REPORT ON CORPORATE GOVERNANCE 2018 - …

1 LEONARDO SPA CORPORATE GOVERNANCE REPORT - FINANCIAL YEAR 2017 _____ 130 REPORT ON CORPORATE GOVERNANCE 2018 LEONARDO SPA CORPORATE GOVERNANCE REPORT - FINANCIAL YEAR 2017 _____ 2 REPORT ON CORPORATE GOVERNANCE AND SHAREHOLDER STRUCTURE 2017 FINANCIAL YEAR 14 MARCH 2018 LEONARDO Societ per azioni Registered office in Rome, Piazza Monte Grappa no. 4 Fully paid-up share capital of Euro 2,543,861, Registered in Rome, Register no.

2 And Tax Ref. 00401990585 VAT no. 00881841001 Disclaimer This REPORT has been translated into English solely for the convenience of the international reader. In the event of conflict or inconsistency between the terms used in the Italian version of the REPORT and the English version, the Italian version shall prevail, as the Italian version constitutes the sole official document. LEONARDO SPA CORPORATE GOVERNANCE REPORT - FINANCIAL YEAR 2017 _____ 3 CONTENTS OUR GOVERNANCE IN BRIEF 6 INTRODUCTION 9 1.

3 ISSUER PROFILE 9 - Company Organisation 9 - Objectives and CORPORATE mission 11 2. INFORMATION ABOUT THE SHAREHOLDER STRUCTURE AT 14 MARCH 2018 (Art. 123-bis, para. 1, TUF) 12 A) Structure of the share capital (Art. 123-bis, para. 1, lett. a), TUF) 12 B) Restrictions on share transfer (Art. 123-bis, para. 1, lett. b), TUF) 12 C) Material shareholdings in the share capital (Art. 123-bis, para. 1, lett. c), TUF) 13 D) Holders of Securities that confer special control rights (Art. 123-bis, para. 1, lett. d), TUF) 13 ) Special powers of the Government 13 E) Employee shareholding: voting mechanism (Art.

4 123-bis, para. 1, lett. e), TUF) 15 F) Voting restrictions (Art. 123-bis, para. 1, lett. f), TUF) 15 G) Shareholders agreements (Art. 123-bis, para. 1, lett. g), TUF) 15 H) Clauses on change of control (Art. 123-bis, para. 1, lett. h), TUF) and By-Laws provisions concerning takeover bids (Art. 104, para. 1-ter and 104-bis, para. 1, TUF) 15 I) Compensation for Directors in case of resignation or dismissal without just cause or termination of employment following a takeover bid (Art. 123-bis, para. 1, lett. i, TUF) 24 L) Laws governing the appointment and replacement of Directors and amendments to the By-Laws (Art.

5 123-bis, para. 1, lett. l, TUF) 24 M) Authorisation for share capital increase and authorisation to purchase treasury shares (Art. 123-bis, para. 1, lett. m, TUF) 25 N) Direction and coordination 25 3. COMPLIANCE (Art. 123-bis, para. 2, lett. a), TUF) 25 4. BOARD OF DIRECTORS 26 APPOINTMENT AND REPLACEMENT (Art. 123-bis, para. 1, lett. l), TUF) 26 - Succession plans 30 COMPOSITION (Art. 123-bis, para. 2, lett. d), TUF) 30 - Curricula of the Directors 31 - Directors Overboarding 41 LEONARDO SPA CORPORATE GOVERNANCE REPORT - FINANCIAL YEAR 2017 _____ 4 ROLE OF THE BOARD OF DIRECTORS (Art.

6 123-bis, para. 2, lett. d), TUF) 42 - Meetings 44 - Board evaluation 48 - Board induction 51 DELEGATED BODIES AND INFORMATION TO THE BOARD OF DIRECTORS 53 - Chief Executive Officer 53 - Chairman of the Board of Directors 53 - Information to the Board of Directors 53 OTHER EXECUTIVE DIRECTORS 55 INDEPENDENT DIRECTORS 55 - Independence assessment 55 - Meetings of Independent Directors 57 LEAD INDEPENDENT DIRECTOR 57 HANDLING OF CORPORATE INFORMATION 58 - Inside information 59 - Code of Internal Dealing 59 DIRECTORS INTERESTS AND TRANSACTIONS

7 WITH RELATED PARTIES 61 5. INTERNAL BOARD COMMITTEES (Art. 123-bis, para. 2, lett. d), TUF) 63 - ANALYSIS OF INTERNATIONAL SCENARIOS COMMITTEE 64 6. NOMINATION, GOVERNANCE AND SUSTAINABILITY COMMITTEE 66 7. REMUNERATION COMMITTEE 70 8. REMUNERATION OF THE DIRECTORS AND OF THE MANAGERS WITH STRATEGIC RESPONSIBILITIES 73 - General remuneration policy 73 - Share-based remuneration plans 74 - Remuneration of executive Directors and Managers with Strategic Responsibilities 75 - Incentive for the Head of the Group Internal Audit 75 - Remuneration of non-executive Directors 76 - Indemnity due to Directors in case of resignation, dismissal without cause or termination of the employment relationship following a takeover bid (under Art.

8 123-bis, para. 1, lett. i), TUF) 76 9. CONTROL AND RISKS COMMITTEE 77 10. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM 82 INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM AS RELATED TO THE PROCESS OF FINANCIAL REPORTING 85 DIRECTOR IN CHARGE OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM 90 HEAD OF GROUP INTERNAL AUDIT 92 ORGANISATIONAL MODEL AS PER LEGISLATIVE DECREE 231/01 94 INDEPENDENT AUDITING FIRM 95 LEONARDO SPA CORPORATE GOVERNANCE REPORT - FINANCIAL YEAR 2017 _____ 5 OFFICER IN CHARGE OF FINANCIAL REPORTING AND OTHER CORPORATE ROLES AND ORGANISATIONAL UNITS

9 96 COORDINATION BETWEEN PERSONS INVOLVED IN THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM 98 11. BOARD OF STATUTORY AUDITORS 99 APPOINTMENT COMPOSITION AND FUNCTIONING (Art. 123-bis, para. 2, lett. d), TUF) - Curricula of the Statutory Auditors - Independence - Duties - Meetings - Remuneration - Self-evaluation 12. DIVERSITY POLICIES (Art. 123-bis, para. 2, lett. d)-bis, TUF) 111 - Board of Directors - Board of Statutory Auditors 13. INVESTOR RELATIONS 116 14. SHAREHOLDERS MEETINGS (Art. 123-bis, para. 2, lett. c), TUF) 118 - Notice of call and disclosures to Shareholders 118 - Right of attendance and voting at the Shareholders Meeting 120 - Functioning and Competences 121 15.

10 ADDITIONAL CORPORATE GOVERNANCE PRACTICES (Art. 123-bis, para. 2, lett. a), TUF) 122 16. CONSIDERATIONS ON THE CHAIRMAN OF THE CORPORATE GOVERNANCE COMMITTEE S LETTER OF 13 DECEMBER 2017 126 APPENDICES: SUMMARY TABLES 1. INFORMATION ON THE SHAREHOLDERS STRUCTURE 129 2. STRUCTURE OF THE BOARD OF DIRECTORS AND OF THE COMMITTEES 130 3. DIRECTORS WHO CEASED TO HOLD OFFICE DURING THE 2017 FINANCIAL YEAR 131 4. STRUCTURE OF THE BOARD OF STATUTORY AUDITORS 132 LEONARDO SPA CORPORATE GOVERNANCE REPORT - FINANCIAL YEAR 2017 _____ 6 LEONARDO SPA CORPORATE GOVERNANCE REPORT - FINANCIAL YEAR 2017 _____ 7 (1) Director appointed from the list submitted by the majority shareholder (Ministry of Economy and Finance), voted by of the share capital represented in the Shareholders Meeting.