Luxottica Group, S.p.A. (LUX)

In 1976 he was awarded the badge of honour of Cavaliere di Gran Croce dell’Ordine per merito alla Repubblica Italiana and in 1988 the President of Italy awarded him the badge of honour Cavaliere dell’Ordine al Merito del Lavoro.

Mr. Rondelli serves as chairman of Assiparos GPA S.p.A., and is a member of the board of Spafid and Arca S.g.r. S.p.A.

With respect to the maximum number of positions as members of the board or auditors in other companies listed in regulated markets, in finance companies, banks, insurance companies or other substantial companies that is compatible with service as a member of the board of Luxottica, it should be noted that during the meeting held on February 19, 2007, the Board of Directors of Luxottica has resolved to approve the following criteria:

Maximum number of offices as Director or Statutory Auditor in other companies

The Chief Executive Officer, Mr. Andrea Guerra, has full authority to manage the Company, according to the guidelines and within the limits of the strategic plans approved by the Board of Directors, except for those powers reserved to the Board by law, the Company’s By-laws or by resolutions of the Board.

Furthermore, on the basis of the directives received by the Board of Directors, the Chief Executive Officer supervises all business structures. He also draws up the proposals to be submitted to the Board of Directors as to the organizational structure of the Company and of the Group, the general development and investment strategies, the financial strategies and the provisional financial statements, as well as in respect of any other matter submitted to him by the Board. He ensures that the organizational, administrative and accounting functions be appropriate considering the nature and size of the company.

By resolution taken on February 19, 2007, the Board resolved for the Internal Auditing chief to report to the Chairman and the Chief Executive Officer. In this respect, please see Section VIII of this Report.

Directors Messrs. Enrico Cavatorta, Roberto Chemello and Luigi Francavilla were granted with powers of attorney enabling them to execute transactions below certain value thresholds.

Deputy Chairman Mr. Luigi Francavilla and Directors Messrs. Roberto Chemello, Enrico Cavatorta and Claudio Del Vecchio hold positions which involve extensive managing powers in significant industrial and commercial subsidiaries.

Therefore, the Board includes six Executive Directors: Messrs. Leonardo Del Vecchio, Andrea Guerra, Enrico Cavatorta, Luigi Francavilla, Roberto Chemello and Claudio Del Vecchio.

Pursuant to the Company’s By-laws, the empowered Directors report to the Board of Directors and to the Board of Statutory Auditors in due time and at least on a quarterly basis on the general trend of the management and on the exercise of their managing powers, as well as on the most relevant economic, financial and asset transactions carried out by the Company and its subsidiaries.

Non-Executive and Non-Independent Directors. In the light of the statements made, Directors Mr. Sergio Erede and Ms. Sabina Grossi, are considered as Non-Executive and Non-Independent Directors.

Independent Directors. Among its members, the Board includes the following six Independent Directors: Messrs. Roger Abravanel, Tancredi Bianchi, Mario Cattaneo, Claudio Costamagna, Lucio Rondelli and Gianni Mion.

The Board assessed the independence of the above mentioned Directors on the basis of the criteria provided by the Corporate Governance Code in place before March 2006. However, the Board resolved to comply with the new criteria provided under the Corporate Governance Code (i.e. as amended in March 2006), as set out in Section VIII of this Report.

The above mentioned Independent Directors, Messrs. Tancredi Bianchi, Mario Cattaneo, Gianni Mion, Lucio Rondelli, Claudio Costamagna and Roger Abravanel, hold the independence requisites provided under Art. 148, paragraph 3, TUF.

On February 19, 2006, the Board of Directors designated a Lead Independent Director to manage the coordination of the requests and contributions of the Independent Directors. In this respect, please refer to Section VIII of this Report.

Appointment of Directors. The current Board of Directors was appointed by the Shareholders’ meeting held on June 14, 2006, on the basis of the By-laws in force as of that date, which did not provide for a mechanism for list voting.

According to the By-laws currently in force, the Directors must be appointed through a mechanism for list voting under the terms provided by Art. 17 of the Company’s By-laws to which full reference is made.

The Company’s By-laws are available on the Company’s web site www.Luxottica.com.

When appointing the current Board of Directors, the proposing shareholder made in any case available to the other shareholders each candidate’s CV, disclosing their personal and professional qualities, for an informed exercise of the voting right.

The Directors have the professional qualifications and the experience required to perform their duties efficiently and effectively.

Thus, the Board of Directors has not considered it necessary to set up an Appointment Committee, i.e. a committee to propose candidates for appointment as Directors, because the Shareholders have not demonstrated any difficulty in providing qualified proposals for appointment.

Directors’ remuneration. The Directors’ fees are resolved by the Shareholders’ Meeting.

The Board of Directors has the exclusive right to determine the fees payable to Directors performing special roles, with prior consultation with the Human Resources Committee and the Board of Statutory Auditors; furthermore, the Board shall decide on the apportionment of the aggregate fees to be paid to each member of the Board, if such apportionment has not been determined by the Shareholders’ Meeting.

In particular, the Shareholders’ meeting held on June 14, 2006 established a maximum amount of Euro 94,731 as the gross monthly fee to be paid to the Board of Directors until the approval of the financial statements as of December 31, 2006, leaving to the Board the decision upon its apportionment to the members of the Board; the Board, on June 14, 2007 resolved to apportion such gross monthly fee in Euro 6,766.50 to each member of the Board for the period starting on June 15, 2006 until the date of approval of the financial statements as of December 31, 2006.

With reference to the remuneration of the Directors performing special roles, please see the Notes supplementing the financial statements as of December 31, 2006.

The fees due to the Chief Executive Officer comprise a fixed portion and a variable portion, linked to the achievement of results determined in advance.

The Chief Executive Officer was granted options to purchase Company’s shares described in the Notes supplementing the financial statements as of December 31, 2006.

Human Resources Committee. On June 14, 2006, the Board of Directors appointed within its members the new Human Resources Committee, comprising five Directors, the majority of whom are Non-Executive Directors. The Human Resources Committee has verification, advisory and proposal-making functions, including the following:

·             Recommending to the Board the aggregate remuneration payable to the Company’s Directors and determining the remuneration criteria for the top management of the Company and of the entire Group;

·             Reviewing the Luxottica Group employees’ incentive plans and the criteria for the composition of the management bodies of the relevant subsidiaries.

The Committee regularly assesses the remuneration criteria adopted for the top management of the Company and the Group and supervises their application. It further controls the evolution and application in time of the incentive plans approved by the Company and the Group.

On the date of the appointment of the new Human Resources Committee, the following members were appointed thereto: Messrs. Gianni Mion, Chairman, Leonardo Del Vecchio, Ms. Sabina Grossi and Mr. Andrea Guerra. Afterwards, by resolution dated February 19, 2007, the Board of Directors decided to replace the members of the Human Resources Committee with Non-Executive members of the Board, three of whom were Independent Directors. Therefore, at the date hereof, the Committee comprises Messrs. Gianni Mion, Roger Abravanel, Ms. Sabina Grossi and Mr. Claudio Costamagna. In this respect, please see Section VIII of this Report.

The Committee meets any time that the Chairman deems it advisable or another member makes a request in respect thereto.

Furthermore, the said Committee resolves in the absence of Directors directly interested in the relevant resolution.

During fiscal year 2006, the Committee met as described in the table attached to this Report.

On February 19, 2007, the Board of Directors resolved upon specific allocations to provide the Committee with appropriate financial resources to perform its duties. In this respect, please see Section VIII of this Report.