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Expert Corporate Governance Service (ECGS)
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Intesa Sanpaolo - 30 April 2019

In item 7, the AGM is called to appoint the members of the Board of Directors and the Audit Committee, on slates of nominees submitted by shareholders holding, even jointly, at least 0.5% of Intesa Sanpaolo's shares. The first candidate in the second most voted slate shall be appointed as Chairperson of the Audit Committee.

Both the slate submitted by a group of banking foundations (sub-item 7.1) and a group of institutional investors (sub-item 7.2) include a large majority of independent nominee Directors. We would support the appointment of the institutional investors' nominee Chair of the Audit Committee, taking into account his professional background and prior experience in the Committee (Intesa Sanpaolo is the first large Italian company having adopted the one-tier board system, and in our opinion a prior experience in the position is preferable, due to the specificities of this governance system in Italy). Therefore, in order to increase the likelihood that the slate of the institutional investors will not be the most voted one, we recommend that shareholders vote for the slate of the banking foundations.

In item 11, shareholders are called to a binding vote of the Bank's remuneration policies for executive Directors and other executives with strategic responsibilities. The quality of disclosure is very good, as all performance conditions are disclosed and long-term targets are quantified, and in our opinion the executive variable remuneration is adequately structured to align the interests of executives and shareholders in the long term. However, we have concerns over the very high fixed remuneration of the CEO (€ 2.6 million), which is used to calculate the variable remuneration and is more than twice the median at Italian and European peers. Therefore, we recommend opposition.

Underlying
Intesa Sanpaolo

Intesa Sanpaolo is a commercial bank. Co. is engaged in lending and deposit collection operations in Italy and associated financial services, serving Households, Personal, Small Business, Private and Small and Medium Enterprise customers. Co. provides medium-term credit, leasing, factoring and agribusiness (Mediocredito Italiano), consumer credit (Intesa Sanpaolo Personal Finance), management of electronic payments (Setefi), and trust services (Sirefid). Co. has approximately 4,300 branches, including Retail and Business branches, distributed broadly throughout Italy. At Dec 31 2014, Co. had total assets of Euro646.43 billion.

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