Enel’s remuneration policy for 2022, which was adopted by the Board of Directors acting on a proposal of the Nomination and Compensation Committee and approved by the Shareholders’ Meeting of May 19, 2022, was formulated on the basis of (i) the recommendations of the Italian Corporate Governance Code published on January 31, 2020; (ii) national and international best practice; (iii) the guidance provided by the favorable vote of the Shareholders’ Meeting of May 20, 2021 on the remuneration policy for 2021; (iv) the results of the engagement activity on corporate governance issues pursued by the Company between January and March 2022 with the leading proxy advisors and some Enel’s relevant institutional investors; (v) the findings of the benchmark analysis of the remuneration of the Chairman of the Board of Directors, the Chief Executive Officer/General Manager and the non-executive directors of Enel for 2021, which was performed by the independent consultant Mercer.
This policy is intended to (i) foster Enel’s sustainable success, which takes the form of creating long-term value for the benefit of shareholders, taking due consideration of the interests of other key stakeholders, so as to incentivize the achievement of strategic objectives; (ii) attract, retain and motivate personnel with the professional skills and experience required by the sensitive managerial duties entrusted to them, taking into account the remuneration and working conditions of the employees of the Company and the Enel Group; and (iii) promote the corporate mission and values.
The 2022 remuneration policy adopted for the Chief Executive Officer/General Manager and key management personnel envisages:
- a fixed component;
- a short-term variable component (MBO) that will be paid out on the basis of achievement of specific performance objectives. Namely:
- for the CEO/General Manager, annual objectives have been set for the following components:
- consolidated net ordinary profit;
- Group opex;
- funds from operations/consolidated net financial debt;
- System Average Interruption Duration Index – SAIDI (gate objective), commercial complaints on the free commodity market in Italy (gate objective) and commercial complains received at the Group level;
- • workplace safety;
- for key management personnel, the respective MBOs identify objective and specific annual goals connected with the Strategic Plan. They are determined jointly by the Administration, Finance and Control function and the People and Organization function;
- a long-term variable component linked to participation in specific long-term incentive plans. In particular, for 2022 this component is linked to participation in the 2022 Long-Term Incentive Plan for the management of Enel SpA and/or its subsidiaries pursuant to Article 2359 of the Italian Civil Code (2022 LTI Plan), which establishes three-year performance targets for the following:
- Enel’s average TSR (Total Shareholder Return) compared with the average TSR for the EURO STOXX Utilities - EMU index for the 2022-2024 period;
- ROIC (Return on Invested Capital) - WACC (Weighted Average Cost of Capital), cumulative for 2022-2024;
- Scope 1 GHG emissions per equivalent kWh generated by the Group in 2024;
- percentage of women in top management succession plans at the end of 2024.
The 2022 LTI Plan establishes that any bonus accrued is represented by an equity component, which can be supplemented – depending on the level of achievement of the various targets – by a cash component. More specifically, the Plan envisages that 130% of the basic bonus of the Chief Executive Officer/General Manager (compared with a maximum of 280% of the basic bonus) and 65% of the basic bonus of key management personnel (compared with a maximum of 180% of the basic bonus) will be paid in Enel shares previously acquired by the Company. In addition, the disbursement of a significant portion of long-term variable remuneration (70% of the total) is deferred to the second year following the three-year performance period covered by the 2022 LTI Plan.
For more information on the remuneration policy for 2022, please see Enel’s “Report on the remuneration policy for 2022 and compensation paid in 2021”, which is available on the Company’s website (www.enel.com)