Amatucci, Carlo; Lubrano di Scorpaniello, Manlio --- "Director and Executive Compensation Regulations for Italian Listed and Closed Corporations" [2012] ELECD 622; in Thomas, S. Randall; Hill, G. Jennifer (eds), "Research Handbook on Executive Pay" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on Executive Pay

Editor(s): Thomas, S. Randall; Hill, G. Jennifer

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803960

Section: Chapter 24

Section Title: Director and Executive Compensation Regulations for Italian Listed and Closed Corporations

Author(s): Amatucci, Carlo; Lubrano di Scorpaniello, Manlio

Number of pages: 15

Extract:

24 Director and executive compensation regulations
for Italian listed and closed corporations
Carlo Amatucci and Manlio Lubrano di Scorpaniello


1 INTRODUCTION

The aim of this chapter is to examine the regulation of director and executive compensa-
tion in Italy in the context of both public listed corporations and unlisted corporations.
As will be discussed, a complex array of laws, regulations, corporate governance
principles and stock exchange rules affect this issue in Italian corporations.
Many Italian corporate law scholars (Bonafini 2005a; Cappiello 2003; Ferrarini 2005)
agree on the importance of performance-based pay as a mechanism to align the interests
of corporate directors and managers with those of shareholders, particularly in the case
of listed corporations that have a clear separation between ownership and control.
The Italian Securities and Exchange Commission ("Consob"), Italy's main corporate
regulator, also takes this view.
Yet, the basic concept of interest alignment can itself be problematical. For example,
in 2007 Consob noted in a consultation document that "compensation plans could, on
the one hand, be considered a potential means of giving top managers excessive compen-
sation, and on the other hand be considered as incentives for managers and directors to
make business decisions that are not in the interest of shareholders, or even an incentive
to commit fraud and manipulate markets" (Consob 2007). Consob's warning was given
added force by the onset the global financial crisis. The Financial Stability Board ("FSB")
considered compensation practices at large financial institutions to be a contributing
factor to ...