According to the Board Index Spencer Stuart 2017 - the report, now in its twenty-second edition, which analyzes the characteristics and functioning of the Boards of Directors of the top 100 listed companies in Italy – as many as 58% of the companies in the sample do not prepare a structured Succession Plan for the CEO.
The phenomenon is due to the ownership structure. In our country, an adequate awareness of Directors on this issue has not yet developed, although regulators show marked attention to the value of succession plans, to mitigate the prospective risk of lack of continuity of managerial action and avoid possible relapses, also reputational, on society.
“Corporate Governance, focused on by the Spencer Stuart Board Index, arouses growing interest in the national public debate – said the CEO of Spencer Stuart Luigi Paro commenting on the data in the Report. “If on the one hand – explains Paro – it is necessary to give continuity of action to the Boards of Directors over time, on the other the selection must lead to the appointment of qualified and increasingly competent Directors (think of the issues related to digital transformation and the risks connected). The possibility for the outgoing Boards of Directors to present their own slate to the Shareholders' Meeting and the non-simultaneous expiry of the Board's mandate (so-called staggered board) have shown to favor the simultaneous achievement of both objectives of renewal and continuity of action of the administrative body."
As regards the total remuneration of the Chairmen, the average in 2016 was equal to
879.000 euros (France 627.654 euros, Germany 374.869 euros, Spain 316.946 euros, Switzerland
1.913.819 Euros, UK 314.731 Euros, USA 346.683 Euros). The average fixed salary alone is 660.000 Euros. Executive presidents earn on average nearly three times more than non-executive presidents.
It is interesting to note that in 2016, there was a decrease in the remuneration of the Chief Executive Officers: the sample analyzed shows a decrease in the overall remuneration of the Chief Executive Officers of approximately 11% compared to the previous year. As regards the Directors, the average total compensation is 135.000 Euros per year, while the average fixed compensation is 72.000 Euros (53% of the total). The total average compensation of a Non-Executive Director is 92.000 Euros, that of an Executive Director is 628.000 Euros.
Looking at the pay mixes, as far as the Chief Executive Officer is concerned, it emerges that the weight of bonuses and other incentives on average is equal to just over a third (36%): there is still little connection between compensation and performance. Independent Directors continue to represent the least remunerated category compared to
Non-Executive and Non-Independent. The average level of emoluments of Non-Executive Directors is generally not adequate for the commitment required in terms of preparation and participation in commitments and responsibilities.
As regards the presence of independent directors on the Boards, it appears that in Italy the average is 5,9 (France 8,5, Spain 4,8, Switzerland 8,9, UK 6,2, USA 9,2) . As a percentage, Independent Directors in Italy are 51% (France 69,1%, Germany 60%, Spain 44%, Switzerland 84%, UK 61,4%, USA 85%).
“If one compares the picture of the boards of listed companies in Italy with that of the main economies at an international level” recalls Paro “it emerges that Italy is the country with the lowest number of foreigners present on the board compared to, for example, Germany ( 31%) and France (37%). It seems important to us to point out that more than half of the companies analyzed in Italy do not even have a foreigner on the Board".
Focusing on the average number of offices per individual Director, Italy records an average of 3,4 offices per individual Director (France 2,1, Spain 1,1, Switzerland 2,2, UK 2, USA 2,1) . This data makes it possible to understand whether the role of Director tends to become a "professional" job or just an "accessory" commitment. In Italy, the Board Index reveals, only 4 companies out of 100 have placed age limits on appointments for the positions of Chairman (Retirement age), CEO and Directors (Germany 83,3%, France
35%, Spain 23%, Switzerland 55%, UK 0%, USA 73%).
From the highlights of the Spencer Stuart Report, it is also highlighted that 47% of the Councils in Italy have an average size between 9 and 11 members (Germany 16,3, France 13,9, Spain 11, Switzerland 10,6, UK 10,2, USA 10,8), 26% (stable) between 12 and 14 members, 17% over 15 members. The trend of the average number of Directors is decreasing. Only 10% of executive directors are women (France 2,6%, Spain 3,4%, Switzerland 0%, UK 8,9%)
Much remains to be done to increase the number of women in executive roles. Compared to the total number of directors in the sample, 31% are women, a noteworthy increase from 26,4% last year (France 42%, Germany 28,7%, Spain 17%, Switzerland 22,2%, UK 25,5%, USA 22,2%). Each female Director sits on average on 1,15 Boards of Directors. If we look at the newly appointed Directors, 46% are women (effect of Law 120/2011).
Taking into consideration only the Prime Ministers, it can be seen that 9% are women, an interesting figure if compared with other European countries, where this percentage is significantly lower (France 2,5%, Germany 3,3%, Spain 7% , Switzerland 4,8%, UK 4,7%, USA 6%). 72% of companies have set up an Appointments Committee, while 46% of companies do not even have a director elected by minorities, despite the presence of list voting in our legal system. This year, on the other hand, there has been a slight increase in the number of directors elected from a minority list.
51% of Presidents hold an Executive role. 19% are also Chief Executive Officer (France 52,5%, Spain 66%, Switzerland 0%, UK 0,67%, USA 49%). On the other hand, the absence of specific powers requires that the Chairman leverage his authority and ability to influence and in no way determines a diminution of his role, which is concentrated on the "management" of the Board and on the effective execution of the decision making process.
Conversely, in Italy only 10% of the Chairmen qualify as Independent. Focusing on the composition of the Board, we read in the Board Index that the rotation rate of the Directors is equal to 18,1%. The Executive Directors amount to 21% of the total of the Directors of the Champion. The average number of Executive Directors in each Board is 2,5. Non-executive and non-independent Directors amount to 28% (3,3 per Board of Directors). The Independent Directors are 50%.
The level of "tenure" (seniority of office) according to which a Director has been a member of the same
Board of Directors, is equal to 6,3 years. From the point of view of the characteristics of the Directors, Spencer Stuart's Report analyzes that of the professional background: managers 49%, professionals 30%, entrepreneurs 18%, Other category 3%. Women with a business management background amounted to 40% this year (men 53%). Professional men are 24%, women 42%. Women entrepreneurs 15%.
The average age of all Directors in Italy is 58,4 (Germany 61, France 58,8, Spain 60,4, UK 56,7, USA 62,6). By dividing the average age by office, that of the Honorary Chairman is 82, Chairman 64, Chief Executive Officer 58. The average age of women is 54, that of men 60. The average number of meetings in 2016 was 11,7 (Germany 6,7, France 9, Spain 10,8, Switzerland 9, UK 7,8, US 8,2). The minimum average duration is one hour and the maximum is 6 hours.
Based on the information available, it emerges that 28% of the companies analyzed have activated
at least one Stock Option plan for Directors.
