PIRELLI - Committee for Internal Control for Risk and Corporate Governance

Board committees

The system of Corporate Governance adopted by the Company foresees - since 2000 - the establishment, within the Board of Directors, of Board Committees with investigative, advisory and/or recommendation functions concerning particularly "sensitive" and economically, financially and strategically significant matters, in order to have both a discussion of opinions and a series of checks in order to ensure the Board takes conscious and effectively informed decisions.
Taking into account of the recommendations of the Self-Regulatory Code of the Italian Stock Exchange, to which Pirelli belongs, and national and international best practices, the Board of Directors of the Company in its meeting of April 21, 2011, established for the duration of the term of office of the Board, the following Committees:

Committee for Internal Control, Risks and Corporate Governance
comprising the following Directors:

* Directors with adequate financial and accounting experience

Remuneration Committee
comprising the following Directors:

* Directors with adequate experience of financial and remuneration issues

Appointments and Successions Committee
comprising the following Directors:

Strategies Committee
comprising the following Directors:

and the General Counsel,Francesco Chiappetta.

Committee for Internal Control, Risks and Corporate Governance

The system of Corporate Governance adopted by Pirelli & C. S.p.A. since 2000 provides for the establishment of a Committee for Internal Control and Corporate Governance, in 2009 renamed "Committee for Internal Control, Risks and Corporate Governance".

The Board of Directors of the Company, in its meeting on 21 April 2011, confirmed the establishment of this Committee.
The Committee has consultative and recommendation functions and has the mission to ensure, with appropriate investigation of the risk management system on the one hand and the efficiency, effectiveness and correctness of the internal control system and the corporate governance framework in general on the other.

Since 2009, the Committee consists of five members, exclusively non-executive, and on the basis of a more rigorous approach than that recommended by the Self-Regulatory Code of the Italian Stock Exchange, all independent.
The Committee is appointed by the Board of Directors (which also appoints the Chairman) and remains in office for the entire term of office of the Board of Directors.

Moreover, the Committee is also assigned the tasks of the Committee for Related Parties Transactions required under Consob regulations and by the Procedure for Related Parties Transactions adopted by the Company, with the sole exception of issues pertaining to the remuneration of directors and managers with strategic business responsibilities, entrusted to the Remuneration Committee.
At least one member of the Committee has adequate experience in accounting and finance, as assessed by the Board of Directors on appointment.
The entire Board of Statutory Auditors is entitled to attend Committee meetings.

Operation

Activities and tasks

The Committee has investigative, advisory and/or recommendation functions to ensure both discussion of opinions and a series of checks in order to guarantee adequate risk management and efficiency, effectiveness and correctness of the internal control and corporate governance system.

The Committee, in particular, has the following tasks:

assists the Board of Directors in setting the guidelines for the internal control system in order to ensure compliance with the principles of sound and proper business management;
assists the Board:
- in the periodic identification and assessment, at least annually, of the main risks facing the Company and its subsidiaries so that they are properly monitored (annual risk assessment);
- in the definition and periodic updating, at least annually, of mitigation plans and in general of "risk management" (annual risk management plan) in order to maintain the level of overall risk exposure within the risk threshold considered by the Board of Directors, at the proposal of the Committee itself, to be "acceptable" (so-called risk appetite);
assists the Board of Directors in:
- the identification of an executive director charged with supervising the operations of the internal control system;
- the evaluation, at least annually, of the adequacy, efficacy and effective operation of the internal control system;
expresses an opinion on proposals to appoint, revoke or assign tasks relating to the internal control officer;
with the Board of Statutory Auditors, the Company administration managers, the officer responsible for preparing the Company's accounting documents and the auditors, evaluates the correct use of accounting principles and their homogeneous application in the Group for the purpose of drawing up the consolidated financial statements;
at the request of the executive manager with specific responsibility, expresses opinions on specific aspects of the identification of the main company risks and on the design, implementation and management of the internal control system;
examines the work plan and periodic reporting of activities prepared by the Internal Control Officer;
annually assesses the "Compliance Plan" and the subsequent report on activities carried out;
reports to the Board of Directors, at least every six months, on the activity carried out during approval of the financial statements and the interim report on the adequacy of the internal control system;
monitors compliance with the rules of corporate governance and respect for any rules of conduct that may be adopted by the Company and its subsidiaries. It is also responsible for proposing the methods and timing of the Board of Directors annual self-evaluation procedure.

Moreover, the Committee is also assigned the tasks of the Committee for Transactions with Related Parties - within the limits established by the current regulatory provisions of the Procedure for Transactions with Related Parties adopted by the Company - with reference to transactions with related parties of the Company or its subsidiaries and with the sole exception of issues pertaining to the remuneration of directors and managers with strategic business responsibilities, entrusted to the Remuneration Committee.

In this regard, the Committee:

periodically assesses (at least every three years) any changes to the Procedure for Transactions with Related Parties, formulating its opinions to the Board of Directors;
for Transactions of Major Significance it is entitled to request information and make comments to those charged with conducting negotiations or investigation of the transactions;
in the case of transactions with related parties of Major and Minor Significance, it formulates justified opinions on the interest of the Company in completing the transaction as well as the convenience and substantial correctness of the related conditions and on the proposal to adopt "Framework resolutions of Major Significance" and "Framework resolutions of Minor Significance".

Last Revised: 27 May 2013

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