Rewarding

The Pirelli compensation system is a flexible system comprised of different tools and segmented according to the various population levels (young university graduates, talents, critical resources/key personnel and senior management).
The Compensation and Benefits Department assures implementation of this system in view of alignment with business practice in the reference market and increasing clarity and transparency of the eligibility requirements.
The objectives that Pirelli wishes to pursue through a system of rewards focused on segmentation of human resources are improved professional motivation , improved performance , the creation of sustainable value over time and development of the fidelity of human resources.
To ensure the competitiveness of the rewards system, the Compensation and Benefits Department uses two tools in particular:

• the Pirelli Global Grading System , in other words, a system for evaluation and mapping all organisational positions, permitting comparison with the external market for positions of comparable weight
• a information technology platform permitting analysis and construction of the compensation markets in all countries where Pirelli operates.

Salary review policies are applied locally by the individual countries, with the exception of the process regarding executives from around the world that is coordinated centrally by corporate headquarters in accordance with shared logics, but always respecting the needs of an international management team.

100% of executives and 50% of managers participate in the Group's annual incentive system ( MBO ), which envisages clear definition of the Group/Business and individual operating and financial targets and conditions the grant of variable compensation on evaluation and the extent to which targets are met.

Pirelli is also highly sensitive to the issue of diversities. In 2006, it will launch the Group Equal Opportunity Project , committing itself to maintaining current equal compensation policies for men and women, in compliance with the principle of equal treatment at the workplace.