This study investigates the financial and non-financial impacts of the use of sustainability criteria in banks’ executive compensation plans. The sample covers all the globally and systemically important European banks over the period 2013–2017. Panel data-fixed effect estimations are employed to mitigate endogeneity concerns and to control for within-firm dynamics. The implementation of sustainable criteria in the banks’ remuneration contracts was found to (i) negatively impact economic performance, (ii) negatively impact the riskiness profile, and (iii) positively impact sustainability performance. These findings have important implications for investors as well as banks. Indeed, these results are encouraging for the use of sustainability targets in executive compensation for restricting excessive risk-taking behaviors and improving sustainability performance.

The crucial role of mutual banks in promoting local development is highlighted by an extensive theoretical and empirical literature. The historical success of mutual banks derives not only from their specific business model, but also from their peculiar and distinguishing corporate governance with member ownership. According to a copious literature, these features have probably allowed mutual banks to better withstand financial crisis. This work compares the cost efficiency of European mutual banks by analyzing a sample which consists of the universe of all the banks operating in Italy, Germany, France and Spain over the period 2011–2016, by employing a stochastic approach (Stochastic Frontier Analysis-SFA) to determine the effects of the recent financial crisis on the efficiency level of this particular kind of bank. The analysis aims to point out the determinants of efficiency in order to understand if the mutual model reveals to be still attractive in the modern banking system. The main contribution of the paper to previous literature consists in comparing different impacts of financial crisis on efficiency of mutual banks in main European countries. Furthermore, the results enrich the recent debate about the cooperative and mutual banking system and its raison d’être. Our results show that the European mutual banks reveal a higher degree of efficiency with respect to commercial banks. Cost efficiency appears to be significantly and negatively related to the level of regulatory capital, the level of credit risk, the level of leverage and the cost-income ratio. On the other hand, it is significantly and positively related to the profitability of the traditional lending activity, to the level of prudence in terms of provisions against credit risk and to the amount of liquidity as a buffer against unexpected troubles.

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Purpose – The purpose of this research is to contribute to the development of an effective incentive policy implementation model, through an in-depth analysis of the stock option and/or stock grant schemes adopted by the major Italian banking groups. Design/methodology/approach – Out of the 77 banking groups operating in Italy on 30 June 2011, The paper selected 12 banking institutions that implemented either stock option or stock grant plans over the years 2007-2010. The documentary analysis was carried out on 22 stock option and/or stock grant schemes and based on the examination of corporate governance reports, as well as information memoranda on incentive plans. Findings – The results show a limited implementation of equity-based incentive plans in the Italian banking sector during the investigation period (2007-2010) and clearly demonstrates that, as far as these types of incentives are concerned, there is ample room for improvement as well as substantial adjustments. Research limitations/implications – The research covers a limited period of time. Therefore, further extending the scope of its survey will definitely be of great academic interest in the light of the latest regulatory changes made to the banking sector remuneration regime. Originality/value – By giving a clear indication of the critical points that should be addressed to improve the policies in force, this research study aims to provide greater knowledge about the remuneration practices adopted by Italian banks, in terms of equity-based incentive plans.