More transparency on severance pay for top managers in listed companies in the event of early termination of office. Consob is asking listed companies, which this morning published on its website the recommendations regarding information to be provided to the public on indemnities and/or other benefits granted to executive directors and general managers of Italian companies included in the Ftse Mib and Mid Cap indices. For now it is a simple recommendation that could soon become mandatory.
In other words, the authority allows until 31 December 2014 for the companies to provide adequate communication on the matter. If the request is not "satisfied" then Consob will evaluate "whether and how to proceed... with the provision of specific disclosure obligations". Basically, the corporate governance committees of the various companies should amend the Self-Regulatory Code to give transparency to the severance pay of top executives, in particular the members of the boards of directors and the general managers.
The document comes after the Authority submitted the guidelines for information on severance payments to public consultation on 10 April and which at the time provided for the obligation to provide information on severance payments for Ftse Mib companies and only a recommendation for other companies.
Among other things, the text published this morning recommends that adequate information be disclosed to the market on the indemnity or other benefits, distinguishing the part paid immediately from that possibly subject to deferral mechanisms and also distinguishing the components attributed by virtue of the office of director from those relating to any employment relationships. The compliance or otherwise of the indemnity or other benefits with the indications contained in the remuneration policy must also be indicated and whether the application has been assessed and, if so, with what outcome, of mechanisms that impose constraints or corrective measures on the payment of indemnity as also recommended by the self-discipline in the event that the termination of the relationship is due to the achievement of objectively inadequate results. Finally, the companies will have to explain whether the replacement of the director (or other outgoing person) is governed by a succession plan possibly adopted by the company and, in any case, what procedures have been or will be followed in the replacement of the director or other subject.
