Executive remunerations trends and investors' scrutiny in the Italian market

Directors’ remuneration is becoming the most relevant topic in the business strategy of Italian banks, due to the introduction of the Single Supervisory Mechanism (SSM), the extended demand from the regulators and the increased scrutiny from \institutional investors. The 2022 AGM season witnessed its growing importance. Taking a closer look at the payout of the big Italian banks' CEOs, according to the official data (in the year 2021), the heaviest paycheck belongs to Andrea Orcel, the CEO of Unicredit.

“Executive remuneration is an increasingly hot topic of discussion between large banks and the market,” comments Andrea Di Segni, Senior Managing Director of Morrow Sodali, in his interview with Milano Finanza. Investors are focused on the performance criteria, rather than on the remuneration amount per se.

The use of ESG metrics as the key performance indicators (KPI) for executive remuneration, is the new frontier gaining ground in Europe and large banks have been regularly linking remuneration to the ESG criteria for at least a decade.

The attention of the market keeps focused on climate change, followed by the composition and the effectiveness of the board, as well as the people management and the executive remuneration. Not to leave out the so-called “niche” topics like supply chain management, cybersecurity and biodiversity.

“On average, 10% to 20% of incentive plans in Italy are already linked to ESG criteria, proving an increasingly growing attention of investors and banks,” comments Di Segni.

Read the full article here (in Italian).