Overcoming Poor Value Executive Remuneration: resolving the manifest conflicts of interest

Sykes, Allen

doi:10.1111/1467-8683.00290

Cited by 18 publications

(3 citation statements)

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“…In addition, the design process of these plans must be managed cautiously to prevent potential recipients from influencing the features of these mechanisms to their own advantage. This objective can be achieved, e.g., by delegating plan design to a compensation committee made up of independent directors, or to independent consultants nominated by this committee (Sykes, 2002). Moreover, the watchdog role of institutional investors is crucial in assuring the respect of the fair treatment of all shareholders (Shleifer and Visnhy, 1997).…”

Section: Discussionmentioning

confidence: 99%

The Diffusion of Equity Incentive Plans in Italian Listed Companies: What is the Trigger?

Zattoni

Minichilli

2009

Corporate Governance

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Recent dynamics in the institutional and market environment have facilitated the propagation of equity incentive plans outside the US and the UK. This study sheds light on the reasons behind the diffusion of these plans in a country, Italy, where companies are usually controlled by a blockholder and where these instruments were almost absent until the end of the ‘90s.\ud To gain a deep understanding of the phenomenon, we collected data and information on both the diffusion and the technical aspects of equity incentive plans adopted by Italian listed companies in 1999 and 2005. The results show that (i) the determinant of their adoption is the firm size rather than the absence of a controlling shareholder; (ii) these plans are not extensively used to extract company value, although few cases suggest this possibility; and (iii) plans’ characteristics generally comply with the requirements in tax law so that fiscal benefits can be accessed. Our findings contribute to expand the traditional knowledge on reasons behind the adoption of equity incentive plans outside Anglo-Saxon countries, and support a symbolic perspective of corporate governance, according to which the introduction of new governance practices may not imply substantive governance reforms.\ud Practitioner/Policy implications: Our study recommends policymakers to improve the disclosure rules about these plans and to avoid the introduction of fiscal benefits that incentive the diffusion of some compensation schemes respect to others. Moreover, our results encourage members of remuneration committees to pay attention to the specific characteristics of the plans they design

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Section: Discussionmentioning

confidence: 99%

The Diffusion of Equity Incentive Plans in Italian Listed Companies: What is the Trigger?

Zattoni

Minichilli

2009

Corporate Governance

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“…On the contrary, executive role can be considered as a tool to guarantee highly-remunerated positions to descendants of founder (Barontini and Bozzi, 2011), implying an opposite conclusion. Haid and Yurtoglu (2006) Previous literature (Sykes, 2002;Jensen et al, 2004;Conyon and He, 2004) pointed out that the role of the board of directors as influent determinant of executive remuneration. The board represents indeed the first internal corporate governance mechanism with the responsibility to set and monitoring management compensation (Gomez-Meija et al, 1997), representing the shareholders and acting as a defence tool against opportunistic managers.…”

Section: Literature Review and Development Of Hypothesesmentioning

confidence: 99%

Relationship between top executive compensation and corporate governance: evidence from large Italian listed companies

2018

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The modernization of corporate governance aims the alignment of the interests of managers with those of companies, promoting a new discipline of internal controls and risk analysis with an enforcement of shareholder rights of information. This research investigates the impact of corporate governance variables-ownership, board of directors and remuneration committee-on executive compensation. A balanced sample of 52 Italian listed companies has been adopted to test the hypotheses, covering 55.98% and 47.13% of market capitalization in 2011 and 2015 respectively and including 669 board members. Theoretical models evidence a certain stability of compensation schemes for Italian managers over time. Findings suggest that there is a statistically significant positive effect of familiar ownership on the amount of compensation. Along with nature of ownership, the number of directors in the remuneration committee appointed by minorities assume a determinant role. With statistical significance, it affects negatively the compensation level, but, contrarily to best practices, it affects negatively the adoption of forms of incentive compensation.

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“…The vast majority of the debates over remuneration are associated with accounting scandals and collapses 11 in the prices of the company's shares, the controversies over a number of CEos who left behind noticeable holes in the corporation structure and disrupted the fluent business circulation. Moreover, the dangerous pressures and widespread conflicts of interest that govern the determination of executive remuneration are perhaps the most egregious illustration of the debilitating governance weaknesses that need to be urgently addressed to restore public trust (Jensen et al 2004;Sykes, 2002).…”

Section: An Overview Of the Literaturementioning

confidence: 99%

Empirical Investigation in Ceocompensation Across Continental Europe and United Kingdom

Baužytė¹

2010

ECO

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The article presents a detailed investigation of the top management / Chief Executive Officer (CEO) remuneration package and reveals why this is important to the economy. The goal of this paper is to examine the CEO pay (salary + bonus), wealth delta, cumulative value of options held and total compensation throughout Continental Europe and the United Kingdom across a number of various sectors during years 2005 and 2006. Attention is turned to the pre-crisis data analysis which might instigate the argument that CEO compensation was one of the main reasons which lead management to the excess risk taking and reckless decision making. Therefore, it might be concluded that the relationship between risk and executive remuneration can be more subtle and complex than it has been thought. The paper applies the multiple regression model supported by research hypothesis postulation tested by the correlation method and T-test approach.

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Overcoming Poor Value Executive Remuneration: resolving the manifest conflicts of interest

Cited by 18 publications

References 0 publications

The Diffusion of Equity Incentive Plans in Italian Listed Companies: What is the Trigger?

The Diffusion of Equity Incentive Plans in Italian Listed Companies: What is the Trigger?

Relationship between top executive compensation and corporate governance: evidence from large Italian listed companies

Empirical Investigation in Ceocompensation Across Continental Europe and United Kingdom

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