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ISS PROXY ADVISORY SERVICES

Report Contents Financial Highlights 3 Vote Results 8 Corporate Governance Profile 5 Meeting Agenda and Proposals 9 Equity Ownership Profile 22 Governance QuickScore 6 Additional Information 22

© 2013 Institutional Shareholder Services Inc. All Rights Reserved.

Prysmian SpA

Key Takeaways

Upon review and analysis of this company's meeting agenda, we highlight that:

Statutory auditors' elections are not contentious as there is the same number of candidates as board seats;

The company has introduced in its remuneration report a provision that caps at 24 months of total remuneration the severance payments for future agreements.

Finally, the severance payments foreseen for the CEO might exceed 24 months of his total remuneration, when looking at the amounts paid out during 2012. However, his severance will be within 24 months if we take into account the deferred portion of his total remuneration. Furthermore, when looking at severance practices in Italy, the absolute amount foreseen for Battista (EUR 4.5 million) does not seem excessive.

Agenda & Recommendations Policy: Europe

Incorporated: Italy

Item Code Proposal Board Rec. ISS Rec.

ORDINARY BUSINESS

1 M0151 Approve Financial Statements, Statutory Reports, and Allocation of Income FOR FOR

ELECT INTERNAL AUDITORS (BUNDLED) AND APPOINT CHAIRMAN OF INTERNAL STATUTORY AUDITORS - CHOOSE ONE OF THE FOLLOWING SLATES

2.1 S0281 Slate 1 Submitted by Clubtre Srl NONE FOR

2.2 S0281 Slate 2 Submitted by Institutional Investors NONE AGAINST

3 S0281 Approve Internal Statutory Auditors' Remuneration NONE FOR

4 M0346 Authorize Share Repurchase Program and Reissuance of Repurchased Shares FOR FOR

5 M0510 Approve Employee Stock Purchase Plan FOR FOR

6 M0550 Approve Remuneration Report FOR FOR

EXTRAORDINARY BUSINESS

1 M0358 Authorize Issuance of 13,444,113 Shares without Preemptive Rights to Service Convertible Bonds Reserved for Institutional Investors

FOR FOR

Shaded areas indicate recommendations against board Items deserving attention due to contentious issues or controversy

ISS QuickScore

GOVERNANCE

1

Scores indicate decile rank relative to index

or region. A decile score of 1 indicates

lower governance risk, while a 10 indicates

higher governance risk.

Meeting Type: Annual/Special

Meeting Date: 16 April 2013 Record Date: 5 A pril 2013 Meeting ID: 778500 Electronic Share Market: PRY

Index: N/A Sector: Electrical Components & Equipment GICS: 20104010

Primary Contact Gabriel Alsina [email protected]

mailto:[email protected]

Prysmian SpA (PRY ) Meeting Date: 16 April 2013

POLICY: Europe Meeting ID: 778500

ISS PROXY ADVISORY SERVICES Publication Date: 27 March 2013

Governance

The company has provided a draft version of the annual report for fiscal year 2012, including details on important corporate governance indicators.

AUDIT INFORMATION

Auditor PWC

Audit Fees EUR 5,621,000

Audit-Related Fees EUR 205,000

Other Fees EUR 420,000

Percentage of total fees attributable to non-audit ("other") fees 6.7 %

Auditor opinion Unqualified (see analysis section)

QUORUM REQUIREMENTS

Ordinary business items require a 50 percent +1 vote to be approved. Extraordinary business items need to be approved by two thirds of the votes.

Abstain Vote

In Italy, the use of abstention is, for all intents and purposes, considered a vote against a particular item.

Additional Information

Note: Exchange rate on Dec. 31, 2012: EUR 1 = US$ 1.32




Financial Highlights

Company Description: Prysmian SpA, together with its subsidiaries, engages in the production, distribution, and sale of cables and systems, and related accessories for energy and telecommunication industries worldwide. The company's Energy segment offers high and extra-high voltage cables for power transmission, as well as high voltage systems, network components, asset management services, and submarine energy systems; and low and medium voltage systems and cables for the connection of industrial and/or residential buildings and for the primary distribution networks, as well as provides accessories and components, and P -Laser systems. This segment also offers automotive, rolling stock, railway and underground, marine, cranes and mobile equipment, mining and tunneling, offshore, umbilicals, plant and petrochemical, pilot, and wind farm cables for industrial applications, as well as airguard cable systems; and indoor, mobile service, power and signaling, and LS0H cables for traders and installers. In addition, this segment provides fire resistant cables and low fire-hazard cables for fire safety applications, as well as sells residual products. Its Telecom segment provides optical cables and fibers, communications copper cables and accessories, FTTx passive solutions, blown fiber systems, OPGW systems, and connectivity solutions for various cable management needs. Prysmian SpA was founded in 1872 and is headquartered in Milano, Italy.

STOCK P ERFORMANCE

TOTAL SHAREHOLDER RETURNS 1 Yr 3 Yr 5 Yr

Company TSR (%) 59.21 9.24 0.33

GICS 2010 TSR (%) 5.25 0.28 -0.04

Index TSR (%) 16.54 6.77 -0.76

Source: Compustat. As of last day of company FY end month: 12/31/2012

COMPANY SNAPSHOT

Market Cap (M) 3,681

Closing Price 17.16

Annual Dividend 0.21

52-Week High 17.96

52-Week Low 10.55

Shares Outstanding (M) 214.51

Average daily trading volume (prior mo) 1382.51

As of March 22, 2013 (All currency in EUR)

FINANCIAL & OPERATIONAL PERFORMANCE Historical Performance (FY)

All currency in EUR 2008 2009 2010 2011 2012

Earnings

Revenue (M) 5,144 3,731 4,571 7,583 7,848

Net Income (M) 237 248 148 -136 168

EBITDA (M) 521 485 406 473 668

EPS (EUR) 1.34 1.39 0.83 -0.64

EPS Y/Y Growth (%) -20 4 -41

Profitability

Net Margin (%) 6 9 5 -1 3

EBITDA Margin (%) 10 13 9 6 9

Return on Equity (%) 53 37 20 -13 15

Return on Assets (%) 8 8 4 -2 3

ROIC (%) 17 16 8 -7 7

Liquidity

Debt/Assets 37 34 35 32 30

Debt/Equity 259 153 174 179 161

Cash Flows

Operating (M) 502 329 283 567 546

Investing (M) -100 -95 -272 -437 -227

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Prysmian S.p.A. MSCI ACWI: Electrical Equipment (GICS: 201040) FT - Italy Index




Financing (M) -151 -240 119 -38 -238

Net Change (M) 240 0 138 97 85

Valuation & Performance

Price/Earnings 8.30 8.80 15.40

Annual TSR (%) -32.44 15.39 7.65 -23.93 59.21

Source: Compustat. Note: Compusta t standa rdizes f inancia l data to allow for accurate compa rison across companies and industries. Compusta t data may differ from companies' disclosed financials. See www.issgovernance.com/ policy/CompanyFinancialsFAQ for more information.

http://www.issgovernance.com/policy/CompanyFinancialsFAQ




Corporate Governance Profile

BOARD & COMMITTEE SUMMARY

Independence Members Meetings

Full Board 55% 11 6

Audit 100% 3 6

Compensation 67% 3 3

Nomination 67% 3 3

Chairman classification Non-Independent

Separate chair/CEO Yes

Independent lead director N/A

Voting Standard Majority

Total director ownership (000 shares) 3,536

Total director ownership (%) N/A

Number of directors attending < 75% of

meetings

1

Number of directors on excessive number

of outside boards

1

Average director age N/A years

% of women on board 9%

SHAREHOLDER RIGHTS SUMMARY

Controlled Company? No

Classified Board No

Dual-class stock No




ISS QuickScore As of March 26, 2013 ISS GOVERNANCE QUICKSCORE PILLARS

Board 1 Remuneration 2 ISS Governance QuickScore is derived from

publicly disclosed data on the company's governance practices. Scores indicate decile rank relevant to index or region. While

company practices that raise concerns in ISS Governance QuickScores are in many cases factors that weigh against the company in analyzing certain proposals, ISS recommenda tions are based on s ituational

proposals and the related qualitative aspects of our review.

Scores are ca lculated at each pillar by summing

the factor scores in that pilla r. Not all factors and not all subcategories have equal weight, and not all factors or subcategories apply to all markets. For more information on ISS

Governance QuickScore, visit www.issgovernance.com/QuickScore. For questions, please contact: [email protected].

Subcategory & Impact: Subcategory & Impact:

Board Composition Pay For Performance

Composition of Committees Non-Performa nce Based Pay

Board Practices Use Of Equity

Board Policies Equity Pay Risk Mitigation

Non-Executive Pay

Communications & Disclosure

Termination

Controversies

Shareholder Rights 1 Audit 1

Subcategory & Impact: Subcategory & Impact:

One Share - One Vote External Auditor

Takeover Defenses Audit & Accounting Controversies

Other Issues

The total number of points in this subcategory is at the top of the possible range.

The total number of points in this subca tegory is at the bottom of the possible range.

No Star or Flag: The total number of points in this subcategory is in the middle of the poss ible range.

http://www.issgovernance.com/QuickScore





Remuneration Profile

Components of Pay

EUR, in thousands

V. Battis ta V. Battis ta V. Battis ta

2012 Change 2011 2010 2012

Base sa lary1 1,116 0.0% 1,116 970 2,876

Perquis i tes2 9 0.2% 9 5 37

Pens ion3 n/d - n/d n/d n/d

Al l other compensation4 3 75.5% 2 n/a 17

Cash bonus 446 97.4% 226 1,482 1,675

Deferred/Share bonus - - - - -

Tota l short-term incentives 5 446 97.4% 226 1,482 1,675

Non-equity incentives 1,449 -14.6% 1,696 - 1,891

Restricted s tock 430 200.0% 143 - 91

Option grant 740 200.0% 247 - 157

Tota l long-term incentives 6 2,619 25.6% 2,086 - 2,140

Total compensation 4,193 22.0% 3,438 2,457 6,745

% of Net Income 2.50% -2.53% 1.66% 4.01%

% of Revenue 0.05% 0.05% 0.05% 0.09%

1

4

5

6

CEO PAY DEVELOPMENT (EUR) COMPANY PERFORMANCE (EUR)

Three executive

di rectors and two

managers with

s trategic

respons ibi l i ty

▲: S/he only served in this position during part of the year.

CEO 2012: Non-equity incentives: EUR 1,448,611 (MBO 2012) for 2012. This is part of the coinvestment plan, which has a three-year vesting period and it is

subject to performance conditions. EUR 1,448,611 is the maximum amount that can be paid. We also note that under the same co-investment plan,

Battista has the following payments that are deferred to future years: EUR 1,695,633 (MBOs) and EUR 1,898,683 (LTIP Cash) for previous years.

CEO Other Executives

CEO 2012: EUR 145,500 was paid as fee for non-competition clause. Other Executives 2012: This includes fees paid for non-competition clause.

CEO 2012: Paid as travel allowance.

CEO 2012: Cash Bonus: EUR 193,148 paid as bonus for 2012 and EUR 253,158 paid as bonuses for previous years.

Notes:

2010 2011 2012

Non-Performance-basedPay

975 1,126 1,128

Performance-based Pay 1,482 2,312 3,065

Total Pay 2,457 3,438 4,193

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

CEO

Pa

y, in

th

ou

san

ds

Non-Performance-based Pay Performance-based Pay Total Pay

FY End2009

2010 2011 2012

Revenue, in millions 4,571 7,583 7,848

Net income, in millions 148 -136 168

Indexed TSR 100 108 82 130

-

20

40

60

80

100

120

140

-1,000

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Revenue, in millions Net income, in millions Indexed TSR




Vote Results for Annual General Meeting 18 April 2012

Proposal Mgmt Rec ISS Rec Disclosed Result

% For % Against % Abstain*

2.1 Fix Number of Directors at 11 For N/A Accepted 98.29 1.7 0.01

2.2 Slate 1 Presented by Management For N/A n/a 83.02 n/a n/a

2.3 Slate 2 Presented by Clubtre Srl None N/A n/a 12.24 n/a n/a

1 Approve Financial Statements, Statutory Reports, and All For For Accepted 99.78 0 0.22

2.4 Slate 3 Presented by Institutional Investors (Assogestio None N/A n/a 3.03 n/a n/a

3 Approve Remuneration of Directors For For Accepted 99.12 0.16 0.72

4 Authorize Share Repurchase Program and Reissuance of Rep

For For Accepted 98.67 0.77 0.57

5 Approve Remuneration Report For For Accepted 98.02 0.71 1.27

* Abstentions are counted together with against votes on a particular item.




Meeting Agenda & Proposals

Ordinary Business

Item 1. Approve Financial Statements, Statutory Reports, and

Allocation of Income FOR

VOTE RECOMMENDATION

This item warrants a vote FOR because: This is a routine request in Italy; There are no specific concerns with the company's accounts.

Discussion

Fiscal ye ar ended Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2010

Earnings per share EUR 0.79 EUR -0.65 EUR 0.82

Dividend per share EUR 0.42 EUR 0.21 EUR 0.17

Payout ratio 53.16% N/A 20.7%

PWC audited the financial statements for 2012. The auditor's report contained in the annual report is unqualified, meaning that, in the opinion of the auditor, the company's financial statements are fairly presented in accordance with the IFRS adopted by the European Union.

Elect Internal Auditors (Bundled) and Appoint Chairman of Internal Statutory Auditors - Choose

One of the Following Slates

Item 2.1. Slate 1 Submitted by Clubtre Srl FOR

VOTE RECOMMENDATION

This slate warrants a vote FOR because:

Shareholders can only vote in favor of one of the two slates; All proposed candidates under both slates possess the professional experience to fulfill their role of

statutory auditors; Supporting this slate will ensure that all candidates are elected and that the chairman of the statutory

auditor board is appointed from the slate presented by institutional investors.

Discussion

Shareholders are called to appoint the board of statutory auditors (collegio sindacale) and its chairman for a term of three years. For further information on the voto di lista system, please refer to the following paper: Safeguarding Minority Rights: An Analysis of Italy's Voto di Lista .

Internal statutory auditors' boards are usually composed of five members, including a group chairman and two alternate auditors -- all of whom are expected to be independent. This board is responsible for the supervision of management practices. The statutory auditors also help ensure compliance with Italian legislation and perform a control of the accounts every three months. Moreover, in accordance to the Italian law n.262/2005, the chairman of the internal statutory auditors' board must be elected by shareholders directly among the members of the internal statutory auditors' board elected by minority shareholders.

http://www.governanceexchange.com/index2.php?x=d&i=1300




COMPANY PRACTICE

The internal statutory auditors' board of is currently composed of three primary auditors (Marcello Garzia, Luigi Guerra, and Paolo Burlando) and two alternate auditors (Luciano Rai and Giovanni Rizzi).

SLATE SUBMITTED BY CLUBTRE SRL

Clubtre Srl, holding 6.20 percent of the company's outstanding share capital, has presented the following slate of candidates.

On

Ballot Name Gender Age Degree-Experience Note

Nominees to the positions of primary auditors

1 Paolo Lazzati M 54 Economics – Chartered

accountant

Since 2004, chairman of statutory auditors of

Prysmian Cavi e Sistemi Srl and Prysmian Powerlink

Srl.

2 Maria Luisa Mosconi F 50

Economics – Chartered

accountant and

certified auditor

Primary auditor in Banca Popolare di Milano SCARL

and Screen Service Broadcasting Technologies Spa,

and director at Biancamano Spa.

Nominees to the positions of alternate auditors

1 Marcello Santino Garzia M 66 Certified auditor

Chairman of Prymian's board of internal statutory

auditors; primary auditor in Prysmian Cavi e Sistemi

Srl.

Analysis

This slate has been presented by the largest shareholder of the company (6.20 percent of the share capital) and contains candidates with a strong profile. In addition, the alternate candidate, Marcello Garzia currently sits as chairman on the company's board of internal auditors.

As only two slates of candidates have been presented this is a non-contentious election, with two statutory auditors elected from the majority slate and the chairman elected from the minority slate.

POTENTIAL OUTCOMES OF THE VOTE

Prysmian has no reference shareholder and 100 percent free-float. Therefore, it is not sure that Slate 1 will get the majority of votes. If Slate 2 gains the majority of votes, Lazzati (Slate 1) will be appointed chairman of the statutory auditors and Garzia will be appointed as alternate auditors. From Slate 2, Libroia would be appointed primary auditor and Mezzabotta would be appointed alternate auditor. Therefore, the general meeting will need to integrate the board of statutory auditors by appointing one primary auditor and one alternate auditor. This situation would not allow institutional investors voting by proxy to cast an informed vote.

On the other hand, if Slate 1 gains the majority of votes, all proposed candidates would be elected to the board of internal auditors and Libroia (proposed by institutional investors under Item 2.2) will be appointed chairman of the statutory board.

CONCLUSION

Considering the unique capital structure at Prysmian and considering that the proposed candidates under both slates have strong and independent profiles, which would allow them to fulfill their role of statutory auditors in the




best interest of all shareholders, we believe that all proposed candidates, under both slates, should be appointed to the board of statutory auditors. The best way of achieving the election of all candidates, it is to support the Slate 1.

Item 2.2. Slate 2 Submitted by Institutional Investors AGAINST

VOTE RECOMMENDATION

This slate warrants a vote AGAINST because:

Shareholders can only vote in favor of one of the two slates; All proposed candidates under both slates possess the professional experience to fulfill their role of

statutory auditors; Supporting Slate 1 will ensure that all candidates are elected and that the chairman of the statutory

auditor board is appointed from this slate.

Slate Submitted by Institutional Investors

Institutional Investors, holding 3.37 percent of the company's outstanding share capital, have presented the following slate of candidates.

On

Ballot Name Gender Age Degree-Experience Note

Nominees to the positions of primary auditors

1 Pellegrino Libroia M 67


accountant and

certified auditor

Chairman of Davide Campari Milano Spa's board of

statutory auditors.

Nominees to the positions of alternate auditors

1 Claudia Mezzabotta F 43


accountant and

certified auditor,

academic

Adjunct Professor of International Financial

Accounting at the University of Trento and the

University Cattolica in Milan.

Analysis

The curriculum vita of the nominees from this slate has been made available also in English which facilitates review by international shareholders.

Pellegrino Libroia seems to have the relevant experience to sit on the board of statutory auditors of a company of the size of Prysmian. Furthermore, as this slate is likely to be the minority slate, he will be appointed chairman of the board of statutory auditors.

As only two slates of candidates have been presented this is a non-contentious election, with two statutory auditors elected from the majority slate and the chairman elected from the minority slate.




Item 3. Approve Internal Statutory Auditors' Remuneration FOR

VOTE RECOMMENDATION

This item warrants a vote FOR because: • Internal statutory auditor remuneration is a routine and non-contentious issue in Italy. • The proposed remuneration was made available in a timely manner.

Discussion

Shareholders are asked to fix the remuneration to be paid to internal statutory auditors for the three-year period 2013-2015.

Clubtre Srl proposes a remuneration of EUR 75,000 for the chairman of statutory auditors and EUR 50,000 for every other primary auditor.

According to the 2012 remuneration report, the individual remuneration of the chairman and the primary auditors for the last fiscal year has been, respectively, EUR 41,080 (EUR 20,660 for his mandate in the parent company and EUR 20,420 for mandates in subsidiaries), EUR 12,920, and EUR 38,420 (EUR 12,920 for his mandate in the parent company and EUR 25,500 for mandates in subsidiaries).

Analysis

The proposed remuneration would constitute a salary increase for the primary auditors of more than three times compared to the current salary. However, we note that the proposed remuneration for the chairman and primary auditors is in line with what it is paid in other Italian companies of the same size of Prysmain.

Internal statutory auditor remuneration is a routine and non-contentious issue in Italy.

Item 4. Authorize Share Repurchase Program and Reissuance of Repurchased Shares FOR

VOTE RECOMMENDATION

This item warrants a vote FOR because: The repurchase limit of up to 10 percent of outstanding issued share capital is respected. The holding limit of up to 10 percent of share capital in treasury is respected.

Discussion

Shareholders are asked to authorize the board to repurchase company shares. As permitted by article 2357 of the Italian Civil Code, the maximum amount of company shares that may be repurchased is limited by the global amount of net results and of distributable reserves resulting from the last approved financial statements. Share Buybacks

Amount 18,411,709 shares 8.6 % of the share capital

Current treasury shares 3,039,169 shares 1.4 % of the share capital

Maximum purchase price 110 % of share market price

Current share price EUR 17.01

Duration of authority 18 months

During takeover NO

The board clarifies that the authorization is requested in order to: • Constitute a pool of treasury shares to service stock incentive plans. • Allow the board greater flexibility in supporting the company's share price and liquidity.




• Support potential strategic agreements that would allow the company to expand its sphere of activities.

• Constitute a pool of treasury shares that could possibly service the conversion of outstanding convertible bonds.

This authorization would replace the previous one granted on April 18, 2012.

Analysis

Share buybacks benefit shareholders by boosting the trading price and returning surplus capital. Additionally, repurchases usually improve the efficiency of the balance sheet, which may also enhance returns over the long term.

Some shareholders object to corporations repurchasing shares. They prefer to see extra cash invested in new businesses or paid out as dividends. We believe that when timed correctly, corporate stock repurchases are a legitimate use of corporate funds and can add to long-term shareholder returns.

The terms of the buyback proposed do not appear problematic.

Item 5. Approve Employee Stock Purchase Plan FOR

VOTE RECOMMENDATION

A vote FOR this resolution is warranted as no corporate governance concerns are highli ghted and the volume of equity reserved to employees is within preferred limits.

Discussion

This is a proposal that would authorize the board to create a new stock purchase plan. Employees would be able to purchase company shares with a maximum 25 percent discount on the market price.

RATIONALE PROVIDED BY THE COMPANY

Improve employees’ loyalty, engagement, business awareness strengthening sense of belonging to the Group;

Align interests of stakeholders (the Group, employees , and shareholders) by identifying a common goal of creating long-term value;

Contribute to the integration process.

ELIGIBILITY

Considering that the plan is addressed to senior executives, managers, and all other group employees, the potential participants would be about 18,300.

PARTICIPATION

Each employee may participate in the plan over a maximum of three purchase cycles (2014, 2015, and 2016).

Each participant agrees to purchase shares for an amount determined by himself, with a minimum of EUR 100, for each of the three purchase cycles. The vesting of the shares held under the plan is immediate, however there is a retention period (three years or more) during which the shares held cannot be sold and/or transferred.

An individual annual cap will be introduced on the discount reserved for each participant and an individual annual cap will be introduced on the investment which, in any case, shall not exceed EUR 26,670.




DISCOUNT

Beneficiaries of the plan will be allowed to buy Prysmian shares at a discount rate. The discount on market price will be 1 percent for senior executives (6), 15 percent for managers (~300), and 25 percent for all other employees (~18,000).

With the exception of senior executives, participants will benefit from an entry bonus equal to six free shares at the moment of their first purchase.

DILUTION

For the purposes of implementing the plan, the company will use treasury shares. The maximum number of shares to be reserved for this plan is 500,000, which correspond to 0.23 percent of the current share capital. When looking at all plans total dilution would correspond to 2.11 percent.

Analysis

This type of plan is not common in Italy while it is common practice in more mature markets (e.g. the United Kingdom). The plan is non-contentious and dilution remains within our preferred threshold; therefore, shareholders are advised to support this item.

Item 6. Approve Remuneration Report FOR

VOTE RECOMMENDATION

This item warrants a vote FOR because the company has improved disclosure practices and introduced new provisions that better comply with international best practices , including:

Details on the pay mix of executives' remuneration, including caps on variable elements;

Performance criteria and other deferral and investment provisions apt to align payouts to the company performance on the long term;

The company has introduced in its remuneration report a provision that caps at 24 months of total remuneration the severance payments for future agreements.

However, we want to highlight the following remuneration practices:

First, the non-competing agreement, paid in annual installments over a period of time, is an uncommon feature in the Italian market. The non-competing agreement would be favorable to the company if the executive contract were to be terminated during the first part of the four-year period. On the other hand, the company is paying a non-competing fee even though the executive contract might not be terminated during the period of reference.

Finally, the severance payments foreseen for the CEO might exceed 24 months of his total compensation, when looking at the amounts paid out during 2012. However, his severance is within 24 months if we take into account the deferred portion of his salary. Furthermore, when looking at severance practices in Italy, the absolute amount foreseen for Battista (EUR 4.5 million) does not seem excessive.

Discussion

Management asks shareholders to approve the company's remuneration report.

This is an advisory vote on the company's remuneration policy.

MARKET CONTEXT

Say-on-pay became mandatory for financial institutions in 2009 and for non-financial issuers in 2012. A proposal for the company's policy on remuneration and other terms of employment for senior management for the coming fiscal year is to be presented to the annual general meeting for approval. Shareholder vote is binding at financial




companies. In the case of non-banking institutions, the shareholder vote is only advisory instead of binding, and only on the forward-looking section of the remuneration report.

The policy is to include information on base salary, variable compensation (including the principal terms of bonus and incentive schemes), and any other remuneration paid, such as pension, notice of termination, and severance pay.

The information provided by issuers is not standardized; therefore, contents and details may vary. A typical proposal will mention the different forms of compensation, and many will mention short-term bonus caps and general short-term performance criteria. On the whole, clear indications on amounts payable as severance packages are not easily accessible.

In addition, the remuneration report always breaks down the amounts paid to executive and non-executive directors last year, and breaks these figures down between different compensation categories as well as between the CEO and the rest of the management as an aggregate group.

COMPANY PRACTICE

Performance-based Pay Elements

SHORT-TERM INCENTIVES

Award level Maximum 100% of base salary for the CEO and between 75 % and 50% of base salary for

other executives

Comprising cash/deferred All in cash

Performance criteria

Gate criteria: Net Financial Position and Consolidated EBITDA.

EBITDA of the group (50% of award) and Financial performance related to Function and

Business Unit (50% of award)

Bonus earned EUR 772,592 to the CEO

Additional information N/A

LONG-TERM INCENTIVES

Co-investment Plan

Plan name Co-investment Plan

Award type(s)

Cash

Option Selected by Executive Directors: The participant co-invests 75% of the value of their

accrued annual bonus with the possibility of obtaining, in 2014 and should the target be

achieved, a multiple of 2.5 times the amount co-invested (including the co-investment

itself), or of losing 75% of the amount co-invested should the target not be achieved.

Award level

CEO Pay mix at target: Salary (27%), annual bonus (9%), LTI Cash (38%), LTI Equity (26%).

CEO Pay mix at maximum level:

Salary (21%), annual bonus (11%), LTI Cash (44%), LTI Equity (23%).

Performance criteria Adjusted Cumulative EBITDA 2011-2013 (minimum EUR 1.75 billion, maximum EUR 2.1 billion)

Awards granted N/A

Awards vested/lapsed N/A

Additional information

The beneficiary resigning during the three-year period will lose the right to return of the co-investment.

This is not an obligatory plan, but is an essential condition to participate in the performance

share plan described hereafter.




Performance Shares

Plan name Performance Shares

Award type(s) Performance shares

Award level

CEO Pay mix at target: Salary (27%), annual bonus (9%), LTI Cash (38%), L TI Equity (26%).

CEO Pay mix at maximum level: Salary (21%), annual bonus (11%), LTI Cash (44%), LTI Equity (23%).

Performance criteria Adjusted Cumulative EBITDA 2011-2013 (minimum EUR 1.75 billion, maximum EUR 2.1

billion).

Awards granted

No grants have been made in 2012. As of Dec. 31, 2012, executive directors (4 persons) and

other managers with strategic responsibilities (2 persons) held a total of 258,313

performance shares, corresponding to 0.12% of the company share capital. When look ing at the entire company, we see that a total of 4,022,375 awards were outstanding on Dec.

31, 2012, which corresponds to 1.88% of the company share capital.

Awards vested/lapsed Awards will vest in 2014

Additional information 290 key managers are beneficiaries of the plan; 2-year lock-up period on 25% of awards; 3-years vesting period.

Non-Performance-based Pay Elements

Base salary

EUR 1,115,500 to the CEO

The company pays a non-competing fee as part of the fixed remuneration to the CEO and

one other executive director (Romeo). The non-competing fee corresponds to 13 percent of

the fixed salary for the CEO and 12 percent of the fixed salary for the other executive

director. The CEO non-competing agreement covers the four-year period 2011-2014.

Key perquisites EUR 9,154 to the CEO

Severance/Change-in-Control Arrangements

Severance arrangements

CEO Valerio Battista is entitled to receive EUR 4.5 million, which is in line with the national

collective bargaining agreement considering his years of service. The severance provisions correspond to:

≈ 3x his total remuneration when considering the remuneration paid out in 2012.

≈ 1.6x his total remuneration when considering the maximum remuneration due for 2012.

Furthermore, when looking at severance practices in Italy, the absolute amount foreseen

for Battista does not seem excessive.

In the remuneration report, the company states " With reference to future appointment of

new Executive Board Members and/or Managers with stra tegic responsibilities, Prysmian is

committed not to envisage ex-ante agreements for employment and/or position termination which are not in line with the Self-Regulation Code for Listed Companies and

Corporate Governance best practices, in compliance with local law and national collective

agreements, and in any case which define a termination indemnity exceeding the two-year

salary."

Change-in-Control arrangements N/A




Remuneration Committee Composition & Communication

Committee Composition

Composition in line with best practice

recommendations* Yes

Risk Mitigations

Claw-back policy or ex-post

adjustments Yes

Stock ownership guidelines No

Stock holding requirements No

Additional information N/A

*The Italian Code requires that the compensation committee is fully composed of non-executive independent directors. If the committee includes non-executive non-independent directors, it should in any case be majority independent and with an independent chairman.

Analysis

ISS POLICY

ISS believes that seeking shareholder approval for a company's remuneration policy is a positive corporate governance provision. It allows shareholders to express their support or displeasure over how the company pays and provides incentive to its senior management in the most direct way possible.

ISS may recommend a vote against compensation-related resolutions in cases where boards have failed to demonstrate good stewardship of investors' interests regarding executive compensation practices.

The assessment of compensation follows the ISS Global Principles on Executive and Director Compensation which are detailed below. These principles take into account global corporate governance best practice.

The ISS Global Principles on Compensation underlie market-specific policies in all markets: 1. Provide shareholders with clear, comprehensive compensation disclosures;

2. Maintain appropriate pay-for-performance alignment with emphasis on long-term shareholder value;

3. Avoid arrangements that risk pay for failure;

4. Maintain an independent and effective compensation committee;

5. Avoid inappropriate pay to non-executive directors.

In line with European Commission Recommendation 2004/913/EC, ISS believes that seeking annual shareholder approval for a company's compensation policy is a positive corporate governance provision.

Thus, ISS will generally recommend a vote against an Italian company's variable remuneration guidelines due to one or a combination of the following factors:

The proposed compensation policy/report was not made available to shareholders in a timely

manner, or the level of disclosure of the proposed compensation policy is below what italian best

practice standards dictate;

Concerns exist with respect to the disclosure or structure of the bonus or other aspects of the

remuneration policy such as performance measures, severance terms, and discretionary payments;




Concerns exist surrounding the company's long-term incentive plan(s), including but not limited to,

dilution, vesting period, and performance conditions.

Provision of stock option grants, or similarly structured equity-based compensation, to non-executive

directors;

The policy or plan is in breach of any other supplemental market specific voting policy.

If an agenda contains, along with the request for approval of the remuneration policy, a separate proposal for an equity-based compensation plan that does not comply with ISS guidelines, ISS will vote case-by-case on the remuneration policy taking into consideration the language of the remuneration policy and whether it includes the newly proposed plan, other components of remuneration, the overall structure of remuneration at the company, and/or any commitment made by the company to address any concerns.

ISS ANALYSIS

Overview of the remuneration policies and practices of Prysmian SpA

EUROP EAN MARKET STANDARD S DOES PRYSMIAN SPA COMPLY?

Disclosure

There should be adequate disclosure on the company's policies and practices in

relation to the remuneration of executives and directors. Yes

Executive remuneration

Any short-term compensation component should include a maximum award limit.

Yes

Performance metrics attached to the short-term compensation component should be disclosed.

Yes

The compensation policy should notably avoid guaranteed or discretionary compensation.

Yes

Executives should not be entitled to termination benefits in excess of 24

months' pay.* Yes

Vesting schedule

Vesting of long-term incentive grants must not occur less than three years from

date of grant. Yes

Performance criteria

Performance metrics attached to the long-term compensation component should be disclosed.

Yes

If applicable, performance targets should provide incentives based on

materially improved company performance. Yes

Non-executive director remuneration

Non-executive directors should not receive options, or similarly structured

equity‐based compensation. Yes

There should not be an existing retirement benefit scheme for non-executive

directors. Yes

Remuneration committee

No executive director, including the CEO, should be a member of the

remuneration committee. Yes




*Excluding applicable national collective bargaining agreement.

DOUBLE DIPPING

The company uses the same performance metric for the co-investment plan and the long-term equity plan, which would allow the beneficiaries to receive two sets of remuneration for the achievement of the same target ("double dipping"). Furthermore, we note that the only short-term performance metric clearly disclosed by the company is the company EBITDA, again the same performance metric used for the other two long-term incentive plans.

The company states that the co-investment plan and the long-term equity plan are to be seen as one plan, with the same performance metrics and vesting period. Furthermore, executives need to participate in the co-investment plan if they wish to participate in the equity plan, which show a clear connection between the two plans.

Furthermore, it has to be stressed that the participants in the co-investment plans can lose up to 75 percent of their initial investment in case the target is not met. This is a feature that we do not see often in the Italian market and that certainly constitute an additional way of motivating executives to meet the financial targets.

CONCLUSION

The proposed remuneration policy is broadly in line with market practice, regarding both actual content and disclosure.

The company provides sufficient disclosure on both short- and long-term performance criteria. Furthermore, clear information is provided both on the absence of guaranteed bonuses and the presence of caps both for the short- and long-term remuneration.

Furthermore, the company has introduced in its remuneration policy the reference to severa nce payments capped at 24 months of total remuneration for future agreements.

Although, the overall policy is well balanced and structured, we want to highlight few aspects of Prysmian' remuneration policy that merit special attention.

First, the non-competing agreement, paid in annual installments over a period of time, is an uncommon feature in the Italian market. The non-competing agreement would be favorable to the company if the executive contract were to be terminated during the first part of the four-year period. On the other hand, the company is paying a non-competing fee even though the executive contract might not be terminated during the period of reference.

Second, the severance payments foreseen for the CEO might exceed 24 months of his total compensation, when looking at the amounts paid out during 2012. However, his severance is within 24 months if we take into account the deferred portion of his salary. Furthermore, when looking at severance practices in Italy, the absolute amount foreseen for Battista (EUR 4.5 million) does not seem excessive.

Finally, we encourage the company to improve its disclosure practices on all performance metrics driving the short-term remuneration.




Extraordinary Business

Item 1. Authorize Issuance of 13,444,113 Shares without Preemptive Rights to Service Convertible Bonds Reserved for Institutional

Investors FOR

VOTE RECOMMENDATION

A vote FOR is warranted because this item might benefit the company financial position. Furthermore, the potential capital increase (6.27 percent over currently issued capital) is within the preferred threshold for issuances without preemptive rights.

Discussion

Management is seeking approval (1) for the conversion of the bond issuance approved by the board on March 4, 2013, and (2) for the issuance of shares up to a maximum amount of EUR 1,344,411.30 to service EUR 300 million convertible bonds.

The company states that maximum amount of shares that could be issued under this authorization equals 13,444,113. The dilutive effect of this proposal would therefore correspond to 6.27 percent.

EUR 300 MILLION 1.25 PERCENT EQUITY LINKED BONDS DUE 2018

On March 4, 2013, the board approved the issue of the bonds. The bonds were placed on the domestic and international market for qualified investors (except investors from the United States, Australia, Canada, Japan, South Africa) in consideration of (1) the complexity of the instruments offered and (2) the desire to ensure the successful outcome of the transaction in a short time. The issuance of bonds to qualified investors made it possible to quickly raise funds from the non‐banking capital market.

Rationale

The conversion of the bonds into newly issued shares shall allow the company to strengthen equity and diversify its financial position, while limiting the related cash outflow for financial expenses and the projected capital, as well as to expand its ownership structure thanks to qualified investors.

The funds collected shall be used for the optimization of the company’s financial position and cost of capital and also to finance business operations, shall also affect the breakdown of the company’s financial debt.

As an indication of the impact on the financial position, the company states that the net financial position as at Dec. 31, 2012, amounted to EUR 918 million. If the impact of the bonds had been taken into account, this Net Financial Position would have been affected by a positive cash effect of EUR 300 million and a liability of EUR 261 million given the “split accounting” of the “debt” component and the “equity” component. Consequently, the Net Financial Position would have improved by approximately EUR 39 million, reaching EUR 879 million.

Risks

The Bond Loan Regulation provides that "should the Shareholders’ Meeting not approve the Share Capital Increase relating to the conversion of the Bonds by 31 July 2013 (the “Long‐Stop Date”), within a limited period of time – not exceeding 10 trading days after the Long‐Stop Date, the Company may issue a specific notice addressed to the holders (the “Shareholder Event Notice”) and proceed to the early redemption of the entire Bond Loan by paying in cash an amount equal to the higher of (i) 102% of the principal and (ii) 102% of the average of the bond market prices recorded over the time period subsequent to the announcement of the redemption (plus, in each case, the interests accrued).

However if, subsequently to the failure to approve the Share Capital Increase, the company has not issued the Shareholder Event Notice within the deadlines established in the Bond Loan Regulation (and in specific circumstances even before that date), each bondholder may, within the deadlines established in the Regulation, request early redemption in cash of the bonds held. In this case, the company shall pay an amount in cash equal to




the market value (determined as indicated in the Regulation) of the Prysmian ordinary shares to which the bondholder would have been entitled if he/she had exercised the right to convert the bonds into ordinary shares."

Conversion Ratio and Other Features

The bond unit amount corresponds to EUR 100,000. The initial conversion price of the bonds into shares is EUR 22.3146 per share, which would result into 4,481 shares for each bond.

If the company distributes dividends during the life of the Bond Loan (until March 8, 2018) in excess of Euro 0.42 per year, the conversion price shall be adjusted in order to compensate bondholders for distributed dividends (the so‐called dividend protection clause).

Analysis

ISS guidelines allow for general capital increases without preemptive rights to a maximum of 20 percent of the existing outstanding share capital; this amount is generally more than adequate for unforeseen contingencies. Issuance authorities larger than 20 percent could lead to excessive cash calls on shareholders, requiring them to provide the funds to maintain their relative positions or accept substantial dilution.

However, we evaluate specific requests on a case-by-case basis and would approve capital increases in excess of the 20-percent threshold if they are justified by a sound rationale and in line with any legal requirements in terms of respect of minority shareholder rights.

CONCLUSION

In this case, the company has provided extensive disclosure on the share issuance as well as the related bond issuance, which would be beneficial to strengthen the company's financial position. Furthermore, the potential capital increase (6.27 percent over currently issued capital) is within our preferred threshold for issuances without preemptive right.




Equity Ownership Profile Type Votes per share Issued Common Equity 1.00 214,508,781

Ownership - Common Equity Number of Shares % of Class Clubtre SRL 13,292,576 6.20 Norges Bank Investment Management 6,975,440 3.25 Fidelity Management & Research Co. 3.10 JP Morgan Chase & Co. Corporation 2.20 Franklin Advisers, Inc. 4,637,547 2.16 State Street Global Advisors Ireland Ltd. 4,571,668 2.13 FIL Investments International 2,021,853 2.12 Schroder Investment Management Ltd. 4,309,358 2.01 OppenheimerFunds, Inc. 4,290,763 2.00 © 2013 Factset Research Systems, Inc. All Rights Reserved., Regulatory News Service as of: 18 Mar 2013

Additional Information

Meeting Location Mediobanca, via Filodrammatici n. 3, Milan, Italy

Meeting Time 14:30

Security IDs T7630L105(CINS)




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