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79
CORPORATE GOVERNANCE
Set out below is a description of the Corporate
Governance framework adopted by Luxottica Group S.p.A.
(“Luxottica”). The framework of rules and procedures
applies equally to Luxottica and all companies reporting to
it and forming part of its group (the “Group”) and is
designed to ensure that all companies in the Group are
appropriately managed and controlled. This report has
been prepared in compliance with the relevant directions
and recommendations of Borsa Italiana S.p.A. and also
takes into account the provisions of the guidance note
issued by Assonime and Emittente Titoli S.p.A. in March
2004 (“Guida alla compilazione della relazione sulla
Corporate Governance”).
I. INTRODUCTION
1. Luxottica, a world leader in ophthalmic eyewear,
implements its business strategy via subsidiaries
based in the many different countries in which it
operates. The business strategy is the same
throughout the Group.
2. The Group has a presence in over 40 countries
and comprises more than 150 companies
worldwide. Its business operations, in terms of
sales and personnel, are particularly significant in
Europe, North America, Australia, and Asia.
3. Luxottica is listed on both the NYSE and the Milan
Stock Exchange, and must therefore comply with
the requirements applicable to companies listed
on these exchanges and, in particular, with the
provisions issued by both the SEC and CONSOB.
4. With the objective of delivering overall profits and
sustainable results for the Group as a whole,
Luxottica manages and co-ordinates the activities
of all companies in the Group, whether directly or
indirectly controlled.
5. The following business tools are used to ensure
that the Group is subject to the direction of a
single managing entity:
- the preparation and approval of business
plans and sales forecasts;
- the preparation and approval of budgets and
the identification of specific targets to be
achieved and projects to be implemented;
- the establishment of rules providing for the
communication of certain information
necessary for the effective management and
control of the Group;
- the requirement that certain significant
transactions be approved by the Board of
Luxottica (e.g., acquisitions and disposals);
- the implementation of certain financial policies
across the Group (e.g., indebtedness tests
and cash investment criteria);
- the establishment of central group services
(e.g. legal, human resources) which provide
professional support and advice for all
companies in the Group;
- the adoption of codes of conduct which apply
to the entire Group;
- the specification and adoption of common
organizational structures; and
- the adoption of guidelines on the composition
and operation of the boards of directors,
including authority levels, for all companies
within the Group. The guidelines are consistent
throughout the Group.
Luxottica’s Corporate Governance framework is
designed to apply to the entire Group and has been
devised on the basis of the mutually compatible
recommendations made by Borsa Italiana, CONSOB,
the SEC and the NYSE and in compliance with the
highest standards of Corporate Governance.
The Corporate Governance framework is based on
five key principles:
1. a set of clearly defined, acknowledged and shared
values;
2. the central role played by Luxottica’s Board of
Directors;
3. the efficacy and transparency of management
decisions;
4. the adoption of an appropriate and workable
internal control system; and
5. the adoption of a set of rules governing potential
conflicts of interests.
ANNUAL REPORT 2004