{"id":538,"date":"2011-11-14T14:25:20","date_gmt":"2011-11-14T14:25:20","guid":{"rendered":"http:\/\/frontisgovernanceblog.wordpress.com\/?p=16"},"modified":"2011-11-14T14:25:20","modified_gmt":"2011-11-14T14:25:20","slug":"ecgs-responses-to-the-consobs-public-consultation-on-directors-remuneration-transparency","status":"publish","type":"post","link":"https:\/\/frontisgovernance.com\/en\/ecgs-responses-to-the-consobs-public-consultation-on-directors-remuneration-transparency\/","title":{"rendered":"ECGS responses to the Consob\u2019s public consultation on Directors\u2019 remuneration transparency"},"content":{"rendered":"<p>We are writing on behalf of European Corporate Governance Service (ECGS) registered in London, to comment on the CONSOB consultation on listed companies compensation disclosure rules for management remuneration.<\/p>\n<p>The ECGS is a partnership of independent local market experts which have come together to provide specialist governance research and proxy voting advice, offering institutions access to unrivalled experience on corporate governance and responsible investment issues. The Managing Partner of ECGS is Proxinvest based in Paris.<\/p>\n<p>Other active ECGS Partners are DSW (D\u00fcsseldorf), Ethos Services (Geneva), Shareholder Support (Rotterdam). Frontis Governance based in Rome recently joined ECGS also associated to local governance experts in Montr\u00e9al and Melbourne. The ECGS acts solely in the interest of all shareholders and is free of conflicts of interests in the production and sale of its advisory services.<\/p>\n<p>ECGS considers that, in view of the globalisation of the markets and of the frequent objection to national reforms in the name of equal footing competition, fair financial markets rules are necessary to the efficient allocation of capital. We consider at ECGS that the fair treatment of shareholders resulting from a better corporate governance is the cornerstone of the financing of new investment and therefore of new employment.<\/p>\n<p>ECGS considers along with its Italian local partner Frontis Governance that the Transparency of the information is fundamental for the fair functioning of the market itself and that full information should be expected from listed companies on Director remuneration.<\/p>\n<p>ECGS therefore commends the Consob for this public consultation enhancing market transparency through the provision of a higher level of public disclosure on remuneration policies and compensation effectively paid to Directors. At the same time, we support\u00a0 rationalization and simplification of the current procedures.<\/p>\n<p>Based on the analysis provided by Frontis Governance and in line with the ECGS guidelines we hereunder submit the following comments:<\/p>\n<ul>\n<li><strong>Financial Statements\u2019 attachment regarding Directors\u2019 remuneration<\/strong>. ECGS supports the choice to rationalize and simplify disclosure duties. On the other hand, minority shareholders should benefit from the same simplification effort. As the reference document carrying the financial statements is the main informative document for the entire market, we recommend that\u00a0the Remuneration Report\u00a0 be necessarily attached to the Financial Statements to be voted at the Annual General Meeting. An English version of the Remuneration Report should be also made available too, in order to facilitate the comprehension for foreign investors.<\/li>\n<li><strong>Remuneration Report disclosure timelines.\u00a0<\/strong>Generally all listed companies should follow the same rules regarding public disclosure and ECGS sees no reason why cooperative listed companies should follow different rules.\u00a0Cooperative listed companies should disclose all information relevant to the vote at the General Meeting at least 21 days before the first call meeting date<\/li>\n<li><strong>Information to include in the first section of the Remuneration Report<\/strong>. In Scheme n.7 of the Remuneration Report,\u00a0the maximum amount that variable remuneration might reach has to be clearly quantified, even in form of an estimate amount in Euros. The disclosure of the weight of variable compensation on total remuneration is not sufficient to clearly quantify the impact of aggregate future remuneration on companies\u2019 financials. Applicable performance criteria should be disclosed with precise and pertinent benchmarks<\/li>\n<li><strong>Disclosure of procedures. ECGS research reports confirm that\u00a0<\/strong>Italian Remuneration Committees generally do not yet rely\u00a0 on independent advisors (selected external advisors paid by the Committee and not by the management) to evaluate Directors\u2019 remuneration fairness. Committees should dispose of an amount decided by the Board to hire an independent advisor. Remuneration committees should not employ the same company already advising the Executive Directors, as this clearly undermines the real independence of their decisions.\u00a0Remuneration Committees should be requested\u00a0 to hire strictly independent advisors, that cannot hold any other advisory contract with the company or the Board of Directors.<\/li>\n<li><strong>Shareholder approval of Directors\u2019 remuneration.\u00a0<\/strong>Too often<strong>,<\/strong>\u00a0Directors\u2019 remuneration is part of bundled items on the Meeting Agenda (usually \u201cElection of the Board of Directors having defined the amount of their remuneration\u201d). Such behaviour prevents shareholders who vote by proxy, that is the case for almost all minority shareholders, from correctly voting Directors\u2019 remuneration.\u00a0It is absolutely necessary to enact a regulatory provision imposing Directors\u2019 (and Statutory Auditors\u2019) remuneration as a specific item on Annual General Meetings Agenda.<\/li>\n<li><strong>Harmonization with Bank and Insurance companies\u2019 regulation.\u00a0<\/strong>Current rules provide that listed banks\u2019 and insurance companies\u2019 Remuneration Reports have to be put to a\u00a0 binding vote of the shareholders. On the other side, all other listed companies\u2019 Remuneration Reports are subject to a non-binding vote.\u00a0As the remuneration has the same importance regardless of the\u00a0business sector, shareholders\u2019 vote on the Remuneration Report should be considered as binding for all listed companies.<\/li>\n<\/ul>\n<p>We appreciate the opportunity to express our views and remain available for further discussion on our proposals.<\/p>\n<p>PARIS, November 9<sup>th<\/sup>, 2011<\/p>","protected":false},"excerpt":{"rendered":"<p>We are writing on behalf of European Corporate Governance Service (ECGS) registered in London, to comment on the CONSOB consultation on listed companies compensation disclosure rules for management remuneration. The ECGS is a partnership of independent local market experts which have come together to provide specialist governance research and proxy voting advice, offering institutions access [&hellip;]<\/p>","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[111,113,120],"tags":[11,12],"class_list":["post-538","post","type-post","status-publish","format-standard","hentry","category-english-news","category-market-rules","category-remuneration","tag-consob","tag-ecgs"],"acpt":null,"_links":{"self":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/posts\/538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/comments?post=538"}],"version-history":[{"count":0,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/posts\/538\/revisions"}],"wp:attachment":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/media?parent=538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/categories?post=538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/tags?post=538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}