股权激励外文文献中英对照.docx

1、股权激励外文文献中英对照外文文献原文The Diffusion of Equity Incentive Plans in Italian Listed Companies1.INTRODUCTIONPast studies have brought to light the dissimilarities in the pay packages of managers in AngloSaxon countries as compared with other nations (e。g., Bebchuk, Fried and Walker， 2002; Chefns and Thomas，

2、2004； Zattoni， 2007）。 In the UK and, above all in the US， remuneration encompasses a variety of components, and short and long term variable pay carries more weight than elsewhere (Conyon and Murphy， 2000)。 In other countries， however， fixed wages have always been the main ingredient in top managers

3、 pay schemes。 Over time， variable short-term pay has become more substantial and the impact of fringe benefits has gradually grown。 Notwithstanding， incentives linked to reaching medium to longterm company goals have never been widely used (Towers Perrin， 2000）。In recent years， however, pay packages

4、 of managers have undergone an appreciable change as variable pay has increased considerably, even outside the US and the UK. In particular, managers in most countries have experienced an increase in the variable pay related to long-term goals. Within the context of this general trend toward medium

5、and long-term incentives, there is a pronounced tendency to adopt plans involving stocks or stock options （Towers Perrin， 2000； 2005). The drivers of the diffusion of long term incentive plans seem to be some recent changes in the institutional and market environment at the local and global levels。

6、Particularly important triggers of the convergence toward the US pay paradigm are both market oriented drivers, such as the evolving share ownership patterns or the internationalization of the labor market, and laworiented drivers, such as corporate or tax regulation (Chefns and Thomas， 2004)。 Drive

7、n by these changes in the institutional and market environment， we observe a global trend toward the “Americanization of international pay practices,” characterized by high incentives and very lucrative compensation mechanisms (e。g。， Chefns, 2003; Chefns and Thomas, 2004).Ironically, the spread of t

8、he US pay paradigm around the world happens when it is hotly debated at home. In particular， the critics are concerned with both the level of executive compensation packages and the use of equity incentive plans (Chefns and Thomas， 2004). Critics stressed that US top managers, and particularly the C

9、EOs， receive very lucrative compensation packages。 The 80s and 90s saw an increasing disparity between CEOs pay and that of rankandle workers. Thanks to this effect, their direct compensation has become a hundred times that of an average employee (Hall and Liebman， 1998). The main determinants of th

10、e increasing level of CEOs and executives compensation are annual bonuses and， above all, stock option grants （Conyon and Murphy， 2000）。 Stock option plans have recently been criticized by scholars and public opinion because they characteristically are too generous and symptomatic of a managerial ex

11、traction of the firms value (Bebchuk et al.， 2002； Bebchuk and Fried， 2006）.In light of these recent events and of the increased tendency to adopt equity incentive plans， this paper aims at understanding the reasons behind the dissemination of stock option and stock granting plans outside the US and

12、 the UK。 The choice to investigate this phenomenon in Italy relies on the following arguments。 First， the large majority of previous studies analyze the evolution of executive compensation and equity incentive plans in the US and, to a smaller extent， in the UK。 Second, ownership structure and gover

13、nance practices in continental European countries are substantially different from the ones in Anglo-Saxon countries. Third, continental European countries， and Italy in particular， almost ignored the use of these instruments until the end of the 90s.Our goal is to compare the explanatory power of t

14、hree competing views on the diffusion of equity incentive plans: 1） the optimal contracting view, which states that compensation packages are designed to minimize agency costs between managers and shareholders (Jensen and Murphy, 1990）； 2） the rent extraction view， which states that powerful insider

15、s may influence the pay process for their own benefit (Bebchuk et al。, 2002)； and 3) the perceivedcost view (Hall and Murphy， 2003）， which states that companies may favor some compensation schemes for their （supposed or real)cost advantages.To this purpose, we conducted an empirical study on the rea

16、sons why Italian listed companies adopted equity incentive plans since the end of the 90s。 To gain a deep understanding of the phenomenon， we collected data and information both on the evolution of the national institutional environment in the last decade and on the diffusion and the characteristics

17、 （i.e。， technical aspects and objectives) of equity incentive plans adopted by Italian listed companies in 1999 and 2005. We used both logit models and difference-ofmeans statistical techniques to analyze data. Our results show that： 1） firm size, and not its ownership structure, is a determinant of

18、 the adoption of these instruments; 2) these plans are not extensively used to extract company value, although a few cases suggest this possibility； and 3) plans characteristics are consistent with the ones defined by tax law to receive special fiscal treatment。Our findings contribute to the develop

19、ment of the literature on both the rationales behind the spreading of equity incentive schemes and the diffusion of new governance practices。 They show， in fact, that equity incentive plans have been primarily adopted to take advantage of large tax benefits， and that in some occasions they may have

20、been used by controlling shareholders to extract company value at the expense of minority shareholders. In other words, our findings suggest that Italian listed companies adopted equity incentive plans to perform a subtle form of decoupling。 On the one hand, they declared that plans were aimed to al

21、ign shareholders and managers interests and incentive value creation. On the other hand， thanks to the lack of transparency and previous knowledge about these instruments, companies used these mechanisms to take advantage of tax benefits and sometimes also to distribute a large amount of value to so

22、me powerful individuals. These results support a symbolic perspective on corporate governance， according to which the introduction of equity incentive plans please stakeholders for their implicit alignment of interests and incentive to value creation without implying a substantive improvement of gov

23、ernance practices。2。Corporate Governance in Italian Listed CompaniesItalian companies are traditionally controlled by a large blockholder （Zattoni, 1999）. Banks and other financial institutions do not own large shareholdings and do not exert a significant influence on governance of large companies,

24、at least as far as they are able to repay their financial debt （Bianchi， Bianco and Enriques, 2001)。 Institutional investors usually play a marginal role because of their limited shareholding, their strict connections with Italian banks， and a regulatory environment that does not offer incentives fo

25、r their activism. Finally， the stock market is relatively small and undeveloped， and the market for corporate control is almost absent （Bianco, 2001). In short， the Italian governance system can be described as a system of “weak managers, strong blockholders, and unprotected minority shareholders” （

26、Melis， 2000: 354）.The board of directors is traditionally one tier, but a shareholders general meeting must appoint also a board of statutory auditors as well whose main task is to monitor the directors performance (Melis, 2000). Further, some studies published in the 90s showed that the board of di

27、rectors was under the relevant influence of large blockholders。 Both inside and outside directors were in fact related to controlling shareholders by family or business ties （Melis， 1999;2000； Molteni, 1997). Consistent with this picture， fixed wages have been the main ingredient of top managers rem

28、uneration， and incentive schemes linked to reaching medium to long term company goals have never been widely used (Melis， 1999）. Equity incentive schemes adopted by Italian companies issue stocks to all employees unconditionally for the purpose of improving the company atmosphere and stabilizing the

29、 share value on the Stock Exchange。 Only very few can be compared with stock option plans in the true sense of the term。 Even in this case, however， directors and top managers were rarely evaluated through stock returns, because of the supposed limited ability of the Italian stock market to measure

30、firms performance （Melis, 1999）.3。The Evolution of Italian Institutional Context The institutional context in Italy has evolved radically in the last decade， creating the possibility for the dissemination of equity incentive plans. The main changes regarded the development of commercial law, the int

31、roduction and updating of the code of good governance， the issue of some reports encouraging the use of equity incentive plans， and the evolution of the tax law （Zattoni, 2006).Concerning the national law and regulations， some reforms in the commercial law (1998, 2003， and 2005) and the introduction

32、 (1999) and update (2002) of the national code of good governance contributed to the improvement of the corporate governance of listed companies (Zattoni， 2006）. Financial markets and corporate law reforms improved the efficiency of the Stock Exchange and created an institutional environment more fa

33、vorable to institutional investors activism （Bianchi and Enriques, 2005)。 At the same time the introduction and update of the code of good governance contributed to the improvement of governance practices at the board level. These reforms did not produce an immediate effect on governance practices of Italian listed companies, alt