Appointment of Directors

Since 2004, the Company bylaws have stated (in article 10) that the appointment of the Board of Directors shall take place through a slate vote and therefore they are already in line with the regulations introduced by the Savings Law in the Financial Services Act. This system ensures that - if more than one slate is presented - minority shareholders can elect one fifth of the Directors.

The slates presented by shareholders, undersigned by the parties submitting them, must be deposited at the registered office of the Company at least ten days prior to the date set for the shareholders' meeting to be held on first call and made available to anyone on request.

Each shareholder may present or participate in the presentation of only one slate and each candidate may appear on only one slate, on pain of ineligibility.

Only shareholders who, alone or together with other shareholders, hold at least 2 per cent of the share capital entitled to vote at the ordinary shareholders' meeting, may present slates, subject to their proving ownership of the necessary number of shares not later than two days prior to the date set for the shareholders' meeting to be held on first call.

Declarations in which the candidates individually accept their candidacy and attest, on their own responsibility, that there are no grounds for ineligibility or incompatibility, and that they meet the requirements prescribed by law and the bylaws, must be deposited together with the slates within the time limit specified above.

The declarations must be accompanied by a curriculum vitae for each candidate regarding his personal and professional characteristics, with the possible indication that the candidate qualifies as independent.

As per international best practices, the renewal of the administrative body of the Company allows shareholders to vote individually on: (i) the number of people on the Board of Directors; (ii) the election of Directors through a vote on the presented slates; (iii) the duration of the mandate of the Board of Directors; and (iv) the pay packages of the Directors.

In reference to the election methods, it seems pertinent to note that the Board of Directors that convened on March 12th, 2007 - in order to align the above-mentioned elections system with the new provisions introduced by the Savings Law and the Corrective Decree, as well as recommendations in the new Code of Conduct - proposed some changes at the following Shareholders' Meeting aiming at (i) allowing for the percentage of share capital required to present slates to be less than 2% if so deemed by Consob (ii) increasing the time within which slates must be presented to 15 days, and (iii) together with the depositing of the curriculum vitae of each candidate, requiring a list of all the administrative and control positions that the candidate has held in other companies, and requiring that the candidate be suitable to be qualified as an independent Director according to legal and Company criteria.

During the same meeting, following a specific recommendation in the new Code of Conduct (criterion no. 1.C.3.), which requires the Board to express an opinion regarding the limit of the number of director's or auditor's positions held in other companies that can be considered compatible with administrative positions in Pirelli & C., the Board mandated the Committee for Internal Control and Corporate Governance to draw up a proposal regarding this point.