Compensation and International Mobility

  • The targets of the annual bonus system (MBO – Management by Objectives), involving all executives and about 60% of cadres at the Group
  • A Cash Incentive Plan 2009-2011 was introduced for senior management in 2009
  • Particular importance is assumed by co-investment on the part of the individual participants of 50% of the annual incentive
  • The variable component of the Total Compensation is always more important

To manage the crucial phases of integration and development of human resources, Pirelli implements an extensive policy system both at Group and sector/affiliate company level.

Compensation policies are applied on a country-bycountry basis, with the exception of processes applicable to executives and human resources on international mobility, which are coordinated by Group headquarters.

The targets of the annual bonus system (MBO – Management by Objectives), involving all executives and about 60% of cadres at the Group, are consistent with the values, objectives and parameters of the annual Management Plan.

A Cash Incentive Plan 2009-2011 was introduced for senior management in 2009. It aims to relaunch and support Group performance over the medium term in support of the Three-year Business Plan, which was presented at the beginning of 2009. In view of greater management involvement, at the end of 2010 the Board of Directors approved extension of a new Cash Incentive Plan 2011-2013, based on the targets of the 2011-2013 Business Plan presented to the financial community in November 2010. For senior manager that were already beneficiaries of the Cash Benefit Plan 2009-2011, the new plan entailed consistent updating of the parameters for the two-year period 2012-2013.

The Incentive Plan is consistent with market best practice, which calls for total compensation of executives where the variable component is always more important, in order to generate a positive correlation between received compensation and achieved results.

Particular importance is assumed by co-investment on the part of the individual participants of 50% of the annual incentive received in support of the three-year plan. Its purpose is to support medium-term performance through use of deferred compensation. Upon attainment of the three-year targets, plans call for disbursal not only of the three-year bonus but also the annual “invested” share with an extra contribution by the company calculated using a certain multiplier (so, its assignment is expected only at the end of the three-year period, in support of the company retention policy). If the three-year targets are not met, the annual “invested” amount of the incentive is returned, less 50%.

The cost of the Cash Incentive Plan 2011-2013 will be entirely self-financed by business results during the three-year period, as in the case of the previous Plan.

In 2011 the compensation and international assignment activities will be the target of special communicat activities. The overriding aim is to promote greater individual engagement, through enhanced awareness of company rules, among other things. Caring programmes in support of expatriate employees will also be upgraded, in order to facilitate their integration in the new country where they work.