股权激励外文文献中英对照.docx

股权激励外文文献中英对照.docx

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股权激励外文文献中英对照

外文文献原文

TheDiffusionofEquityIncentivePlansinItalianListedCompanies

1。

INTRODUCTION

PaststudieshavebroughttolightthedissimilaritiesinthepaypackagesofmanagersinAnglo—Saxoncountriesascomparedwithothernations（e。

g.，Bebchuk,FriedandWalker,2002;CheffinsandThomas，2004;Zattoni，2007）。

IntheUKand,aboveallintheUS,remunerationencompassesavarietyofcomponents,andshortandlongtermvariablepaycarriesmoreweightthanelsewhere（ConyonandMurphy，2000）.Inothercountries,however，fixedwageshavealwaysbeenthemainingredientintopmanagers’payschemes.Overtime，variableshort-termpayhasbecomemoresubstantialandtheimpactoffringebenefitshasgraduallygrown。

Notwithstanding，incentiveslinkedtoreachingmediumtolong—termcompanygoalshaveneverbeenwidelyused（TowersPerrin,2000）.

Inrecentyears，however，paypackagesofmanagershaveundergoneanappreciablechangeasvariablepayhasincreasedconsiderably,evenoutsidetheUSandtheUK。

Inparticular,managersinmostcountrieshaveexperiencedanincreaseinthevariablepayrelatedtolong—termgoals.Withinthecontextofthisgeneraltrendtowardmediumandlong-termincentives,thereisapronouncedtendencytoadoptplansinvolvingstocksorstockoptions（TowersPerrin，2000;2005）.Thedriversofthediffusionoflongtermincentiveplansseemtobesomerecentchangesintheinstitutionalandmarketenvironmentatthelocalandgloballevels.ParticularlyimportanttriggersoftheconvergencetowardtheUSpayparadigmarebothmarketorienteddrivers,suchastheevolvingshareownershippatternsortheinternationalizationofthelabormarket，andlaw—orienteddrivers，suchascorporateortaxregulation（CheffinsandThomas，2004）.Drivenbythesechangesintheinstitutionalandmarketenvironment，weobserveaglobaltrendtowardthe“Americanizationofinternationalpaypractices,"characterizedbyhighincentivesandverylucrativecompensationmechanisms（e。

g.，Cheffins，2003;CheffinsandThomas，2004）.

Ironically,thespreadoftheUSpayparadigmaroundtheworldhappenswhenitishotlydebatedathome.Inparticular，thecriticsareconcernedwithboththelevelofexecutivecompensationpackagesandtheuseofequityincentiveplans（CheffinsandThomas，2004）。

CriticsstressedthatUStopmanagers,andparticularlytheCEOs,receiveverylucrativecompensationpackages。

The’80sand’90ssawanincreasingdisparitybetweenCEO'spayandthatofrank—and-fileworkers。

Thankstothiseffect,theirdirectcompensationhasbecomeahundredtimesthatofanaverageemployee（HallandLiebman，1998）.ThemaindeterminantsoftheincreasinglevelofCEOs’andexecutives'compensationareannualbonusesand，aboveall,stockoptiongrants（ConyonandMurphy,2000）。

Stockoptionplanshaverecentlybeencriticizedbyscholarsandpublicopinionbecausetheycharacteristicallyaretoogenerousandsymptomaticofamanagerialextractionofthefirm’svalue（Bebchuketal.,2002；BebchukandFried,2006）.

Inlightoftheserecenteventsandoftheincreasedtendencytoadoptequityincentiveplans,thispaperaimsatunderstandingthereasonsbehindthedisseminationofstockoptionandstockgrantingplansoutsidetheUSandtheUK。

ThechoicetoinvestigatethisphenomenoninItalyreliesonthefollowingarguments.First，thelargemajorityofpreviousstudiesanalyzetheevolutionofexecutivecompensationandequityincentiveplansintheUSand，toasmallerextent，intheUK.Second,ownershipstructureandgovernancepracticesincontinentalEuropeancountriesaresubstantiallydifferentfromtheonesinAnglo-Saxoncountries。

Third，continentalEuropeancountries，andItalyinparticular，almostignoredtheuseoftheseinstrumentsuntiltheendofthe’90s。

Ourgoalistocomparetheexplanatorypowerofthreecompetingviewsonthediffusionofequityincentiveplans:

1）theoptimalcontractingview，whichstatesthatcompensationpackagesaredesignedtominimizeagencycostsbetweenmanagersandshareholders（JensenandMurphy,1990）；2）therentextractionview，whichstatesthatpowerfulinsidersmayinfluencethepayprocessfortheirownbenefit（Bebchuketal.，2002）；and3）theperceived—costview（HallandMurphy，2003）,whichstatesthatcompaniesmayfavorsomecompensationschemesfortheir（supposedorreal）costadvantages.

Tothispurpose,weconductedanempiricalstudyonthereasonswhyItalianlistedcompaniesadoptedequityincentiveplanssincetheendofthe’90s.Togainadeepunderstandingofthephenomenon,wecollecteddataandinformationbothontheevolutionofthenationalinstitutionalenvironmentinthelastdecadeandonthediffusionandthecharacteristics（i。

e。

，technicalaspectsandobjectives）ofequityincentiveplansadoptedbyItalianlistedcompaniesin1999and2005.Weusedbothlogitmodelsanddifference-of—meansstatisticaltechniquestoanalyzedata。

Ourresultsshowthat:

1）firmsize，andnotitsownershipstructure，isadeterminantoftheadoptionoftheseinstruments;2）theseplansarenotextensivelyusedtoextractcompanyvalue，althoughafewcasessuggestthispossibility；and3）plans’characteristicsareconsistentwiththeonesdefinedbytaxlawtoreceivespecialfiscaltreatment.

Ourfindingscontributetothedevelopmentoftheliteratureonboththerationalesbehindthespreadingofequityincentiveschemesandthediffusionofnewgovernancepractices。

Theyshow，infact,thatequityincentiveplanshavebeenprimarilyadoptedtotakeadvantageoflargetaxbenefits,andthatinsomeoccasionstheymayhavebeenusedbycontrollingshareholderstoextractcompanyvalueattheexpenseofminorityshareholders。

Inotherwords，ourfindingssuggestthatItalianlistedcompaniesadoptedequityincentiveplanstoperformasubtleformofdecoupling.Ontheonehand,theydeclaredthatplanswereaimedtoalignshareholders’andmanagers’interestsandincentivevaluecreation。

Ontheotherhand，thankstothelackoftransparencyandpreviousknowledgeabouttheseinstruments，companiesusedthesemechanismstotakeadvantageoftaxbenefitsandsometimesalsotodistributealargeamountofvaluetosomepowerfulindividuals.Theseresultssupportasymbolicperspectiveoncorporategovernance,accordingtowhichtheintroductionofequityincentiveplanspleasestakeholders–fortheirimplicitalignmentofinterestsandincentivetovaluecreation–withoutimplyingasubstantiveimprovementofgovernancepractices.

2.CorporateGovernanceinItalianListedCompanies

Italiancompaniesaretraditionallycontrolledbyalargeblockholder（Zattoni,1999）.Banksandotherfinancialinstitutionsdonotownlargeshareholdingsanddonotexertasignificantinfluenceongovernanceoflargecompanies,atleastasfarastheyareabletorepaytheirfinancialdebt（Bianchi,BiancoandEnriques,2001）.Institutionalinvestorsusuallyplayamarginalrolebecauseoftheirlimitedshareholding，theirstrictconnectionswithItalianbanks，andaregulatoryenvironmentthatdoesnotofferincentivesfortheiractivism.Finally,thestockmarketisrelativelysmallandundeveloped，andthemarketforcorporatecontrolisalmostabsent（Bianco，2001）。

Inshort,theItaliangovernancesystemcanbedescribedasasystemof“weakmanagers，strongblockholders,andunprotectedminorityshareholders”（Melis,2000:

354）.

Theboardofdirectorsistraditionallyonetier,butashareholders’generalmeetingmustappointalsoaboardofstatutoryauditorsaswellwhosemaintaskistomonitorthedirectors’performance（Melis,2000）。

Further，somestudiespublishedinthe'90sshowedthattheboardofdirectorswasundertherelevantinfluenceoflargeblockholders.Bothinsideandoutsidedirectorswereinfactrelatedtocontrollingshareholdersbyfamilyorbusinessties（Melis,1999；2000；Molteni,1997）.

Consistentwiththispicture，fixedwageshavebeenthemainingredientoftopmanagers’remuneration，andincentiveschemeslinkedtoreachingmediumtolongtermcompanygoalshaveneverbeenwidelyused（Melis,1999）。

EquityincentiveschemesadoptedbyItaliancompaniesissuestockstoallemployeesunconditionallyforthepurposeofimprovingthecompanyatmosphereandstabilizingthesharevalueontheStockExchange。

Onlyveryfewcanbecomparedwithstockoptionplansinthetruesenseoftheterm。

Eveninthiscase,however,directorsandtopmanagerswererarelyevaluatedthroughstockreturns，becauseofthesupposedlimitedabilityoftheItalianstockmarkettomeasurefirm’sperformance（Melis，1999）.

3.TheEvolutionofItalianInstitutionalContext

TheinstitutionalcontextinItalyhasevolvedradicallyinthelastdecade，creatingthepossibilityforthedisseminationofequityincentiveplans。

Themainchangesregardedthedevelopmentofcommerciallaw，theintroductionandupdatingofthecodeofgoodgovernance,theissueofsomereportsencouragingtheuseofequityincentiveplans,andtheevolutionofthetaxlaw（Zattoni,2006）。

Concerningthenationallawandregulations,somereformsinthecommerciallaw（1998，2003，and2005）andtheintroduction（1999）andupdate（2002）ofthenationalcodeofgoodgovernancecontributedtotheimprovementofthecorporategovernanceoflistedcompanies（Zattoni，2006）。

FinancialmarketsandcorporatelawreformsimprovedtheefficiencyoftheStockExchangeandcreatedaninstitutionalenvironmentmorefavorabletoinstitutionalinvestors’activism（BianchiandEnriques，2005）。

Atthesametimetheintroductionandupdateofthecodeofgoodgovernancecontributedtotheimprovementofgovernancepracticesattheboardlevel.ThesereformsdidnotproduceanimmediateeffectongovernancepracticesofItalianlistedcompanies,alt