Directors' Remuneration

In addition to reimbursement for expenses incurred in performing their duties, Directors receive annual fees determined by the shareholders' meeting (Article 14 of the bylaws).
The meeting of April 28th, 2005 decided "to establish a maximum of  € 1,200,000 as the total annual compensation to the Board of Directors pursuant to Art. 2389, paragraph 1, of the Civil Code, an amount to be distributed among its members in conformity with decisions taken in this regard by the Board."
At the same meeting, on April 28th, 2005, the Board of Directors established the distribution of the compensation as follows:

- € 50,000 annually for each of the 20 members of the Board of Directors;

- € 25,000 annually for each of the members of the Committee for Internal Control and Corporate Governance;

- € 20,000 annually for each member of the Remuneration Committee, with the right being reserved to use the residual amount (¤65,000) in the future to give the Board a margin of organizational flexibility, including for the adoption of any new governance solutions.
 
A payment of €10,000 annually is also made to the Board member taking part in the Self-Regulatory Body as per legislative decree no. 231/2001 (Carlo Secchi).

The Board of Directors upon consultation with the Board of Statutory Auditors establishes remuneration for directors given particular tasks, as proposed by the Remuneration Committee. The current remuneration system provides for payments to comprise a fixed amount and an additional bonus linked to the performance of the Group, and to be related to the attainment of specific objectives set by the Board.

Information on the remuneration of the directors entrusted with special powers can be found in a chart in the notes to the financial statements for 2006.
Lastly, it should be noted that there are no stock-option plans for either the executive or the nonexecutive directors ³ .
 
³ With the exception of Deputy Chairman Carlo Alessandro Puri Negri, in that, as Chief Executive Officer of Pirelli & C. Real Estate S.p.A., he holds stock options in that company.