Enel – report on corporate governance and ownership structure for year 2012 REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE (approved by the Board of Directors of Enel S.p.A. on April 4, 2013) - YEAR 2012 - (Drawn up pursuant to Articles 123-bis of the Consolidated Financial Act and 144-decies of CONSOB’s Regulation on Issuers) 1 Enel – report on corporate governance and ownership structure for year 2012 Section I: Governance and ownership structure ......................................................................................... 3 Introduction .................................................................................................................................................... 3 Ownership structure ....................................................................................................................................... 3 Share capital structure ....................................................................................................................................... 3 Major shareholdings and shareholders’ agreements ........................................................................................ 3 Limit on the ownership of shares and voting rights ........................................................................................... 4 Special powers of the Italian government.......................................................................................................... 4 Employee shareholdings: mechanism for exercising voting rights .................................................................... 7 Appointment and replacement of directors and amendments of the bylaws ..................................................... 8 Authorizations to increase the share capital and to buy back shares ............................................................... 8 Change-of-control clauses ................................................................................................................................. 9 Compensation owed to directors in the event of early termination of the relationship, including as the result of a takeover bid ........................................................................................................................................... 12 Organizational structure ............................................................................................................................... 12 Section II: Implementation of the recommendations of the Corporate Governance Code and additional information ................................................................................................................................... 13 Board of Directors ........................................................................................................................................ 13 Role and functions ........................................................................................................................................... 13 Appointment, replacement, composition, and term ......................................................................................... 15 Remuneration .................................................................................................................................................. 18 Limit on the number of offices held by directors .............................................................................................. 18 Board meetings and the role of the Chairman ................................................................................................. 19 Evaluation of the functioning of the Board of Directors and its Committees ................................................... 20 Executive and Non-executive directors ........................................................................................................... 21 Independent directors ...................................................................................................................................... 22 Committees .................................................................................................................................................. 24 Compensation Committee ............................................................................................................................... 26 Control and Risk Committee ............................................................................................................................ 27 Related Parties Committee .............................................................................................................................. 29 Nomination and Corporate Governance Committee ....................................................................................... 30 Board of Statutory Auditors .......................................................................................................................... 32 Auditing firm ................................................................................................................................................. 35 Oversight of the Court of Auditors ................................................................................................................ 35 Executive in charge of preparing the corporate accounting documents ...................................................... 35 Internal control and risk management system ............................................................................................. 36 The system of risk management and internal control of financial information ................................................ 40 Non-EU foreign subsidiaries ........................................................................................................................ 43 Transactions with related parties ................................................................................................................. 44 Processing of corporate information ............................................................................................................ 47 Relations with institutional investors and shareholders in general .............................................................. 49 Shareholders’ Meetings ............................................................................................................................... 49 Code of Ethics .............................................................................................................................................. 52 Compliance program pursuant to Legislative Decree No. 231 of June 8, 2001 .......................................... 52 Zero tolerance for corruption plan ................................................................................................................ 54 SCHEDULE1: Biography of the members of the Board of Directors ........................................................... 55 SCHEDULE2: Biography of the members of the Board of Statutory Auditors ............................................. 61 TABLE 1: Structure of Enel’s Board of Directors and Committees .............................................................. 63 TABLE 2: Structure of Enel’s Board of Statutory Auditors ........................................................................... 66 2 Enel – report on corporate governance and ownership structure for year 2012 Report on corporate governance and ownership structure SECTION I: GOVERNANCE AND OWNERSHIP STRUCTURE Introduction The corporate governance structure of Enel S.p.A. (hereinafter, also “Enel” or the “Company”) and of its corporate group (hereinafter, in short, the “Enel Group” or the “Group”) complies with the principles set forth in the edition of the Corporate Governance Code for listed companies (1)(hereinafter, in short, the “Corporate Governance Code”) adopted by the Company. Furthermore, the aforementioned corporate governance structure is inspired by CONSOB’s recommendations on this matter and, more generally, international best practice. In December 2012, Enel’s Board of Directors resolved to implement the recommendations set forth in the edition of the Corporate Governance Code published in December 2011 (drafted by the Corporate Governance Committee promoted by ABI, Ania, Assogestioni, Assonime, Borsa Italiana and Confindustria), in compliance with the timetable provided for under the applicable transitional legal framework. Until such date, in 2012, the Company’s and the Group’s corporate governance system was in line with the recommendations set forth in the edition of the Corporate Governance Code published in the month of March 2006 (and drafted by the Corporate Governance Committee promoted by Borsa Italiana), as well as with the amendments on directors’ compensation made to art. 7 of the same Code in the month of March 2010. The corporate governance system adopted by Enel and its Group is essentially aimed at creating value for the shareholders over the medium-long term, taking into account the social importance of the Group’s business operations and the consequent need, in conducting such operations, to adequately consider all the interests involved. Ownership structure Share capital structure The Company’s share capital consists exclusively of ordinary shares with full voting rights at both ordinary and extraordinary shareholders’ meetings. At the end of 2012 (and as of the date of this report), Enel’s share capital amounted to Euro 9,403,357,795, comprised of the same number of ordinary shares having a par value