The pandemic has clearly disrupted the internal dynamics of companies. Among the priorities emerges increasingly stronger in the last year and a half there is certainly that of a greater commitment to sustainability. The green agenda is on the tables of all the CEOs of Piazza Affari and from what emerges from an analysis by Mercer Italia it also represents a key element in determining the extent of the variable part of their salaries.
The ninth edition of the Mercer study on the remuneration of the Boards of Directors of companies belonging to the FTSE MIB Index shows an increase in remuneration compared to last year as regards the variable part. This trend is also influenced by the change in the perimeter of the FTSE MIB basket and by the arrival of new managers at the head of some large companies in the Index.
A target pay-mix increasingly unbalanced on the variable components makes the component conditioned to the achievement of increasingly slower medium-long term performance objectives, in line with the guidelines of the Corporate Governance Code and the approval of Proxy Advisors and Institutional Investors.
The Mercer FTSE-Mib study notes that 79% of the sample have at least one ESG indicator within their short-term incentive systems (I accounted for 69% last year). On the other hand, the percentage of companies that present at least one ESG indicator within long-term incentive systems rose to 53% (44% last year).
The study also records the increase in the number of companies they predict Committees whose functions are exclusively related to Sustainability / ESG (present in 42% of the panel against 28% in the last edition). With the implementation of SRD II in the Consob Issuers’ Regulation, elements such as the contribution of the remuneration policy to the results and corporate social responsibility, as well as the growing transparency in the link between pay and performance, represent distinctive factors in the relationship between company and market: 9 out of 10 companies have represented in their documents the link between their remuneration policy, corporate strategy and sustainable development.
“The variable part of the salary of CEOs thus becomes a strategic lever for companies that intend to pursue clear objectives of value growth, as well as profit, with seriousness and decision – declared Marco Valerio Morelli, Chief Executive Officer of Mercer Italia – and we are pleased to note a decisive orientation of the large Italian companies towards sustainability understood as a structured medium-long term path “.
“If we look at the meaning of the ESG acronym in detail – continues Morelli – we note that attention to the environment and safety in the workplace is increasingly integrated with actions involving Human Capital, what we call” empathy ” , perhaps the result of a complicated year, where we moved from a ‘command & control’ leadership model to a style of listening and understanding the needs that come from people “
The Mercer study reveals that, in addition to the use of metrics related to issues such as environment and safety in the workplace, measures are emerging to consider employee engagement, as well as diversity and inclusion.
Focus also on gender gap
Instead, just under half of the incentive systems assess the performance of the top management on the gender gap and on the strategies aimed at bridging it. Many companies focused on supporting gender diversity in the “Talent Pipeline”, but still little challenge the top management on issues such as gender pay gap, subject to future attention in the light of the regulatory evolution underway. In relation to this issue, there was a slight increase in the number of women on the Boards of Directors, while registering only 4 executive women (compared to 6 last year). Furthermore, in the panel of companies analyzed, about 50% insert diversity & inclusion objectives in their incentive systems. However, if we analyze the level of the figures who report directly to the CEO, we note that the presence of women in the “front line” averages 19% with few cases in which it reaches around or over 30% .
“The road is marked – comments Morelli – but the top management must overcome the logic of “pink quotas” and decisively undertake actions aimed at bridging the gender pay gap, with the supervision of the Boards of Directors. Furthermore, inclusion strategies must extend to the entire management line, where we have unfortunately seen that the higher you go, the lower the percentage of women in top positions. “