The 2018 Report of the Observatory on Corporate Governance Excellence in Italy by the European House – Ambrosetti, now in its 14th edition, was presented in Milan.
According to the update of the Index of Governance Excellence (EG Index) prepared by The European House – Ambrosetti on the basis of 32 indicators, the quality of governance of the main listed companies continues to improve (FTSE MIB, MID CAP and STAR SMALL segments of the Italian Stock Exchange, totaling 142 companies).
The analyses also revealed the existence of a positive relationship between the quality of governance and corporate performances. In 68% of cases in the FTSE MIB segment there was a coherence between the positioning within the 2018 EG Index and the ranking by the respective TSR (compared to a European reference peer group) of the last three years. The studies by the Observatory also examined, in greater depth, how the responsibilities associated with sustainability are taken on.
The larger companies are more organized (for example, in almost 4 out of 5 in the FTSE MIB segment, the issue of sustainability is assigned to a Committee, whereas such a body does not exist in 81% of the MID CAP companies and in 88% of those in the STAR SMALL. 52% of FTSE MIB companies have created a managerial post for managing issues associated with sustainability. However, with reference to the expected sustainability parameters linked to the variable remuneration of CEOs or top corporate positions, just over a third of the FTSE MIB companies links the CEO’s bonus to results tied to performances in the area of sustainability, something that virtually does not happen in smaller companies.)
The current status of Italian listed companies with reference to Executive Compensation was also presented: what was found in approximately 30% of the responses in the sample of industrial sector companies (and in 33% of those in the financial sector) was an apparent inconsistency between performance and bonus trends (the companies in the FTSE MIB are the most “virtuous”). In many cases the variable pays do not seem justified.
Since 2004, the Observatory has set out to provide proposals and concrete information to promote the attainment of excellence in the corporate governance of Italian companies.
During the course of the Workshop, the in-depth studies contained in the Observatory’s 2018 Report, produced in collaboration with Allianz Global Investors, Enel, Gruppo Falck, Intesa Sanpaolo, Lavazza, Leonardo and Pirelli & C., were presented along with the thoughts on some of the key issues for the corporate governance of companies and of Italy, which included how to improve the dialog between institutional investors, proxy advisors and issuers.