1. Guido Corbetta Chair AIdAF-EY of Strategic Management in Family Business In memory of Alberto Falck Helsinki, 19 th September 2014 Governance for Long-lasting Family Businesses

2. Ownership stage Founder Second generation Cousin consortium Entrepreneurial family Board of Directors Shareholders’ agreements Family meetings Family protocol Family foundation Family office Family council A dynamic vision of family and corporate governance Corporate governance activity Ownership organization (Family holding) - 2 -

3. Corporate Governance as a system The successful governance of a company is a system of “actors” (and processes): Shareholders’ assembly Board of Directors Chairman CEO Committees of the Board (Executive, Audit, Human Resources, …) Legal context and group structure are relevant - 3 -

4. Models of Boards of Directors Directors’ competencies High Low Role of the Board within the decision process Limited Relevant B.o.D in transformation Governing B.o.D Useless B.o.D Dangerous B.o.D - 4 -

5. Roles of Boards of Directors The Board of Directors doesn’t have direct managerial tasks, but governing tasks which may be aggregated into legal rolestrategic role In a “governing” Board of Directors it is necessary to develop both roles - 5 -

6. The outside directors It is difficult (or impossible ?) to organize a “governing” Board of Directors without outside directors who can be:  Affiliated (friends, ex managers, …)  Unaffiliated or independent Outside members can support the company and the owning family - 6 -

7. The roles of outside directors for the company   to stimulate self-discipline and a sense of responsibility   to promote the introduction of reporting tools more sophisticated and connected to management performance   to monitor potential confllicts of interest   to secure minorities’ interests   to secure other stakeholders’interests In terms of control: - 7 -

8.  to acquire new experiences and competencies  to have stimulating counterparts during the formulation of goals and strategies  to improve the quality of the decision making process through deep-reaching questions  to improve the quality of people evaluation processes  to improve relations among other stakeholders and the business  to improve the reputation of the company In terms of strategy - 8 - The roles of outside directors for the company

9. Outside directors can complete the skills missing from the board (1/2) - 9 - According to directors of family-owned and non- family-owned businesses: Source: Boris Groysberg and Deborah Bell Are there skills missing or insufficiently represented on this board? Is there a formal process of determining what skills are required for the board and, therefore, for new directors?

10. - 10 - Source: Boris Groysberg and Deborah Bell What are the skills missing from boards?        Outside directors can complete the skills missing from the board (2/2)

11. The roles of third parties for the family Third parties unaffiliated of the owning family are very useful for family governance because they help:  to define the right rules in the relations among the company and the family  to plan in a professional way the succession process  to manage some “strategic traps” that may happen because of the entrepreneur getting older  to manage with less emotional bias the tensions which may arise among family shareholders, managers and non managers  to train successors - 11 -

12. Zegna case: corporate governance   Board Governance:   Four “independent” Board members out of 8, with age limit rule   Audit Committee and Compensation Committee   Group Governance:   Executive Committee: top management, of which one third is foreign, meets 4 times per year   Zegna Convention: all worldwide executives meet 2 times a year (of which one at our Milan Headquarters) - 12 -

13. Zegna case: family governance   Entry of the next generation:   Admission rules tied to education, competence and passion: university degree, foreign languages and work experience in other companies for at least 3 years   Young Generation Committee: meets twice a year under the guidance of our Chairman Paolo Zegna and with the presence of experts in Family Business to move the fifth generation towards the Group. - 13 -

14. De Agostini case: family governance (1/2) The Assembly of the shareholders has approved the “Rules for the IV generation”. According to these rules, members of this generation could have different roles:   Managers: a candidate must reach some significant results in the managerial career outside, before entering in the Group   Part time employees: each branch of the family can candidate two members for part time employment   Suppliers or consultants of the companies of the Group (with some limitations). - 14 -

15. To prepare all the members of the IV generation to their ownership responsibilities, a Committee IV Generation has been established. The Committee is composed by 8 members of the IV generation (4 olders and 4 youngers) and organizes actvities for all the members of the IV generation. An Implementation Committee is in charge of all the development process of the IV generation. The Committee is composed by the Chairman of the Group, the Vice Chairman in charge of the relationships with the owners, the non family CEO, the head of the Committee IV Generation, three consultants expert in family business and in head hunting. - 15 - De Agostini case: family governance (2/2)

16. Pay attention ! Before asking an outsider to join it is useful to get to know each other a balanced person independent in his/her judgments motivated morally upright with experiences in family business used to working in businesses of larger size - 16 -