Expert Corporate Governance Service (ECGS)
EUR 492.40 For Business Accounts Only

Etude de l'AG du 14/04/2017

We have serious concerns over the Company's corporate governance, as it does not respect the "one vote - -one share" principle: all shareholders that have registered their shares for more than 3 years are entitled to receive an additional voting right. Although the Bylaws provide that "the chairperson of the Board of Directors shall be a nonexecutive Director" (Art. 15.2), the Board appointed Mr. Marchionne as Chairman-CEO. Furthermore, the Board appointed a non-independent Director as Senior Non-Executive Director, who should be the reference point for shareholders who wish to express concerns about the management or performance of the Company.

For all the above mentioned concerns, we recommend opposing the discharge of Board members (item 2.f), the re-appointment of the Chairman-CEO Mr. Sergio Marchionne (item 3.a) and the re-appointment of non-independent Directors according to our guidelines: Mr. John Elkann (item 3.b), Mr. Piero Ferrari (item 3.c), Mr. Louis Camilleri (item 3.e), Mr. Lapo Elkann (item 3.i), the former CEO Mr. Amedeo Felisa (item 3.j) and Mr. Adam Keswick (item 3.l).

In item 6, the Board proposes to approve a new performance share plan for executive members, including the Chairman-CEO Mr. Marchionne. As the base salary of the Chairman-CEO is not disclosed (he received no compensation as executive Chairman in 2015 and 2016), it is not possible to compare the maximum incentive with his fixed remuneration. However, the incentive amount appears definitely excessive in absolute terms (up to € 42.3 million on the date of approval of the Plan). We also regret that the incentive depends on only one performance metric (relative TSR) and it may vest even in case of underperformance (50% vesting if Ferrari's TSR is lower than 3 peers in a group of 7). Accordingly, we recommend opposition.

In item 4, the AGM is called to a binding approval of the remuneration policy, as the Board proposes to amend the non-executive Directors' remuneration (it shall be only paid in cash, eliminating the possibility to receive 50% of the fee in shares), and a new performance share plan is proposed in item6. The maximum amount and the performance conditions of the annual cash bonus are not disclosed, and discretionary bonuses are specifically allowed by the remuneration policy. Also taking into account our concerns over the new performance share plan, we recommend opposition.



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