Directors’ remuneration An empirical analysis of 2012 Remuneration Reports Carmine Di Noia

1. Directors’ remuneration An empirical analysis of 2012 Remuneration Reports Carmine Di Noia

2. 12th Assonime and Emittenti Titoli Report on the Italian Corporate Governance(edited by Proff. Belcredi and Bozzi, Università Cattolica) • First Part: Compliance with CG Code • Analysis on the compliance with the “old” CG Code • First data on the compliance with the “new” CG Code • Second Part: Remunerations • Directors’ and Statutory Auditors’ remuneration analysis: • Remuneration Report • Section I: Policy and governance procedures • Section II: Effectively “paid out” compensations • Crossing data between CG and Remuneration Report

3. Directors’ and Statutory Auditors’ remuneration Remuneration Reports: • Section I (vote of the AGM): policy and governance procedures • Section II: effectively-paid compensation - requireddata are now much more detailed - distinction between remuneration paid by the issuer and that by subsidiaries/affiliated companies • These data are compared with: - features of the company (size, sector) - data already disclosed in the CG Report (i.e. qualification of directors/statutory auditors, committees’ participation, situations “at risk”) 2012: First application of the new Italian legal (and self regulatory framework) –some mistakes are possibly related to misunderstandings (e.g. complex legal dispositions)

4. Directors’ (cash) remunerations • Remuneration varies according to office held

5. Directors’ (cash) remuneration • Differences across size and sector • Possible changes of the remuneration package

6. Role and structure of the package Amount and structure of the package vary according to the role: • MD: relevant bonuses • Chairmen and other executives (but half compensation): fees paid by subsidiaries

7. Remuneration policy in the EC Action plan 2012 • shareholders should be enabled to exercise better oversight of remuneration policies • shareholders need clear, comprehensive and comparable information on remuneration policies and individual remuneration of directors • not all Member States give shareholders the right to vote on remuneration policy and/or the report, and information disclosed by companies in different Member States is not easily comparable • The Commission will propose in 2013 an initiative, (maybe through a modification of the SHRD or through basic harmonisation of disclosure requirements): • to improve transparency on remuneration policies and remuneration of individual directors • to grant shareholders the right to vote on remuneration policy and the remuneration report • Why not even a EU Regulation imposing: 1) a Remuneration Report; 2) non-binding vote on the first part (i.e. remuneration policy); 3) ex post disclosure of individual compensation of all board and supervisory board members (possibly also top managers)?

8. Backup

9. LID remuneration • Does the LID play a real role in the company?

10. Role and structure of the package • The same also for non executives: • Chairmen: higher remuneration (fixed r.) • Non executives: medium remuneration (paid by subsidiaries) • Independents: lower remuneration (for committees)