year periodof reference.The Plan requires that the performanceconditions be measured on the basis of thefollowing parameters:- Total Shareholder Return (TSR) of the

Saipem share, with a weighting of 50%,measured on a three-year basis in terms ofpositioning relative to the peer groupconsisting of the main internationalcompanies operating in the same sector asSaipem. The TSR is measured in relation tothe following peer group: Subsea 7,Petrofac, Hyundai E&C, McDermottInternational, Samsung Engineering Co,Aker Solutions, Technip, Tecnicas Reunidas,Noble Corporation, Ensco, NaborsIndustries. The plan requires that a part ofthe award for the performance conditionmeasured in terms of Saipem’s TSR be atleast equal to the median performance ofthe peer group as illustrated in the table onpage 15.

- Net Financial Position (NFP): objective thatmeasures Saipem’s medium to long-termfinancial performance at the end of the three-year reference period, with a 50% weight.

The performance conditions operateindependently of each other. This means that,in the presence of an adequate performancein at least one of the two objectives, a part ofthe award will mature regardless of theperformance achieved in the other objective.The achievement of the maximum result levelfor each performance condition leads to thepayment of 100% of the shares promised,while an achievement of a threshold result,50% of the shares assigned for the TSR and30% for the NFP will mature. In the event ofperformances below the threshold level, noshares will be issued. The maximum level of incentive attributed bythe Plan for the Chief Executive Officer-CEO isdefined in relation to fixed remuneration, inline with contractual provisions stipulated withthe Chief Executive Officer-CEO and will beequal to 88.4% of fixed remuneration.The maximum value at the end of the vestingperiod cannot be any more than four timesthe value of the shares at the moment of theirallocation.

If the mandate is not renewed it is envisagedthat the definitive amount of shares beallocated at the end of the associated vestingperiod, according to the performanceconditions of the Plan. With a view to aligningthe Company’s interests with those of itsshareholders over the long term, and ofensuring the sustainability of the resultsobtained, the Plan also requires that 25% ofthe shares matured by virtue of theachievement of the above mentioned resultsare to be locked up for a period of two years,during which the Chief Executive Officer-CEOcannot dispose of them.

Clawback clauseAll short- and long-term variable incentivesinclude a clawback clause enabling therecovery of variable remunerationcomponents found to have been paid out inerror or as the result of intentional misconductby beneficiaries, according to the conditions,methods and terms of application describedin the ‘Aims and general principles of theRemuneration Policy’ section of this Report(page 11).

Accessory remuneration instrumentsThe following payments are envisaged for theChief Executive Officer-CEO, in line with therelevant practices and the provisions of theRecommendation of the EuropeanCommission No. 385 of April 30, 2009, and toprotect the company from potentialcompetition risks:a) Indemnities for termination of office or

termination of employment.- For early termination, not for just cause,

of the 2015-2018 mandate, also in thecase of resignations caused by essentialreduction of mandates, the payment isenvisaged of an all-inclusive lump sumaccording to Article 2383(3) of the Italiancivil code, of an amount correspondingto two years of the total fixed grossremuneration (a total of €1,800,000).It should be noted that, in the event ofresignation from the post of ChiefExecutive Officer-CEO, when this is notjustified by demotion, said resignationmust be communicated to the Board ofDirectors with 4 months’ notice or,alternatively, the Chief ExecutiveOfficer-CEO must pay an indemnity of€300,000.

b) Non-competition agreement.- Non-competition agreement, to protect

the company’s interests, in considerationof the high management profile ofinternational standing in the Oil & GasServices industry and the networks ofinstitutional and business relationshipsbuilt globally by the Chief ExecutiveOfficer-CEO. The non-competitionclause can be activated by the Board ofDirectors following evaluation and using



19

an option against a specific payment (ofa gross amount of €450,000 paid in 3annual instalments). It envisages thepayment of an amount against thecommitment taken on by the ChiefExecutive Officer-CEO not to carry outany activities in competition with Saipemoperations, in terms of its companyobject and in the primary internationalmarkets, for the 12 months following thetermination of the mandate.This payment, approved by the Board ofDirectors on June 15, 2015, amounts to€1,800,000. Any breach of thenon-competition agreement will lead tonon payment (or the restitution on thepart of the payee, where the violation hascome to Saipem’s knowledgesubsequent to payment), as well as theobligation to pay the damagesconsensually and conventionallydetermined in an amount equal to doublethe payment agreed, without prejudice toSaipem’s faculty to request fulfilment ofthe agreement in a specific form.

At the date of approval of this Report, theBoard has not yet expressed its opinion onthe activation of the agreement.

BenefitsThe Chief Executive Officer-CEO is grantedinsurance cover against the risk of death andpermanent disability and membership of thesupplementary healthcare fund (FISDE), aswell as use of a Company car for business andpersonal use and reimbursement of expensesfor a Rome-Milan journey once per week, ifneeded.

Policies for Senior Managerswith strategic responsibilities

Fixed remunerationFixed remuneration of SMSR is set based onroles and responsibilities assigned, taking intoaccount average levels of remuneration atother major Italian and internationalcompanies for roles of a similar level ofmanagerial responsibility and complexity, andmay be adjusted periodically in the frameworkof the annual salary review process which iscarried out for all managers.Taking into account the relevant context andcurrent market trends, the 2018 Guidelineswill employ selective criteria designed toensure adequate levels of competitivenessand motivation.Specifically, the proposed actions willconcern: (i) the possibility of makingadjustments to align fixed remuneration withthe market median for resources that areparticularly strategic for the achievement ofCompany results, for those who haveincreased the perimeter of their responsibilityor the level of coverage of their role, or who

have highly critical skills with a high impact onbusiness; (ii) the possibility of awarding veryselective, special one-off bonus payments(up to a maximum of 25% of fixedremuneration) for excellent performances onkey projects or targeted at recoveringcompetitiveness, and in consideration ofretention purposes and performances ofexcellent quality.

Annual variable incentivesThe new short term variable incentive planenvisages a remuneration calculated withreference to Saipem, divisions and individualperformance results of the previous year andmeasured according to a 70-130performance scale (below 70 points theperformance of each target is deemed to bezero), with a minimum individual incentivethreshold of 70 points, below which no bonusis payable, in line with that previouslydescribed for the Chief ExecutiveOfficer-CEO. The target level incentive(performance = 100) and maximum levelperformance (performance = 130) entailpayouts that vary in accordance with the roleof the beneficiary, up to a maximum of 45%and 58.5% of fixed remuneration, respectively.The performance objectives of other SMSRare calculated on the basis of the objectivesassigned to Top Management and focus oneconomic-financial performance, operations,internal efficiency, sustainability (especiallyhealth and safety, environmental protection,respect for human rights and labour,stakeholder relations), as well as in relation tothe manager’s area of responsibility for therole covered, in accordance with theCompany Performance Plan.

Long-term variable incentivesSenior managers with strategicresponsibilities, in line with that defined for theChief Executive Officer-CEO, participate in thelong-term incentive plan defined by the Boardof Directors on March 16, 2016 and approvedby the Shareholders’ Meeting on April 29,2016.The Long-Term Incentive Plan (LTI)2016-2018, which includes all managerialresources, with three awards beginning in July2016, encompasses the free allocation ofordinary Saipem shares (performance shares)against the achievement of two performanceconditions, the first in relation to a businessobjective measured over the three-yearvesting period, and the second linked to theperformance of the Saipem share in thethree-year period of reference. The Planrequires that the performance conditions bemeasured on the basis of the followingparameters:- Total Shareholder Return (TSR) of the

Saipem share, with a weighting of 50%,measured on a three-year basis in terms ofpositioning relative to the peer group



20

consisting of the main internationalcompanies operating in the same sector asSaipem;

- Net Financial Position (NFP): objective thatmeasures Saipem’s medium to long-termfinancial performance at the end of thethree-year reference period, with a 50%weight.

The TSR is measured in relation to thefollowing peer group: Subsea 7, Petrofac,Hyundai E&C, McDermott International,Samsung Engineering Co, Aker Solutions,Technip, Tecnicas Reunidas, NobleCorporation, Ensco, Nabors Industries.The Plan requires that a part of the award forthe performance condition measured in termsof Saipem’s TSR be at least equal to themedian performance of the peer group asillustrated in relation to the Chief ExecutiveOfficer-CEO. The performance conditionsoperate independently of each other.This means that, in the presence of an

adequate performance in at least one of thetwo objectives, a part of the award will matureregardless of the performance achieved in theother objective. The achievement of themaximum result level for each performancecondition leads to the payment of 100% ofthe shares, while on achievement of athreshold result, 50% of the shares assignedfor the TSR and 30% for the NFP will mature.In the event of performances below thethreshold level, no shares will be issued.The maximum levels of incentive attributed bythe Plan are defined in relation to the positioncovered and to fixed remuneration, consistentwith the principles laid down in the Guidelines,and are equal to 100% of fixed remuneration,leaving unchanged the maximum incentivepercentages contained in the previouslong-term incentive plans. The maximum valueat the end of the vesting period cannot be anymore than four times the value of the sharesat the moment of their allocation.

PERFORMANCE AND VESTING PERIOD CO-INVESTMENT PERIOD

Year T T+1 T+2 T+3 T+4 T+5

Promise

of free shares

allocation


75% matured shares


25% matured shares

and retention shares

ILT FOR SENIOR MANAGERS WITH STRATEGIC RESPONSIBILITIES - TIMELINE

Total Shareholders Return and Net Financial Position

The Plan further provides that 25% of theshares matured at the end of the three-yearvesting period by virtue of the degree ofachievement of the above mentionedperformance conditions will be invested in aco-investment scheme for a two-year periodduring which the beneficiaries cannot in anyway dispose of the part of matured shares,and at the end of which the beneficiaries willreceive one additional share for each shareinvested. The co-investment aims tostrengthen further the alignment of interestsbetween management and shareholders overthe long-term and to act as leverage for theretention of management.

The Plan includes clauses designed toencourage retention whereby, in the event oftermination of the employment contract bymutual consent or loss of control by Saipemof the company where the beneficiary of theplan is employed during the vesting period,the beneficiary conserves the right to theincentive, which is reduced on a pro-rata basisin relation to the time elapsed between theaward of the base incentive and theoccurrence of the event. In the event ofunilateral termination of employment, nopayment is made.


(14) Closed pension fund operating on a defined contribution, individual account basis, www.fopdire.it.(15) Capital funded pension scheme established in the form of a notarised association. www.previndai.it.(16) Healthcare fund providing reimbursement of medical expenses for working and retired Senior Managers and their family members, www.fisde-eni.it.


21

Clawback clauseThe clawback clause is envisaged for SeniorManagers with strategic responsibilities, andhas the conditions, methods and terms ofapplication described in the ‘Aims and generalprinciples of the Remuneration Policy’ sectionon page 11 of this Report.

Accessory remuneration instrumentsa) Indemnities for termination of office or

termination of employment.- SMSR, like all Saipem Senior Managers,

receive the termination indemnityestablished in the National CollectiveLabour Agreement, as well as anysupplementary indemnities that may beagreed on an individual basis upontermination in accordance with criteriaset by Saipem and whose maximumamounts are established taking intoaccount the entitlements alreadyprovided by the National CollectiveLabour Agreement for Senior Managersin the event of voluntary redundancy orearly retirement. These criteria takeaccount of the actual and pensionableage of the Senior Manager at the timethe contract is terminated and his/herannual remuneration. In addition,severance payments up to a maximum oftwo years’ fixed remuneration for aChange of Control resulting inresignation or termination and/ordemotion may be established on thebasis of individual termination indemnityagreements.

b) Minimum Term Agreements.- Minimum term agreements may be

prescribed to protect the know-how withthe aim of guaranteeing continuity inachieving the business objectives for amaximum period of 12 months of annualremuneration.

c) Non-competition agreements.- Specific remuneration may be envisaged

for cases where the need is found toenter into non-competition agreementsfor a maximum amount of 12 months ofannual remuneration per year of theagreement.

BenefitsIn continuity with the remuneration policiesimplemented in 2017 and in accordance withthe relevant collective labour agreementestablished at national level andsupplementary agreements reached atcompany level for Saipem Senior Managers,Senior Managers with strategicresponsibilities are granted membership ofthe supplementary pension fundFOPDIRE14/PREVINDAI15 and theSupplementary Healthcare Fund FISDE16,death and disability insurance coverage and acompany car for business and personal use.

+100%Retention share

Invested shares(Co-investment)

Invested shares (Co-investment)

Equal to 25% of matured shares from the basic plan

T3

Matured at the end of the two-year investment period

T5

Co-investment plan


Implementation of 2017compensation policies

This section of the Report provides adescription of the remuneration policiesimplemented in 2017 for the Chairman of theBoard of Directors, non-executive Directors,the Chief Executive Officer-CEO and SeniorManagers with strategic responsibilities.Implementation of the 2017 RemunerationPolicy, according to what has been verified bythe Compensation and NominationCommittee on the periodic evaluationenvisaged by the Corporate GovernanceCode, was found to be in line with the 2017Remuneration Policy approved by the Boardof Directors on March 16, 2017, according tothe provisions of the resolutions taken by theBoard of Directors on May 25, 2015, June 15,2015 and June 27, 2016, regarding theremuneration of non-executive Directorsparticipating in Board Committees and thedefinition of the remuneration of the Chairmanand the Chief Executive Officer-CEO.Based on the evaluation expressed by theCommittee, the 2017 Policy is in line with themarket benchmarks.

Fixed compensation

DirectorsThe Chairman was paid the compensation forthe position approved by the Board ofDirectors on June 15, 2015, in line withmarket practices and at a higher level than thecompensation assigned for the office ofChairman during the previous mandate, due tothe duties and the increased powersenvisaged by the Board of April 30, 2015.This remuneration includes that for the officeof Director approved by the Shareholders’Meeting of April 30, 2015. The Chairman wasalso paid the remuneration for the post ofChairman of the Corporate GovernanceCommittee and Scenarios.Non-executive Directors were paid the fixedremuneration approved by the Shareholders’Meeting of April 30, 2015, unvaried withrelation to the previous mandate.With reference to the Chief ExecutiveOfficer-CEO, the compensation approved bythe Board of Directors on June 15, 2015 waspaid, increasing compared to the previousmandate and in line with market references.This compensation includes the amount forthe position of Director, approved by theShareholders’ Meeting of April 30, 2015, incontinuity with the previous mandate.

Senior Managerswith strategic responsibilitiesFor Senior Managers with strategicresponsibilities, as part of the annual salaryreview envisaged for all managers, in 2017adjustments were made to the fixedremuneration for positions whose perimeterof responsibility has increased or are placedbelow the average market benchmarks.In addition, extraordinary one-off paymentswere provided during 2017, connected toexcellent performance on projects ofparticular relevance or aimed at recoveringcompetitiveness, as well as consideringretention needs and excellent performance,for a total amount equal to €313,500.The sums for fixed remuneration and, asregards employment salaries, for indemnitiescovered under the national contract for seniormanagers and under supplementary companyagreements, are specified in the relevant itemof Table No. 1 of the chapter ‘Remunerationpaid in 2017’.

Remuneration for serviceon Board Committees

Non-executive Directors were paid theadditional remuneration due for service onBoard Committees, according to theresolution of the Board of Directors datedMay 25, 2015, unvaried with relation to theprevious mandate, according to the criteria ofdifferentiation between the Chairman andother members.Remuneration for service on BoardCommittees is shown in Table No. 1 of thesection ‘Remuneration paid in 2017’.

Variable incentives

Annual variable incentivesSaipem results for 2016 evaluated on aconstant currency basis and approved by theBoard of Directors at the proposal of theCompensation and Nomination Committee inthe meeting held on March 16, 2017generated a performance score equal to 72.9points on the measurement scale used, whichsets the minimum performance level at 70points.The table shows the weights and performancelevels reached for each objective.

22

Section II - Compensation and other information

SAIPEM Remuneration Report / Section II - Compensation and other information



23

2016 targets for the 2017 Variable Incentive Plan

Target Weight Minimum Target Maximum

1. Free Cash Flow 40% √

2. Adjusted EBIT 30% √

3. Cost savings (‘Fit For the Future’ programme) 20% √

4. Sustainability and HSE 10% √

In accordance with the 2017 RemunerationPolicy Guidelines, the performance scoreachieved did not activate the annual monetaryincentive system for the Chief ExecutiveOfficer-CEO.For the purposes of variable remuneration forSenior Managers with strategicresponsibilities, the annual variable incentivewas paid out in March 2017, calculated in linewith the Remuneration Policy, is connected tocompany performance and a series ofindividual objectives assigned based on theresponsibilities of the role, in line with theSaipem 2016 performance plan. For thepurposes of the variable remuneration paid in2017, the final performance determined forSenior Managers with strategicresponsibilities the provision of bonusescalculated on the basis of specific objectivesachieved, in line with incentive levelsdifferentiated based on the role held, up to amaximum of 41.5% of fixed remuneration,taking into account the target (35%) andmaximum (52%) incentive levels assigned.The incentives awarded to the SeniorManagers with strategic responsibilities areindicated under the item ‘Non-equity variableremuneration/bonuses and other incentives’in Table No. 1, and detailed in Table No. 3 ofthe section ‘Remuneration paid in 2017’.

Long-term variable incentivesUp to 2015, the Saipem long-term variablecomponent consisted of two separateincentive plans:- Deferred Monetary Incentive Scheme (DMI)

including all managerial resources, linked tothe performance of the Company measuredin terms of EBITDA17. The incentive actuallypaid out at the end of the three-year vestingperiod is calculated on the basis of theaverage annual EBITDA results obtained inthe vesting period, as a percentage rangingfrom 0 to 170% of the value assigned.The annual performance is assessedaccording to a scale between 70% and170% (below the minimum threshold of70% the performance is considered equalto zero).

- The Long-term Monetary Incentive Plan(LTMI) for critical managerial resources,

linked to the return of the share achieved bythe Company in relation to that of maininternational competitors (measured byTotal Shareholder Return) and the results ofreturn on invested capital (ROACE18).The amount to be paid out at the end of thethree-year vesting period is calculated as apercentage of the amount allocated, basedon the results achieved during thethree-year vesting period. The annualperformance is assessed according to ascale between 70% and 130% (below theminimum threshold of 70% theperformance is considered equal to zero).

In 2016, a new share-based Long-TermIncentive (LTI) Plan was introduced to replacethe previous DMI and LMIT schemes, whichinvolves free allocation of ordinary shares inthe Company against the achievement ofperformance conditions, measured via abusiness objective and an objective relating tothe trend of the Saipem share price, bothmeasured over a period of 3 years,maintaining the maximum incentivepercentages envisaged by the previous 2long-term plans unchanged.

Deferred Monetary Incentive SchemeIn 2017, the deferred monetary incentiveawarded by Eni in 2014 to the managerialresources subsequently subject to mobilitytowards Saipem came to maturity. In order to determine the incentivepercentage for Senior Managers withstrategic responsibilities and that weresubject to mobility, the percentages definedby Eni were therefore used based on theperformance achieved during the vestingperiod by both companies.The incentives awarded to the SeniorManagers with strategic responsibilities andthat were subject to mobility from Eni, areindicated under the item ‘Bonuses from prioryears payable/paid out’ in Table No. 3B of thesection ‘Remuneration paid in 2017’.

Long-Term Monetary IncentiveIn 2017, the long-term monetary incentiveallocated in 2014 to managerial resourcesaccrued. On March 16, 2017, the Board ofDirectors, at the proposal of the

(17) Earnings before interest, tax, depreciation and amortisation.(18) Return On Average Capital Employed.



24

Compensation and Nomination Committee,set the factor to be applied to the baseincentive to calculate the award at 0% basedon ROACE and TSR results for the period2014-2016.The incentives awarded to the SeniorManagers with strategic responsibilities andthat were subject to mobility from Eni, areindicated under the item ‘Bonuses from prioryears payable/paid out’ in Table No. 3B of thesection ‘Remuneration paid in 2017’.

Share-based Long-Term IncentiveIn accordance with the 2016 RemunerationPolicy Guidelines and the contractualconditions relating to the 2015-2017mandate associated with the post of ChiefExecutive Officer-CEO approved by the Boardof Directors on June 27, 2016, the Board ofDirectors decided at the meeting of July 24,2017 on 397,500 ordinary shares in SaipemSpA as the number of shares subject to the2016 allocation to the Chief ExecutiveOfficer-CEO. This forms part of the2016-2018 share-based Long-Term IncentivePlan, according to the criteria and methodsdefined by the Board of Directors on March16, 2016 and approved by the Shareholders’Meeting of April 29, 2016. For Senior Managers with strategicresponsibilities the 2017 allocation was madein an amount of shares of 1,166,100, withinthe sphere of the maximum incentive levelsattributed by the Plan for Saipemmanagement, defined in relation to theposition held and the fixed remuneration oraverage remuneration of the relevantmanagement band.The shares subject to the allocation to theChief Executive Officer-CEO and the SeniorManagers with strategic responsibilities arereported in Table No. 1 of scheme 7 of Annex3A of Regulation No. 11971/1999, accordingto the requirements of Article 84-bis (Annex3A, scheme No. 7) of the Consob IssuersRegulation, with the associated detail in TableNo. 3A of the section ‘Remuneration paid in2017’.

Benefits

Table No. 1 of the chapter ‘Remuneration paidin 2017’ shows the taxable value of benefitspaid in 2017, in particular with reference to thefollowing benefits: (i) annual contribution to thesupplementary pension fund FOPDIRE;(ii) annual contribution to the supplementaryhealthcare fund FISDE; (iii) assignment of acompany car for business and personal usefor a three-year period (the value stated isexclusive of the contribution paid by theassignee); (iv) amount payable for the weeklyreturn flights between Milan and Rome.

Accessory remunerationinstruments

Indemnities for termination of officeor termination or employmentDuring 2017 no indemnities for termination ofoffice were deliberated and/or paid toDirectors and other Senior Managers withstrategic responsibilities.

Minimum term agreementsFor the Senior Managers with strategicresponsibilities, in line with 2017Remuneration Policy Guidelines, minimumterm agreements my be required to protectknow-how with the goal of guaranteeingcontinuity in the achievement of businessobjectives for an amount of up to 12 monthssalary. In 2017, the total amount of €100,000was paid for minimum term agreements.

Payment against the Board of Directors’option for implementationof the non-competition agreementFor the Chief Executive Officer-CEO in office,in line with the 2017 Remuneration PolicyGuidelines, the third and last tranche was paidin the amount of €150,000, of the €450,000 gross total that was to be paid inthree annual payments starting in 2015,provided for under the non-compete optionreserved to the Board of Directors forimplementation of the non-competitionagreement with the Chief ExecutiveOfficer-CEO.



25

(19) There is no current legal requirement for disclosure on an individual basis for Senior Managers with strategic responsibilities.

Compensation paid in 2017

Table 1 - Compensation paidto Directors, Statutory Auditorsand other Senior Managers withstrategic responsibilities

The following table shows remuneration paidto Directors and Statutory Auditors, who arelisted by name, and remuneration paid toother Senior Managers with strategicresponsibilities19, which is shown on anaggregated basis. Separate indication issupplied for compensation received fromsubsidiaries and/or associated companies,not including those renounced or paid into theCompany. All persons who held theabove-mentioned positions are included inthe table, even if they only held such office fora part of the year.Specifically:- the column ‘Fixed compensation’ shows

fixed emoluments and remuneration foremployed work due for the year.The amounts shown are gross beforedeductions for social security and taxpayable by the employee. They do notinclude attendance fees, as these are notprovided for. The footnote provides detailsof compensation, as well as a separateindication of any allowances and otherentitlements related to employment;

- the column ‘Compensation for participationin Committees’ shows compensationpertaining to the year paid to Directors forparticipation in Committees created by theBoard. The footnote provides a separateindication of remuneration for eachCommittee on which the Director sits;

- the item ‘Bonuses and other incentives’ inthe column ‘Non-equity variable

compensation’ shows incentives paidduring the year as a result of rights maturingfollowing checking and approval ofperformance results by the relevantCompany Bodies as detailed in Table No.3B, ‘Monetary incentive for Directors andSenior Managers with strategicresponsibilities’. In addition, the veryselective extraordinary one-off paymentsprovided in consideration of excellentperformance on projects of particularrelevance or aimed at a recovery ofcompetitiveness, as well as in considerationof retention needs and excellentperformance. The column ‘Profit sharing’ isempty because there are no profit sharingschemes in place;

- the column ‘Non-monetary benefits’ showsthe taxable value of benefits paid;

- the column ‘Other compensation’ showsany other compensation paid pertaining tothe year and relating to other servicesperformed;

- the column ‘Total’ shows the total of thepreceding items;

- the column ‘Fair value of equitycompensation’ shows the fair value for theyear of stock grant plans in place asestimated in accordance with InternationalFinancial Reporting Standards which requirecosts to be distributed over the vestingperiod, as further detailed in Table No. 3A,‘Incentive plans based on financialinstruments other than stock optionspayable to Directors and to other SeniorManagers with strategic responsibilities’;

- the column ‘Indemnities for termination ofoffice or employment’ show indemnitiesaccrued, including indemnities not yet paid,in relation to termination of office oremployment.



26

Table 1: Compensation paid to members of management and control bodies and other Senior Managerswith strategic responsibilities

(€ thousand)

Non-equity variable compensation

Board of DirectorsColombo Paolo Andrea Chairman (1) 01.01-31.12 04.18 278 (a) 20 (b) 298Cao Stefano Chief Executive Officer-CEO (2) 01.01-31.12 04.18 900 (a) 21 (b) 921 490Cappello Maria Elena Director (3) 01.01-31.12 04.18 60 (a) 20 (b) 80Ferrucci Francesco Antonio Director (4) 01.01-31.12 04.18 60 (a) 30 (b) 90Mazzarella Flavia Director (5) 01.01-31.12 04.18 60 (a) 24 (b) 84Pattofatto Leone Director (6) 01.01-31.12 04.18 60 (a) 15 (b) 75Guzzetti Guido Director (7) 01.01-31.12 04.18 60 (a) 39 (b) 99Picchi Nicla Director (8) 01.01-31.12 04.18 60 (a) 30 (b) 90Ferro-Luzzi Federico Director (9) 01.01-31.12 04.18 60 (a) 15 (b) 75Board of Statutory AuditorsBusso Mario Chairman (10) 01.01-31.12 04.20 70 (a) 70Invernizzi Massimo Statutory Auditor (11) 01.01-28.04 17 (a) 17Perotta Riccardo Statutory Auditor (12) 28.04-31.12 04.20 33 (a)

De Martino Giulia Statutory Auditor (13) 01.01-31.12 04.20 50 (a) 50Senior Managers with strategic responsibilities (**) (14) 4,262 (a) 1,545 (b) 126 (c) 5,933 1,261

6,030 187 1,545 147 7,881 1,751

(*) Term of office of Directors appointed by Shareholders’ Meeting on April 30, 2015 expires at Shareholders’ Meeting convened to approve the financial statements at December 31, 2017.(**) All Senior Managers that are required to serve on the Executive Committee and in any case all direct reports of the Chief Executive Officer-CEO (fourteen senior managers).(1) Paolo Andrea Colombo - Chairman

(a) Includes the fixed compensation set by the Board of Directors’ Meeting of June 15, 2015 (€278,000) which includes the compensation for the office of Director (€60,000).(b) The amount corresponds to compensation as President of the Corporate Governance Committee and Scenarios (€20,000).

(2) Stefano Cao - Chief Executive Officer-CEO(a) The amount corresponds to the fixed compensation approved by the Board on June 15, 2015 (€900,000) which includes the base salary as Chief Executive Officer-CEO as establishedby the Shareholders’ Meeting (€60,000), to which €150,000 is added, issued as the third annual tranche related to stock options connected to the non-competition agreement requiredfor the Chief Executive Officer-CEO for a total amount equal to €450,000.(b) The amount includes the valuation of automobile benefits, supplemental health insurance paid by the company and the taxable amount for weekly round trip flights between Milan andRome.

(3) Maria Elena Cappello - Director (a) The amount corresponds to the fixed board meeting fees.(b) The amount corresponds to compensation for the role of President of the Compensation and Nomination Committee (€20,000).

(4) Francesco Antonio Ferrucci - Director (a) The amount corresponds to the fixed board meeting fees.(b) The amount corresponds to compensation for serving on the Compensation and Nomination Committee (€15,000) and the Corporate Governance Committee and Scenarios (€15,000).

(5) Flavia Mazzarella - Director (a) The amount corresponds to the fixed board meeting fees.(b) The amount corresponds to compensation for serving on the Audit and Risk Committee (€24,000).

(6) Leone Pattofatto - Director (a) The amount corresponds to the fixed board meeting fees.(b) The amount corresponds to compensation for serving on the Corporate Governance Committee and Scenarios (€15,000).

(7) Guido Guzzetti - Director (a) The amount corresponds to the fixed board meeting fees.(b) The amount corresponds to compensation for serving on the Audit and Risk Committee (€24,000) and the Corporate Governance Committee and Scenarios (€15,000).

(8) Nicla Picchi - Director (a) The amount corresponds to the fixed board meeting fees.(b) The amount corresponds to compensation for the role of President of the Audit and Risk Committee (€30,000).

(9) Federico Ferro-Luzzi - Director (a) The amount corresponds to the fixed board meeting fees.(b) The amount corresponds to compensation for serving on the Compensation and Nomination Committee (€15,000).

(10) Mario Busso - Presidente Collegio Sindacale(a) The amount corresponds to the fixed board meeting fees.

(11) Massimo Invernizzi - Sindaco Effettivo(a) The amount corresponds to the pro-rata board meeting fees.

(12) Riccardo Perotta - Sindaco Effettivo(a) The amount corresponds to the pro-rata board meeting fees.

(13) Giulia De Martino - Sindaco Effettivo(a) The amount corresponds to the fixed board meeting fees.

(14) Senior Managers with strategic responsibilities(a) To the amount of €4,262,000 for gross annual compensation allowances for assignments in Italy and overseas can be added that are in line with the national contract for seniormanagers and with supplementary company agreements, and other compensation included in the employment contract, for a total amount of €148,000.(b) The amount includes the 2017 annual monetary incentive of €1,007,000 for performance in 2016, the issue of €125,500 in deferred monetary incentives allocated in 2014, the issueof €99,500 regarding long-term incentives allocated in 2014 and the issue of extraordinary bonuses for €313,500.(c) The amount includes the valuation of automobile benefits and supplementary health insurance paid by the Company.

Nam

e an

d su

rnam

e

Off

ice

held

Per

iod

of o

ffic

e

Expi

ry o

f te

rm (*

)

Fixe

d co

mpe

nsat

ion

Com

pens

atio

nfo

r pa

rtic

ipat

ion

in C

omm

itte

es

Bon

uses

and

oth

erin

cent

ives

Pro

fit

shar

ing

Non

-mon

etar

y be

nefi

ts

Oth

er c

ompe

nsat

ion

Tota

l

Fair

val

ue o

f eq

uity

com

pens

atio

n

Inde

mni

ties

for

term

inat

ion

of o

ffic

eor

em

ploy

men

t



27

Table 3A - Incentive plansbased on financial instrumentsother than stock optionspayable to Directorsand to other Senior Managerswith strategic responsibilities

The following table shows long-term variablemonetary incentives based on financialinstruments other than stock options payableto the Chief Executive Officer-CEO and, as anaggregated figure, to Senior Managers withstrategic responsibilities.In particular:- the column ‘Number and type of financial

instruments’ indicates the number of freeshares allocated during the year, in

implementation of the share-basedlong-term incentive plans;

- the column ‘Fair value at date of award’shows the total fair value of stock grantplans in place at the date of allocation;

- the column ‘Vesting period’ shows thevesting period for long-term monetaryincentives awarded during the year;

- the column ‘Fair value for the year’ showsthe fair value of stock grant plans in placeas estimated in accordance withInternational Financial Reporting Standardswhich require costs to be distributed overthe vesting period.

The total of the column ‘Fair value for the year’corresponds with the amount indicated inTable No. 1.

Table 3A - Incentive plans based on financial instruments other than stock options payable to Directorsand to other Senior Managers with strategic responsibilities

Financial Instruments allocatedin previous years not vested

(€ thousand) during the year Financial instruments allocated during the year

Stefano Cao Chief Executive 2017 Long-term Officer-CEO Incentive Plan

BoD, July 24, 2017 397,500 1,059 three-year (2) July 24, 2017 3.42 155

2016 Long-termIncentive Plan

BoD, July 27, 2016 365,349 (*) three-year (2) 335

Senior Managers 2017 Long-termwith strategic Incentive Planresponsibilities (1) BoD, July 24, 2017 1,166,100 3,909 three-year (3) July 24, 2017 3.42 479

2016 Long-termIncentive Plan

BoD, July 27, 2016 847,757 (*) three-year (3) 782

Total 1,213,106 4,968 1,751

(*) The number of financial instruments subject to the promised 2016 allocation has been updated by virtue of the resolution passed by the Extraordinary Shareholders’ Meetingheld on April 28, 2017 which established the grouping of the ordinary and savings shares with a ratio of: one new ordinary share for every 10 (ten) existing ordinary shares. (1) All Senior Managers that are required to serve on the Executive Committee and in any case all direct reports of the Chief Executive Officer-CEO (fourteen senior managers).(2) At the end of the vesting period the plan requires that 25% of the matured shares be subject to a lock-up period of two years.(3) At the end of the vesting period the plan requires that the strategic resources invest 25% of the matured shares for a further two years (co-investment period), at the end ofwhich the beneficiaries will receive an addition free share for every share invested.

Nam

e an

d su

rnam

e

Off

ice

held

Plan

Num

ber

and

type

of fi

nanc

ial

inst

rum

ents

Vest

ing

peri

od

Num

ber

and

type

of fi

nanc

ial

inst

rum

ents

Fair

val

ueat

dat

e of

aw

ard

Vest

ing

peri

od

Awar

d da

te

Mar

ket p

rice

on

allo

catio

n

Fina

ncia

lin

stru

men

tspe

rtai

ning

to

the

year

(fai

r va

lue)



28

Table 3B - Monetary incentiveplan for Directorsand other Senior Managerswith strategic responsibilities

The following table shows the short andlong-term variable monetary incentivespayable to the Chief Executive Officer-CEOand (as an aggregated figure) to SeniorManagers with strategic responsibilities.All persons who held the above-mentionedpositions during the reporting period areincluded in the table, even if they only heldsuch office for a part of the year.In particular:- the column ‘Annual bonus - to be paid

out/paid out’ shows the short-term variableincentive paid out on the basis ofperformance, as evaluated by thecompetent company bodies in relation tothe targets set for the previous year;

- the column ‘Bonuses from previous years -no longer payable’ shows long-termincentives which can no longer be paid outon due to the performance recorded duringthe vesting period or to portions of

incentives which have been cancelled inconnection with events relating to theemployment contract pursuant to the PlanRules;

- the column ‘Bonuses from previous years -to be paid out/paid out’ shows long-termvariable incentives paid out on during theyear that were earned due to theperformance recorded during the vestingperiod or to portions of incentives whichwere paid out on in connection with eventsrelating to the employment contractpursuant to the Plan Rules;

- the column ‘Bonuses from previous years -still deferred’ shows incentives awarded inprevious years as part of long-termincentives that have not yet vested;

- the column ‘Other bonuses’ showsincentives paid out on an extraordinaryone-off basis in relation to the achievementof particularly important results or projectsduring the year.

The total of the columns ‘Annual bonus - to bepaid out/paid out’, and ‘Other bonuses’corresponds to the figure show in column‘Bonuses and other incentives’ of Table No. 1.

Table 3B. Monetary incentives paid to Directors and other Senior Managers with strategic responsibilities

(€ thousand) Annual bonus Bonuses from previous years

Stefano Cao Chief Executive 2015 Long-term Monetary Incentive PlanOfficer-CEO BoD, October 12, 2015 450

Senior Managers 2017 Annual Monetarywith strategic Incentive Planresponsibilities (1) BoD, March 16, 2017 1,007

2015 Deferred Monetary Incentive PlanBoD, July 28, 2015 584

2015 Long-term Monetary Incentive PlanBoD, October 12, 2015 964

2014 Deferred Monetary Incentive PlanEni BoD, March 17, 2014; BoD, March 16, 2017 0.1 (2) 125 (3)

2014 Long-term Monetary Incentive PlanBoD, October 28, 2014; BoD, March 16, 2017 804 (4) 99 (5)

Total 1,007 804 225 1,547 313

(1) All Senior Managers that are required to serve on the Executive Committee and in any case all direct reports of the Chief Executive Officer-CEO (fourteen senior managers).(2) Pro-rata amount of the deferred monetary incentive awarded in 2014 by Eni and no longer payable following the finalisation of the EBITDA performance during the three-yearreference period 2014-2016.(3) Payout of deferred monetary incentive awarded in 2014 by Eni, based on EBITDA performance during the three-year reference period 2014-2016.(4) Pro-rata amount of the long-term monetary incentive awarded in 2014 and no longer payable following the finalisation of the ROACE and TSR performance during the three-yearreference period 2014-2016.(5) Payout of long-term monetary incentive awarded in 2014, based on the ROACE and TSR performance during the three-year reference period 2014-2016.

Nam

e an

d su

rnam

e

Off

ice

held

Plan

To b

e pa

id o

ut/

paid

out

Defe

rred

Defe

rral

per

iod

No

long

er p

ayab

le

To b

e pa

id o

ut/

paid

out

Stil

l def

erre

d

Oth

er b

onus

es



29

Shares held

Table 4 - Shares held byDirectors and other SeniorManagers with strategicresponsibilities

Pursuant to Article 84-bis of the ConsobIssuers Regulation, the following table showsshares held in Saipem SpA by the Directors,Statutory Auditors and other Senior Managerswith strategic responsibilities, as well as bytheir spouses, where not legally separated, and

by their minor children, either directly orthrough subsidiary companies, fiduciaries orthird parties, as per the Shareholders Register,communications received or other informationreceived from the persons concerned.The table includes all persons that held officefor whole or a part of the year.The number of shares (all of which are‘ordinary’) is indicated on an individual basisfor Directors and Statutory Auditors and on anaggregated basis for Senior Managers withstrategic responsibilities. All shares are heldas personal property.

The Board of Directors

Paolo Andrea Colombo Chairman Saipem SpA 290,000 29,000 (*)

Stefano Cao Chief Executive Officer-CEO Saipem SpA 290,285 285 (2) 29,000 (*)

Riccardo Perotta Statutory Auditor Saipem SpA 184,000 18,400 (*)

Other Senior Managerswith strategic responsibilities (1) Saipem SpA 397,100 16,439 (*)

(*) The number of shares held at the end of the year is the result of the resolution passed by the Extraordinary Shareholders’ Meeting held on April 28, 2017 which established thegrouping of the ordinary and savings shares with a ratio of: one new ordinary share for every 10 (ten) existing ordinary shares.(1) All Senior Managers that are required to serve on the Executive Committee and in any case all direct reports of the Chief Executive Officer-CEO (fourteen senior managers).The number of shares held at the end of the previous financial year takes into account those also held by Senior Managers who became non-strategic during 2017.(2) Transaction not subject to mandatory reporting pursuant to Article 19 of EU regulation No. 596/2014 and Article 152-quinquies.1 of the Issuers Regulations.

Nam

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Com

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Num

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of s

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end

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Num

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Num

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30

With reference to the 2016-2018 share-based Long-Term Incentive Plan approved bythe Shareholders’ Meeting on April 29, 2016,in conformity with the conditions andobjectives illustrated in the Information

Document available on the internet sitewww.saipem.com, the following table providesthe details of the 2017 allocation for the Plan,pursuant to Article 84-bis (Annex 3A, schemeNo. 7) of the Consob Issuers Regulation.

Annex pursuant to Article 84-bis of the Consob Issuers Regulation- Implementation for 2016 of the share-based Long-TermIncentive Plan 2016-2018 (LTI)

Table No. 1 of form 7, Attachment 3A to Regulation No. 11971/1999Box 1 - Financial instruments other than stock options

Section 2 - Newly allocated instruments based on decisions made by the relevant company bodyto implement a resolution of the Shareholders’ Meeting

Stefano Cao Chief Executive Officer-CEO April 29, 2016 stock grant 397,500 BoD July 24, 2017 - 3.420 3 years (2)

CC July 18, 2017

Senior Managers April 29, 2016 stock grant 1,166,100 BoD July 24, 2017 - 3.420 3 years (3)

with strategic responsibilities (1) CC July 18, 2017

Other Senior Managers April 29, 2016 stock grant 5,178,800 BoD July 24, 2017 - 3.420 3 years (3)

CC July 18, 2017

(1) All Senior Managers that are required to serve on the Executive Committee and in any case all direct reports of the Chief Executive Officer-CEO (fourteen senior managers).(2) At the end of the vesting period the plan requires that 25% of the matured shares be subject to a lock-up period of two years.(3) At the end of the vesting period the plan requires that the strategic resources invest 25% of the matured shares for a further two years (co-investment period), at the end ofwhich the beneficiaries will receive an addition free share for every share invested.

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Headquarters: San Donato Milanese (Milan) - Italy

Via Martiri di Cefalonia, 67

Branches:

Cortemaggiore (Piacenza) - Italy

Via Enrico Mattei, 20

Information for Shareholders

Saipem SpA, Via Martiri di Cefalonia, 67

20097 San Donato Milanese (Milan) - Italy

Relations with institutional investors

and financial analysts

Fax +39-0244254295

e-mail: [email protected]

Publications

Relazione finanziaria annuale (in Italian)

Annual Report (in English)

Interim Consolidated Report as of June 30

(in Italian and English)

Saipem Sustainability (in English)

Also available on Saipem’s website:

www.saipem.com

Website: www.saipem.com

Operator: +39-0244231

Layout and supervision: Studio Joly Srl - Rome - Italy

Printing: Stilgraf Srl - Viadana (Mantua) - Italy

Società per Azioni

Share Capital €2,191,384,693 fully paid up

Tax identification number and Milan Companies’ Register

No. 00825790157

01-30RelRemSaipem18Ing.qxd 8-04-2018 22:28 Pagina III

saipem spaVia Martiri di Cefalonia, 6720097 San Donato Milanese (MI)

saipem.com

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01-30RelRemSaipem18Ing.qxd 8-04-2018 22:28 Pagina IV

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