Board Committees

The current "Internal Controls & Risks Committee" was established in June 2000 under the name of "Audit Committee". Its name, structure and tasks have changed over the years, in line with the evolution of the regulatory and supervisory framework and industry best practices.

Since October 18, 2018, the Committee has also responsibilities over equities investments held by banks and banking groups allocated in Bank of Italy Circular no. 285/2013 to independent Directors.

Committee's role

The Committee supports the Board of Directors on risk management and control-related issues.

Among other things, the Committee:

a)    With the support of the Corporate Governance & Nomination Committee, identifies and proposes to the Board who should be appointed as Head of the corporate control functions or assesses the evaluation of their dismissal; for the Head of Internal Audit function, issues its opinion on setting the remuneration and the performance goals associated with its variable portion in line with the company policies;

b)    Pre-examines activity programmes (including audit plans) and annual reports from corporate control functions to be sent to the Board, as well as periodical reports prepared by these functions above and beyond legal or regulatory requirements;

c)    Evaluates and issues opinions to the Board on the compliance of the internal control system and corporate organization with the applicable rules and regulations, and on the requirements that must be complied with by the corporate control functions, drawing the Board's attention to any weaknesses and consequent corrective actions to be implemented; for this purpose, it assesses proposals put forward by the CEO;

d)    Through evaluations and opinions, contributes to defining company policy on the outsourcing of corporate control functions;

e)    Verifies that the corporate control functions correctly comply with the Board's recommendations and guidelines, assisting the Board in drafting the coordination documents envisaged under Bank of Italy Circular no. 285;

f)     Examines and assesses the correct use of accounting principles and their uniformity with regard to drafting the main accounting documents (such as, by way of example, operating and consolidated financial statements, interim operating reports, etc.), for this purpose coordinating with the Manager in charge of drafting the company financial reports and with the Board of Statutory Auditors;

g)    Examines the work carried out by the Group's external auditors and the results stated in their reports or any letters and suggestions;

h)    Assesses any findings reported by Internal Audit and Group Compliance, or that may arise from enquiries and/or investigations carried out by third parties;

i)     May seek specific audit interventions, at such time informing the Chair of the Board of Statutory Auditors;

j)     Analyses Group guidelines for the Group Compliance function that fall within its remit, monitoring that they have been adopted and implemented;

k)    Requests that the Head of Internal Audit draft any proposals for the qualitative and quantitative improvement of the function itself;

l)     Is involved, within its specific remit, in the process of identifying material risk takers on an on-going basis.

With a special focus on risk management and control-related issues, the Committee supports the Board of Directors in:

-     Defining and approving strategic guidelines and risk management policies with specific reference to risk appetite and risk tolerance. For this purpose, it also examines the annual budget drafting guidelines;

-     Verifying that risk strategies, management policies and the Risk Appetite Framework (RAF) have been correctly implemented;

-     Defining policies and processes for evaluating corporate activities, including verification that the price and conditions of client transactions comply with the risk-related business model and strategies.

Without prejudice to the competencies of the Remuneration Committee, the Committee checks that the incentives underlying the remuneration and incentive system comply with the RAF, particularly taking into account risks, capital and liquidity.

Moreover, the Committee reports to the Board of Directors on the status of the Group's internal control system.

Furthermore, as regards investments in non-financial equities, the Committee assesses, supports and puts forward proposals with regard to organizing and enacting internal controls on the making and managing of equity investments in non-financial companies, in addition to verifying compliance within the framework of such equity investments in terms of strategic and operational guidelines.

Committee meetings are attended by the Chair of the Board of Statutory Auditors, the Head of Internal Audit, the Group Compliance Officer and the Group Risk Officer. Staff from the external audit firm may also be invited.

Composition

The majority of the members of the Internal Controls & Risks Committee is independent according to the Italian Corporate Governance Code and the Decree issued by the Ministry of Economics and Finance no. 169/2020; all the members are independent according to the Legislative Decree no. 58/1998. A minority Director sits on the Committee.

The majority of the members of the Committee has the experience required under applicable provisions, covering the provided areas of competence related to risk and control as well as accounting and audit.

Information regarding the Committee's activities is available in the Corporate Governance Report concerning each year. 

The current "Corporate Governance & Nomination Committee" was established in June 2000 under the name of "Nomination Committee". Its name and and tasks have changed over the years, in line with the evolution of the regulatory framework and industry best practices.

Committee's role

The Committee:

a) Provides opinions and support to the Board regarding the definition of the UniCredit corporate governance system, corporate structure and Group governance models and guidelines;

b) Drafts proposals to be submitted to the Board regarding the optimal qualitative and quantitative composition of the Board, and the maximum number of posts held by Directors in other companies considered compatible with effectively fulfilling these roles at UniCredit;

c) Provides opinions and support regarding the Board self-assessment process, as directed by the Chair of the Board of Directors;

d) Sets targets for the least well represented gender in corporate bodies as well as for management and staff belonging to the Group, and prepares a plan to bring this proportion up to set targets;

e) Drafts proposals to be submitted to the Chair of the Board of Directors regarding the selection of staff appointed to conduct the Board's self-assessment process.

The Committee provides opinions and support to the Board also regarding:

a)    The verification that UniCredit Directors comply with the requirements provided by applicable laws and the Articles of Association (including the ban on interlocking directorships laid down by applicable laws), and that they collectively and individually ensure abidance with the qualitative and quantitative composition of the Board deemed to be optimal;

b)    The selection of candidates for the post of Chair, Chief Executive Officer and Director of UniCredit, in the event of co-optation, and, should the Board present its own list of candidates for the position of independent Director for approval by the UniCredit Shareholders' Meeting, taking into due account any recommendations from shareholders, as per the process for selecting candidates for the posts of Board of Directors' members (including the Chair and the Chief Executive Officer), approved by the Board itself;

c)    The appointment of the Chief Executive Officer, General Manager, Deputy General Managers and other Executives with strategic responsibilities;

d)    The verification that the General Manager and the Manager in charge of drafting the company financial reports comply with the requirements provided by applicable laws and the Articles of Association, if applicable;

e)    The definition of appointment and succession plan policies for the Chief Executive Officer, General Manager, Deputy General Managers and other Executives with strategic responsibilities, Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and Leadership Team (Senior Vice Presidents);

f)    The definition of the policy for the appointment of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies;

g)    The designation of corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at the main companies.

Moreover, the Committee:

-     Provides support, coordinating with the Internal Controls & Risks Committee, in proposing candidates or assessing dismissal for the roles of Heads of corporate control functions to the Board of Directors;

-     Undertakes research to help the Board of Directors draft a succession plan for executive directors.

Composition

The majority of the members of the Corporate Governance & Nomination Committee is independent according to the Italian Corporate Governance Code and the Decree issued by the Ministry of Economics and Finance no. 169/2020; all the members are independent according to the Legislative Decree no. 58/1998.

Information regarding the Committee's activities is available in the Corporate Governance Report concerning each year. 

The "ESG Committee" was established in April 2021.

Committee's role

The purpose of the ESG Committee is to support the Board of Directors in fulfilling its responsibilities with respect to the ESG integral components on the Group's business strategy and sustainability.

The ESG Committee shall provide opinions and support to the other Board Committees to ensure the alignment of the Group's policies to UniCredit's ESG principles and objectives.

The Committee also oversees:

-     ESG and sustainability-related developments also considering international guidelines and principles and market developments, monitoring the positioning of the Group with respect to national and international best practices in the ESG field,

-     The preparation of the yearly Integrated Report, which constitutes a non-financial declaration pursuant to the provisions of Sections 3 and 4 of Legislative Decree no. 254/2016, as well as the preparation of the TCFD (Task force on Climate-related Financial Disclosures) report, and any other specific disclosure obligations required by future ESG commitments of the Bank.

Composition

All members of the ESG Committee are independent according to the Italian Corporate Governance Code, the Decree issued by the Ministry of Economics and Finance no. 169/2020 and the Legislative Decree no. 58/1998. A minority Director sits on the Committee.

Information regarding the Committee's activities is available in the Corporate Governance Report concerning each year. 

Since 2000 a Remuneration Committee has been established, which provides opinions and puts proposals to the Board of Directors on the Group's Remuneration Strategy. 

Committee's role

The Committee:

-     Puts proposals to the Board regarding the remuneration and the performance goals associated with its variable portion, for the members of the Board of Directors, the General Manager, Deputy General Managers, Heads of the corporate control functions and personnel whose remuneration and incentive systems are decided upon by the Board;

-     Exercises oversight on the criteria for remunerating the most significant employees, as identified pursuant to the relevant Bank of Italy provisions, as well as on the outcomes of the application of such criteria.

Furthermore, the Committee issues opinions to the Board on:

a)    The remuneration policy for Senior Executive Vice Presidents, the Group Management Team (Executive Vice Presidents) and the Leadership Team (Senior Vice Presidents);

b)    Group incentive schemes based on financial instruments;

c)    The remuneration policy for corporate officers (members of the Board of Directors, Board of Statutory Auditors and Supervisory Board) at Group companies.

Committee members regarding whom the Committee is called upon to express its opinion on their remuneration as a result of their specific assignments shall not attend meetings at which the proposal for such remuneration is calculated.

Furthermore, the Committee:

-     Coordinates the process for identifying material risk takers on an on-going basis;

-     Directly oversees the correct application of rules regarding the remuneration of the Heads of corporate control functions, working closely with the Board of Statutory Auditors;

-     Works with the other committees, particularly the Internal Controls & Risks Committee, to verify that the incentives included in compensation and incentive schemes are consistent with the RAF, ensuring the involvement of the corporate functions responsible for drafting and monitoring remuneration and incentive policies and practices;

-     Provides appropriate feedback on its operations to the Board of Directors, Board of Statutory Auditors and the Shareholders' Meeting;

-     Where necessary drawing on information received from the relevant corporate functions, expresses its opinion on the achievement of the performance targets associated with incentive schemes, and on the other conditions laid down for bonus payments.

Composition

The majority of the members of the Remuneration Committee is independent according to the Italian Corporate Governance Code; all the members are independent according to the Decree issued by the Ministry of Economics and Finance no. 169/2020 and the Legislative Decree no. 58/1998.  

Some members have specific technical know-how and experience on financial matters or remuneration policies.

Information regarding the Committee's activities is available in the Group Remuneration Report concerning each year. 

The setting-up of a sub-committee within the Internal Controls & Risks Committee - in order to oversee transactions with related parties - took place in September 2010. Over the years, the name of the sub-committee, its structure and areas of responsibility have been modified, in line with the evolution of the regulatory and supervisory framework, to take into account the role that the Supervisory Provisions have assigned to independent directors with regard to risk activities and conflicts of interest with parties connected to the bank and/or the banking group. In light of the scope, complexity and relevance of its duties since February 2013, the Board of Directors has established an ad hoc Committee, named Related Parties Committee since October 2018.

Committee's role

The Committee oversees issues concerning transactions with related parties pursuant to CONSOB Regulation no. 17221/2010 and transactions with associated parties pursuant to Bank of Italy Circular no. 285/2013 (Part III, Chapter 11), carrying out the specific role attributed to independent Directors by the aforementioned provisions. 

Furthermore, it carries out any other duties assigned to it within the Global Policy for the management of transactions with persons in conflict of interest.

The Committee operates on a consultative and proposition-making basis. Pursuant to the current provisions, the Committee is in particular in charge of:

-     formulating prior, motivated and binding opinions for the purposes of the Board of Directors' resolving on the suitability of internal procedures and subsequent updates in order to achieve the objectives established in the external regulatory environment;

-     formulating prior and motivated opinions, when expressly required, in the event of transactions with members who qualify as persons in conflict of interest (known as the so-called "Perimetro Unico") carried out either directly or indirectly with UniCredit, concerning the Company's interest in the performance of such transactions, as well as the profitability and substantial correctness of the conditions of such transactions;

-     in the event of transactions of "greater significance", - if deemed necessary by the Committee becoming involved through one or more delegated members - in the negotiation phase and in the preliminary phase via the reception of an exhaustive and timely information flow, including the right to request information and issue observations to the delegated bodies and the persons in charge of carrying out negotiations or the preliminary phase.

The Company's competent offices ensure a constant monitoring of transactions envisaged by the procedures for the identification and management of transactions with related and/or associated parties, also in view of enabling the Committee to propose corrective actions.

For each individual transaction, Committee members must be different from the counterparty, its associated parties and/or any entities related to it.

If a Committee member is a counterparty to the transaction under examination (or is related/associated with the counterparty), he/she must promptly inform the Chair of the Board of Directors and the Committee Chair (provided he/she is not in a conflict of interest situation), and abstain from attending further Committee proceedings with regard to the transaction in which the relationship exists. Having consulted with the Committee Chair (provided he/she is not in a conflict of interest situation), the Chair of the Board of Directors shall immediately take steps to replace the member who has this conflict of interest with another member from the Board of Directors who qualifies as independent pursuant to the Italian Corporate Governance Code, after contacting them beforehand, in order to restore the Committee to three non-related and non-associated independent Directors.

For transactions that need to be finalised urgently and require the intervention of the Related-Parties Committee during negotiations and due diligence and/or during the issue of opinions, having acknowledged the urgency and noted that the majority or all members are unable to meet or carry out the required activities in time to conclude the transaction, the Committee Chair shall promptly inform the Chair of the Board of Directors of this situation. In any event, these circumstances must be communicated no later than the day after the Committee Chair was informed that the majority or all Committee members were not available. Having consulted with the CEO and determined that the transaction cannot be delayed, the Chair of the Board of Directors immediately takes steps to find three Directors to sit on the Committee and follow the process for temporary substitutions in the event of conflicts of interest.

Composition

All members of the Related-Parties Committee are independent according to the Italian Corporate Governance Code. 

Information regarding the Committee's activities is available in the Corporate Governance Report concerning each year.