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Pay for Sustainable Performance: variable remuneration for 2020

In line with the philosophy of sustainable value creation, Prysmian’s approach to variable remuneration refers to a broad concept of performance, characterized by objectives and action plans aimed at generating solid economic-financial results together with positive impacts on the environment, people and communities where the  Company operates.

Adj. EBITDA = 840 €M

 

in the high end of the post-Covid guidance issued on July 2020

Free Cash Flow = 487 €M

 

above maximum level defined in the pre-Covid guidance

TSR = 37,1%

 

high ranked vs peers and capital goods sector

 

50% of the amount assigned to the Chief Executive Officer and the other Managers with Strategic Responsibilities as part of the 2020 MBO Plan will be deferred at the end of the vesting period relating to the 2020-2022 LTI Plan and paid in the form of Company shares. Moreover, it should be noted that, as  already disclosed to the market, the Chief Executive Officer and the Group’s top managers voluntarily invested 50% of the amount assigned as part of the 2019 MBO Plan in Company shares, with a 3-year lock up period.

CEO Pay Ratio

Fixed remuneration paid in 2020 Fixed and variable remuneration paid in 2020
CEO
€ 1,100,000
€ 1,749,000
Average Group Employees
€ 35,576
€ 37,331
Ratio 2020
31:1
47:1

 

 50% of KPIs  composing our Sustainability Scorecard are  connected to variable remuneration systems  (MBO Plan and LTI Plan):
 20%-30%  of the annual incentive -  twice the weight  of 2020
 20%-30%  of the long-term incentive

ESG Indicators

MBO 2020 Plan

2020 Results: Positioning in Indexes

Index Score
DJSI
87
Improved from 84 point in 2019
CDP
B
=
Stable
Ecovadis
76 (platinum)
Improved from 73 points (gold) in 2019

2020 Results: Progress vs Internal Targets

KPI Target Score
Frequency rate of injuries
1.28 / 1.23
1.25 ↑
Improved vs 1.30 in 2019
% of production sites with ISO 14001 certification
85% / 87%
83% =
Stable vs 2019 baseline(highly impacted by Covid prevention measures)
% of famale desk workers hires
33% / 35%
34% ↑
Improved vs 33% in 2019

2020-2022 LTI Plan

2020 results: progress vs internal targets

KPI Target 2022 2020 Results
% reduction of GHG emissions (Scope 1 and 2)
- 2% / -3%
-8% ↑
Reduction in energy consumption due to lower production caused by Covid-19; reduction of SF6 emissions
% waste recycled
64% / 66%
69% ↑
Improved vs 63% baseline in 2019
% of women Executive
14% / 18%
13% ↑
Improved vs 12% baseline in 2019
Leadership Impact Index
59% / 65%
57% =
Result as of 2019, awaiting new survey cycle

 

The ESG indicators included in the 2020 MBO Plan and in the 2020-2022 LTI Plan have progressed in an overall positive way, both in terms of internal indicators and positioning within the sustainability indexes.

Furthermore, in a 2020 severely impacted by the Covid-19 crisis, Prysmian’s commitment to its employees took concrete shape in numerous efforts aimed at protecting people’s health and safety.

In particular:

  • No dismissal of permanent staff/company restructuring
  • Temporary use of social safety nets
  • Wide use of flexible working tools/maternity policy
  • Block on business travel since February 2020
  • Massive use of remote working for about 8,000 of the Group’s employees upgrade of technological platforms and devices used
  • Serological tests, swabs and personal protective equipment free for all employees
  • Influenza vaccination campaigns for employees and their families
  • Mental health assistance
  • 500 e-bikes purchased for staff in the Milan office

 

Remuneration Policy for the 2021-2022 period

 

In order to allow an immediate and exhaustive understanding, the main elements and features of the remuneration packages of the Chief Executive Officer, the Executive Directors and Managers with Strategic Responsibilities (MSR) of Prysmian Group are summarized in the following table.

 

Fixed Pay

PURPOSE:

It rewards the role held in order to ensure an adequate and competitive fixed remuneration

MAIN CHARACTERISTICS:

It is defined in line with the complexity and responsibilities of the role.

It is set based on internal fairness, so as to guarantee a proper amount with respect to comparable positions, and the external market, so as to support an appropriate level of competitiveness.

It takes into account the individual performance monitored over a long-term period.

AMOUNTS:

CEO: 1,100,000€

Executive Directors:

- CFO: 590,000€

- COO: 950,000€

DSR: definied on tha basis of the role held

Short-term variable remuneration (2021 MBO Plan)

PURPOSE:

It rewards the annual performance on the basis of objective and measurable indicators

MAIN CHARACTERISTICS:

It is linked to pre-set annual performance objectives

Key performance indicators:

  • Income - Adjusted EBITDA
  • Financial - Net Financial Position
  • Cost management - Fixed costs
  • ESG - safety on the workplace, environmental impact of production sites, gender diversity among employees

Incentive Cap - envisaged for all participants

Individual performance (“P3”) - assessment of the quality of the leadership and of the individual contribution to the achievement of objectives; it acts as multiplier of the vested amount (+/- 15%; not applied to the CEO)

Deferral - 50% of the vested amount is deferred and paid as Deferred Share and Matching Share as part of the 2020-2022 LTI Plan

AMOUNTS:

CEO: 67-100% of fixed pay(tgt-max)

COO: 50-100% of fixed pay (tgt-max), excluding multiplier for individual performance

Executive Directors/MSR: 50-75% of fixed pay (tgt-max), excluding multiplier for individual performance

Long-term variable remuneration (2021 LTI Plan)

PURPOSE:

It rewards the medium-term performance on the basis of 3-year objectives

It fosters the alignment of interests towards sustainable value creation in the mid to long-term, reinforcing the retention of key resources

MAIN CHARACTERISTICS:

LTI Plan consists of two elements:

  1. Performance Shares
  2. Deferred Shares combined with Matching Shares

Maximum number of shares to be allocated - maximum number of shares that can be allocated for each participant and to the entire Plan

1. Performance Shares
Free shares granted subject to achieving performance conditions
Vesting – 3 years (2020-2022)
Performance conditions

  • Cumulated Adjusted EBITDA (30%)
  • Cumulated Free Cash Flow (30%)
  • Prysmian’s relative Total Shareholder Return (rTSR) compared to comparison panel (20%)
  • ESG, measured by a set of KPIs (20%)

Lock-up - 2-year period for a portion of the shares granted as Performance Shares

2. Deferred Shares and Matching Shares

2.1 Deferred Share
Free shares — granted on a deferred basis — equal to 50% of annual amount vested as part of the 2020, 2021 and 2022 MBO Plans

2.2 Matching Shares
0.5 free share for each Deferred Share granted. For the CEO and top managers, the Matching Shares are subject to the achievement of the ESG performance condition

AMOUNTS:

CEO: 300-450% of fixed pay over 3 years (tgt-max)

Executive Directors/MSR: 200-300% of fixed pay over 3 years (tgt-max)

Deferred share

CEO/ Executive Directors/MSR: 50% of annual vested incentive is deferred in shares

End of service or termination indemnity

 

PURPOSE:

It supports the recruitment and retention of key resources

MAIN CHARACTERISTICS:

Severance for the end of the office term or termination of employment relationship under specific individual agreements

Not higher than 24 months’ fixed pay, in compliance with local laws and contracts

AMOUNTS:

CEO: 24 months’ fixed pay

Executive Directors/MSR: If envisaged, max 24 months’ fixed pay

Non-competition agreements

 

PURPOSE:

They protect the company’s interests following the exit of key resources

MAIN CHARACTERISTICS:

Specific individual agreements in relation to the duration and extent of the limitation

AMOUNTS:

CEO: validity 3 years; remuneration 40% of gross pay per year of duration of the agreement

Executive Directors/MSR: If envisaged, of variable duration based on the regulatory framework and with maximum remuneration equal to a percentage of fixed pay per year of validity of the agreement

Benefits

 

PURPOSE:

They supplement social security and contractual benefits in a total reward perspective

MAIN CHARACTERISTICS:

Social security and medical benefits; company car

Share Ownership Guidelines

 

PURPOSE:

They help to align in the long term the interests of key resources and those of shareholders

MAIN CHARACTERISTICS:

Over the entire term of office, it is necessary to meet a minimum requirement of ownership of Prysmian shares

AMOUNTS:

CEO: 3x the fixed remuneration

Executive Directors/MSR: 1.5x the fixed remuneration

The remuneration package of the Executive Directors  and  other Managers with Strategic Responsibilities is composed as follows:

  • a significant portion is linked to the achievement of  preset results (pay for performance);
  • a significant portion of the variable component is  deferred over time;
  • variable remuneration is largely paid in shares, with a  portion of the award subject to lock-up restrictions.

ESG indicators in the 2021 MBO Plan

 

A portion of the annual incentive is linked to the achievement of an ESG objective that is common to all Group management. The ESG objective is measured through both internal performance indicators and Prysmian’s positioning in two sustainability indices. The 2021 MBO Plan enhances the ESG target with the introduction of two further indicators focused on a reduction in CO2 emissions and improving gender balance within the management. The assessment of the performance achieved is carried out by the Remuneration and Nomination Committee, with the prior favorable opinion of the Sustainability Committee.

The assessment of the performance level achieved in relation to the ESG objective provides for a weighting of the po-sitioning with respect to the external indices and progress made with reference to the internal indicators.

Any fatal accidents that occur when performing pro-fessional duties will be subject to a special in-depth investigation and evaluation by the  Remuneration and Nomination Committee and may result in can-cellation of the overall incentive portion connected with the ESG objective.

KPI Target Range Weight
Frequency rate of injuries
1.22 - 1.19
30%
% women hired - Desk workers
35% - 38%
15%
% women hired - Management
35% - 38%
15%
Investment plan for CO2 emission reduction (GHG Scope 1 and 2)
8€M - 10€M with qualitative assessment on plan’s deployment
20%
Positioning in sustainability indexes (CDP and DJSI(
Assessment based on result achieved and comparison vs 2020
20%

 

 65%  of the  CEO ‘s total remuneration is  variable upon results 

 

Over  50%  of the  CEO ‘s total remuneration is  paid in shares in the medium-long term  (3-5 years), consistently with the economic and financial sustainability of the performance achieved

2021 Guidance and MBO Plan access condition

The 2021 MBO Plan foresees an access condition structured in consistency with the 2020 guidance and applied to all partici-pants. In case the threshold level is not reached, the system is not activated and no incentive is paid.

2021 Guidance and MBO Plan access condition

The objectives of the Chief Executive Officer, Executive Directors and other MSR are articulated upon a common base scheme for all positions and on specific objectives related to  the  business  area  managed  as  represented  by  the  beside schemes.

There is a maximum level (cap) for the incentive payable upon achievement of the maximum score of 150 points, equal to 100% of the fixed remuneration for the CEO and the COO and to 75% of the fixed remuneration for the other Executive Directors and MSR.

The incentive payable at the achievement of 100 points is 67% of fixed remuneration for the Chief Executive Officer and to 50% for the other Executive Directors and MSR. If the final score obtained is less than 50 points, the incentive disbursed will be zero. Should the final score obtained be between  50 and 150, th  final incentive value will be calculated in a linearly proportional manner.

The incentive accrued based on such objectives can be multiplied/de-multiplied in relation to the assessment of the individual performance (+/-15%) as part of the “P3” performance management annual process.

 
 

Fees paid to Board Members and to Managers with Strategic Responsibilities in 2020 (Figures in EUR)

See table 1 of the Remuneration Policy and compensation paid for further details/notes

Full Name & Office Fixed Pay Fees for participation in Committees Variable non-equity pay Non-monetary benefits Total
Claudio De Conto - Chairman of the Board of Directors
130,000
13,333
-
-
143,333
Valerio Battista - CEO
1,100,000
-
324,280
4,333
1,428,613
Massimo Battaini - Executive Director
815,530
-
241,500
40,926
1,097,956
Pier Francesco Facchini - Executive Director
590,000
-
129,800
3,529
723,329
Fabio Romeo - Executive Director
601,709
-
132,376
5,102
739,187
Paolo Amato - Director
50,000
13,333
-
-
63,333
Joyce Victoria Bigio - Director
50,000
13,333
-
-
63,333
Maria Elena Cappello - Director
50,000
13,333
-
-
63,333
Monica De Virgillis - Director
50,000
13,333
-
-
63,333
Francesco Gori - Director
50,000
13,333
-
-
63,333
Mimi Kung - Director
50,000
13,333
-
-
63,333
Maria Letizia Mariani - Director
50,000
26,666
-
-
76,666
Pellegrino Libroia - Chairman of the Board of Statutory Auditors
75,000
-
-
-
75,000
Laura Gualtieri - Standing Auditor
50,000
-
-
-
50,000
Paolo Lazzati - Standing Auditor
78,000
-
-
-
78,000
Managers with Strategic Responsibilities - 4 people
2,282,891
-
464,060
187,197
2,934,148

Shares held in 2020 by members of the Board of Directors, general managers and other mangers with strategic responsibilities

See Scheme 7-ter, table 1 and 2 of the Remuneration Policy and compensation paid for further details/notes

Full Name & Office Investee company Number of shares owned as at 31/12/2019 Number of shares assigned Number of shares sold Number of shares owned as at 31/12/2020
Claudio De Conto - Chairman of the Board of Directors
-
-
-
-
-
Valerio Battista - CEO
Prysmian S.p.A.
4,075,182
13.056
-
4.088.238
Massimo Battaini - Executive Director
Prysmian S.p.A.
240,838
7,503
-
248,341
Pier Francesco Facchini - Executive Director
Prysmian S.p.A.
285,527
5,040
-
290,567
Fabio Romeo - Executive Director
Prysmian S.p.A.
268,927
5,487
-
274,414
Paolo Amato - Director
-
-
-
-
-
Joyce Victoria Bigio - Director
-
-
-
-
-
Maria Elena Cappello - Director
-
-
-
-
-
Monica De Virgiliis - Director
-
-
-
-
-
Francesco Gori - Director
-
-
-
-
-
Mimi Kung - Director
-
-
-
-
-
Maria Letizia Mariani - Director
-
-
-
-
-
Pellegrino Libroia - Chairman of the Board of Statutory Auditors
-
-
-
-
-
Laura Gualtieri - Standing Auditor
-
-
-
-
-
Paolo Lazzati - Standing Auditor
-
-
-
-
-
Managers with Strategic Responsibilities - 4 people
Prysmian S.p.A.
327,329
22,029
51,545
297,813
Overview

Archive

Archive of our historical remuneration policy report and incentive plans