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26 May 2019 • Articles

Start Magazine

How funds will influence companies' remuneration policies

A solid corporate governance, appropriate and aligned to the business strategy of listed companies is a key factor for international funds. More and more often, international funds' voting decisions at the annual general meetings are no longer taken through standardized models but taking into account various ESG factors and increasingly evaluating the specificities of issuers.

Part of this analysis comes from Morrow Sodali's 2019 Investor Survey that the company conducts every year on a portfolio of institutional investors representing over 33 trillion assets under management and that anticipates the most relevant issues in view of the general meeting season.

One of the main elements emerged during the last few months concerns the need for a high level of transparency with respect to remuneration policies, which must be an incentive and a challenge for the management, guaranteeing a certain elasticity between the bonuses paid and the management individual performances.

In particular, the funds seem to prefer a less standardized approach towards remuneration issues: companies' specific characteristics, corporate culture, business plan and strategy must be fully aligned with the overall incentive plans.

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