The Composition of the Board of Directors

The Board of Directors of the Company, as established by the bylaws, consists of no less than seven and no more than twenty-three members.
The Board of Directors in office on April 28th, 2005 was renewed for three financial years (and will therefore be the Board that will convene for the approval of the financial statements at December 31st, 2007), and set the number of its members at twenty.

Through a vote, the minority list therefore nominated four Directors, i.e. one fifth of the total number. Two lists were presented, one by the participants in the Pirelli & C. S.p.A. Share Block Syndicate and the other by various savings management companies.

Those proposing the slates made the candidates' profiles available so that the candidates' personal and professional characteristics, as well as some candidates' qualifications as independents, were made known prior to voting.

The curricula vitae presented when the slates were filed were promptly published on the Company web site at www.pirelli.com, where they remain available in an updated version.

During 2006, some changes were made in the system of directors. Specifically, following the resignation of the Director Carlo De Benedetti - which took place in May - the Board of Directors convened on September 12th, 2006 nominated Alberto Bombassei who, in accordance with legislation, will remain in office until the next Shareholder Meeting.

Subsequently, on November 6th, 2006 Carlo Buora resigned from his post of Managing Director and Board Member (as well as General Manager) of the Company.
Carlo Angelici, Franco Bruni, Mario Garraffo and Aldo Roveri were minority candidates.

Three of the members of the Board of Directors are executive directors as defined in Article 2.C.1 of the new Code of Conduct: The Chairman Marco Tronchetti Provera, and (due to the executive duties bestowed upon them regarding the companies Pirelli Tyre S.p.A. and Pirelli & C. Real Estate S.p.A.) Deputy Chairmen Alberto Pirelli and Carlo Alessandro Puri Negri.

The Board of Directors evaluated the role of independent directors based on the most rigorous requirements in the new Code of Conduct (criterion 3.C.1.) which states that an independent director may not be - by law - considered independent:

a) if they, directly or indirectly or on behalf of subsidiaries, trust companies or through third parties, control the issuer or are able to exercise considerable influence, or are a participant in a shareholder agreement through which one or more individuals can exercise control or significant influence on the issuer;

b) if they have or have been in the past three financial years a member of prominence 2 of the issuer, or one of its strategic subsidiaries or a company under joint control with the issuer, or a company or a body that, alone or together with others in accordance with shareholders agreements, control the issuer or are able to exercise considerable influence;

c) if directly or indirectly (e.g. through subsidiaries or bodies that have a significant position, such as a partner of a law firm or a consultancy company) they have, or had in the previous financial year, a close business, financial or professional relationship with the following:
  - the issuer, one of its subsidiaries, or any related prominent exponent thereof;
  - an individual who, alone or together with others within a shareholder agreement, controls the issuer, or - if a company or body - with related prominent exponents thereof;
  or if, in the previous three financial years, they were an employee of one of the above-mentioned individuals or bodies;

d) if they receive, or in the past three financial years received, from the issuer or one of its subsidiaries or parent companies, a substantial bonus compared to their "fixed" salary as non-executive director of the issuer, including performance-based incentive plans, such as stock bonuses or other;

e) if they have been a director for more than nine years of the past twelve;

f) if they are an executive director in another company in which the executive director of the issuer holds the role of director;

g) if they are a board member or director of a company or body belonging to the company mandated to audit the accounts of the issuer;

h) if they are a close family member of a person that finds themselves in one of the situations described above.
 
Following a lengthy evaluation of the information supplied by the Directors and available to the Company, the Board of Directors - also based on declarations made by the same - judged 10 of the remaining 16 directors (Carlo Acutis, Carlo Angelici, Alberto Bombassei, Franco Bruni, Mario Garraffo, Dino Piero Giarda, Berardino Libonati, Giampiero Pesenti, Aldo Roveri and Carlo Secchi) may be qualified as independent directors, while the other six (Gilberto Benetton, Gabriele Galateri di Genola, Giulia Maria Ligresti, Massimo Moratti, Giovanni Perissinotto and Paolo Vagnone) may be qualified as non-executive directors.
Moreover, we note that the Board of Directors has checked that all directors qualified as independent may also be so deemed in accordance with the requirements for members of the board of statutory auditors in the Financial Services Act, as amended by the Savings Law.
A table at the end of this chapter shows the positions which the directors of the Company hold as director or member of the board of statutory auditors in other listed companies in Italy and abroad, in financial, banking and insurance companies, and in other large companies.
 
2 The following are considered "members of prominence" of a company or body: the chairman of the body, the legal representative, the chairman of the board of directors, the executive directors and managers with strategic responsibilities within the company or body concerned.