Search results

Based on the agency and resource dependence theories, this study aims to investigate whether nomination committee (NC) characteristics could serve as key attributes for reducing environmental, social and governance (ESG) disputes and whether NC composition affects the appointment of ESG-friendly directors to the board.

This study focuses on a sample of 30 global systemically important banks from 2015 to 2021. The authors estimate panel data models with fixed effects, clustering heteroskedastic standard errors at the bank level to account for the serial correlation of the dependent variables for each bank.

Banks’ exposure to ESG controversies can be reduced when NC members have specific skills, in particular when at least one member of this committee also belongs to the sustainability committee and is a foreign director. Moreover, banks’ ESG disputes decrease when the NC members are younger, while the share of independent NC members has a negative impact. Finally, a positive influence of NC composition and its members’ features as well as the appointment of ESG-friendly directors on the board is found.

The findings are particularly useful during periods such as the current one, when there is growing attention to both banks’ corporate governance, the subcommittees’ role and functioning and social and environmental issues. This study shows that the NC is important in reducing the likelihood of banks incurring ESG disputes and in appointing more ESG-friendly directors. NC effective functioning and its members’ qualities serve as a key attribute for fulfilling objective assessment and improving board effectiveness.

Following the subprime crisis and the detrimental role played by remuneration practices, an important reform concerned bank remuneration committees, especially in “significant financial institutions”. In light of this consideration, this paper aims to investigate the scope and format of this renewal in order to verify whether and how those bodies are conforming to the new regulatory framework while improving their efficiency and functionality.

The study was carried out on 30 top European banks through the elaboration of a qualitative analysis model that takes into account both the procedural and the compositional aspects of remuneration committees. The model was used as a benchmark for assessing the effectiveness of the remuneration committees operating within a sample. This assessment was carried out according to the content analysis approach.

The results show a high diffusion of these bodies within the banks and a gradual expansion, during the time under investigation (three years 2008-2010), of the information provided by them on their tasks and decision-making. In the same time, the study highlights some important criticalities concerning both the composition of the banks' remuneration committees, how they carry out their functions, and the level of disclosure addressed to shareholders and the market in order to formalize the results of their work.

The added value of the analysis is related to the implementation of an “effectiveness remuneration committee rating” applied to a sample of top European banks during the financial crisis.