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02 July 2022 • Articles

Il Sole 24 Ore

Italian AGMs 2022: listed companies and institutional investors' alignment on executive remunerations

Average support for executive remuneration at Italian FTSE MIB companies, expressed by the institutional investors (alias “minority” shareholders), has increased up to 77,9%, when compared to 72,5% in 2021, according to Morrow Sodali’s experts’ analysis of the latest AGM Season.

In this article by Il Sole 24 Ore, Fabio Bianconi, Managing Director at Morrow Sodali, shares his views on the growing importance of the alignment on executive pay.

“After five “up-and-down” years, we are seeing the results of the progressive adherence to the best practices, and an intense engagement work, along with the greater involvement of the boards with the investors, starting with the remuneration committee,” comments Bianconi.

For the first time since 2017, favorable votes in support of the executive remuneration (especially in the first, binding, section) reached over 90%. “These are important results, especially when compared to a generalized increase in the institutional investors’ participation by 2%, and an overall increase of the votes at the AGMs, by 4%.”

They are even more relevant when considering that the funds' votes account on average for over half of the total votes (51%). Hence rather than a minority, we may refer to them as a silent majority.

“However, there are still criticisms due to the lack of KPIs clarity and transparency relating to incentive plans,” highlights Bianconi, echoed by the proxy advisors, ISS and Glass Lewis, in the lead. Under the oversight also fall the pay-performance link, discretionary bonuses (entry bonuses, guaranteed bonuses, etc.) and an excessively high payout, compared to the market peer. Last but not the least, ESG metrics “are driving investors’ expectations, increasingly demanding, both in terms of quality and quantity,” concludes Bianconi.

Read the full article here (in Italian).

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