During 2005, the Board of Directors held nine meetings in which it analyzed and approved the guidelines for Group operations, organizational recommendations and general guidelines regarding human resources management, proposals to reorganize the corporate structure, operating performance, extraordinary operations and the quarterly and half-year results.
During these meetings, the executive directors also provided the Board of Directors and Board of Statutory Auditors with information regarding any significant or unusual operations or related party transactions.
The Board of Directors has paid particular attention on analyzing the periodic reports of the Internal Audit Committee regarding its activities and an evaluation of the appropriateness of the internal control system, and providing updates on the accomplishments adopted by the Committee in accordance with the Sarbanes-Oxley Act (the U.S. law that Benetton is required to observe as a result of being listed on the New York Stock Exchange).
At the Board meetings, the necessary documentation and information were provided, with reasonable advance notice, such that the Board could knowingly deliberate on the various issues submitted before it.
The current system of powers granted by the Board of Directors on May 16, 2005, as described below, and the disclosure procedures adopted ensure that the Board is informed of all of the most significant transactions for the Company and for the Group. Indeed, even though vested with the related powers, executive directors are required to submit such transactions to the Board of Directors for approval before their execution.
Particular attention has been paid on transactions with related parties, as described in greater detail below in the section “Related Party Transactions”.
Directors
The current Board of Directors, appointed by the shareholders’ meeting on May 16, 2005, is composed of 11 members, who are to remain in office until the meeting of shareholders to approve the financial statements for the year ended December 31, 2005. A complete overview of the directors’ curricula are available on the Company’s web site in the Corporate Governance section.
The Chairman, Luciano Benetton, is vested with the powers of company representation and the power to carry out all actions related to the Company’s activities, with limitations for certain categories of actions and the following transactions in particular:
- the purchase and sale of shares or corporate bonds for amounts exceeding 25 million euro;
- the purchase and sale of business units and the purchase and sale of property for amounts exceeding 25 million euro;
- the approval of loans to parties other than subsidiaries for amounts exceeding 5 million euro.
The Chief Executive Officer, Silvano Cassano, is vested with the power to carry out actions related to ordinary administration and certain actions of extraordinary administration, with limitations for the following actions in particular:
- the purchase and sale of shares in companies for amounts exceeding 5 million euro;
- the purchase and sale of securities and bonds for amounts exceeding 10 million euro;
- the purchase and sale of business units and the purchase and sale of property for amounts exceeding 10 million euro;
- the approval of loans to parties other than subsidiaries for amounts exceeding 5 million euro;
- the guarantee of loans of companies that are not wholly controlled, either directly or indirectly, by Benetton Group S.p.A.
None of the other directors have executive powers.
The Board of Directors has appointed two Deputy Chairmen (Carlo Benetton and Alessandro Benetton), who are vested severally with the powers of Company representation in the absence of the Chairman.
There are seven non-executive directors (Carlo Benetton, Gilberto Benetton, Giuliana Benetton, Reginald Bartholomew, Luigi Arturo Bianchi, Giorgio Brunetti and Ulrich Weiss), of whom four (Reginald Bartholomew, Giorgio Brunetti, Luigi Arturo Bianchi and Ulrich Weiss) are “independent” from the owners and corporate management, in accordance with the concept of independence as defined by the Corporate Governance Code for listed companies in effect for financial year 2005. All directors participate diligently in the board’s activities.
On an annual basis, the Board of Directors, based also on the information provided by the directors themselves, evaluates the requirements of independence of all members in accordance with the aforementioned Corporate Governance Code. No limits to the reappointment of directors have been defined.
The table below shows the offices that the directors hold in other companies listed on regulated markets, either domestic or foreign, or in banks, insurance companies, or other financial organizations, as well as in other companies of significant size that are not a part of the Group:
| Director | Office | Company |
|---|---|---|
| Luciano Benetton | Board member | 21,Investimenti S.p.A., Edizione Holding S.p.A. |
| Carlo Benetton | Deputy Chairman | Edizione Holding S.p.A. |
| Gilberto Benetton | Chairman | Autogrill S.p.A., Edizione Holding S.p.A., |
| Ragione S.A.p.A. di G. Benetton & C. | ||
| Deputy Chairman | Telecom Italia S.p.A., Olimpia S.p.A. | |
| Board member | Aldeasa S.A., Mediobanca S.p.A., | |
| Lloyd Adriatico S.p.A., | ||
| Autostrade S.p.A., Pirelli & C. S.p.A., | ||
| Schemaventotto S.p.A., | ||
| Infrastrutture e Sviluppo S.p.A. | ||
| Giuliana Benetton | Board member | Edizione Holding S.p.A. |
| Alessandro Benetton | Chairman and CEO | 21,Investimenti S.p.A. |
| Chairman | 21 Partners S.G.R. S.p.A., | |
| 21,Investimenti Partners S.p.A., 21 Network S.p.A. | ||
| Deputy Chairman | Nordest Merchant S.p.A. | |
| Sole Director | Saibot S.r.l. società unipersonale | |
| Board member | Edizione Holding S.p.A., | |
| Autogrill S.p.A., Sirti S.p.A., | ||
| Permasteelisa S.p.A., | ||
| Industrie Zignago Santa Margherita S.p.A. | ||
| Member of the Supervisory Board | 21 Centrale Partners S.A. | |
| Reginald Bartholomew | Chairman | Merrill Lynch Italy |
| Deputy Chairman | Merrill Lynch Holdings Ltd | |
| Board member | Pirelli & C. Real Estate S.p.A. | |
| Giorgio Brunetti | Board member | Autogrill S.p.A., Carraro S.p.A., |
| Messaggerie Italiane S.p.A. | ||
| Auditor | Autorità per l’energia e il gas | |
| Luigi Arturo Bianchi | Board member | Anima S.G.R. S.p.A., |
| Assicurazioni Generali S.p.A., MBE Holding S.p.A. | ||
| Gianni Mion | Deputy Chairman | TIM Italia S.p.A. |
| CEO | Edizione Holding S.p.A. | |
| Board member | Aldeasa S.A., 21,Investimenti S.p.A., | |
| Autogrill S.p.A., Autogrill Group Inc., | ||
| Autostrade S.p.A., Cartiere Burgo S.p.A., Olimpia S.p.A., | ||
| Telecom Italia S.p.A., Fondazione Cassa di Risparmio di Venezia, | ||
| Luxottica Group S.p.A., Infrastrutture e Sviluppo S.p.A., | ||
| Schemaventotto S.p.A., Igli S.p.A. | ||
| Ulrich Weiss | Board member | Ducati Motors S.p.A., |
| Bego Medical AG (Bremen) |
The Group has recently adopted a new Policy, which was also approved by the Boards of Directors of the subsidiaries, regarding the exercise of power granted to Benetton Group S.p.A.’s proxy holders and to directors and proxy holders of its subsidiaries. This Policy provides prior authorization by the Board of Directors of each company, or by its shareholders’ meeting, for the execution of the following transactions, in the event that such transactions are not conducted within the scope of ordinary intragroup relations: the issuance of guarantees, concessions or requests for financing, the purchase or sale of property, the purchase or sale of shares in companies (with certain exceptions).
In principle, the Policy assures to the Group the directors and proxy holders of all foreign or domestic subsidiaries are vested with uniform decision-making powers regardless of the provisions of local laws and regulations.
Parent Company directors as of December 31, 2005 were as follows:
| Name and surname | Date of birth | Appointed | Office |
|---|---|---|---|
| Luciano Benetton | 05.13.1935 | 1978 | Chairman |
| Carlo Benetton | 12.26.1943 | 1978 | Deputy Chairman |
| Alessandro Benetton | 03.02.1964 | 1998 | Deputy Chairman |
| Silvano Cassano | 12.18.1956 | 2003 | Chief Executive Officer |
| Giuliana Benetton | 07.08.1937 | 1978 | Director |
| Gilberto Benetton | 06.19.1941 | 1978 | Director |
| Gianni Mion | 09.06.1943 | 1990 | Director |
| Giorgio Brunetti | 01.14.1937 | 2005 | Director |
| Ulrich Weiss | 06.03.1936 | 1997 | Director |
| Reginald Bartholomew | 02.17.1936 | 1999 | Director |
| Luigi Arturo Bianchi | 06.03.1958 | 2000 | Director |
Luciano Benetton, Gilberto Benetton, Carlo Benetton and Giuliana Benetton are siblings;
Alessandro Benetton is the son of Luciano Benetton.
For 2005, the total fees granted by the shareholders to the Board of Directors of Benetton
Group S.p.A. amounted to 4,369 thousand euro.