This study investigates independent non-executive directors' remuneration from an agency theory perspective, taking into account both optimal contracting and managerial power perspectives. Using a sample of 1733 independent non-executive directors' year observations in Italian and UK non-financial firms listed in the period 2007-2009, we find that in both countries independent non-executive directors' remuneration is mainly based on the observable effort they exert and their responsibilities. Our findings also show that independent non-executive directors who do not fulfil formal independence criteria, as stated in the respective national corporate governance codes, seem to be paid more than those who do fulfil such criteria, particularly in the UK.Our findings contribute to the existing literature by providing evidence on the determinants of independent non-executive directors' remuneration in two major European economies and offer insights to policy-makers by questioning the effectiveness of adopting non-binding criteria when assessing non-executive directors' independence.

This paper has analysed the Italian prevailing corporate governance system in terms of issues such as ownership and control structures, structure and functioning of the boards, executive remuneration and evaluation, the mission of the companies, the role of banks and market for corporate control. The issues determined by the presence of the blockholder have been analysed as well as the changes that derive from the Draghi reform. The Italian system of corporate governance seems to be effectively summarised by the expression`weak managers, strong blockholders and unprotected minority shareholders', paraphrasing Roe`s (1994) sentence.

This study relies on environmental stewardship, a stakeholder enlarged view of stewardship theory, and institutional theory to analyze the relationship between CEO compensation and firms' environmental commitment in a worldwide sample of 520 large listed firms. Our findings show that environment friendly firms pay their CEOs less total compensation and rely less on incentive-based compensation than environment careless firms. This negative relationship is stronger in institutional contexts where national environmental regulations are weaker. Our findings have important theoretical meaning and practical implications. Results show that CEOs do not necessarily act opportunistically; rather some of them may be willing to act as stewards of the natural environment and accept a lower, less incentive-based, compensation from environment friendly firms. This study also provides evidence of the important influence of the institutional context in setting-up CEO compensation as the relationship is stronger when national environmental regulations are weaker.Our findings question the universal validity of agency theory in explaining CEO compensation.Compensation based on pecuniary incentives might be less indicated to motivate CEOs who feel rewarded by playing a stewardship role for environment friendly firms. When designing compensation for CEOs, compensation committees and external compensation advisors should consider psychological and institutional factors that might affect CEO motivation.

The aim of this study is to explore how stock options are used for executive remuneration in blockholder-dominated listed firms. By analysing how stock options granted to executive directors were designed, this paper sheds light on how stock options are used in Italian blockholder-dominated listed firms. Empirical evidence from a unique hand-collected dataset comprising stock options granted by Italian non-financial listed firms between 2004 and 2006 suggests that stock option design seems to be better explained by rent-extraction theory than by optimal contracting theory. Our results suggest that board independence, particularly in terms of minority shareholders’ representation, seems to have a positive influence on stock option design. These findings are consistent with rent-extraction theory:\ud stock option designs that are not explained by optimal-contracting theory are likely to reflect governance/agency problems. This study provides insights on executive remuneration to policy-makers. It is recommended that codes of best practice should stress the importance of stock option design and of remuneration committees’ independence, in particular in terms of minority shareholders’ representation.\ud Last but not least, this study points out the importance of enforcing substantial compliance with the codes’ recommendations

This paper discusses the role of the board of statutory auditors as a monitoring device within the prevailing Italian corporate governance system, characterised by the presence of a strong blockholder. We describe the structure and functioning of the board of statutory auditors in the listed companies in terms of size, composition, method of appointment, powers, and duties after the changes due to the Draghi reform and the Preda Code of conduct. Copyright Blackwell Publishing Ltd. 2004.