corporate governance report and shareholding structure...

Corporate Governance Report and Shareholding Structure 2010

Pursuant to Article 123-bis of Law 58/1998, approved by the Board of Directors on March 8, 2011

CorporateGovernance10Ing 21-03-2011 17:25 Pagina I

Corporate Governance and Shareholding Structure Report 2010

The Corporate Governance Report is published on SaipemÕs website www.saipem.com,in the ÔCorporate GovernanceÕ section

Contents

Issuer profile 4

Principles 4

Business ethics 4

Stakeholders 5

Labour protection and equal opportunities 5

Development of professional skills 5

Diversity 5

Cooperation 5

Policies 5

Health and Safety 5

Environmental protection 5

The Code of Ethics 5

Sustainability Report 6

Saipem’s organisational structure 6

Shareholding structure 7

Share capital distribution 7

Restrictions on the transfer of shares 7

Relevant shareholdings 7

Shareholders rights restrictions 8

Shareholding of employees: exercise of voting rights 8

Voting rights restrictions 8

Agreements as per Article 122 of Law 58/1998 8

Change of control clauses 8

Indemnification for Directors in case of dismissal 8(without just cause), resignation or terminationfollowing a public purchase offer

Directors’ appointment or replacement 8and modifications to the Articles of Association

Share capital increases and buy-back of treasury shares 8

Direction and coordination 8(pursuant to Article 2497 of the Italian Civil Code)

Corporate Governance Code 9

Risk management systems and internal control 9over financial reporting

Main features of the risk assessment 9and internal control systems for the purposesof financial reporting

The Board of Directors 10

Executive Director responsible 10for the internal control system

Board of Statutory Auditors 11

Audit Committee 11

Officer in charge of the internal control system 11and the Internal Audit department

Organisational model, pursuant to Law Decree 231/2001 11

Anti-corruption procedures 12

External auditing company 12

Senior Manager in charge of preparing 12the Company’s financial reports

The Shareholders’ Meeting 13

Management and Control Bodies and Committees 13

The Board of Directors 13

Responsibilities and powers of the Board of Directors 13

Board review 15

Composition 15

Cumulation of offices 16

Board of Directors’ Meetings 17

Executive Directors 17

Independent Directors 17

Remuneration report 18

Board committees 19

Audit Committee 19

Compensation Committee 20

The Board of Statutory Auditors 20

Directors’ interests and transactions 22with related parties

Investor relations 23

Processing of inside information - Internal Dealing 24

Table 1. Shareholding structure 25

Table 2. Structure of the Board of Directors 26and its Committees

Table 3. Structure of the Board of Statutory Auditors 27

Saipem Annual Report / Corporate Governance Report and Shareholding Structure 2010

Corporate Governance Report and Shareholding Structure 2010

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This Report is designed to provide a general and completeoverview of Saipem SpA’s (‘Saipem’) corporate governancesystem. In order to comply with applicable laws and stock marketlisting standards, in keeping with the recommendations of BorsaItaliana SpA and of the relevant business associations, the Reportalso furnishes information regarding Saipem’s shareholding, itscompliance with the corporate governance codes established byinstitutional bodies and the relevant commitments to observethem, as well as the choices that the Company has made inimplementing its governance. This Report is available at Saipem’sheadquarters, published on Saipem’s website, and sent to BorsaItaliana SpA in accordance with set rules and deadlines.

The information contained in this Report relates to the financialyear 2010 and has been updated, with respect to certain matters,as of March 8, 2011, the date of the Board of Directors’ meetingthat approved it, together with the Annual Financial Report 2010.

Issuer profile

The Saipem Group is a world leader in the provision of engineering,procurement, project management and construction services withdistinctive capabilities in the design and execution of large-scaleoffshore and onshore projects, and technological competencessuch as gas monetisation and heavy oil exploitation, with a stronginternational bias towards operations in remote areas, ultra-deepwaters and challenging environmental conditions.Amongst its major global competitors offering turnkey solution inthe Oil&Gas industry, Saipem represents one of the mostbalanced groups in terms of core businesses (Onshore andOffshore, in addition to Drilling), the markets in which it operates(strong geographical diversification) and client base (majornational and international oil companies).In the Offshore and Onshore sectors Saipem enjoys a competitiveposition of excellence in the provision of EPIC (‘Engineering,Procurement, Installation and Construction’) and EPC(‘Engineering, Procurement and Construction’) services to the oilindustry. In the Drilling sector, Saipem performs in some of themost complex areas in the oil industry (North Sea andultra-deepwater) often creating positive synergies with Onshoreand Offshore operations.In 2010 Saipem was organised into three business units:Offshore, Onshore and Drilling. On February 10, 2011, the Board ofDirectors approved the reorganisation of the business units. TheOnshore and Offshore Business Units have been unified with theaim of facilitating enhanced integration of the Engineering& Project Management competencies with those deriving from ourstrong Asset Base. The resulting single Business Unit, named

‘Engineering & Construction’, will be headed by Chief OperatingOfficer Pietro Varone. The Drilling Business Unit, headed by ChiefOperating Officer Giuseppe Caselli, already comprises bothOnshore and Offshore segments.From a geographical standpoint, Saipem has a heavy internationalbias, with approximately 90% of revenues generated outwith Italyand approximately 80% outwith Europe. The global spread of itsreference markets, its growth in size and the complexity of itscore businesses have created the need, on the one hand, topursue a delocalization policy of its operational hubs towards therelevant geographical areas, namely Northern Europe, West andNorth Africa, the Middle East, the Caspian region, South-East Asiaand the Americas, and on the other, to develop, in specific areas ofcompetence, specialised know-how at certain Group companiesinvolved in specific operations.Alongside the major European hubs (Milan, Paris, Fano andLondon), the majority of Saipem’s 36,000-strong workforce iscomprised of more than 100 nationalities. The fleet vessels, thelogistical bases, the construction and fabrication yards and theengineering centres in host countries are staffed by a significantnumber of expatriate resources from developing countries(mainly India and South-East Asia) alongside the strong localcontent.

PrinciplesSaipem undertakes to maintain and strengthen a governancesystem in line with international best practice and standards. Thecomplexity of the situations in which Saipem operates, thechallenges of sustainable development and the need to take intoconsideration the interests of all those having a legitimateinterest in the corporate business (‘Stakeholders’), increase theimportance of clearly defining the values and responsibilities thatSaipem recognises.Compliance with the law, regulations, statutory provisions,self-regulatory codes, ethical integrity and fairness, is a constantcommitment and duty for all Saipem personnel, and characterisesthe conduct of Saipem’s entire organisation.All personnel working for Saipem, without distinction and/orexceptions, are committed to observing and enforcing theaforementioned principles, within their own function andresponsibilities, in addition to the values and principles in mattersof transparency, energy efficiency and sustainable development,as stated by Institutions and International Conventions.The belief of acting in Saipem’s interests cannot in any way justifythe adoption of practices contravening these principles.

Business ethicsSaipem’s business and corporate activities must be carried out ina transparent, honest and fair way, in good faith, and in full


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compliance with competition protection rules.Specifically, Saipem applies the OECD (Organisation for EconomicCo-operation and Development) guidelines for multinationalcompanies.

StakeholdersSaipem is committed to respecting all stakeholders with whom itinteracts in business, as it believes that they are an importantasset to the Company.

Labour protection and equal opportunitiesSaipem respects the universally recognised core labour standardscontained in the Fundamental Conventions of ILO (InternationalLabour Organisation); it guarantees the freedom to form a unionand the right of collective bargaining; it repudiates any form offorced or juvenile labour and/or discrimination. In addition, Saipemis an equal opportunity employer and guarantees its employeesequal treatment based on merit.

Development of professional skillsSaipem values and promotes the development of skills andcompetencies of each employee in addition to team work, so thatthe energy and creativity of an individual can realise their fullpotential.

DiversitySaipem’s business conduct is inspired by the respect it affords tocultures, religions, traditions, ethnic diversity and thecommunities in which it operates, and strives to preserve theirbiological, environmental, social, cultural and economic identities.

CooperationSaipem is committed to promoting the quality of life and thesocial and economic development of the communities in whichthe Group operates.

PoliciesTo rationalise and improve the efficiency of the body ofdocuments that define general principles and conduct rules thatmust inspire all actions carried out by Saipem and its subsidiaries,and to ensure the achievement of corporate objectives, the Boardof Directors has so far approved the following Policies:- Our people- Our Partners in the value chain- Global Compliance- Corporate Governance- Operational Excellence- Our Institutional Partners- Information ManagementSpecifically, the first Policy deals with the importance of thehuman factor, the culture of plurality, the valourisation of people,the knowledge and training systems, remuneration,communication and organisational well-being; the second Policy,the promotion of long-term relations, client satisfaction, the

selection process (control chain) and the competition; the thirdPolicy, compliance, effectiveness of compliance regulations andcontinuous improvement; the fourth Policy, integrity andtransparency, the practice of excellence, the system of control,direction and co-ordination; the fifth Policy, the culture andachievement of operational excellence; the sixth Policy, thepromotion of long-term relations; the seventh Policy, information,IT systems and communication.

Health and SafetySaipem ensures the highest health and safety standards for itsemployees and those of its subcontractors in all geographicalareas of operations, and faces all challenges by applying a newsafety vision: ‘to be winners through passion for Health andSafety’. The rationale behind this health and safety vision is thatbeing safe equates to being more efficient in terms of businessperformance. In 2007, Saipem began implementing an innovativeand interactive safety programme called Leadership in Health andSafety - LiHS, aimed at creating a strong safety culture throughoutthe Company by turning its leaders into safety leaders. A series ofLiHS workshops were held involving the Company’s management,and tools were created for self-development, namelyquestionnaires posted on the Company website, safety guidelinesfor structured communication, films, publications and documentsendorsed by members of the Board of Directors. In September2010, the ‘LiHS’ (Leadership in Health and Safety) Foundation wasset up to further strengthen health and safety initiatives. TheFoundation is currently awaiting juridical recognition.With the aim of becoming a global knowledge centre, theFoundation promotes studies, research, training, information andpropagation of health and safety material, contributing to thegrowth in ‘culture and awareness of health and safety at work’,which could also extend into the social milieu, and in particularinto both the Italian and international Oil&Gas industrial worlds.Saipem’s Health and Safety system complies with bothinternational standards and the strictest legislations. This ensuresthe structured management of health and safety issues forSaipem’s employees through health protocols, training and audits.

Environmental protectionSaipem is committed to protecting the environment andecosystems interested by its business operations, through theimplementation of a management system which complies withbest international safety standards. Saipem has also adoptedprocedures to ensure compliance in terms of environmentallegislation, with specific reference to waste disposal, discharges,atmospheric emissions and reinstatement.

The Code of EthicsAt the meeting of July 14, 2008, the Board of Directors of SaipemSpA approved the new organisational, management and controlModel pursuant to Legislative Decree No. 231 of 2001 (Model231)1 and the document ‘Sensitive activities and specific controlstandards’, which forms part of Model 231.

(1) Model 231, comprising the Code of Ethics, is published on Saipem’s website www.saipem.com in the ‘Corporate Governance’ section.


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Model 231 includes the new Code of Ethics which replaces the Codeof Practice and is a compulsory general principle of Model 231 itself.The Code of Ethics clearly defines, in compliance with theprovisions of law, the values that Saipem recognises and accepts,as well as the responsibilities the Company assumes bothinternally and externally. It imposes fairness, honesty, integrityand transparency on operations, conduct, working practices andrelations both internal and external to the Group; the Board ofDirectors ensures adherence to the Code through the annualreport of the Guarantor of the Code of Ethics, whoseresponsibilities have been delegated to the ComplianceCommittee of Saipem SpA and which, pursuant to Article 6,paragraph 1 of Law Decree 231 of 2001 has been granted‘independent powers of initiative and control’.Saipem sent Model 231 (updated through a Board of Directors’resolution on October 27, 2010) together with an accompanyingletter, to all Italian and foreign companies in which it has aholding, underlining the fundamental importance that they adopttheir own Code of Ethics and organisational, management andcontrol model defining, in compliance with local legislation, thevalues recognised, accepted and shared by Saipem, as well as theresponsibility it assumes towards stakeholders in both in Italyand worldwide.In compliance with Confindustria (Italian ManufacturingCompanies Association) guidelines and the latest court decisions,the Board of Directors, at the Audit Committee’s proposal,resolved, at their meeting of July 14, 2008, to appoint twoexternal members to the Compliance Committee, to furtherguarantee its independence. These additional members wereselected from among academics and professionals with provenexpertise, one of whom took on the role of Chairman of theCommittee.In 2008, the Technical Secretariat of the Compliance Committeewas established to monitor the evolution of the relevant laws andcourts decisions, to draw up proposals for the continuousupdating of Model 231, to collate and review information anddocuments received from Saipem offices, and to inform theaddressees of the Model of the Committee’s decisions andmonitor their implementation.To promote the dissemination of the Code and facilitate itsimplementation, a specific ‘Code of Ethics Promotion Team’ wascreated on July 14, 2008, under the remit of the ComplianceCommittee. The Team consists of 8 members from several internaldepartments (Legal, Investor Relations, Italian Industrial Relationsand Social Activities, Human Resources, Secretary’s Office,Personnel Development, Training and Compensation Organisation,Communication and Sustainability Departments). In 2010 theTeam met on three occasions and resolved to have the Code ofEthics translated into 12 languages for publication on theCompany’s intranet and website, and promoted its disseminationat Saipem Group's overseas companies.With these initiatives, the Board of Directors further strengthenedthe internal control system, with the firm conviction that theCompany’s business activities, whose aim is the creation of value

for its Shareholders, must be founded on the principle of fairconduct towards all stakeholders (comprising, besides theShareholders, employees, suppliers, clients, commercial andfinancial partners, in addition to the communities the Groupcomes into contact with in the countries where it is present) andthat this including the promotion of important social initiatives, ina continuous effort to foster amongst stakeholders an awarenessthat only a business approach that seizes the opportunities andmanages the risks resulting from economic, environmental andsocial development generates long-term value for all partiesinvolved.

Sustainability Report2

The Code of Ethics includes the general principles underpinningSaipem’s sustainability policy, as detailed in the SaipemSustainability Report which has been produced annually since2000, and is used to promote the sustainability culture andmonitor initiatives and performance. The report is proof of thegrowing commitment by Group companies to share values andsafeguard Quality, Health and Safety and the Environment; keyfactors for the success of the business and to improve the social,cultural and economic context in which Saipem operates.Saipem’s approach to Quality, Health & Safety, Environment andSustainability is based on principles, policies and processes thatare governed by certified management systems and adecentralised organisation best suited to Saipem’s business as aglobal contractor to the energy industry. Sustainability is aconsistent and responsible way to ensure the creation of value forstakeholders in this industry, for which every challenge requiressafe, reliable and innovative solutions. For Saipem, theSustainability Report represents the most important tool forreporting on activities and results as well as for informing andengaging with stakeholders.

Saipem’s organisational structureSaipem’s organisational structure is based on the traditionaladministration and control model whereby the Board of Directorsis the central body, solely responsible for the Company’smanagement.Supervisory and control duties are the responsibility of the Boardof Statutory Auditors, whereas the External Auditors areresponsible for the legal auditing of accounts.The Shareholders’ Meeting manifests the will of the Shareholders,through resolutions adopted in compliance with the law and theCompany’s Articles of Association.The Shareholders’ Meeting appoints the Board of Directors for amaximum term of three years.The Board of Directors has appointed the Chairman, a DeputyChairman - CEO (Chief Executive Officer), to whom report the COOs(Chief Operating Officers) who head the various Business Units,and a Managing Director for Business Support and TransversalActivities - Deputy CEO.The Chairman has the power to represent the Company, pursuantto Article 21 of the Company’s Articles of Association, together

(2) The Sustainability Report is published on Saipem’s website www.saipem.com in the ‘Sustainability’ section under ‘Sustainability Report’.


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with those Directors vested with executive powers (pursuant toArticle 26 of Articles of Association).The Board of Directors has also set up two internal corporatecommittees, with consultative and advisory functions: the AuditCommittee, composed of non-executive independent Directors,and the Compensation Committee, composed of non-executiveDirectors, the majority of whom are independent.The Board of Directors, having received the opinion of the Board ofStatutory Auditors and at the Chairman’s proposal, appointed theCompany’s CFO as the Senior Manager responsible for thepreparation of financial reports, in compliance with Article 21 ofthe Articles of Association.

Shareholding structure(pursuant to Article 123-bis of Law Decree No. 58of February 24, 1998 - TUF at December 31, 2010)

Share capital distribution- At December 31, 2010, the share capital of Saipem SpA

amounted to €441,410,900, fully paid up and comprising No.441,270,452 ordinary shares, equal to 99.97% of the sharecapital, with a nominal value of €1 each, and No. 140,448savings shares, equal to 0.03% of the share capital, with a

nominal value of €1 each, both of which are listed on theComputerised Share Trading Market (Mercato TelematicoAzionario) managed by Borsa Italiana SpA. Shares cannot bedivided and each share carries the entitlement of one vote.Saipem’s Shareholders enjoy, and are limited by, all relevantrights afforded by law. Savings shares are convertible at parwith ordinary shares, without charges or time restrictions; theyenjoy a higher dividend than ordinary shares equal to 3% of thenominal share value. On January 14, 2010, the SavingsShareholders’ Meeting confirmed Mr. Roberto Ramorini as theircollective representative for the following three years (seeTable 1).No other financial instruments have been issued by theCompany that allocate the right to subscribe newly-issuedshares.

Restrictions on the transfer of shares- No restrictions exist on the transfer of shares.

Relevant shareholdings- Based on information available and notifications received

pursuant to Article 120 of Law 58/1998, Shareholders owning astake in Saipem SpA in excess of 2% at December 31, 2010, are(see Table 1):

Shareholders Shares held % of capital

Eni SpA 189,423,307 42.91

Capital Research and Management Co 21,656,293 4.908

FMR Llc 15,223,856 3.450

Blackrock Inc 12,421,763 2.815

FIL Ltd 8,898,844 2.016

Shareholders by area based on 2009 dividend payments

Shareholders Number of shareholders Shares held % of capital

Italy 29,394 277,137,238 (*) 62.78

Other EU Member States 940 52,599,480 11.91

Americas 734 63,677,953 14.43

UK and Ireland 310 24,491,073 5.55

Other European States 102 4,310,762 0.98

Rest of the World 232 19,194,394 4.35

Total 31,712 441,410,900 100.00

(*) Includes treasury shares with no dividend entitlement.


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Shareholders rights restrictions- All Shareholders enjoy the same rights.

Shareholding of employees: exercise of voting rights- Employees holding Saipem’s shares enjoy the same voting

rights as ordinary shareholders.

Voting rights restrictions- No restrictions exist on voting rights.

Agreements as per Article 122 of Law 58/1998- No known agreements exist amongst Shareholders, as per

Article 122 of Law 58/1998.

Change of control clauses- Saipem and its subsidiaries are not parties to any significant

agreements that would become effective, be modified or beextinguished in the event of a change in the identity of theshareholders who currently control Saipem, except from thefollowing:• financing currently held with third-party credit institutions

or with Eni, which, at December 31, 2010, amounted to atotal of €3,887 million.Should there be a change of control, Saipem may berequested to repay the loaned capital and related interestsin advance of the contractual terms and conditions.Replacing the aforementioned financing on the market andtaking into account the adjustment in the risk profile of theCompany, would result in an increased annual financialoutlay estimated at approximately €27 million;

• bank guarantees amounting to a total of €5,688 million.Should there be a change of control, Saipem may berequested to release all Eni lines of credit currently utilisedagainst bank guarantees.Replacing existing lines of credit on the market, taking intoaccount the adjustment in the risk profile of the Company,would result in an increased annual financial outlayestimated at approximately €3.4 million.

Indemnification for Directors in case of dismissal(without just cause), resignation or terminationfollowing a public purchase offer- There are no agreements indemnifying Directors in case of

dismissal/revocation of their appointment without just cause,

resignation or termination following a public purchase offer.Current Stock Option Plans provide that, in cases of consensualemployment termination, or termination of the Assignee by thecompany for reasons relating to the company’s operations, for‘objective just cause’, the Assignee retains the right to exercisethe options within the constraints set forth in Stock OptionRegulations and for reduced quantities.In the event of employment being terminated unilaterally bythe Assignee or dismissal by the company for ‘subjective justcause’ or for ‘just cause’ before the end of the vesting period,the Options become null and void.

Directors’ appointment or replacementand modifications to the Articles of Association- Procedures regulating the appointment of Board Directors are

illustrated under the item ‘Board of Directors’. The Board ofDirectors has the power to amend the Articles of Association tocomply with the provisions of law and has all powers grantedby Article 2365 of the Italian Civil Code, and Article 20 of Articlesof Association (please refer to paragraph ‘Responsibilities andpowers of the Board of Directors’, page 13).With regard to the information required by Consob Notificationdated February 24, 2011 relating to succession plans forExecutive Directors, Saipem informs that, in consideration ofthe nature of the Company’s shareholding structure, noprovisions have been made for a succession plan of Saipem’sExecutive Directors.

Share capital increases and buy-backof treasury shares- The Board of Directors does not have the power to increase

the share capital, pursuant to Article 2343 of the Italian CivilCode.The number of treasury shares held by the Company atDecember 31, 2010 was 3,710,372, equal to 0.84% of the sharecapital. The Shareholders’ Meeting had resolved to buy-backshares for allocation to the Stock Option Plans from 2002 to2008. This resolution is no longer valid.

Direction and coordination(pursuant to Article 2497 of the Italian Civil Code)- The Company is subject to the direction and coordination of Eni

SpA, pursuant to Article 2497 (and subsequent amendments)of the Italian Civil Code.

Shareholders by amount of shares held based on 2009 dividend payments

Shareholders Number of shareholders Shares held % of capital

> 10% 1 189,423,307 42.91

> 2% 4 58,200,756 13.18

1% - 2% 9 59,200,110 13.41

0.5% - 1% 6 18,874,657 4.28

0.3% - 0.5% 14 25,244,128 5.72

0.1% - 0.3% 49 34,208,488 7.75

≤ 0.1% 31,629 56,259,454 12.75

Total 31,712 441,410,900 100.00


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Corporate Governance Code

The corporate governance of Saipem SpA is based on internationalbest practice standards and, in particular, on the principles of theCorporate Governance Code (hereafter Code) of listed companiesapproved in 2006 by the Corporate Governance Committee andpromoted by Borsa Italiana SpA (available atwww.borsaitaliana.it), in addition to all relevant provisions ofregulations issued by Consob (Italy’s Securities and ExchangeCommission).At their meeting of November 9, 2000, the Board of Directors ofSaipem SpA resolved to adopt the Code and has aligned itsCorporate Governance to amendments made to the Code in 2002.At their meeting of December 14, 2006, the Board of Directorsmoved to adopt the recommendations and principles of the Codein its current version, and to monitor its application.The Board of Directors also approved a number of resolutionsimplementing and specifying the provisions it contains. Inparticular: (i) the functions of the Board of Directors have beenredefined. The Board maintains an absolutely central position withrespect to the corporate governance system of the Company andretains wide-ranging responsibilities, particularly in terms ofCompany and Group organisation and the internal control system;(ii) the most significant transactions of the Company and theGroup have been defined and presented for approval by the Board,which is required to pay particular attention to situations in whichDirectors have personal or third party interests, as well as totransactions with related parties; (iii) the Board of Directors alsohas a key role in defining sustainability policies and approving theSustainability Report, which are also submitted to theShareholders’ Meeting; (iv) the guidelines on the maximumnumber of offices held by Directors in other companies have beendefined.This annual corporate governance report was prepared, as inprevious years, utilising the format of Borsa Italiana SpA (2nd

Edition - February 2010). The Company strived to provide correct,exhaustive and effective information consistent with thecharacteristics of its business activities and corporate objectives,and in line with market requirements.Saipem SpA and its subsidiaries are not subject to any non-Italianlegal requirement that may influence the Corporate Governance ofthe Issuer.

Risk management systems and internalcontrol over financial reporting

Internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability3, accuracy,fairness and timeliness of financial reporting and the preparationof financial statements for external purposes in accordance withgenerally accepted accounting principles.The guidelines on internal controls over financial reportingapproved by the Board of Directors on October 29, 2007 are aimed

at achieving healthy and fair business management; they definerules and methodologies on the design, implementation andmaintenance of the internal control system over Saipem’sfinancial reporting, as well as on the evaluation of the system’seffectiveness.These guidelines have been designed in accordance with theprovisions of the aforementioned Article 154-bis of Law 58/1998and of the U.S. law Sarbanes-Oxley Act of 2002 (SOA) whichSaipem is required to comply with as a subsidiary of Eni whosesecurities are listed on the New York Stock Exchange (NYSE), andbased on the COSO Report (‘Internal Control - IntegratedFramework’ published by the Committee of SponsoringOrganisations of the Treadway Commission).In accordance with international accounting principles, theseguidelines are applicable to Saipem SpA and its direct and indirectsubsidiaries, in consideration of their relevance for thepreparation of financial reporting. All controlled companies,regardless of their relevance with respect to Saipem’s internalcontrol system, use these guidelines as a reference for the designand implementation of their own internal control system in orderto ensure its adequacy in relation to the size of the company andthe nature of its business.

Main features of the risk assessmentand internal control systems for the purposesof financial reportingThe internal control system was designed in accordance with twofundamental principles: to extend control to all levels of theorganisational structure, consistent with operatingresponsibilities; and the sustainability of controls in the long-term,so as to ensure that the performance of controls is increasinglyintegrated and compatible with operational requirements.The design, implementation and maintenance of the internalcontrol system are ensured through: risk assessment, controlidentification, evaluation and reporting.The risk assessment process has a top-down approach aimed atidentifying those organisational departments, processes andspecific activities that bear the risk of unintentional errors and/orfraud, which could have a material impact on the financialstatements.The identification of companies that fall within the scope of theinternal controls system is based both on their contribution to theconsolidated financial statements (turnover, net revenues, profitsbefore taxation) and their relevance in terms of processes andspecific risks4. Among the companies identified as relevant for thepurposes of internal controls, significant processes are thenidentified based on an analysis of quantitative factors (processesinvolved in the preparation of financial statements items greaterthan a certain percentage of profits before taxation) as well asqualitative factors (for instance: complexity of the accountingtreatment used for an item; new items or significant changes inbusiness conditions).Risks are assessed for relevant processes and activities, i.e.potential events whose occurrence could compromise the

(3) Reliability (of reporting): ensuring that reporting is correct, in accordance with generally accepted accounting principles and in compliance with current laws and regulations.(4) Companies subject to internal controls include those incorporated under and regulated by non-EU member state legislations, for which the provisions of Article 36 of Consob Market Regulations apply.


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achievement of the control objectives for financial reporting (forinstance financial statements assertions). These risks areprioritised in terms of their potential impact and likelihood ofoccurrence, based on quantitative and qualitative parameters andassuming no controls. Saipem carries out a specific assessmenton risks of fraud5, using a methodology based on the ‘Anti-fraudProgrammes and Controls’ included in the guidelines on internalcontrols over financial reporting.Controls are defined for the individual company, processes andassociated risks deemed relevant. The control system comprisesof entity level controls, which operate across the relevant entity(Group/individual company) and process level controls.A checklist based on the model adopted in the COSO Reportdivides entity level controls into five components (controlenvironment, risk assessment, control activities, IT systems andinformation flows and monitoring activities). The ‘controlenvironment’ component includes all activities relating to thedefinition of time-frames for the preparation and publication offinancial results (interim and annual financial statements andassociated financial calendars); the ‘control activities’ componentcovers organisational and regulatory structures that guaranteethe achievement of financial reporting objectives (for instance thereview and updating by specific departments of Group rules forpreparing financial statements and charts of accounts); thecomponent ‘IT systems and information flows’ includesmanagement controls over the consolidation process (Mastro).Process level controls are divided into specific controls, which areall activities, both manual and automated, aimed at preventing,identifying and correcting errors and irregularities occurringduring operating activities; and pervasive controls, which arestructural elements of the internal control system aimed atestablishing a general environment which promotes the correctexecution and control of operational activities (for instancesegregation of incompatible duties and general IT controls).Specific controls are detailed in ad-hoc procedures which definecompany processes and the ‘key controls’, whose absence ornon-implementation entails the risk of significant error/fraud inthe financial statements which cannot be detected by othercontrols.Entity level controls and Process Level Controls are constantlymonitored to evaluate their design and operating effectiveness;this is done by means of ongoing monitoring activities carried outby the managers in charge of the relevant processes/activities,and through separate evaluations carried out by the Internal AuditDepartment in accordance with an audit plan provided by theChief Financial Officer/Manager responsible for preparing financialreports6 which defines the audit scope and objectives to beimplemented through agreed-upon audit procedures.Monitoring activities highlight possible deficiencies in the controlsystem; these are evaluated in terms of probability of occurrenceand impact on Saipem’s financial reporting and, based on theirsignificance, are classed as ‘deficiencies’, ‘significantweaknesses’ and ‘material weaknesses’.The findings of monitoring activities regarding the state of the

internal control system are periodically reported using IT toolsthat ensure the traceability of information relating to theadequacy of design and the operating effectiveness of controls.The work of the CFO/Manager responsible for preparing financialreports is supported by various departments within Saipem,whose responsibilities and tasks are set forth in theaforementioned guidelines. Specifically, internal controls involveall levels of Saipem’s organisation, from operations and businessmanagers to function and administrative managers. In thisorganisational context, a very important figure of the internalcontrol system is the risk owner, who carries out line monitoringactivities, evaluating the design and operating effectiveness ofspecific and pervasive controls and producing reports onmonitoring activities.

The Board of DirectorsThe Board of Directors fulfils a pivotal role for the internal controlsystem, as it defines the guidelines of the organisational,administrative and financial structure of the Company and mainGroup subsidiaries. It also defines, having reviewed the proposalsput forward by the Audit Committee, the guidelines of the internalcontrol system, to ensure that main risks for the Company and itssubsidiaries are identified, measured, properly managed andmonitored. When defining these guidelines, the Board appliessector regulations and takes into account both national andinternational reference models and best practices.Finally, the Board of Directors, with the support of the AuditCommittee, assesses annually the adequacy, effectiveness andefficiency of the internal control system as a whole in relation toSaipem’s characteristics. At their meeting of March 8, 2011, theBoard examined the 2010 Report of the Officer in charge of theinternal control system (as at March 8, 2011) and its findings onSaipem’s internal control system. Following their examination, andtaking into consideration initiatives currently underway, the Boarddeemed Saipem’s internal control system adequate, effective andefficient.

Executive Director responsiblefor the internal control systemAt their meeting of April 22, 2009, the Board of Directorsappointed the Deputy Chairman - CEO the executive directorresponsible for supervising the functionality of the internalcontrol system, always ensuring its adequacy and operatingeffectiveness, supported by the Audit Committee, the InternalAudit Senior Vice President and the Officer in charge of the internalcontrol system.The Deputy Chairman - CEO identified the Company’s mainbusiness risks, taking into account the characteristics of theactivities carried out by the Issuer and its subsidiaries andperiodically reporting his findings for review by the Board ofDirectors; implemented the guidelines for the internal controlsystem approved by the Board; and was responsible for amendingthis system to suit the dynamics of the operating conditions andlegislative and regulatory framework.

(5) Fraud: for the purposes of the Internal Control System, this refers to any intentional act or omission that may result in false representation or misleading reporting.(6) Additional information on the Chief Financial Officer/Manager responsible for preparing financial reports are provided under its dedicated section.


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Board of Statutory AuditorsThe Board of Statutory Auditors oversees the following:- compliance with the law and Articles of Association;- adherence to fair management principles;- the adequacy of the Company’s organisational structure within

each area of competence, the suitability of the internal controlsystem and the administrative/accounting system, as well asthe keeping of accurate accounting records of the company’soperations;

- the implementation of corporate governance regulationscontained in the Codes of Borsa Italiana to which the Companyadheres;

- the adequacy of directions given by the Company to itssubsidiaries to ensure full compliance with legal reportingrequirements;

- the process of financial reporting;- the efficiency of the internal control, internal audit and risk

management systems;- the legal audit of annual statutory and consolidated accounts;- the independence of the external auditors, specifically for the

provision of non-audit services to the audited company.

Audit CommitteeThe Audit Committee assists the Board of Directors in fulfiling itsresponsibilities vis-à-vis the internal control system. Specifically,it assists in setting guidelines for the internal control system andperiodically checks that it is adequate and operates effectively.The Audit Committee oversees Internal Audit activities andreviews any problems emerging from the internal control system,with the support of the functions, departments and bodiesinvolved in managing and/or ensuring compliance with thesystem itself.

Officer in charge of the internal control systemand the Internal Audit departmentOfficer in charge of the internal control systemOn December 14, 2006, the Officer in charge of the internal controlsystem (hereafter the Officer), Mr. Alessandro Riva, was appointedby the Board of Directors at the Deputy Chairman and CEO’sproposal, having received the opinion of the Audit Committee. TheDeputy Chairman - CEO sets the Officer’s remuneration, in linewith Company policy and at the proposal of the Audit Committee.The Officer is responsible for ensuring that the internal controlsystem is adequate, fully operational and effective at all times. Heis not responsible for any operative area and reports to theDeputy Chairman - CEO, the Audit Committee and the Board ofStatutory Auditors on the adequacy of the internal control systemto achieve an acceptable overall risk profile.The Deputy Chairman - CEO granted Alessandro Riva the powers toenter into contracts for consultancy and professional services forthe purposes and in support of his responsibilities as the Officerin charge of the internal control system, having access to funds(up to €750,000 per transaction for contracts with juridicalpersons and up to €500,000 per transaction for contracts withphysical persons – with no budget restrictions).On March 8, 2011, the Officer released the annual report on theinternal control system (covering the period January 1-December

31, 2010, containing information up to the date of issue) andexpressed his opinion on its adequacy based on the monitoringactivities carried out during the reference period by the InternalAudit department of Saipem SpA.

Internal Audit departmentOne of the main players operating in the complex internal controlsystem are the Internal Audit department, whose manager is notresponsible for any operating activity and reports to the DeputyChairman - CEO; other players are the Board of Statutory Auditorsand the Audit Committee.In line with the ‘Standards for the Professional Practice of InternalAudit’ issued by the ‘Institute of Internal Auditors’, the InternalAudit department is responsible for providing independent andobjective activities aimed at promoting efficiency andeffectiveness improving measures in the internal control systemand the Company’s organisation.The Internal Audit Department assists the Board of Directors, theAudit Committee and the Company’s management in pursuing theobjectives of the organisation through a systematic professionalapproach, aimed at reviewing and improving processes of control,risk management and corporate governance.Main responsibilities of the Internal Audit Department are:(i) ensuring compliance with national and internationalregulations vis-à-vis: Law Decree 231/2001, independentmonitoring of SAO, operational, financial, IT and fraud audit for theentire Saipem Group; (ii) updating the system for the assessment,classification and evaluation of risk areas (integrated riskassessment) in order to plan control measures; (iii) implementingplanned and unplanned control audits, identifying gaps in existingmodels, proposing corrective measures and ensuring thatfollow-up activities are properly monitored; (iv) maintainingrelations with the external audit company; (v) maintainingrelations and ensuring proper information flows with theCompliance Committee, the Audit Committee and the Board ofStatutory Auditors; (vi) managing employee notifications,including anonymous ones, in compliance with current corporateprocedures, and providing support in their evaluation by therelevant corporate bodies.During the year, the Internal Audit department carried out theAudit Plan approved by the Board of Directors and reported itsprogress to the Audit Committee and the Board of StatutoryAuditors on a quarterly basis.The Officer in charge of the internal control system and theInternal Audit department have full access to data, documentsand information required to carry out their duties.

Organisational model,pursuant to Law Decree 231/2001On March 22, 2004, the Board of Directors approved theOrganisational, managerial and control model, pursuant to Law231/2001 and established a Compliance Committee. The Modelcomprises a comprehensive set of procedures and controlprocesses aimed at preventing the offenses detailed in theaforementioned law decree, and subsequent amendments. Thecurrent scope of application of the Saipem Model, compliant withLegislative Decree No. 231 of 2001, provides for the following:


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(i) offenses against public authorities and public faith;(ii) corporate crimes; (iii) crimes associated with the subversionof public order and financing of terrorism; (iv) offenses againstthe person; (v) market abuse (‘abuse of confidential information’and ‘market manipulation’); (vi) offenses against individuals,Law No. 7 of 2006; (vii) transnational crimes; (viii) manslaughterand serious or very serious personal injury committed inviolation of industrial accident laws and of the protection ofindustrial hygiene and health; (ix) crimes related to receivingstolen goods, recycling and unlawful usage of money andproperties of illegal origins; (x) computer crimes and unlawfuldata processing.The Chairman is responsible for devising and implementing initialactivities, updating and upgrading the Model.In May 2008, the Deputy Chairman - CEO started the process toalign Model 231 to the new corporate organisation, which led tothe Board of Directors approving the new Organisational,managerial and control Model 231/2001 on July 14, 2008.In 2010, Saipem SpA and the Compliance Committee completed‘Project 231’ aimed at updating all documentation supporting theModel and associated control procedures in terms of health andsafety in the workplace, pursuant to the provisions of Law Decree81/2008.On October 27, 2010, pursuant to Article 7, paragraph 4 of LawDecree 231/2001, the Board of Directors of Saipem SpA updatedthe Model in order to be compliant with the new legal provisionsintroduced by Article 24-bis relating to computer crimes.As stated at the beginning of this report, Model 231 includes theCode of Ethics which replaces the Code of Practice and is amandatory general principle of Model 231 itself.In 2010, the Boards of Directors of all subsidiaries adopted theirown models, containing the Code of Ethics.

The Compliance Committee comprises two external members, oneof whom is appointed by the Chairman of the Committee, andthree internal members, namely the Legal, Human Resources andInternal Audit Managers of the Company. The members of thecurrent Compliance Committee are: Marco Elefanti, Chairman(external member), Pietro Galizzi (Legal), Luigi Rinaldi (externalmember), Alessandro Riva (Internal Audit) and SebastianoMassimo Roccuzzo (Human Resources).

The Compliance Committee, which now is also the Guarantor ofthe Code of Ethics, is responsible for implementing its actionplans and informs the Deputy Chairman - CEO on activities carriedout. The Compliance Committee’s independence is safeguarded byits position within the Company’s organisation and reporting lines,pursuant to Article 6, paragraph 1, letter b), of Law 231/2001.

In 2010, the Compliance Committee convened on fourteenoccasions and: promoted and monitored all initiatives aimed atSaipem SpA employees to ensure adequate knowledge of theModel; it defined the Compliance Programme for the year andensured that it was implemented alongside the scheduled andad-hoc control activities; contributed to updating the new Model;coordinated and maintained communication channels with theCompliance Committee.

Anti-corruption proceduresIn line with the values that underpin Saipem’s activities, namelyits ability to conduct business ethically, with loyalty, fairness,transparency, honesty and integrity and its respect for, andcompliance with the laws, the Board of Directors on February 10,2010 approved the adoption of procedures aimed at preventingthe corruption of both Italian and foreign public officials, byimproving the current compliance system. Specifically, the Boardof Directors approved the ‘Anti Corruption Compliance Guideline’and associated procedure entitled ‘Intermediary Agreements’ and‘Joint Venture Agreements - Prevention of Illegal Activity’. Thesedocuments are in line with international Best Practices.Furthermore, an Anti-corruption Legal Support Unit was created toprovide Saipem employees with legal support in matters ofAnti-corruption.

External auditing companyIn compliance with the law, legal audits of accounts are entrustedto an external auditing company registered in Consob’s Roll ofAuditors, appointed by the Shareholders’ Meeting. The currentauditing company is Reconta Ernst & Young SpA.On April 26, 2010, the Shareholders’ meeting approved theproposal for the revocation for ‘objective’ cause of the auditassignment of PricewaterhouseCoopers SpA, in order to guaranteean efficient and effective audit performance for the Company andavoid the inefficiencies that may have arisen as a result of themisalignment of Saipem’s audit appointment with that of Eni SpA,and confer a new mandate for the years 2010-2018 on thecompany Ernst & Young SpA.The financial statements of subsidiary companies are also subjectto audit; these are carried out mostly by Ernst & Young.With regard to the opinion on the consolidated financialstatements, Ernst & Young is responsible for the audits carriedout at subsidiary companies by other external auditors, which areimmaterial in terms of consolidated assets and turnover.The external audit company has full access to data, documentsand information required to carry out their duties.

Senior Manager in charge of preparingthe Company’s financial reportsPursuant to Article 21 of Articles of Association and Article 154-bisof Law 58/1998, the Board of Directors, having heard the opinionof the Board of Statutory Auditors and at the Chairman’s proposal,appoints a Senior Manager in charge of preparing the Company’sfinancial reports, selected from individuals who have carried outthe following for at least three years:a) administrative and control activities in a managerial capacity

at listed companies with a share capital exceeding €1 million,in Italy, in other European Union or OCSE member states; or

b) legal audits at the companies, under letter a); orc) having had a professional position in the field of or a university

professor teaching finances or accounting; ord) a management position at public or private companies with

financial, accounting or control responsibilities.

The Board of Directors ensures that the Senior Manager in chargeof preparing the Company’s financial reports is granted adequate


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powers and has sufficient means to carry out his/her duties; theBoard also ascertains that the administrative and accountingprocedures are adhered to. The Senior Manager in charge ofpreparing the Company’s financial reports has the power to signcontracts, should he deem it necessary, for the provision ofintellectual work and professional services up to the sum of€750,000 per contract, without budget restrictions.Saipem’s CFO Mr. Giulio Bozzini is the Senior Manager in charge ofpreparing the Company’s financial reports, pursuant to Article154-bis of Law 58/1998.He was appointed by the Board of Directors on July 29, 2008,having first ascertained that he met the professional criteriarequired by the Articles of Association.

The Shareholders’ Meeting

The Shareholders’ Meeting represents the institutional meetingpoint of the Company’s management and its Shareholders. Atthese meetings, Shareholders may ask questions pertaining toitems on the agenda or the Company’s management at large. Theinformation provided shall comply with the provisions applicableto inside information.Ordinary Shareholders’ Meetings are regulated by Article 2364 ofthe Italian Civil Code, Extraordinary Shareholders’ Meetings byArticle 2365.A notice of Shareholders’ Meeting is also published on theCompany’s website to promote Shareholder attendance. TheShareholders’ Meeting of January 30, 2001 approved theShareholders’ Meetings regulations (posted on Saipem’s websitewww.saipem.com) to ensure smooth and effective meetingsproceedings and, specifically, to safeguard every Shareholder’sright to intervene on items under discussion.The Extraordinary Shareholders’ Meeting of April 30, 2007 hadapproved the amendments to the Company’s Articles ofAssociation in order to comply with the provisions of Law262/2005 on protection of investors and had granted the Board ofDirectors the power to approve amendments to the Articles ofAssociation if required by law.On December 13, 2010, the Board of Directors approvedamendments to the Articles of Association in compliance with thenew provisions of law in terms of Shareholders’ rights (Law Decree27 of January 27, 2010).Specifically, they provide that the Annual General Meeting becalled through publication on the Company's website in addition toall other methods set forth in Consob Regulations and incompliance with the Law and current legislation.The legitimate attendance at Shareholders’ meetings and theexercise of voting rights is confirmed by a statement to theCompany from the accredited intermediary in compliance withhis/her accounting records, on behalf of the Shareholder entitledto vote.This statement is based on the intermediary accounting recordsregistered at the end of the seventh trading day prior to the dateof the Shareholders’ Meeting on first call. Credit and debit records

after this deadline shall not be considered for the purpose oflegitimising the exercise of voting rights at the Shareholders’Meeting. Statements issued by the intermediaries must reach theCompany by the end of the third trading day prior to theShareholders’ Meeting on first call.Shareholders who, solely or jointly, represent at least one fortiethof the share capital may request, within ten days from publicationof the calling of the Shareholders’ Meeting, detailing items theywish to be added to the meeting agenda.Shareholders entitled to vote may delegate others to representthem at the Shareholders’ Meeting pursuant to the law; to do so,they must present a request either in writing or electronically. Theelectronic proxy can be filled in on Saipem’s website and sent viacertified e-mail, under the terms advised in the notice ofShareholders’ Meeting and in compliance with current legislationand regulations.Pursuant to Article 135-undecies of Law 58/1998, the Companyshall appoint a representative for the next Shareholders’ Meeting,upon whom shareholders may confer a proxy, with votinginstructions on all or a number of items on the agenda, by thesecond trading day prior to the date established on first call of theShareholders’ Meeting. The proxy is conferred by signing a proxyform, the content of which is governed by Consob regulation.At the Shareholders’ Meeting called to approve the financialstatements, the Board of Directors reports on activities thatoccurred during the year, both through reports in the financialstatements, which have been released prior to the meeting,through methods as provided by the law and current regulationsand by answering questions and requests for clarification posedby the Shareholders.At the Shareholders’ Meeting, votes are cast using remotecontrols, which facilitate the Shareholders in exercising their rightsand ensure that the voting results are immediately available.The Board of Directors’ Meeting held on March 8, 2011, resolved tosubmit to the Shareholders’ Meeting amendments of a nonnormative nature to the Articles of Association, i.e. those which,based on Law Decree 27 of January 27, 2010, empower theCompany to make choices.Specifically, amendments concern the opportunity to holdOrdinary and Extraordinary Shareholders’ Meetings in single call(Article 19 of Articles of Association), the opportunity to provide inthe notice of meeting the option to participate in the Shareholders’Meeting remotely and cast votes electronically (Article 13 ofArticles of Association), and the power to appoint a Shareholders’representative (Article 13 of Articles of Association).

Management and Control Bodiesand Committees

The Board of Directors7

Responsibilities and powers of the Board of DirectorsThe Board of Directors is the central body within the CorporateGovernance system of Saipem SpA and the Saipem Group. Article

(7) The Directors’ professional résumés are published on Saipem’s website www.saipem.com under the section ‘Corporate Governance’.


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20 of the Articles of Association states that the management ofthe Company is exclusively the responsibility of the Board ofDirectors.Article 2365 of the Italian Civil Code and Article 20 of the Articlesof Association grant the Board the power, normally theresponsibility of the Extraordinary Shareholders’ Meeting, toresolve on motions concerning:- mergers by incorporation of companies whose shares or stakes

are owned entirely by the Company, pursuant to Article 2505 ofthe Italian Civil Code;

- merger by incorporation of companies whose shares or stakesare at least 90% (ninety per cent) owned by the Company,pursuant to Article 2505-bis of the Italian Civil Code;

- the proportional de-merger of companies whose shares orstakes are entirely or at least 90% (ninety per cent) owned bythe Company, pursuant to Article 2506-ter of the Italian CivilCode;

- transfer of the Company’s headquarters within Italy;- incorporation, transfer and closure of secondary offices;- share capital reductions in case of Shareholder’s withdrawals;- the issue of corporate bonds and other debentures, barring the

issue of bonds convertible into Company’s shares;- the adoption of modifications to the Articles of Association to

comply with the provisions of law.In addition to the powers granted by Article 2381 of the ItalianCivil Code, the Board of Directors is responsible for:- setting a corporate governance system and regulations for the

Company and the Group. Specifically, subject to the approval ofthe Internal Audit Committee, it implements procedures toensure that the following operations are carried out in atransparent and correct manner, both in terms of procedureand substance: operations with related parties and operationswhere a Director has an interest, either directly or through athird party. The Board also adopts procedures for themanagement and release of Company information in general,and sensitive information in particular;

- establishing internal corporate Committees with consultativeand advisory functions, appointing their members, definingtheir responsibilities and approving their regulations;

- granting and revoking powers to Board Directors, setting theirlimitations and methods of exercise; having reviewed theproposals put forward by the Compensation Committee andfollowing consultation with the Board of Statutory Auditors,setting the compensation commensurate with the powersgranted. The Board has the power to issue directives todelegated bodies and carry out operations within its remit;

- setting the guidelines for the organisational, administrative andaccounting structure of the Company and main Groupsubsidiaries;

- annual evaluation of the adequacy of the organisational,administrative and accounting model, placing particularemphasis on the internal control system and the managementof conflicts of interests, based on the reports/informationreceived by the CFO, the Officer in charge of the internal controlsystem, the Audit Committee and the Internal Auditdepartment;

- defining, based on indications provided by the Internal Audit

Committee, guidelines for the internal control system, ensuringthat main business risks for the Company and its subsidiariesare identified, measured, monitored and properly managed. Itascertains annually the adequacy, effectiveness and operationof the internal control system;

- defining strategies and objectives for the Company and theGroup, including sustainability policies. The Board reviews andapproves industrial and financial strategic plans for theCompany and the Group, as well as all the Company’s strategicagreements;

- reviewing and approving the preliminary financial statements,the budget, interim and six-monthly reports, and preliminaryresults for the Company and the Group. The Board reviews andapproves the sustainability report;

- receiving information from Directors with executive powers atBoard Meetings, at least quarterly, regarding: activities withintheir responsibility, Group activities and major operationscarried out by the Company or its subsidiaries;

- approving, having received a reasoned opinion from the AuditCommittee, transactions of greater importance with relatedparties, in compliance with the procedure ‘Transactionsinvolving interests held by Board Directors and StatutoryAuditors and transactions with related parties’; it receives atleast quarterly from the Deputy Chairman - CEO a reportdetailing transactions of greater and lesser importance, in linewith the provisions of the aforementioned procedure;

- reviewing and granting preliminary approval to transactionsthat involve interests held by Board Directors and StatutoryAuditors, pursuant to Article 2391 of the Italian Civil Code andthe provisions of the aforementioned procedure ‘Transactionsinvolving interests held by Board Directors and StatutoryAuditors and transactions with related parties’;

- approving possible join venture agreements, following the duediligence report on potential partners having been obtained bythe Anti-corruption Legal Support Unit;

- receiving information from internal corporate Committees everysix months;

- evaluating the general management and performance of theCompany and the Group, based on the information receivedfrom Directors with executive powers, comparing actual interimand yearly results against budget forecasts;

- resolving on the most significant and strategic economicand/or financial Company operations, reviewing the mostrelevant Group industrial and financial operations.The following are considered to be significant operations:a) acquisition, disposal or transfer of holdings exceeding

€25,000,000;b) capital expenditure on technical assets differing from

previous ones exceeding €300 million, or of a lower amountbut of strategic importance or posing a particular risk;

c) purchase or sale or goods and services other thaninvestments, exceeding €1 billion and those whoseduration is greater than 20 years;

d) acquisition or transfer of company holdings or branchesexceeding €25,000,000;

e) acquisition, sale or financial leasing of land and/or buildingsexceeding €2,500,000;


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f) financing of entities other than subsidiary companies: (i) foramounts exceeding €50 million; or (ii) of any amount, tocompanies where the share held is not a controlling stakeand the loan is not proportional to the share of the holding;

g) issue of personal or other guarantees to entities other thansubsidiary companies: (i) for amounts exceeding €200million in favour of subsidiary companies; or (ii) of anyamount, to companies where the share held is not acontrolling stake and the loan is not proportional to theshare of the holding;

h) incorporation of subsidiaries or company branches;- appointment and dismissal of General Managers, granting them

the relevant powers;- appointment and dismissal, having consulted the opinion of the

Board of Statutory Auditors, of the Senior Manager charged withpreparing the company’s financial reports, granting himadequate powers;

- appointment and dismissal, having consulted the opinion of theAudit Committee, of a manager in charge of the internal controlsystem;

- appointing the Compliance Committee, pursuant to Law231/2001;

- ensuring the appointment of managers in charge of thedepartments responsible for dealing with Shareholders andinvestors;

- setting the remuneration of Directors with executive powers,having reviewed the proposals put forward by the relevantCommittee and having heard the opinion of the Board ofStatutory Auditors;

- having heard the proposals of the Compensation Committee,setting the criteria for the remuneration of the management ofthe Company and the Group; implementing incentive plansbased on stock or other financial instruments approved by theShareholders’ Meeting;

- approving the proposals to be submitted for approval to theShareholders’ Meetings;

- reviewing and resolving on all other matters that Directors withexecutive powers deem appropriate for the Board to assess,due to their sensitivity and/or importance;

- approving and entering into agency agreements; approving alldonations.

The Shareholders’ Meeting endorsed the competition ban providedfor in Article 2390 of the Italian Civil Code.Pursuant to Article 2391 of the Italian Civil Code, Directors shallinform the other Directors and the Statutory Auditors of intereststhey may have, on their own behalf and on behalf of third parties,in any specific Company operation.At Board Meetings, the Chairman reminds the Board of Directorsthat, pursuant to Article 2391 of the Italian Civil Code, BoardDirectors must voice any interests they may have, directly orthrough a third party, related to any items on the Agenda beforethey are discussed. Directors have to state the nature, origin andrelevance of these interests, if any.The Chairman organises the activities of the Board of Directorsand ensures that the Directors and Statutory Auditors areprovided with the necessary documentation and information in atimely manner to enable them to make decisions. To improve the

Board’s knowledge of the Company’s operations and dynamics,the Board of Directors’ meetings where financial reports areapproved are attended by the managers of the various BusinessUnits, who illustrate the most significant projects, strategies andmarket conditions in their respective areas.

Board reviewThe Board of Directors, in compliance with the provisions of theCorporate Governance Code, carried out, as in previous years, itsannual review of its size, composition, level of operation andefficiency of the Board itself and its Committees.The Board utilised a qualified external consultant, Egon ZehnderInternational, to ensure maximum objectivity in the proceedings.The review was based on a questionnaire prepared by theconsultant and individual interviews with all Directors. Results ofthe review were presented to the Board and discussed at theirmeeting of March 8, 2011.This year’s questionnaire favoured an empirical approach, centredon the analysis of specific topics encountered by the Board ofDirectors.The review confirmed that Saipem’s Board of Directors hadreceived adequate and timely supporting information to carry outin-depth discussions on the various topics.Generally, the review found that the Board operates in fullcompliance with the recommendation of the CorporateGovernance Code.The following have been identified as specific areas of excellence:- the clear separation of roles between Saipem’s Chairman and

CEO, which integrate harmoniously;- positive internal climate that allows all Directors to participate

constructively in discussions and share in the Company’sstrategy;

- increased knowledge by the Directors of the Company’soperations, gained from presentations given by the COOs of theBUs at Board meetings and visits to operational sites;

- in-depth and transparent documentation provided in advanceof Board meetings;

- particular attention paid to ‘safety’ and ‘risk management’ issues.Moreover, the benchmark of Saipem’s Board effectiveness withother international Boards reported very positive results.The work carried out by the Committees was deemed to be bothfruitful and accurate.

CompositionThe Board of Directors, comprising nine members, was appointedby the Shareholders’ Meeting on April 28, 2008 for a three-yearperiod, its mandate expiring at the Shareholders’ Meeting called toapprove the Financial Statements at December 31, 2010. Theappointment of Directors occurs pursuant to Article 19 of Articlesof Association, through voting from lists, so as to allow theappointment of minority interest representatives. Lists are filed atthe Company’s registered headquarters at least twenty-five daysprior to the Shareholders’ Meeting (first call) and are published incompliance with current legislation and Consob regulations.Voting lists include professional résumés for all candidates, theirdeclaration accepting the nomination, stating that there are nogrounds for ineligibility and/or incompatibility, and that they meet


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the integrity and/or independence requirements. Lists can bepresented by Shareholders, who, individually or with others, holdvoting shares representing at least 1% of the share capital, as perConsob Resolution No. 17633 of January 26, 2011. Seven tenthsof Directors are appointed from the list that has obtained themajority of votes (rounded down if necessary). The remainingDirectors will be selected from the other lists, provided they arenot in any way, not even indirectly, linked with the shareholderswho have presented or voted for the list that has obtained themajority of votes; therefore, votes obtained for each list will besuccessively divided by one, two, three and so on, until thenumber of remaining Directors to be appointed has been reached.The ratios obtained will be progressively attributed to candidatesof each list, in the order attributed to each candidate within thatlist. Candidates will be classified in decreasing order according totheir respective ratios, and those who have received the higherratios will be appointed. In the event that more than one candidateobtains the same ratio, the candidate on the list with no Directoryet appointed or on the list with the lowest number of Directorsappointed will be elected. If these lists have yet to elect a Director,or if they have already appointed an equal number of Directors,the candidate on the list with the highest number of votes will beappointed. In case the vote is still tied, the Shareholders’ Meetingwill vote again, but only amongst the candidates under ballot, andthe candidate who receives the majority of votes will be elected.Should this procedure fail to appoint the minimum number ofindependent Directors required by the Articles of Association, theratio of votes is calculated for each candidate from said lists, incompliance with the aforementioned system; candidates whomeet the independence requirement and who have obtained thehighest ratios will be selected; their number will depend on theregulations set forth in the Articles of Association. These take theplace of non-independent Directors who have obtained the lowestratios. Should the minimum number of independent Directors notbe reached, the Shareholders’ Meeting resolves through majorityvote, as per legal requirements, the replacement of candidateswho do not fulfil the independence requirement and haveobtained the lowest ratios.Directors shall meet the integrity requirements prescribed byregulations, possess the professional expertise and experience tocarry out their mandate efficiently and effectively and be able todedicate sufficient time and resources to their office. Pursuant toArticle 1, paragraph 2 of the Code, information regarding offices ofDirectors or Auditors held by members of the Board of listedcompanies, financial or insurance companies or companies ofconsiderable size is provided below under ‘Cumulation of offices’.The Board comprises the Chairman Marco Mangiagalli, the DeputyChairman - CEO Pietro Franco Tali, the Managing Director HughJames O’Donnell and the Directors Luca Anderlini, Anna MariaArtoni, Pierantonio Nebuloni, Salvatore Sardo, Umberto Vergineand Ian Wybrew-Bond. The list put forward by Eni at theShareholders’ meeting of April 28, 2008 had obtained 52.74% ofvoting shares.Luca Anderlini, Anna Maria Artoni and Pierantonio Nebuloni havebeen nominated from the list put forward by institutionalinvestors coordinated by ARCA SGR SpA, and had obtained 16.75%of voting shares.

Umberto Vergine was co-opted at the Board of Directors’ meetingof October 27, 2010, at the proposal of the shareholder Eni,replacing Jacques Yves Léost, who had resigned on August 18,2010.Marco Mangiagalli, Pietro Franco Tali, Hugh James O’Donnell,Salvatore Sardo, Umberto Vergine and Ian Wybrew-Bond havebeen put forward by Eni.Article 27 of Articles of Association has been adjusted to complywith new Article 37, paragraph 1 of Regulations on Market,whereby the Board of Directors of a listed subsidiary subject tomanagement and coordination by another listed company shallcomprise of a majority of independent Directors, identified assuch in compliance with the law and current regulations. Thisamendment will take effect from the appointments made by thenext Shareholders’ Meeting.

Cumulation of officesPursuant to items 1.c.2 and 1.c.3 of the Corporate GovernanceCode, to ensure that Directors can devote enough time to theiroffice, the Board of Directors on March 28, 2007 expressed thefollowing guideline on the number of offices Directors mayhold:- an executive Director shall not hold: (i) the office of executive

Director in other listed companies, either in Italy or abroad, infinancial companies, banks, insurance companies orcompanies with net equity in excess of €1 billion; and (ii) theoffice of non-executive Director or Statutory Auditor (or memberof other control body) in more than three aforementionedcompanies;

- besides the appointment at this Company, a non-executiveDirector shall not hold: (i) the office of executive Director inmore than one of the aforementioned companies and the officeof non-executive Director or Statutory Auditor (or member ofother control body) in more than three aforementionedcompanies; and/or (ii) the office of non-executive Director orStatutory Auditor in more than six of the aforementionedcompanies.

Offices held at companies of the same Group are excluded fromthe limit of cumulation.Should the aforementioned limits be exceeded, Directors shallimmediately inform the Board of Directors, who, after assessingthe position and, in light of the Company’s interests, shall invitethe Director to take the relevant decisions.The Code recommends that public companies set up a Committeefor appointment proposals comprising a majority of non-executiveDirectors, ‘specifically when the Board of Directors notices thatShareholders are finding it difficult to put forward appointmentproposals’. This Committee has never been implemented in viewof the nature of the Company’s shareholding structure and thefact that the Articles of Association provide that Directors beappointed by the Shareholders’ Meeting from lists put forward bythe Shareholders.Based on the information received, we list hereunder additionaldirectorships or auditor posts held by Saipem’s Board Directors inother companies.


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Marco MangiagalliBoard Director of Luxottica Group SpA (listed company); Memberof the Watch Board of Intesa San Paolo SpA (listed company).

Anna Maria ArtoniVice President and Managing Director of Artoni Group SpA; VicePresident of Artoni Trasporti SpA and Artoni Logistica Srl; Chairmanof Artleasing SpA and A.B. Logistica Srl; Board Director of CarraroSpA (listed company), Cassa di Risparmio di Parma e Piacenza(Crédit Agricole Group), Alemea Technology Srl, Alemea ConsultingSrl and Linkiesta SpA.

Pierantonio NebuloniBoard Director of Polynt SpA; Vice President of In BusinessConsulting SA; Board Director of Socotherm SpA.

Salvatore SardoChairman of Eni Corporate University; Chairman of Snam Rete GasSpA (listed company).

Board of Directors’ MeetingsThe Company’s Articles of Association do not specify how often theBoard should meet, although Article 21 states it has to occur at leastquarterly as follows: ‘The Directors inform the Board of Directorsand the Board of Statutory Auditors promptly or at least everyquarter on Company activities, major economic and financialtransactions involving the Company or its subsidiaries; in particularthey report those operations in which they have an interest, onbehalf of themselves or third parties, or those operations that aresubject to the influence of the controlling party’.In 2010, the Board of Directors met on eight occasions, theirmeetings lasting three hours on average; three meetings havebeen scheduled to take place in the first half of 2011, two of whichhave already been held as of March 8, 2011. The general public isinformed of the dates of Board Meetings when periodicalstatements and reports, required by current legislation, are to beapproved.The Board of Directors sets down the formalities pertaining to thecalling of Board Meetings; in particular, meetings are convened bythe Chairman, who also prepares the agenda for the meeting,through notices sent by mail, fax or e-mail at least five days priorto the date of the meeting; in exceptional circumstances, notice issent at least 24 hours prior to the time of the meeting. The Articlesof Association allow for meetings to be held via video-conferencelink. Directors and Statutory Auditors are provided in advance withdocuments pertaining to items to be discussed and/or resolvedon at the meeting.In 2010, an average of 90% of Board Directors and 88% ofindependent Directors attended Board Meetings. Saipem’s COOsalso attended Board of Directors’ meetings on a regular basis toreport on the status of operations and the strategic prospects forthe various business units, in addition to other senior managersinvolved in specific matters.

Executive DirectorsConsistent with international best practices, which recommendavoiding the concentration of duties in one person, the Board of

Directors resolved, at their meeting of July 29, 2008, to separatethe roles of Chairman and Chief Executive Officer (CEO), the latterbeing the administrator who, by virtue of powers granted andtheir actual exercise, is the principal person responsible for themanagement of the Company.The Corporate Governance Committee of Borsa Italiana believesthat the separation of the aforementioned roles can strengthenthe characteristics of impartiality and balance required of aChairman of the Board, to whom the law and procedure entrustthe tasks of organising the work of the Board as well as acting asa link between executive and non-executive Directors.The separation of the roles of Chairman and Chief ExecutiveOfficer (CEO) makes the appointment of a lead independentDirector unnecessary.The Board of Directors resolved to appoint Marco MangiagalliChairman and Pietro Franco Tali Deputy Chairman - CEO.On May 25, 2009, the Board of Directors appointed Hugh JamesO’Donnell Deputy CEO and Managing Director for Business Supportand Transversal Activities, and granted him the powerscommensurate with his position.Pietro Franco Tali and Hugh James O’Donnell are executiveDirectors.The Board vested the Deputy Chairman - CEO with all ordinary andextraordinary powers to manage the Company, except for theundelegable powers and those of the Board itself. The Chairman isa non-executive Director and is vested with all powers granted tohim by law and the Company’s Articles of AssociationThe Deputy Chairman - CEO, whom the COOs (Chief OperatingOfficers) of the Business Units report to, in addition to the CFO,the Internal Audit, Human Resources and Legal Affairs managers,is ultimately responsible for the management of the Company,with all the relevant powers barring those of the Board itself. TheChairman chairs the Shareholders’ Meeting, convenes and chairsBoard of Directors’ meetings and ensures the implementation ofresolutions carried by the Board itself.

Independent DirectorsLaw 58 of February 24, 1998 provides that a minimum of twoDirectors meet the independence criteria required from StatutoryAuditors of listed companies, if the Board comprises more thanseven members.Article 19 of Articles of Association provides that a minimum ofthree Directors meet the aforementioned independencerequirements if the Board comprises more than five members,boosting the number of independent Directors on the Board.Should a Director declare that he fails to meet the independenceand integrity requirements, or should the Board not reach theminimum number of independent Directors as set in the Articlesof Association, the Board of Directors shall declare theappointment of said Director void and provide for theirreplacement.Consob Resolution No. 17221 of March 12, 2010 (adoption of‘Related Parties’’ Regulations) amended through Resolution No.17389 of June 23, 2010, had amended Article 37, paragraph 1,letter d), of Market Regulations, providing that the shares of asubsidiary subject to management and coordination by anothercompany may only be admitted to trading if its committees are


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composed of independent directors. For companies subject tomanagement and coordination by another listed company, theBoard of Directors shall also be composed of a majority ofindependent members.On December 13, 2010, the Board of Directors amended Article 19of the Articles of Association, providing that the majority ofDirectors shall meet the independence requirements set byConsob for Directors of companies subject to management andcoordination by another listed company.The aforementioned Consob Resolution No. 17221 also providesthat this provision be enforced within 30 days from the firstShareholders’ Meeting called after October 1, 2010 to appoint anew Board.The composition of the Board of Directors shall be adjustedfollowing the Shareholders’ Meeting called to approve the 2010Financial Statements, which will also reappoint the managementand control bodies.The Board of Directors, pursuant to the provisions of the Codeand the provisions of Article 147-ter and Article 148, paragraph3, of Law 58/1998, ascertains annually that the Directorscomply with the independence and integrity requirements.Specifically, declarations by the interested parties confirmed asindependent four non-executive Directors (Luca Anderlini, AnnaMaria Artoni, Pierantonio Nebuloni and Ian Wybrew-Bond). Theyare considered independent following the evaluation carried outby the Board based on the parameters contained in Article 3 ofthe Corporate Governance Code and Article 148, paragraph 3, ofLaw 58/1998.

Directors who do not comply with the independence requirementare executive Directors Pietro Franco Tali and Hugh JamesO’Donnell, and non-executive Directors Marco Mangiagalli,Salvatore Sardo and Umberto Vergine.The Board of Statutory Auditors has assessed the application ofcriteria and procedures adopted by the Board of Directors toascertain the independence of its members and found them to becorrect. Independent Directors have not deemed it necessary tomeet without the other Directors in view of the fact that they takean active part in Committee meetings.

Remuneration reportDirectors’ remuneration is approved by the Shareholders’ Meeting;the remuneration of the Chairman, the Deputy Chairman - CEO,and the Managing Director for Business Support and TransversalActivities - Deputy CEO is set, pursuant to Article 2389, paragraph3 of the Italian Civil Code, by the Board of Directors at the proposalof the Compensation Committee, having previously conferred withthe Statutory Auditors. Pursuant to Consob regulations, theDirectors’ Report in the Financial Statements, i.e. the Notes to theFinancial Statements, contain the following: (i) amounts paid tothe Directors, Statutory Auditors and senior managers withstrategic responsibilities; (ii) number of stock grants and stockoptions allocated to the Deputy Chairman - CEO, and the ManagingDirector for Business Support and Transversal Activities - DeputyCEO and senior managers with strategic responsibilities;(iii) number of shares held by the Directors, Statutory Auditorsand senior managers with strategic responsibilities of Saipem and

its controlled companies; (iv) long-term incentives granted toBoard Directors and senior management with strategicresponsibilities.The Shareholders’ Meeting of April 28, 2008 set at €40,000 theremuneration for each Director for every year of office, in additionto reimbursement of expenses incurred.The remuneration of the Deputy Chairman - CEO, and the ManagingDirector for Business Support and Transversal Activities - DeputyCEO, as well as that of senior managers with strategicresponsibilities comprises a fixed component and an annualvariable component, in addition to two long-term incentives (adeferred monetary incentive and a long-term incentive plan).The fixed remuneration of the Deputy Chairman - CEO, and theManaging Director for Business Support and Transversal Activities- Deputy CEO is commensurate with the powers vested in them.The fixed remuneration of senior managers with strategicresponsibilities is based on their position and strategicresponsibilities, in line with comparable positions in the market oflarge national and international companies, with annualadjustments based on merit (continuity of individualperformance) or promotion (progression ofposition/responsibilities).The variable remuneration is paid annually in cash and is linked tothe achievement of specific economic, operational and/orstrategic objectives and individual targets (for the single businessunits or departments) set the previous year.The variable part of the Deputy Chairman - CEO’s, and theManaging Director for Business Support and Transversal Activities- Deputy CEO’s remuneration is linked to the achievement ofCompany objectives. The variable remuneration paid in 2010 wasbased on Saipem’s targets for the year 2009, comprising newcontracts, investments, backlog, adjusted EBITDA andsustainability (further subdivided into LTI rate and zero injurypolicy), approved by the Board of Directors at the proposal of theCompensation Committee.The remuneration of non-executive Directors is not linked to theresults achieved. Non-executive Directors do not participate in theCompany’s incentive schemes.The remuneration paid to Board Directors and senior managerswith strategic responsibilities are detailed in the annual FinancialStatements.In 2010, the Board of Directors approved the 2010 allocation ofthe 2009-2011 long-term incentive plan (deferred monetaryincentive) implemented by the Board of Directors in 2009 in orderto continue promoting the achievement of the Company’s targetsover the long-term.The deferred monetary incentive granted in 2010 will be paid aftera three-year vesting period depending on the achievement ofannual EBITDA targets (actual vs. budget results) in the years2010-2012.After every three-year vesting period, the results of long-termincentive plans will be reviewed by the Compensation Committeeand approved by the Board of Directors.In 2010, the Board of Directors has also approved, at the proposalof the Compensation Committee, a new long-term monetaryincentive plan for senior managers directly responsible forSaipem Group results. This new incentive, which has replaced the


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Stock Option plan, aims at ensuring the long-termcompetitiveness of their global remuneration structure.The deferred monetary incentive granted in 2010 is payable aftera three-year vesting period and the amount depends on theaverage position achieved by Saipem in terms of profitability(adjusted net profit + depreciation and amortisation) over the

vesting period versus 2009, against a panel of peer competitorsidentified by the Board of Directors.

In 2010 the remuneration structure of the Chairman, the DeputyChairman - CEO, the Deputy CEO and senior management withstrategic responsibilities was the following:

Senior managerswith strategic

Chairman CEO Deputy CEO responsibilities

Fixed remuneration 100% 36% 49% 50%

Variable remuneration (linked to targets) - 26% 22% 21%

Long-term incentives (linked to results) (*) - 38% 29% 29%

Total 100% 100% 100% 100%

(*) Value of long-term incentives (actualised) if target are achieved.

Board committees

In order to carry out its responsibilities more efficiently, the Boardhas set up two committees: the Audit Committee, comprisedexclusively of non-executive independent Board members, andthe Compensation Committee, comprising a majority ofindependent Board members, all of whom are non-executiveDirectors.All Audit Committee members are accounts and finance experts.The Audit Committee comprises Luca Anderlini, Anna Maria Artoniand Pierantonio Nebuloni.The Compensation Committee comprises Salvatore Sardo -Chairman, Anna Maria Artoni and Pierantonio Nebuloni. The Boardof Directors has not deemed it necessary to set up a Directors’Nominations Committee in view of the Company’s currentshareholder structure, and the fact that, pursuant to the law andthe Articles of Association, Directors are appointed by theShareholders’ Meeting from lists put forward by the Shareholders.Following the introduction of a new procedure ‘Transactionsinvolving interests held by Board Directors and Statutory Auditorsand transactions with related parties’, the Audit Committeeprovides the Board of Directors with opinions, as per theprocedures. The Compensation Committee provides opinions inmatters of remuneration (please refer to the section ‘Directors’interests and transactions with related parties’, page 22).

Audit CommitteeIn compliance with the Board resolution of November 9, 2000, theAudit Committee fulfils a preparatory, consultative andpropositive role regarding the general management of theCompany. In compliance with the amendments made to the Codein July 2002, the Committee approved the ‘Audit CommitteeRegulations’ on February 25, 2003. In accordance with theRegulations, the Chairman of the Board of Statutory Auditors, or anAuditor appointed by the Chairman takes part in the Committee’sactivities; meetings can be attended by Saipem’s DeputyChairman - CEO. The Internal Audit Manager (being the SeniorManager in charge of the internal control system) assists theAudit Committee and carries out duties assigned as part ofhis/her role.

The Internal Audit department, reporting to the Deputy Chairman -CEO, is responsible for the following: (i) assessing the conformityof accounting and non-accounting criteria and principles, theefficiency of administrative procedures and control systems;(ii) ensuring the implementation and updating of the riskassessment, mapping and classification systems for auditingpurposes.The Audit Committee’s responsibilities are: (i) assisting the Boardof Directors in the following areas: (a) setting guidelines for theinternal control system; (b) periodically checking that it isadequate and operates effectively; (c) ensuring that major risksfacing the Company are suitably identified and properly managed;(ii) evaluates together with the CFO and the external auditors, theadequacy of accounting principles adopted and their consistencythroughout the consolidated financial statements; (iii) assessestogether with the external auditors: (a) accounting principlesconsidered ‘critical’ for the correct financial and economicrepresentation of Saipem’s position; (b) alternative accountingstandards provided for by the accounting principles and reviewedwith the management, the consequences of the application of saidalternative standards and related information in addition to themethods considered preferential by the external auditors;(c) contents of every relevant written exchange between theexternal auditors and the Company’s management; (d) issuesrelating to statutory and consolidated financial statements ofmajor Group companies; (iv) evaluates the work programmeprepared by the Internal Audit Manager and receives from thelatter reports, at least quarterly, on work performed; (v) evaluatesissues raised through Internal Audit reports, communicationsfrom the Board of Auditors or individual Auditors, reports and themanagement letter issued by the external auditors, the annualreport issued by Compliance Committee in its capacity as theGuarantor of the Internal Code of Practice, inquiries and studies bythird parties; (vi) assesses audit plans put forward and workscarried out by the external auditing firms, also in terms of theirindependent opinions; (vii) verifies independence of the externalauditors; (viii) evaluates requests advanced by departmentalmanagers to utilise the auditing firm appointed to audit thefinancial statements for non-audit service and presents proposalsto the Board of Directors.


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The Audit Committee has access to information and Companydepartments as required to carry out its duties. Through theOfficer in charge of the Internal Control System, the AuditCommittee can draw on the necessary financial resources tocarry out its responsibilities.The Audit Committee convened eleven times in 2010, withmeetings lasting on average two hours and fifteen minutes. Allmembers attended all meetings, apart from one attended by twoout of three members. Main activities consisted of:- reviewing the Integrated Risk Assessment system aimed at

setting up the integrated audit programme of the Internal AuditDepartment;

- approving the annual audit plan;- reviewing and evaluating internal audit activities;- meeting with the Chief Financial Officer, the Chairman of the

Board of Statutory Auditors and the partner from theIndependent Auditors to examine the main issues pertaining tothe 2009 and 2010 financial statements;

- monitoring the development of the operating model of theInternal Audit Department;

- acknowledging Company activities relating to Law Decree231/2001 particularly those activities relating to compliance,training and the analysis of sensitive processes;

- carrying out an in-depth study of the risk analysis and riskmanagement model of the Saipem Group;

- acknowledging the Company’s organisational structure and thepowers of attorney and proxy systems at the basis of theSaipem Group decision making mechanism;

- monitoring Company activities related to the implementation ofthe accounting processes necessary to implement the newInternational Financial Reporting Standards (IFRS);

- checking that the Internal Audit Manager continues to meet theintegrity, professionalism, competence and independencerequirements;

- evaluating the performance and adequacy of the fixed andvariable remuneration structure of the Internal Audit Manager;

- reviewing the Company’s anti-corruption procedures;- reviewing the Company’s procedure regulating related parties’

transactions.

All meetings were minuted.Twelve meetings have been scheduled to take place in 2011, threeof which have already been held as of March 8, 2011.The Audit Committee reports to the Board of Directors every sixmonths, providing a detailed account of work carried out and theadequacy of the internal control system.

Compensation CommitteeThe Compensation Committee fulfils a propositive role for theBoard of Directors vis-à-vis the Executive Directors remunerationas well as: (i) deferred incentive schemes; (ii) criteria for settingthe Group’s top management remuneration; (iii) setting targetsand assessing performance achievements and incentive plans.In 2010, the Compensation Committee convened on six occasions,

with meetings lasting an average of one hour. They were attendedon four occasions by all three members and on two occasions bytwo members.Main activities of the Compensation Committee consisted of:- reviewed results for the year 2009 for the purposes of the

monetary incentive plan;- verified Saipem’s 2009 performance in terms of TSR versus its

main competitors required for the calculation of the percentageof shares that can be exercised as part of the Stock Optionplans allocated in the period 2006-2008 to senior managerswho have a direct impact on Company results or of strategicinterest to the Company;

- approved the introduction of a new monetary long-termincentive plan applicable to senior managers directlyresponsible for Saipem Group results;

- it proposed the fixed and variable remuneration of the DeputyChairman - CEO and the Managing Director for Business Supportand Transversal Activities - Deputy CEO, based on 2009 results.

The Compensation Committee oversees the implementation ofresolutions taken by the Board of Directors.

Saipem’s Executive Vice President Director for Human Resources,Organisation and Systems and the Senior Vice President forDevelopment, Organisation, Communication and Compensationwere invited and attended all Compensation Committee meetings.Compensation Committee meetings at which remunerationproposals are put forward were not attended by Directors withinterests.All meetings were minuted.Four meetings have been scheduled to take place in 2011, one ofwhich has already been held as of March 8, 2011.The Audit Committee has access to information and companydepartments as required to carry out its duties. The CompensationCommittee has access to the necessary financial resources tocarry out its responsibilities.

The Board of Statutory Auditors8

The Board of Statutory Auditors, pursuant to Article 149 of LawDecree 58/1998, monitors: compliance to the law and the Articlesof Association; that management principles are correctly adheredto; the adequacy of the Company organisational structure, theinternal control system and the administrative/accountingsystem, and the reliability of the latter to clearly reflect theCompany’s position; the implementation of corporate governanceregulations contained in the Codes of Practice issued by StockExchange management companies and/or professionalassociations, which the Company has made a public declaration toadhere to; the adequacy of directions given by the Company to itssubsidiaries. Pursuant to the Consolidated Law on Finance andLaw Decree 39/2010, the Board of Statutory Auditors submits adocumented proposal to the Shareholders’ Meeting concerningthe granting of auditing responsibilities as well as compensation

(8) The professional résumés of Statutory Auditors are published on Saipem’s website www.saipem.com under the section ‘Corporate Governance’.


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for the audit firm, it is consulted in case of revocation of the auditfirm mandate by the Shareholders’ Meeting, and receives theaudit report prepared in compliance with Article 14 of theaforementioned law decree.The Board comprises three Statutory Auditors and two AlternateAuditors, appointed by the Shareholders on April 28, 2008. Theterm of office for Statutory Auditors is three years and will expireat the Shareholders’ Meeting called to approve the FinancialStatements at December 31, 2010.Pursuant to Article 27 of the Articles of Association, StatutoryAuditors are appointed from voting lists; the Chairman of theBoard of Statutory Auditors and one Alternate Auditor areappointed from the list put forward by the minority Shareholders.Lists are structured in two sections: the first comprisescandidates for the office of Statutory Auditor, the secondcandidates for the office of Alternate Auditor. Two statutoryauditors and one alternate auditor are selected from the list whichreceives the majority of votes. The remaining statutory auditorand alternate auditor are selected by allocating each candidate aratio, obtained by dividing the votes received by each list by theprogressive number of Statutory Auditors still to be appointed. Inthe event that more than one candidate obtains the same ratio,the candidate on the list with no Auditors yet appointed or on thelist with the lowest number of Auditors appointed will be elected. Ifthese lists have yet to elect a Statutory Auditor, or if they havealready appointed an equal number of Auditors, the candidate onthe list with the highest number of votes will be appointed. In thecase of another tie, the Shareholders’ Meeting will vote again, butonly amongst the candidates under ballot, and the candidate whoreceives the majority of votes will be electedThe Shareholders’ Meeting appoints the Chairman of the Board ofStatutory Auditors from the list put forward by the minorityShareholders.In the event of the replacement of an Auditor from the list that hasreceived the majority of votes, the Alternate Auditor from the samelist fills the vacant position; in the event of a replacement of anAuditor from other lists, the Alternate Auditor from those lists fillsthe vacant position.This voting procedure from lists is only applicable whenever theentire Board of Statutory Auditors is replaced.Lists are filed, presented and published in compliance with legalrequirements and Consob Regulations.Pursuant to Consob Resolution No. 17633 of January 26, 2011,lists may be presented by Shareholders who, individually or withothers, hold shares amounting at least to 1% of the share capital.Pursuant to Article 27, as amended by the Shareholders’ Meetingon April 30, 2007 to comply with Law 262 of December 28, 2005,the Shareholders’ Meeting appointed the Chairman of the Board ofStatutory Auditors from the minority list. Lists enclose declarationsby each candidate stating that they meet the integrity andindependence requirements (see Article 148, paragraph 3 of Law58/1998) provided by law alongside their professional résumé.The Board of Auditors comprises the Chairman Fabio Venegoni, theStatutory Auditors Fabrizio Gardi and Adriano Propersi and theAlternate Auditors Giulio Gamba and Alberto De Nigro. Thesecretary of the Board of Statutory Auditors is the Head of theInternal Audit Department, Alessandro Riva.

Article 27 of the Articles of Association states that StatutoryAuditors must be in possession of the requisites as per currentlegislation, in particular Decree 162/2000; in compliance with thedecree, the Articles of Association provide that the following fieldsare pertinent to the Company’s activities: commercial law,business administration and management, the engineering andgeology sectors. All of Saipem’s Statutory Auditors are members ofthe Register of Certified Auditors.In compliance with the provision of the Corporate GovernanceCode aimed at ensuring that Statutory Auditors meet theindependence requirements following their appointment (asimilar provision applies also to Board Directors), the Board ofStatutory Auditors assesses annually, through their owndeclarations, that all its members meet the independencerequirements.Statutory Auditors are provided in advance with documentspertaining to items to be discussed and/or resolved on at Boardmeetings.The Board of Statutory Auditors ensured the independence of theexternal audit company, ascertaining that it met all legalrequirements and evaluating the nature and size of services otherthan accounting audits it provided to the Company and itssubsidiaries directly, or through associated companies.The Board of Statutory Auditors liaised closely with the InternalAudit department and the Audit Committee, attending Committeemeetings and inviting the Internal Audit Manager to its ownmeetings.Meetings of the Board of Statutory Auditors may be held viavideo-conference link.The Board of Statutory Auditors of Saipem SpA convened fifteentimes during 2010, with meetings lasting on average two hoursand twenty minutes. Meetings were attended by an average of93% of Statutory Auditors, while Board meetings were attended byan average of 83% of Statutory Auditors.Main activities included:- review of the Integrated Risk Assessment system organised by

the Internal Audit function;- approval of the annual audit plan;- review and evaluation of results of Internal Audit activities;- meeting with the Company’s Chief Financial Officer, the partner

of the Independent Auditors to review the main items of the2009 and 2010 financial statements;

- monitoring the development of the Internal Audit operatingmodule;

- acknowledging the measures implemented by the Company tocomply with Law Decree 231/2001, paying particular attentionto the compliance, training and analysis of sensitive processes;

- in-depth review of the risk assessment and managementwithin the Saipem Group;

- acknowledging the organisational structure and powerallocation at the basis of the decision-making process withinthe Saipem Group;

- monitoring the measures undertaken by the Company to adjustaccounting processes in accordance with IFRS;

- checking that the Internal Audit Manager continues to meet theintegrity, professionalism, competence and independencerequirements;


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- evaluating the performance and adequacy of the fixed andvariable remuneration structure of the Internal Audit Manager;

- overseeing the progress of the tender process for the2010-2018 audit assignment;

- preparation of the proposal for the revocation, for ‘objective’cause of the PricewaterhouseCoopers SpA audit assignmentand simultaneous conferment of a new audit assignment onReconta Ernst & Young SpA;

- analysis, at least quarterly, of reports of issues, even inconfidential or anonymous form (whistle blowing), that arereceived by Saipem, assessing their contents and proposedcorrective measures;

- reviewing the Company’s anti-corruption procedures;- reviewing the Company’s procedure on related parties’

transactions.Twelve meetings have been scheduled to take place in 2011, threeof which have already been held as of March 8, 2011.The Shareholders’ Meeting of April 28, 2008 set the annualremuneration of the Chairman of Statutory Auditors at €60,000and that of the Auditors at €40,000, in addition to thereimbursement of expenses incurred.Pursuant to Article 27 of the Articles of Association, StatutoryAuditors may hold positions as members of administrative andcontrol bodies at other companies; however, these are limited byConsob’s Issuers’ Regulations, Article 144-terdecies. In any case,pursuant to the aforementioned regulation, candidates alreadyholding the office of Statutory Auditor at five listed companiesmay not be appointed as Auditors, and if elected, shall forfeit theiroffice.

Fabrizio Gardi, Adriano Propersi and Giulio Gamba have beennominated by Eni SpA, obtaining 59.66% of voting capital; FabioVenegoni and Alberto De Nigro have been nominated byinstitutional investors coordinated by ARCA SGR SpA.

Based on information received, we list hereafter the other offices(as Board Directors or Statutory Auditor) held by Saipem’sStatutory Auditors in other companies.

Fabio Venegoni (Chairman)Board Director of Naar Tour Operator SpA, Ceccato SpA,Mediolanum Farmaceutici SpA, Zest Gaming SpA and 100% CapriHolding SpA; Chairman of the Board of Statutory Auditors ofCoccinelle SpA, Infragruppo SpA, Pietro Fiorentini SpA, QuantaSystem SpA, Riqualificazione Grande Distribuzione Srl, New MallSrl, Saipem Energy Services SpA; Statutory Auditor of Beni StabiliSpA (listed company), Boutique Vercelli Srl, Fiditalia SpA, AuraHolding SpA, La Casa Vhernier SpA, Radiall Elettronica Srl and SGItalian Holding SpA.

Fabrizio Gardi (Statutory Auditor)Board Director of Bidachem SpA, Boehringer Ingelheim Italia SpA,V.P. Holding SpA, Valore Reale SGR SpA, Value Partners SpA, ValueTeam SpA; Statutory Auditor of Almaf SpA, Cititrust SpA - Istituto

Fiduciario, Cosmo Bioscience SpA, Cosmo Pharmaceuticals SpA,Econocom Locazione Italia SpA, Fimag SpA, Gewiss SpA, GianniVersace SpA, Polimeri Europa SpA, Verim Srl and Voith SiemensHydro Power Generation SpA.

Adriano Propersi (Statutory Auditor)Chairman of the Board of Directors of IMI Fabi SpA; Board Directorof Banca Popolare di Sondrio (listed company), Prisma Srl;Chairman of the Board of Statutory Auditors of Tecnocasa HoldingSpA, Tecnocasa Franchising SpA, Tecnocasa Partecipazioni SpA,Kiron Partners SpA, Tecnomedia Srl, Trade & Partners SpA, FamilyPartner SpA, La Ducale SpA, Immobiliare Giulini SpA, BEAIngranaggi SpA, Miba Srl, Raffineria di Gela SpA; Statutory Auditorof Unicredit Business Partner ScpA, Feem Servizi Srl, A.T. KearneySpA, Eni Gas & Power Belgium SpA, Atlas Copco BLM Srl,Immobiliare Santa Caterina Sr, and Abac Aria Compressa SpA.

Giulio Gamba (Alternate Auditor)Chairman of the Board of Statutory Auditors of IFM Scarl andServizi Porto Marghera Scarl; Statutory Auditor of Servizi EnergiaItalia SpA, Venezia Tecnologie SpA, Priolo Servizi SCpA, RavennaServizi Industriali SCpA, and VEGA Parco Scientifico-Tecnologico diVenezia Scarl.

Alberto De Nigro (Alternate Auditor)Chairman of the Board of Statutory Auditors of AIM Congress Srl,AIM Group SpA, AIM Group International SpA, AIM Travel Srl, ChiquitaItalia Srl, Engineering.IT SpA, Nexta Srl, Telit Wireless Solutions Srl,Toyota Motor Leasing Italia SpA, 7Finance Holding dipartecipazioni SpA; Statutory Auditor of Armosia TV Srl, ConsorzioSinergie per l’innovazione nella ricerca nell’industria e nelleorganizzazioni, Dahlia TV SpA (in liquidation), Dahlia TVBroadcasting Srl, Engo SpA, Ergo Italia SpA, Ergo Previdenza SpA,Ergo Italia Business Solutions Scrl, Ergo Assicurazioni SpA, ErgoItalia Direct Network Srl, Olivetti SpA, Telecom Italia Media SpA;Board Director and member of the Control Committee ofIngegneria Informatica SpA (listed company); Liquidator of Ipse2000 SpA currently (in liquidation).

Directors’ interests and transactionswith related parties

In order to implement Article 2391-bis of the Italian Civil Code,Consob approved a Regulation on March 12, 2010 which obligeslisted companies to adopt procedures not later than December 1,2010 aimed at guaranteeing full transparency as well asprocedural and effective fairness for transactions with relatedparties.Also in light of the recommendations of the Corporate GovernanceCode, on November 24, 2010, Saipem’s Board of Directorsunanimously approved the procedure ‘Interests held by BoardDirectors and Statutory Auditors and transactions with relatedparties’9, effective from January 1, 2011. This procedure

(9) The procedure ‘Transactions involving interests by Board Directors and Statutory Auditors and transactions with related parties’ is published on Saipem’s website www.saipem.com under thesection ‘Corporate Governance’.


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supersedes the procedure ‘Code of Practice Regulating Operationswith Related Parties’ approved by the Board of Directors on July 7,2003.The Audit Committee, comprised wholly of independent Directorspursuant to the Self-Regulatory Code and the aforementionedRegulation, have expressed a preliminary opinion in favour of theadoption of this procedure.This largely reflects the definitions and provisions of ConsobRegulation: transactions with related parties have been dividedinto transactions of greater importance, transactions of lesserimportance, and exempted transactions, with differentprocedures to be followed based on the type and relevance oftransactions.Specifically, the Board of Directors reserves the right to approvetransactions of greater importance, subject to the AuditCommittee being in favour, having been involved in negotiationsand having received complete and timely information.With regard to transactions of lesser importance, the AuditCommittee expresses a reasoned, albeit not binding opinion onthe interest the Company may have in the transaction and itssubstantial fairness.The Board of Directors, having consulted the Audit Committee, hasalso identified transactions of smaller amounts, which areexcluded from the procedure, as well as other types oftransactions, which, due to the nature of the revenue and/or cost,are deemed to be regular transactions as they were completed inmarket-equivalent or standard terms and therefore are excludedfrom the procedure even if they are not of lesser amounts.This procedure attributes a major role to independent Directors, asmembers of the Audit Committee and the CompensationCommittee, in matters of remuneration.Also in terms of the duty of information to the public, Saipem’sprocedure reflects the provisions of Consob Regulation in full.Board Directors, Statutory Auditors and senior managers withstrategic responsibilities declare every six months alltransactions they may have entered into involving Saipem SpAand/or its subsidiaries, either directly or through a third party, incompliance with IAS 24. They also declare potential significantrelations for the purposes of the identification of related parties(for instance, close relatives).Amounts of transactions of a commercial, financial or other naturewith related parties, a description of the most relevant types oftransaction, their incidence on the balance sheet, incomestatement and financial flows are detailed in the consolidated andstatutory financial statements of Saipem SpA.Finally, in compliance with paragraph 9 of the Self-RegulatoryCode of Listed Companies and consistent with previousregulations, a specific code of conduct has been set up to regulatetransactions whereby a Director or Statutory Auditor may have avested interest, either directly or through a third party.Specifically, the Company is obliged to evaluate, during thepreparatory and approval stages, the reasons for the transactionswith the interested party. An in-depth and documented review ofthe reasons behind the transaction is required during thepreparatory stage, emphasising the interest held by the companyand the expediency and fairness of its terms.

Board Directors and Statutory Auditors declare, every six monthsor sooner in the event of changes, any potential interests theymay hold towards the Company and the Group.

Investor relations

Saipem has adopted a policy of information supporting constantdialogue with institutional investors, the Shareholders and themarket in order to guarantee the timely disclosure ofcomprehensive information on Company activities, and is limitedonly by the confidentiality requirements afforded to certaininformation. Information for investors, the market and the mediais disseminated via press releases, and periodic meetings withinstitutional investors, the financial community and the press, inaddition to the comprehensive information made available andconstantly updated on the Company website.Relations with investors and financial analysts are maintained bythe Investor Relations Manager. Information of interest is postedon Saipem’s website (www.saipem.com) or can be requested viae-mail from: [email protected] with Shareholders are maintained by the Head of theSecretary’s Office. Information of interest to Shareholders isposted on Saipem’s website or can be requested via e-mail from:[email protected] January Saipem discloses to the public and publishes on itswebsite its financial calendar detailing the main financial eventsfor the current year.Information pertaining to periodic financial reports, relevantoperations and newly-issued corporate governance procedures, isdisclosed immediately to the public also via publication on thewebsite www.saipem.com, where all press releases andShareholders’ notices are also posted.Saipem’s commitment to providing investors and markets withfinancial information that is true, comprehensive, transparent,timely and non-selective is stated in the Code of Ethics, whichidentifies the values it applies in its business operations and therelations with third parties: namely, disclosure of complete andclear information, the formal and essential legitimacy of practicesby its employees at all levels, clarity and veracity of its accountingpractices in compliance with current legislation and internalprocedures.On December 13, 2010, the Board of Directors approvedamendments to the Articles of Association to comply with newlegislation relating to Shareholders’ rights (Law Decree 27 ofJanuary 27, 2010) and legal audit of accounts (Law Decree 39 ofJanuary 27, 2010). Further amendments to the Articles ofAssociation on which the Company must express a choice will besubmitted to the next extraordinary Shareholders’ Meeting. Pleaserefer to the section ‘The Shareholders’ Meeting’ on page 13.


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Processing of inside information- Internal Dealing10

On March 23, 2006, the Board of Directors updated the ‘Procedureregulating Market disclosure of inside information’11, which wasapproved on December 12, 2002. This procedure whichimplements the provisions contained in the ‘Guide on Informationto the Market’ issued by ‘Forum Ref’ in June 2002 and theprovisions of the European Directive on Market Abuse defines therequirements to be applied to the disclosure of sensitiveinformation to the market (materiality, clarity, homogeneity,symmetry, consistency and timeliness) and regulates the flow ofinformation from controlled companies aimed at obtainingcomprehensive and timely information for the Board of Directorsand the market on events that may become inside information.This procedure also identifies measures to be taken in case ofviolation of its provisions, also in light of the penal andadministrative sanctions introduced by Law 262/2005. The Codeof Ethics also defines the duty of confidentiality that Groupemployees are required to adhere to, in compliance with dataprotection legislation.On March 23, 2006, the Board of Directors approved theprocedure for the ‘Upkeep and update of the List of personshaving access to inside information’, in compliance with theprovisions of Article 115-bis of Law 58/1998, which states that‘Listed issuers and persons in a control relationship with themand persons acting on their behalf or for their account shall drawup, and keep regularly updated, a list of the persons who, in theexercise of their employment, profession or duties, have access toinformation referred to in Article 114, paragraph 1 (editor’s note:inside information)’. This procedure, which contains theprovisions of Chapter 1 (Lists of insiders) of Title VII of ConsobRegulation No. 11971/1999 implementing the provisions onissuers of Legislative Decree 58/1998, identifies: (i) methods andterms applicable to listing and/or cancellation of personal datarelating to persons, who in the exercise of their employment,profession or duties, have regular or occasional access to insideinformation; (ii) notification to the interested party of their listing

and/or cancellation from the List and reasons thereof. Thisprocedure became effective as of April 1, 2006.The Board of Directors also approved the ‘Procedure regulating theidentification of relevant parties and operations carried out bythem, directly or through third parties, involving shares of SaipemSpA or other associated financial instruments (Internal DealingProcedure)’, which replaces the Internal Dealing Code approved bythe Board on December 12, 2002. This procedure complies withthe provisions of Article 114 (information to be provided to thepublic), paragraph 7 of Law 58/1998, according to which ‘personsperforming administrative, supervisory and managementfunctions in a listed issuer and managers who have regularaccess to inside information referred to in paragraph 1 and thepower to make managerial decisions affecting the futuredevelopment and prospects of the issuer, persons who holdshares amounting to at least 10% of the share capital, and anyother persons who control the issuer must inform Consob and thepublic of transactions involving the issuer’s shares or otherfinancial instruments linked to them that they have carried outdirectly or through nominees. Such disclosures must also bemade by the spouse, unless legally separated, dependentchildren, including those of the spouse, cohabiting parents andrelatives by blood or affinity of the persons referred to above andin the other cases identified by Consob in a regulationimplementing Commission Directive 2004/72/EC of April 29,2004’. This procedure, which contains the provisions of Chapter II(Transactions concluded by relevant persons and persons closelyassociated with such persons) of Title VII of Consob Regulation No.11971/1999 implementing the provisions on issuers of LegislativeDecree 58/1998: (i) identifies relevant persons; (ii) identifiesoperations involving shares issued by Saipem or other associatedfinancial instruments; (iii) sets methods and conditions ofdisclosure involving transactions and their notification to thepublic; (iv) states sanctions to be applied in case ofnon-compliance of the provisions stated in the procedure.In addition to legal requirements, this procedure also listsblocking periods, i.e. periods during which relevant parties maynot carry out operations.

(10) The procedure ‘Internal Dealing’ is published on Saipem’s website www.saipem.com under the section ‘Corporate Governance’.(11) The ‘Procedure regulating Market disclosure of inside information’ is published on Saipem’s website www.saipem.com under the section ‘Corporate Governance’.


25

Table 1. Shareholding structure

Shareholding structure

Number % of shareof shares capital Listed market / not listed Rights and obligations

Ordinary shares 441,270,452 99.97% Computerised Share Trading Market Dividend / entitled to vote(Mercato Telematico Azionario Italia - MTA) at the Shareholders’ Meeting

Shares with limited vote entitlement 140,448 0.03% Computerised Share Trading Market Convertible with ordinary share(savings shares) (Mercato Telematico Azionario Italia - MTA) without time restriction

/ dividend 3% higher thanordinary shares / not entitledto vote at the Shareholders’ Meeting

Shares without vote entitlement

Relevant shareholdings

% of ordinary % of votingDeclarant Direct shareholder capital capital

FMR Llc FMR Llc 3.450 3.450

Blackrock Inc Blackrock (Netherlands) BV 0.088 0.088

Blackrock (Luxembourg) SA 0.264 0.264

Blackrock Institutional Trust Co NA 0.734 0.734

Blackrock Fund Managers Ltd 0.016 0.016

Blackrock Advisor (UK) Ltd 0.590 0.590

Blackrock Investment Management (Australia) Ltd 0.002 0.002

Blackrock Investment Management Llc 0.147 0.147

Blackrock Financial Management Inc 0.093 0.093

Blackrock Asset Management Japan Ltd 0.188 0.188

Blackrock Asset Management Australia Ltd 0.007 0.007

Blackrock Asset Management Canada Ltd 0.14 0.14

Blackrock Fund Advisors 0.30 0.30

Blackrock Advisors Llc 0.037 0.037

Blackrock Investment Management (UK) Ltd 0.057 0.057

Blackrock International Ltd 0.278 0.278

Total 2.815 2.815

FIL Ltd FIL Ltd 2.016 2.016

Capital Research and Management Co Capital Research and Management Co 4.908 4.908(as manager of the Euro Pacific Growth Fundwhich holds 2.681%)

Ministry of Economy and Finance Eni SpA 42.91 42.91


26

Table 2. Structure of the Board of Directors and its Committees

Title

Board of Directors Audit CompensationCommittee Committee

Indep. No.List Indep. purs to of other

In office In office (M/m) Non- purs to Law (%) officesOffice Members since until (1) Exec. exec. CG Code 58/98 (2) (3) (4) (2) (4) (2)

Chairman Mangiagalli Marco April 28, 2008 Approval of M X 100 2Financial

Statements2010

Deputy Tali Pietro Franco April 28, 2008 Approval of M X 100 -Chairman - CEO Financial

Statements2010

Managing O’Donnell Hugh James April 28, 2008 Approval of M X 100 -Director Financial

Statements2010

Director Anderlini Luca April 28, 2008 Approval of m X X X 100 - X 100Financial

Statements2010

Director Artoni Anna Maria April 28, 2008 Approval of m X X X 75 1 X 100 X 100Financial

Statements2010

Director Nebuloni Pierantonio April 28, 2008 Approval of m X X X 88 - X 90 X 85Financial

Statements2010

Director Sardo Salvatore April 28, 2008 Approval of M X 62 1 X 85Financial

Statements2010

Director Vergine Umberto April 28, 2008 Approval of M X 100 -Financial

Statements2010

Director Wybrew-Bond Ian April 28, 2008 Approval of M X X X 100 -Financial

Statements2010

Directors terminated during the year

Director Léost Jacques Yves April 28, 2008 August 18, 10 M X 100

Indicate minimum quorum required for the presentation of lists at the last appointment of the Board: 1%

Number of meetings held during the year: BoD: 8 AC: 11 CC: 6

(1) In this column ‘M’ denotes a member appointed from the majority list while ‘m’ denotes a member appointed from the minority list.(2) This column details the percentage of attendance of Directors to Board and Committee meetings (attendance/number of meetings held during the period of office).(3) This column details the number of offices of Director or Statutory Auditor held in other companies listed either in Italy or abroad, and/or in financial, banking, insurance or large companies.(4) In this column, the ‘X’ denotes membership of a Director to a Committee.


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Table 3. Structure of the Board of Statutory Auditors

Board of Statutory Auditors

List Independent No. of otherIn office In office (M/m) pursuant (%) offices

Office Members since until (1) to the CG Code (2) (3)

Chairman Venegoni Fabio April 28, 2008 Approval of m X 100 1Financial

Statements2010

Statutory Auditor Gardi Fabrizio April 28, 2008 Approval of M X 100 -Financial

Statements2010

Statutory Auditor Propersi Adriano April 28, 2008 Approval of M X 80 1Financial

Statements2010

Alternate Auditor Gamba Giulio April 28, 2008 Approval of M X -Financial

Statements2010

Alternate Auditor De Nigro Alberto April 28, 2008 Approval of m X 1Financial

Statements2010

Statutory Auditors terminated during the year

- - -

Indicate minimum quorum required for the presentation of lists at the last appointment: 1%

Number of meetings held during the year: 15

(1) In this column ‘M’ denotes a member appointed from the majority list while ‘m’ denotes a member appointed from the minority list(2) This column details the percentage of attendance of Statutory Auditors to the Board of Statutory Auditors’ meetings (attendance/number of meetings held during the period of office).(3) This column details the number of offices of Director or Statutory Auditor held in other companies deemed relevant pursuant to Article 148-bis of Law 58/1998. A complete list of offices is detailed,pursuant to Article 144-quinquiesdecies of Consob Issuers’ Regulations, to the compliance report drawn up by the Statutory Auditors in compliance with Article 153, paragraph 1 of Law 58/1998.

Headquarters: San Donato Milanese (Milan) - Italy

Via Martiri di Cefalonia, 67

Branches:

Cortemaggiore (Piacenza) - Italy

Via Enrico Mattei, 20

Information for Shareholders

Saipem SpA, Via Martiri di Cefalonia, 67 - 20097

San Donato Milanese (Milan) - Italy

Relation with institutional investors

and financial analysts

Fax +39-0252054295

e-mail: [email protected]

Publications

Bilancio al 31 dicembre (in Italian)

Annual Report (in English)

Interim Consolidated Report as of June 30

(in Italian and English)

Sustainability Report (in English)

Also available on SaipemÕs website:

www.saipem.com

Website: www.saipem.com

Operator: +39-025201

Design: Opera

Cover: Inarea

Layout and supervision: Studio Joly Srl - Rome - Italy

Printing: Impronta Grafica - Cant� (Como) - Italy

saipem Societ� per Azioni

Capital Stock O441,410,900 fully paid

Tax identification number and Milan CompaniesÕ

Register No. 00825790157

www.saipem.com

corporate governance report and shareholding structure...

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