Tiscali 2007 Annual Report Download - page 57

he has provided and continues to provide in relation to the
development of IPTV services.
The Committee also expressed an fairness opinion concern-
ing the fee acknowledged by the Board on 12 July 2007 to
the Director Arnaldo Borghesi for financial advisory services
he has provided to the Company within the sphere of negoti-
ating the funding package granted by IntesaSanpaolo and JP
Morgan.
The Committee has discussed a settlement agreement with the
Chief Executive Officer which disciplines the economic aspects
associated with the consensual termination of the manage-
ment relationship established between Tommaso Pompei and
the Company. This agreement was analyzed and approved by
the Board on 28 February 2008.
4.3. Appointments Committee
As mentioned in paragraph 1.6 of this Report, the Board of
Directors has not deemed it necessary to set up an Appoint-
ments Committee in so far as the voting list system as defined
in Article 11 (Board of Directors) of the Articles of Association
ensures the protection of minority Shareholders’ rights. In addi-
tion, the voting list system requires proposals for the appoint-
ment of Directors to be submitted by Shareholders subject to
candidate suitability selection.
5. Governance and interfunctional committees
During the meeting held on 9 November 2006, the former
Chief Executive Officer Tommaso Pompei presented the Board
of Directors with the main guidelines of the new organization
and governance model adopted by the Company and the Tis-
cali Group, necessary in light of the review and simplification
of the scope of the Group’s activities, as emerging from the
business plan approved by the Board of Directors on 11 Octo-
ber 2006. This model, as specified further on, was discussed
during the meeting held on 20 March 2007.
The Group’s key activities were organizationally grouped togeth-
er into three operational macro-blocks.
The first two blocks include the operating activities located with-
in the subsidiaries which operate in Italy and the UK, respective-
ly Tiscali Italia S.p.A. and Tiscali UK Ltd., who have primary
responsibility for the earnings-related and competitive results.
Technological services are envisaged for supporting these activ-
ities; these are grouped in a third block and aim at efficiency,
and include
Network Technology services , located within the
subsidiaries belonging to the Tiscali International Network
Group, and
Information Technology services , located within
the subsidiary Tiscali Services S.p.A., which was subsequent-
ly merged via incorporation within Tiscali Italia S.p.A. on 5
March 2008.
The remaining activities, essentially relating to
operations in Ger-
many not disposed of to third parties and to a number of non-
strategic equity investments in Italy, have been grouped togeth-
er in an additional block, pending disposal or winding-up.
The corporate structure, located within the Parent Company,
maintains a policy and co-ordination role, as well as sees to
the allocation of services and auditing within this organization
model.
6. Internal auditing
Back in October 2001, the Company formalized the internal
audit organizational set-up. Following the amendments to the
Code of Conduct for listed companies and the suggestions of
Borsa Italiana S.p.A., on 25 March 2004 the Board of Direc-
tors took steps to up-date the organizational set-up of the
Company’s internal audit system, on the basis of a proposal
made by the Internal Audit Committee 24 March 2004. The
current internal audit set-up is in line with the matters envis-
aged by the principles and applicative criteria contained in
Article 8 of the Code.
6.1. Internal audit system
The internal audit system is the set of processes dedicated to
monitoring efficiency of Company operations, the reliability of
its financial data, the observance of laws and regulations, and
the safeguarding of Company assets.
The internal audit system is the responsibility of the Board of
Directors, which sets guidelines for the system and periodical-
ly verifies its adequacy and correct functioning, ensuring that
the main business risks are identified and appropriately man-
aged.
The Director appointed to this task identifies the main busi-
ness risks, submits them for the attention of the Board of Direc-
tors and implements the Board’s recommendations by devel-
oping, managing and monitoring the internal audit system. He
is assisted in this task by an Internal Audit Coordinator, appoint-
ed by the CEO on the recommendation of the Internal Audit
Committee. The Coordinator is equipped with all means nec-
essary to perform this support role.
The Internal Audit Coordinator has no line manager, and reports
directly to the CEO, the Internal Audit Committee and the Board
of Statutory Auditors at least once every three months.
The Internal Audit Coordinator was identified as the person
with operational responsibility for coordinating activities with-
in the Internal Audit department, since he has no direct line
manager and is in possession of the professional skills neces-
sary to perform his duties as recommended by the Code.
To further reinforce the requirement of independence, the Inter-
REPORT ON OPERATIONS
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