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Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

VIPsight is a dynamic photo archive, sorted by nations and dates, by and for those interested in CG from all over the world.

VIPsight offers, every month:
transparent and independent current information / comments / facts and figures on corporate governance locally and internationally,

  • written by local CG experts,
  • selected and structured by the Club of Florence,
  • financed by its initiator VIP and other sponsors with a background of “Equity and Advisory” interests.

VIPsight International

Welcome to VIPsight Europe - Italy




Daniela Carosio Sergio Carbonara  


26 January 2020

Extract of the Statuto dell’Istituto per le Opere di Religion (IOR)

§ 1

1. The Institute for Works of Religion has public canonical juridical personality. §2. It has its seat in the Vatican City State and has no subsidiaries or branches.


§ 2

1. The purpose of the Institute is to provide for the custody and administration of movable and immovable property transferred or entrusted to it by natural or juridical persons and intended for works of religion or charity.

2. The Institute therefore accepts goods with the - at least partly or future - destination referred to in the preceding paragraph, according to the legitimately established modalities.

3. The Institute may accept deposits of goods from entities and persons of the Holy See and Vatican City State.


§ 5

1. The Commission of Cardinals is composed of five Cardinals appointed by the Holy Father and presided over by the Cardinal himself designated by the members of the Commission.


§ 8

1. The Commission of Cardinals monitors the adherence of the Institute to the statutory norms.

2. It appoints and revokes the members of the Council of Superintendence and, upon proposal ofthe latter, the President and the Vice President.


§ 9

1. The Prelate, appointed by the Commission of Cardinals, remains in office for five years and can be confirmed once. If the Prelate dies, becomes incapacitated or ceases to hold office for any reason whatsoever, the Commission of Cardinals appoints a new Prelate who will remain in office until the end of the five-year term.

2. The Prelate has the function of assisting directors and employees in loco to govern and operate in accordance with the founding principles of Catholic ethics and in accordance with the mission of the Institute.

For that purpose:

(a) has its own office at the Institute; and

(b) maintains constant exchanges with directors and employees, taking care to promote the ethical dimension of their work.

3. In addition, the Prelate:

a) participates in the meetings of the Commission of Cardinals as Secretary;

b) keeps the archives of the Commission of Cardinals in his own office, keeping it available for members of the Commission; and

(c) attends the meetings of the Superintendence Board.


§ 10

1. The Board of Superintendence is responsible for the administration and management of the Institute as well as the vigilance and supervision of its financial, economic and operational activities.


§ 11

1. The Council of Superintendence is appointed by the Commission of Cardinals and is composed of seven members with recognized economic and financial experience and proven reliability, who meet the requirements expressly provided by the regulations.

2. The members of the Board remain in office for five years and may be confirmed once.


§ 16

1. The Board of Superintendence approves, by April 30 of each year, the Financial Statements prepared by the Direction, after which it transmits them to the Commission of Cardinals accompanied by a report on the economic-financial situation and on the correspondence of the Institute's activities with the statutory purposes.


§ 18

1. The President of the Board of Superintendence, appointed by the Commission of Cardinals, performs the following functions:

a) he has the legal representation of the Institute and may delegate it according to the procedures laid down in the Regulations;

b) he has the power to sign and may delegate it in the manner provided for in the Regulations;

c) he guides and coordinates the activities of the Board of Superintendence;

d) he convenes and chairs the Board meetings.

If the Chairman is absent or unable to attend, his functions are carried out by the Deputy Chairman.


§ 19

1. Direction is formed by the Director General and a Vice Director who assists him and replaces him in case of absence or impediment.

2. The Director General and the Vice Director are appointed by the Board of Superintendence with the approval of the Commission of Cardinals.

3. The Director General and the Vice Director may be revoked by the Board of Superintendence with the approval of the Commission of Cardinals.


§ 20

1. The Director General may be appointed for an unspecified or fixed term. In both cases, he ceases to hold office when he reaches the age of 70.

2. In the case of appointment for a fixed term, the Director General remains in office for five years and may be confirmed once.

3. The Vice Director is appointed for five years and may be confirmed once.


§ 22

1. Each month, the Director General prepares the financial statements at the end of the previous month and sends them to the members of the Board of Superintendence and to the Prelate together with a report.

2. Fifteen days before each meeting of the Superintendence Council, the Director General reports in writing to the Council on the progress of the Institute's activities.


§ 23

1. In the first quarter of each year the Director General prepares the Financial Statements for the previous year: Profit and Loss Account and Balance Sheet, according to generally accepted accounting principles.

2. The Financial Statements must be accompanied by a report on the management of the Institute.

3. The financial statements, the annual report, and the supporting documents must be submitted to the Board of Superintendence at least twenty days prior to the meeting set for the approval of the Balance sheet.

4. The Balance Sheet, the annual report and any further supporting documents shall be accompanied by the report of the person in charge of the statutory audit.


§ 24

1. The Director General is responsible for all operational activities that he directs, organizes and controls according to the guidelines and strategies established by the Superintendence Council.

2. The Director General implements the decisions adopted by the Council of Superintendence and supervises the organization of the Institute and personnel management.

3. The specific competencies and powers of the Directorate are listed in the Rules and Regulations of the Institute.


§ 26

1. The statutory audit is carried out by an external auditor (individual or company) appointed by the Commission of Cardinals, on the proposal of the Board of Superintendence, for a period of three consecutive financial years, renewable only once.


§ 30

1. All employees must comply with the Code of Ethics approved by the Board of Supervisors.


Translation: Club of Florence



17 December 2018

Patrizia Grieco


Italian Corporate Governance Committee


Ladies and Gentlemen,

Good afternoon to everybody. I am sony that the Italian Prime Minister, Giuseppe Conte, will not be able to attend today's Conference, due to unexpected institutional commitments. However, he kindly sent us a letter that I am now going to read.

[READING OF THE PRIME MINISTER'S LETTER] Thanks again to our Prime Minister.

On behalf of the Italian Corporate Governance Committee, I would like to thank you all for your attendance to our 4th Italy Corporate Governance Conference, organized by Assogestioni and Assonime in cooperation with the OECD and with the support ofthe Italian Stock Exchange.

Since 2014, this annual conference represents an opportunity for an open dialogue between public institutions, issuers and investors on various corporate governance topics, with the aim to identify the best ways to support the key role of corporate governance in value creation and economic growth.

The role of corporate governance for economic growth is also acknowledged in main international fora, such as the G20, that by endorsing the OECD Principles represents a milestone in economic policy making. The G20-0ECD  Principles in fact provide a forward-looking source for allinitiatives in the field of corporate governance. We are therefore extremely pleased to have the OECD as an institutional partner of our Conference and we welcome the deputy Secretary General of the Organization, Mr. Schuknecht, among our key speakers.

I would also like to underline that this Conference hosts many representatives of institutions such as Consob, the Italian Market Surveillance Authority, as well as ofvarious Italian listed companies and national and international institutional investors, tagether with experts and academics of a high international standing. The Acting Chair of Consob, Ms. Genovese, will deliver her speech tomorrow.

As you all know, the corporate governance culture and its standards developed primarily through self­ regulation, namely through Corporate Governance Codes. These were established upon initiative of the private sector and play a major role in setting best practices andin monitaring procedures.

Corporate Governance Codes are a dynamic policy tool that enable us to identify best practices and update them according to new challenges and opportunities that have been identified thanks to the evolution of capital markets and corporate practices. At the same time, their flexible approach, based on the "comply or explain" principle, ensures an adaptable but transparent environment, making companies responsible towards the market.

To provide the Italian self-regulatory system with a rigorous source for its code of conduct, the major business associations representing issuers, intermediates institutional investors, tagether with Italian Stock Exchange established the Italian Corporate Governance Committee in 1999. I am honoured to chair this Committee, which acts as a standard setter and monitaring entity, and plays a key role in promoting a constant evolution of Italian corporate governance, in line with international best practices.

The Italian Corporate Governance Committee is now setting the path of a new revision of the Code, in order to make it more effective by assessing and developing new evolving practices. In this light, an international perspective and an open dialogue on the evolving market expectations is essential; and this is exactly the scope of this conference.

We have also to address some governance areas that are facing particular attention by the regulator. The revised European Shareholders'  Rights Directive and the upcoming European Commission's Action Planfora Sustainable Finance are two good examples that show that the ernerging framework for corporate governance, at national and European level, is by far more complex than ever, with a rebalance towards mandatory rules.

We are currently transferring the European Shareholders' Rights Directive at nationallevel and we can proudly say that the Italian governance model already proves to be weil developed. In fact, the Italian system anticipated the principles that led to the revision of the European directive and developed them through a proportionate framework, as well as a balanced interaction and mutual trust between rules and best practices.

Considering the implementation of the Directive at nationallevel, companies representatives as weil as the Committee as a whole, are calling for an open dialogue with the Government and other Competent Institutions to assess, on the basis of an appropriate cost benefi.t analysis, the possible changes to the existing framework. This shall be done through a careful consideration of the opportunity of gold-plating and open interaction on the most innovative changes.

As to Environmental, Social and Governance (ESG) issues, sustainability is a real challenge in its diverse dimensions. It is only by being socially responsible that companies can drive sustainable development and become real contributors to the Sustainable Development Goals set by the United Nations in its Agenda 2030. Being sustainable and having a real impact on society is therefore in the hands of everyone: governments, institutions, companies and other organizations. And the financial market has to take all of it into consideration.

Hence, policy makers today are taking a number of initiatives aimed at supporting investors and companies to pursue a sustainable economy.

On one side, international standard setters and self-regulatory Codes developed best practices pushing investors to consider ESG issues in their investment policies and companies to evaluate sustainability factors, when developing their business strategy and carrying out a related risk analysis. On the other side, the European lawmaker introduced some flexible provisions through the directive for the disclosure of non-fmancial information. Moreover, new forthcoming regulations stemming from the European Commission's  Action Plan on Sustainability are in the pipeline.

It is important to ensure an efficient and consistent evolution of new and forthcoming  European measures regarding sustainability with the existing best practices. This view is shared by main European Corporate Govemance Committees. In last November, the Chairs of the Committees from France, Germany, Italy, the Netherlands, the United Kingdom and Sweden met in Rome and shared the opportunity of an appropriate enhancement of the role played by Corporate Govemance Committees in setring ESG best practices and monitaring their application. At the same time, in their role as Corporate Govemance Codes custodians, the Six Chairs committed to develop a shared approach to enhance sustainability best standards.

Indeed, Corporate Govemance Codes consider a company's  sustainability as a key pillar, requiring companies  to  integrate  ESG  material  factors into  the  company's   business  strategy  and  risk management. If we look closely, almost all the recent revisions of the main European Codes aim at enhancing best practices by pushing companies to: pursue a sustainable long-term success, develop a sustainability strategy, consider ESG risks, and set long-term oriented incentives for their directors.

Moreover, as we affmn once again the importance of a balanced approach to govemance issues -and call even for a step back by Regulators - we take the responsibility to keep the model of Corporate Govemance Codes in line with social expectations, to retaina the principles that we think are valuable and develop them further. In the next revision of the Italian Code we will in fact adopt this approach, to lead the evolution of corporate practices towards a more sustainable growth, and we have already accomplished a frrst relevant step in this direction.

In July 2018 the Committee decided to introduce the principle of board diversity within our Code, as the Italian law on gender quotas is going to expire after the frrst three mandates (hence, the latest in

2023). By doing so, the Committee decided to recommend the same quota that is now required by law and at the same time introduced an advanced approach to diversity issues. This approach aims to: (i) set the primacy of competence and professional skills when implementing diversity policy (including gender); (ii) provide companies with a wide array of different measures that might be adopted to ensure board diversity (from by-laws to board guidelines); (iii) suggest companies to promote equal opportunities within their organizations.

Accountability stems also from an effective monitaring of best practice application, which is in fact a core element of a sound corporate govemance system.

Corporate  Governance in Italy

The Italian Corporate Govemance Committee met this moming to approve its Annual Report, that provides a global outlook on the corporate govemance ofltalian listed companies and identifies some areas for further improvement.

I would like to quote some of the main results of the Report:

- 90% of Italian listed companies adhere to the last edition of the Corporate Govemance Code and the quantity and quality of information provided to describe their practices is overall good;

- the average level of compliance with the recommendations ofthe Code is about 75%;

- Italian listed companies' boards have an adequate composition, also in terms of gender diversity. Almost all Italian listed companies have a control and risk and a remuneration committee, while the creation of a nomination committee is still to be considered by half of the listed companies;

- pre-meeting information is still an issue in one-third of Italian listed companies: the Committee focused on a better implementation of these best practices, since an adequate and prompt information of the board members is fundamental for an effi.cient govemance of the company;

- 90% of Italian listed companies carry out the board and committees review; nevertheless, the Committee called for some further improvement regarding the govemance of the process the contributions from each director;

- a good level of transparency regarding directors' remuneration policies has been achieved, but there is still room for some substantial improvements: one third of companies need to assess the introduction oflong term oriented variable remuneration and to better regulate possible severance payments;

- the number of succession plans for executive directors is stilllow, but is increasing over time, even if their adoption is not expressly recommended by the Code.

Starting from this evidence, also this year the Committee has decided to strengthen the effects of its monitaring activity by sending a formalletter to alllisted companies, in order to highlight the main critical issues.

The structure of the conjerence

As already mentioned, today's Conference represents a unique opportunity for issuers and investors, as well as for all the other main actors of the Italian and international fmancial community, to discuss some of the most relevant issues of the corporate govemance framework.

In particular, the first panel will focus on the development of engagement policies and practices between the board and investors.

The second panelwill debate the role ofthe controlling shareholders and some govemance measures, such as control enhancing mechanisms that might influence companies' access to capital markets. The panelwill tallc about loyalty shares, introduced in 2014 in Italy and adopted by almost one fi.fth of the listed companies: a tool that is widely debated at intemationallevel, but deserves an in-depth and data-supported analysis

The third panel, tomorrow moming, will address the role of shareholders' activism. This panel will debate the different aspects and targets of active ownership and the wide range of possible effects that such activism might have on companies.

The fourth (and fmal) panelwill deal with the challenges and opportunities presented by the evolving technological tools such as the blockchain technology.


Corporate govemance is a dynamic and evolving tool that can support companies to effectively face the rapid and significant changes that today affect the fmancial globalized markets. The contribution of  all players, in  the analysis  of  the new challenges and the identification  of new govemance standards, is therefore essential.

Then, thank you for being here and thank for your attention.



20 February 2017

"Claudio Descalzi, CEO of Eni, the Italian oil company that our Foundation is engaging since 2008, has been asked by Italian prosecutors to stand trial for alleged international corruption in Nigeria along with the former CEO Paolo Scaroni and nine other individuals, among them Roberto Casula, the current chief technology officer of the company. Antonio Vella, current chief upstream officer, will stand trial for international corruption in Algeria. Being questionned, Eni answers have always been elusive. Eni has paid an "independent U.S. law firm" to conduct an audit on the Nigerian deal and, surprisingly enough, the audit "has found no evidence of illegal conduct". Finally a Justice Court will decide whether the allegations are founded or not. It will take years until a final sentence on the Algerian and Nigerian cases is pronounced. As responsible shareholders we cannot wait that long. The suspicion, confirmed by the prosecutors, that Eni's managers may have been involved in corrupt practices is already a huge stain in the company's reputation. This is why Eni should part ways with Descalzi, Casula and Vella. The company needs to be reawaken with a new management as soon as possible.

Royal Dutch Shell and Eni paid $1.3 billion in 2011 for the OPL 245 block off the coast of Nigeria, which is believed to contain nine billion barrels of oil. They have said that they were buying it from the Nigerian government. However, it is claimed that only $210 million went to the government, with most of the cash appearing to go to Dan Etete, a former Nigerian energy minister, and his associates. Mr Etete had awarded rights to the block to Malabu, a company with which he had links, for only $20 million while serving as energy minister in 1998."


7 September 2014

The CEO of Luxottica, Andrea Guerra, resigned on 1 September, after a brief (2 hours) Board meeting held in a “very relaxed atmosphere”, as an unnamed Director said to il Sole 24 Ore Radiocor press agency. According to an interview to the Financial Times, the founder and major shareholder of Luxottica, Leonardo Del Vecchio, had decided to change the management structure of the company since April, through the appointment of more than one CEO. As Mr Guerra did not agree with the founder’s decision, he had to leave.

The case of Luxottica is a clear example of the absolute power that controlling shareholders may still exercise in large listed companies, even when all rules and codes are complied. Mr. Del Vecchio controls almost two-thirds of voting rights and he is the executive Chairman of the Board. According to the company’s self-assessment, 7 out of 13 Board members are independent (54%), but one of the “independent” Directors has been in charge for more than 9 years (which is the Italian CG Code’s limit for independence) and another one is a former executive of UniCredit, which is one of the main creditors of Luxottica. Remaining 5 Directors are: 3 employees (including the outgoing CEO), the son of Mr. Del Vecchio and his lawyer. Thanks to this composition, it is easy to presume that many Board meetings are “very relaxed”, as the Chairman/founder/controlling shareholder is in full control of almost everything.


2 February 2014


It is amazing how Fiat-Chrysler has been free to choose one domicile for every need: the headquarter in the Netherlands (so that Agnelli family will be able to control the company with less than 30%, thanks to the special voting shares), the fiscal domicile in the UK to pay less taxes on dividends, the listing in the US and Italy where the brand is more recognized, the factories around the world. Also the acronym changed, from FIAT (Fabbrica Italiana Automobili Torino) to FCA, gradually eliminating any reference to Italy. But they still have big problems with operating results (profits from ordinary activities went down by 4% in 2013) and increasing net debt (€ 11.4 billion in the third quarter 2013, versus € 9.4 billion in the same period of 2012). The company also stated that no dividends will be paid in 2014, for the third year in a row. Hopefully, now that Mr. Marchionne’s dream came true, they will go back to make cars…

Sergio Carbonara, Rome


VIPsight Archives Europe - Italy

2013 2012 2011 2010


17.December 2013

Telecom Italia 2013 EGM: the unusual proxy fight (not) to gain the control


On December 20th, the shareholders of the main Italian telecommunication company, Telecom Italia, will be called to vote on the removal of all Board members. The meeting has been called upon the request of the relevant shareholder Findim SA (5%), an investment vehicle created by Mr. Marco Fossati, who strongly contests the clear conflicts of interest of Telecom Italia’s major shareholder, Telco SpA (22.4%).

The background

Telco is a holding company built in 2007, at the sole scope to acquire the relative majority of Telecom Italia, currently owned by the Spanish telecommunication company Telefonica SA and by the Italian financial companies Assicurazioni Generali SpA, Intesa Sanpaolo SpA and Mediobanca SpA. On September 24th, 2013, Telefonica increased its holdings in Telco, through the subscription of new Telco’s non-voting shares, which may be converted into voting shares starting from January 2014. Following the eventual conversion, Telefonica will control 66% of Telco’s voting share capital, Generali 19.32%, Intesa Sanpaolo and Mediobanca 7.34% each. As per Telco’s shareholder agreement, Telefonica has an option to further increase its holdings in Telco, up to 100%. The CEO of Telefonica, Mr. Cesar Izuel Alierta, as well as the COO Mr. Julio Linares Lopez, sit on the Board of Telecom Italia since 2007.

The two telecommunication companies are competitors on the Brazilian market, through Telecom Italia’s TIM Brazil and Telefonica’s Vivo. Hence, the acquisition by Telefonica of the effective control of Telecom Italia is subject to the approval of the Brazilian Antitrust Regulator (CADE), which recently communicated to Telefonica that any direct or indirect financial interests in TIM Brazil shall be ceased.

Mr. Fossati's reasons

The clear conflicts of interest of Telefonica in Telecom Italia have been strongly contested by Mr. Fossati starting from 2010, when Telefonica acquired the control of the Brazilian Vivo. The growth of Telefonica’s holdings in Telco even strengthened Mr. Fossati’s concerns: Telecom Italia may be forced to quickly sell TIM Brazil at sub-optimal conditions, as he believes it already happened in November, when the Company sold all its holdings of Telecom Argentina to Fintech Group.

Serious concerns also arose over the recent issue of mandatory convertible bonds reserved to qualified investors. On November 7th, the Board approved the issue of € 1.3 billion convertible bonds 6.125%, due November 2016, which were fully allocated through an accelerated book-building procedure. The Company gave priority treatment in the allocation process to three institutions, among which Telefonica, that subscribed 7.9% of the issue. Two independent Board members (Ms. Lucia Calvosa and Mr. Luigi Zingales) opposed the issue and the Italian Market Authority (Consob) has been investigating over the procedures activated by the Company, as well as over the sale of Telecom Argentina.

In order to eliminate any possible conflicts of interest, the dissident shareholder decided to ask the removal of all Telecom Italia’s Board members that were appointed by Telco (all Directors except the independent member Mr. Luigi Zingales, who was appointed by a group of fund managers). To strengthen his position, Mr. Fossati drafted an alternative strategic plan for Telecom Italia, that was presented to institutional investors on November 6th in London, and that is based on the following key points: to create partnerships with international operators (e.g. with Vivendi's GVT in Brazil), to issue € 2 billion convertible bonds, to sell the subsidiary Telecom Italia Media and some properties, not to pay dividends for one year and to defer the sale of TIM Brazil.

The unusual proxy fight

If the December 20th General Meeting will approve the removal of the current Board members, the new Directors shall be appointed through slates of nominees submitted by shareholders holding more than 1% of the share capital. According to Telecom Italia’s bylaws, 80% of the Board members will be appointed from the list obtaining the majority of votes, regardless the actual number of votes gathered, while remaining 20% will be appointed from the eventual other lists.

Only two slates of nominees have been submitted so far: by the major shareholder Telco (including 3 nominees) and by a group of fund managers coordinated by the Italian association Assogestioni (including 7 nominees). Although having requested the removal of the Board and having drafted a strategic plan for the Company, Mr. Fossati decided not to submit a list of candidates for the eventual renewal. As he thought that the Assogestioni’s list would have gathered the large majority of institutional investors’ votes, Mr. Fossati found it more convenient to support their candidates. Nevertheless, according to the Assogestioni’s internal rules, the Directors appointed from their lists of candidates cannot represent the majority of the Board members and cannot hold executive positions into the Company. Furthermore, as per the Company’s bylaws, the Board can be made of a minimum of 7 up to a maximum of 19 members. The Meeting will fix the number of members upon eventual shareholders’ proposals. In case no proposal will be submitted to the Meeting, the number of Directors will remain unchanged to current 15 (as fixed by the AGM held on 2011). So far, neither Telco nor Assogestioni proposed a number of Board members.

The oddity of this unusual proxy fight is that, in case the Board will be removed, none of the contenders wants to gain the control of the Company: Assogestioni because of their internal regulations, Telco because their representatives were removed from the Board. All candidates submitted by Assogestioni are strictly independent from the Company (including the two current members Ms. Calvosa and Mr. Zingales), while Telco’s list includes the current CEO Mr. Marco Patuano and Telefonica’s COO Mr. Linares Lopez, both removed by the shareholders. Of course, in case of removal, Mr. Patuano shall not be charged of executive powers.

In case of removal, who will implement Mr. Fossati’s strategic plan? Who will manage the Company? And who will chair the Board? But questions are even more basic: how many directors will be appointed? Assogestioni submitted 7 candidates, being sure that Telco had submitted 15 candidates, but it did not happen. Unless different proposals are submitted at the Meeting, all 10 nominees will be elected and 5 missing Directors shall be appointed. Who will appoint the missing members? Telco is the only one that has the power to appoint them at the Meeting, through individual nominations, but does Telco really want to integrate the missing directors to re-gain the control of the Board? In that case nothing would really change, but a higher number of independent members would be elected. Nonetheless, Telco may decide to leave the responsibility to Mr. Fossati, who won the battle but has no representatives on the Board.

It should also be noted that even some of the subscribers of the Assogestioni’s slate are not strictly independent from Telco’s shareholders: Eurizon and Fideuram are part of Intesa Sanpaolo's group, Mediolanum and UniCredit's Pioneer are linked to the shareholders agreement controlling Mediobanca.

Despite the concerns of Mr. Fossati over the clear conflicts of interest of Telefonica are absolutely sharable, not submitting any candidates for the eventual renewal contributed to create a huge uncertainty in case of removal of the current Board members. Telecom Italia has to face a very delicate situation: a very high net debt (amounting to € 28 billion, or 1.4 times the shareholders’ equity, as per the 3rd Edition Report), poor operating  performances on the domestic market, both Moody’s and Standard & Poor’s recently downgraded the Company to a sub-investment grade and Italian political and financial contexts are still highly turbulent. In a so delicate situation, it is clear that the Company should strongly avoid further uncertainty.

Several newspapers reported that both ISS and Glass Lewis recommended approving the Board removal. Although supporting Mr. Fossati’s reasons, ECGS recommended (proxy reports issued on December 4th) and still recommends opposition, as the concerns over the huge uncertainty deriving from the removal overwhelm the risks of Telefonica’s conflicts of interest. Approximately 50% of the share capital is expected to vote at the Meeting, of which 22.4% represented by Telco, 5% by Fossati’s Findim and approximately 23% by independent shareholders. Hence, it is impossible to predict the outcomes of the Meeting.

Further obstacles to the shareholders' vote

The problems for shareholders are not limited to the decision whether to support Mr. Fossati or not, as great confusion was also created by Telecom Italia itself, that published inconsistent meeting material: the Notice of Meeting includes a different number of resolutions respect to the proxy card published by the Company itself!

The Notice of Meeting includes 5 resolutions: 1) the removal of the Board, 2) the eventual appointment of the new Board (in case the removal is approved), 3) the eventual integration of 2 Board members (in case the removal is rejected), 4) the elimination of shares’ par value and 5) the share capital increase to serve the mandatory convertible bonds. In case the removal is approved, shareholders will have to appoint the new Board members, having previously defined the number of members, the term of office and the remuneration of the new members. Hence, as per the Notice of Meeting, item 2 and 3 include bundled resolutions. But the bundled resolutions are unbundled on the proxy card, still issued by the Company, that includes 9 items: 1) removal, 2) eventual definition of the number of Directors, 3) eventual definition of the term of office, 4) eventual definition of the remuneration, 5) eventual election of the Board members, 6) eventual appointment of one Board member, 7) eventual appointment of the second Board member, 8) elimination of shares’ par value, 9) share capital increase.

The crazy situation affected also the major voting platform, which is based on the notifications received by the local custodians. Foreign institutional investors found 6 resolutions to be voted! While item 2 is still bundled, item 3 correctly allows shareholders to separately vote for the eventual appointment of each missing director.

At a time when proxy advisers’ activities are strongly criticized, it would be highly recommendable that national and supranational market Authorities cast a glance on the correctness of the entire voting channel, that involves also the issuers (and their advisers), the custodians, the voting platforms and the proxy agents.


19 October 2013


Windreich: senza fiato

Ai primi di settembre il progettista dei parchi eolici Windreich è andato in bancarotta con 400 milioni di Euro di debiti. L’emittente di due bond pmi per un totale di 125 milioni di euro ha annunciato l’insolvenza  solo tre o quattro giorni dopo il ricorso per fallimento. Su richiesta degli investitori e di business partner il consulente aziendale Werner Heer ha sostituito l’ex AD Willi Balz. Ancora poche settimane fa quest’ultimo, che a suo dire è impegnato con 250 milioni, di dichiarava ottimista.

Ciò che spetterà ai creditori della Windreich dipenderà ora dal finanziamento del progetto del parco eolico offshore MEG 1. La banca svizzera Sarasin è il più grande datore di credito con un prestito di 70 milioni di Euro.  Alcuni creditori dei bond hanno presentato una causa contro la  banca privata per non aver informato a sufficienza gli investitoti sui rischi legati ai bond della Windreich.

Evotec: parnership eccelente

Insieme agli scienziati della Harvard Università l’azienda biotecnologica Evotec intende fare ricerca sulle malattie del sistema nervoso.  Insieme agli esperti delle cellule staminali l’azienda vuole cercare delle sostanze attive contro la perdita di cellule nervose. L’obiettivo è anche l’inibizione o al meno il rallentamento della perdita dei cosiddetti motoneuroni nella sindrome di Lou-Gehrig, la sclerosi laterale amiotrofica, la cosiddetta SLA. Questo è il quarto progetto tra Evotec e gli specialisti di Harvard. Evotec è quotata nel Tec-Dax.

Hornbach: il fai da te si sta riprendendo

Dopo un primo semestre piuttosto fiacco a causa del cattivo tempo i mesi estivi sono andati di nuovo a gonfie vele per la catena di mercati del fai da te Hornbach. Tra luglio ed agosto il fatturato è salito del quasi 7% portando il fatturato totale a 939 milioni di Euro. L’azienda è riuscita a recuperare le perdite  iniziali  registrando rispetto all’anno precedente un aumento del fatturato del 1.8%. Con  risultato operativo di 87 milioni di Euro l’oramai terzo gruppo del fai da te in Germania non è riuscito a recuperare nel secondo trimestre la perdita del 30 % registrata nel primo. L’aumento era solo del 12 5. Secondo gli amministratori anche questo risultato cambierà entro la fine dell’anno. Hornbach si aspetta di chiudere con un risultato operativo che sia almeno pari a quello dell’anno precedente.

Il gruppo intende inoltre di espandere i propri mercati: per quest’anno sono previsti i Paesi bassi, la Svezia e la Slovacchia. Hornbach non intende invece rilevare il concorrente fallito Praktiker, anche se per alcuni sedi esiste un certo interesse.

L’azienda è quotata nel Prime-Standard.

Buhlmann's Corner

Si vota – alcuni ci vanno e altri arrivano!

L’elezione del parlamento e l’assemblea generale sono la stessa cosa?  In linea di massima, si, solo che nel primo caso il risultato non lo si conosce già giorni prima e che i voti vengono consegnati personalmente, o eventualmente per posta. Bisogna dirlo, la maggior parte dei voti degli azionisti si arena, si perde da qualche parte. Come mai? Perché da qualche parte hanno cambiato sistema, o semplicemente perché nessuno sa come il sistema, la custody chain funziona.


Dopo 21 ore e 19 minuti il senatore texano Ted Cruz è stato portato via dal pulpito in seguito al voto di 60 colleghi. Aveva promesso di portare avanti il suo discorso contro l’„Obamacare“ finché le sue gambe avrebbero retto. Di fronte a questo episodio  i tre minuti di intervento concessi agli azionisti durante le assemblee tedesco fanno quasi ridere, vero? La presenza die voti degli azionisti nelle assemblee tedesche è drammaticamente scesa – solo perché un giudice ha applicato una legge che si conosceva da tempo? Fatto sta che tutti gli sforzi per aumentare la presenza sono andate tendenzialmente male. Particolarmente divertente, se così si può dire, il caso PUMA. Alla mia richiesta di inviarmi relazione sulla gestione ricevo una gentile risposta per mail:“ le manderemo certamente una versione stampata della relazione in tedesco. Le copie stampate saranno a disposizione a partire dal giorno (...) dell’assemblea“. Il fatto che la promessa si è rivelata essere un lapsus non fa che amplificare  il suo non-senso: prima si vota, e dopo si legge su che cosa.

Mentre gli executive varcano sempre più spesso i confini, i voti degli azionisti rimangono tendenzialmente chiusi a casa – e quando possono lasciare il paese, sono praticamente ai piedi del management. I gestori possono utilizzarli (quasi) come vogliono. C’è però una controprova alla tendenza. L’aneddoto è del 2013, l’anno in cui le presenze erano più basse che mai. Nel caso della GSW gli azionisti attivi avevano capito l’importanza e la necessità di una presenza in persona all’assemblea. La Signora col viaggio più lungo aveva affrontato ben 20500 km per spostarsi da Sao Paolo a Berlino per partecipare alla breve e vincente rivolta degli azionisti. Questo era l’unico modo per portare al suo hedge fund un certificato di partecipazione alla votazione (voting receipt). (VIP avrebbe potuto risolvere il problema ad un prezzo inferiore)

Sarà interessante osservare come andrà a finire la seconda Assemblea post IPO  di facebook. Alla prima a giugno 2013 (AGMagenda.com) il valore dell’azienda risultava dimezzato, e nel frattempo è più che raddoppiato. E tutto ciò senza applicazione di  Corporate Governance (one share on vote) ne in Facebook, ne nella cinese ALIBABA che proprio a causa della rottura con la buona Corporate Governance non entrerà in borsa nella sua Cina, ma nel paese madre della Corporate Governance (?Sic)

A questo punto mi sembrano più consequenziali gli americani quando decidono di designare il CEO di NOKIA. Questo intreccia il business con  quello della sua azienda d’origine alla quale poi ritorna. Mi chiedo per quale motivo  NOKIA gli paga 19 milioni di Euro per questo servizio, visto che ha ricondotto il l’azienda finlandese alla produzione di stivali di gomma. Casi simili sono successi alla grande nell’aeronautica europea, penso a Air France, IAG international airlines group (former: British Airways) o Deutsche Lufthansa. Abbiamo del Executives cross border c/o Linde, RWE, Roche und Diageo – perché non farli accompagnare anche dai voti degli aizonisti? Un caso buffo si sta già delineando per il 2014: Cevian ce la farà a far influenzare il consiglio di sorveglianza della Daimler dagli azionisti? Intanto qualcuno prepara i voti per il viaggio cross border e il tavolo delle discussioni è apparecchiato in  molti / tutti i paesi.


Nemetschek: Tensione in alto

In Nemetschek AG,  produttore di software architettonica e per l’edilizia, Tobias Wagner ha preso il posto della CEO Tanja Tamara Dreilich che, ad Agosto,  nonostante lo sviluppo positivo dell’azienda ha deciso lasciare la carica. Secondo la stampa ci sarebbero state delle “differenze incolmabili” tra il  CEO e il consiglio di sorveglianza. Negi ultimi due anni Dreilich è la terza top manager che lasca l’azienda.

Da settembre Nemetschek è quotata nel TecDax.

Balda: Controllo pieno

Dall’inizio di settembre lo  specialista per la plastica Balda AG ha un nuovo consiglio di sorveglianza. Durante l’assemblea straordinaria il grande azionista Elector ha vinto la gara per l’organo di controllo (VIPsight ne ha parlato). I nuovi membri del consiglio di amministrazione Thomas van Aubl, Frauke Vogler e Klaus Rueht sostituiscono quindi completamente gli ex-controllori. All’inizio dell’assemblea l’ex presidente si era dimesso dalla sua carica.

L’avvocato van Auble tiene attraverso la Elector circa il 30 % delle quote di Balda. Anche Vogler è avvocato. L’ex Manager della Merck, Klaus Rueht, è stato nominato per  il consiglio di amministrazione dal hedge fund Texas Pacifica Group e dal Indaba Capital Fund. Inoltre Elector ha nominato Dieter Brenken come nuovo membro del consiglio di amministrazione.

Per mesi Balda e Elector erano in lite. Elector rimprovera al presidente del consiglio di sorveglianza Naschke di essere incompetente.  Dal suo canto Naschke ha rifiutato l’intenzione di van Aubel, di occupare il consiglio di sorveglianza per la maggior parte con candidati propri. Con un terzo delle quote Elector possiede adesso una maggioranza con due terzi nell’attuale organo di controllo; da un punto di vista della compliance la situazione potrebbe essere problematica.  La Balda AG è quotata nel SDax.

MT Energie: Novità a tutto tondo

Nell’ambito di una ristrutturazione dell’azienda lo specialista di Biogas e emittente di un bond pmi MT Enegier ha cambiato tutte le teste del suo consiglio di amministrazione. L’ex-manager MAN, Markus Niedermayer, è sato nominaro CEP. Sören Schleider, prima diretto commerciale in una affiliata di Bosch,  è il nuovo CFO. Il terzo à Karsten Wünsche nel ruolo del COO. L’ex AD Christoph Martens,  fondatore dell’azienda, e l’ex CFO e socio Tobias Brunkhorst rimangono dentro MT Energie nello sviluppo dei prodotti e nella distribuzione.

Al CFO Schleider aspetta già una prima sfida: tenendo conto del fatto che i numeri non sono buoni l’azienda non esclude un rottura dei covenant nei bond piazzata ad aprile 2013. Se il caso si produce e se la quota di capitale passa sotto i 20% garantiti gli investitori avrebbero un diritto di recesso straordinario Questo potrebbe costare ad MT Energie circa 14 milioni di Euro.


SAF Holland: Con passi molleggianti verso il lontano oriente

SAF Holland, quotato SDax, fornitore globale nell’industria dei veicoloi commerciali rileva l’ottanta per cento delle quote di un produttore cinese di sistemi di sospensione. Con la partecipazione alla Corpco Beijing Technology and Develpoment Co, Ltd.  l’azienda della Bassa Franconia estende la sua presenza globale e la sua gamma di prodotti per il mercato cinese.

Ambedue le aziende vogliono sfruttare il potenziale di sinergia nel mercato crescente per sospensioni per camion e autobus.  Secondo l’azienda Corpco si considera con 18 milioni Euro di fatturato  nel 2012 e circa 180 collaboratori leader del mercato in questo settore. La Joint Venture costituita comprende anche l’opzione di acquistare il restante 20 percento della Corpco in un secondo momento.

Delticom: Acquisizione con pneumatici caldi

La Delticom AG, venditrice on line di pneumatici ha rilevato la Tirendo, portale concorrente e azienda in start up, per 50 milioni di Euro in contanti dal Berliner Inkubator Project A e dalla famiglia di editori Jahr. La piattaforma nata nell’aprile 2012 sarà gestita dalla Delticom, ma come marchio proprio. La società è il distributore online leader del mercato europeo per gomme e accessori per automobili. Di Delticom fanno parte 100 online-shop in 42 paesi rivolti sia a clienti privati che a clienti commerciali. Nel primo semestre 2013 l’azienda ha registrato un fatturato di 220 milioni di Euro e un utile operativo di nove milioni di Euro.

Tirendo ha attualmente circa 100 collaboratori e prevede per questo anno un fatturato superiore  a 10 milioni di Euro. Nel frattempo l’ex-socio della Tirendo, la European Media Holding, si inserisce con una partecipazione a Delticom di nuovo nel business dei pneumatici. La Delticom è quotata nel SDax.


TecDAx al femminile: Migliori opportunità di carriera  che nel S- oppure nel MDax

Chi pensava che le aziende tecnologiche fossero riservate agli uomini ora si dovrà stupire: il 12 percento dei membri del consiglio di sorveglianza e di amministrazione delle aziende quotate nel TecDax  sono donne, come risulta da uno studio fatto dalla agenzia di consulenza per risorse umane Dwight Cribb per il 2012. L’indice tecnologico supera così per presenza femminile gli indici SDax e MDax dove solo un dirigente su dieci è una donna. Tra le cinque aziende con il maggiore numero di donne nei board ci sono, secondo la ricerca, Bechtle, Sartorius, Jenoptik, la Software AG e Freenet. Se la ricerca coprisse anche l’esercizio corrente al primo posto ci sarebbe probabilmente Telefonica, dove le donne occupano  il 44 % dei posti. Il gruppo di telecomunicazione è però entrato a far parte del TecDax solo a marzo di quest’anno.


Capital News

MorhoSys: Pronti per acquisizioni e ricerca

A settembre l’azienda biotecnologica MorphoSys ha raccolto 84 milioni di denaro nuovo tramite un aumento del capitale. Con i ricavi del collocamento (private placing) di circa 1,5 milioni di azioni presso investitori istituzionali l’azienda intende finanziare delle acquisizioni e ulteriore ricerca e sviluppo.


Il bond aziendale del gestore di parchi eolici e solari Energiekontor AG è stato sottoscritto al cento per cento a soli pochi mesi dopo la sua emissione. Con un volume di 7 milioni di Euro e una durata di cinque anni gli ammontano al 7%. L’azienda ha anche piazzato nelle ultime settimane in breve tempo uno step-up bond di 23 milioni di Euro e prevede di emettere ancora prima della fine di quest’ anno altri step-up bonds.

All’inizio di settembre l’azienda di Brema aveva annunciato la vendita di un parco eolico offshore con una perdita prevista di due a tre milioni di Euro.

Helma: Case stabili

Da settembre un bond aziendale della Helma  Eigenbau con un volume di 25 milioni di Euro e una durata di cinque anni è commerciabile. Gli interessi sono del 5,9 % circa. Il bond era già pienamente sottoscritto prima della fine della scadenza. L’azienda realizza il suo fatturato con case di proprietà, immobili per vacanza e immobili per abitazione per investitori. Nei mesi passati Helma ha guadagnato sia nel fatturato che nel risultato e registra un aumento delle commesse. I ricavi delle emissioni dei bond sono andranno a favore della crescita organica. L’azienda è quotata nel Entry Standard.




VIPsight Archives Europe - Italy

2012 2011 2010

25 September 2013

Frontis Governance published the 2013 study on remuneration in Italian listed companies: Pay on Performance?

During the last few years, also thanks to the financial crisis, the executives’ remuneration at listed companies has become a critical issue in the dialogue between issuers and shareholders, who often contested the gap between the top managers’ compensation and the value created. The Frontis Governance’s report analyses in deepest details all the remuneration components of the CEOs and the Board members of 98 Italian listed companies. The purpose of the study is not to define whether an overall compensation is too high, but, as the title states, to evaluate its actual alignment to the company’s goals: are remunerations effectively structured to pay the performance?


Since the first year of implementation, the shareholders’ vote on remuneration reports showed all its strength: in 2012 the level of dissent was so high to define that proxy season “the shareholders’ spring”. Nonetheless, one of the main and clearest effects of the introduction of the say-on-pay in Italy, is a higher transparency on executives’ remuneration structure. The analysis of 2012 remunerations is therefore highly relevant for at least two reasons: for the first time it is possible to observe the changes of each component over the time, also allowing a first evaluation of the closer dialogue between issuers and minority shareholders.

Methodology and contents

The Frontis Governance’s study, Pay on Performance? Analysis of 2012 Remuneration in Italian Listed Companies (that will be available in English soon), scrutinizes the compensation structure of 98 largest Italian issuers. All remuneration components are analyzed by their nature (cash, shares or stock options) and relevant vesting period (base salary, annual bonus and long-term incentives), in order to compare each amount through appropriate parameters: company’s size, operating results and stock market performances, achieved the previous year and in the long term.

The second part of the study is focused on the remuneration vested in 38 FTSE MIB index components, enlarging the analysis to the entire Board of Directors: the CEOs, the Chairpersons and all other members, differentiating the executives from the non-executive ones.

Finally, thanks to the partnership with the international network of proxy advisors ECGS (“Expert Corporate Governance Service”), it has been possible to compare the remuneration structure at Italian large-caps with a sample of European peers, operating in the same industries represented in the FTSE MIB index.


Italian CEOs’ overall compensation increased by 27.5% in 2012 (+31.3% in 38 FTSE MIB companies), but the in-depth analysis led to much more articulated conclusions, that in some way answered the initial question:

  • The amount of base salaries seems to be completely independent of the company’s size, both in Italian companies and in comparison with their European peers: the average fixed component of Italian CEOs ranked second in Europe, despite the lower market capitalization.
  • Annual bonuses seem not to be correlated to any performance achieved in the short term, both in terms of operating criteria and total shareholders’ return.
  • The alignment between the long-term incentives and the value created is not clear, but it is possible to verify a higher correlation of vested incentives with operating performances (in terms of EBITDA, Tier 1 Ratio or Solvency Ratio, according to relevant industry).
  • The introduction of the say-on-pay already caused clear positive effects: the quality of disclosure improved with regards to long-term incentive plans (while annual bonuses still represent a critical issue) and several companies changed some remuneration clauses (better defining the severance provisions or eliminating discretionary variable components), often urged by shareholders.
  • Last proxy season’s results confirm the positive effects of the closer dialogue between companies and their financial stakeholders: dissent votes, coming from strictly independent shareholders, decreased by 17.3% in 2013, to 30.2% from 36.5% in 2012.

The full report: Pay on Performance? Studio sulle remunerazioni 2012 nelle società quotate italiane (Italian version) is available here <Download here the English Abstract>


25 September 2013


Ansaldo STS
Banca Carige
Banca Generali
Banca IFIS
Banca Monte dei Paschi di Siena
Banca Popolare di Milano
Banca Popolare di Sondrio
Banca Popolare dell’Emilia Romagna
Banco Desio e Brianza
Banco Popolare
Beni Stabili
Bonifiche Ferraresi
Brunello Cucinelli
Buzzi Unicem
Cattolica Assicurazioni
Cementir Holding
Credito Emiliano
Credito Valtellinese
De’ Longhi
DeA Capital
EI Towers
Enel Green Power
Falck Renewables
Fiat Industrial
Fondiaria Sai
Intesa Sanpaolo
Milano Assicurazioni
Pirelli & C.
RCS Mediagroup
Salvatore Ferragamo
Telecom Italia
Trevi Fin. Industriale
UBI Banca
Vittoria Assicurazioni
Zignago Vetro


16 September 2013

Corporate Actions

GILDEMEISTER ha avviato  un aumento di capitale in contanti (capital increase for cash). Ai vecchi azionisti si offre l’opzione di sottoscrivere 15,4 milioni di nuove azioni con un rapporto di quattro a uno. Secondo l’azienda di Bielefeld questo corrisponderebbe a quasi un quarto del capitale sociale. Secondo gli analisti della Close Borthers Seydler il prezzo di 14,50 Euro per ogni azione dovrebbe essere molto interessante per gli investitori perché in borsa costa più caro. Sembra inoltre che  la GILDEMEISTER voglia allontanarsi dal moltiplicatore finora previsto del 13 a 3. Il costruttore di macchine utensili  vorrebbe incassare tramite l’aumento di capitale 210 milioni di Euro da destinare agli affari all’estero.

ProSiebenSat.1 Media ha annunciato il 13 agosto che le azioni privilegiate al portatore senza diritto di voto vendute finora attraverso la borsa saranno trasformate in azioni ordinarie nominative con diritto di voto. La trasformazione ha acquistato efficacia quando il 16 agosto le necessarie variazioni statutarie sono state registrate presso il registro commerciale. Finora solo le azioni privilegiate erano commercializzate in borsa, le azioni ordinarie invece no. Dopo una profonda ristrutturazione della composizione dell’azionariato la quota-parte di KKR e Permira ai diritti di voto del gruppo TV si è dimezzata da 88 a 44 percento. Resta da chiedersi se dopo il ritiro delle finanziarie si trovano nuovi investitori disposti ad entrare in ProSieben in grande stile.


Finanziamento di piani pensionistici sempre stabile, anche se gli interessi continuano a rimanere bassi

Secondo i calcoli di Towers Watson le pension obligations delle aziende quotate nel DAX sono diminuite nella prima metà dell’anno del 0,6%, a 311,8 miliardi di Euro nonostante che gli interessi si fossero mantenuti bassi. Alla fine del 2012 erano 131,8 miliardi di Euro.  Anche le pension obligations delle PMI quotate nel MDAX si sono abbassate del 6% a 37.5 (37.3) miliardi di Euro. I valori patrimoniali riservati per il pagamento delle pensioni ammontano senza  variazione a 192,1 miliardi di Euro. In questo modo il rapporto tra patrimonio pensionistico e obblighi pensionistici aumenta di 0,4 %  punti percentuali (fine 2012 61,2 %, fine primo semestre : 61,6%). Nelle aziende quotate nel MDAX gli asset ammontano a 16,4 miliardi di euro e il rapporto patrimonio/obblighi è del 43,7 (43,1) percento.  La società di consulenza ha pubblicato questi numeri nell’ambito della “German Pension Finance Watch” che dal 2003 riporta regolarmente le analisi dei piani pensionistici delle aziende del DAX e del MDAX.  Tenendo conto della stabilità di questa fase di bassi interessi Towers Watson consiglia alle aziende di non guardare solo gli aspetti del finanziamento delle pensioni aziendali, ma di prendere in riesame anche la struttura fondamentale dei loro piani pensionistici.

DAI dovrebbe finanziare la commissione di governo


Il finanziamento del Codice Tedesco per la Corporate Governance,  Deutscher Corporate Governance Kodex, dovrebbe in futuro essere garantito anche attraverso il Deutsche Aktieninstitut (DAI). La segreteria della Commissione governativa viene attualmente organizzata dal suo presidente Klaus-Peter Müller e potrebbe in futuro traslocare all’interno degli uffici del DAI a Francoforte. Il progetto deve ancora essere approvato dai due gruppi durante la prossima riunione il 17 settembre.  Manfred Gentz dovrebbe assumersi la carica del presidente della Commissione CG. Si sapeva da tempo che l’attuale presidente avrebbe lasciato il posto, ma finora nessuno voleva sostituirlo.  Sia la più grande associazione per investitori privati, la  Deutsche Schutzvereinigung für Wertpapierbesitz e. V.  (DSW) che l’associazione industriali tedesca, il  Bundesverband der Deutschen Industri (BDI),  si sono dichiarati favorevoli a questo nuovo inizio della Commissione per la Corporate Governance con a capo un ex-amministratore Daimler. Il maggiore coinvolgimento del mondo economico dovrebbe portare, secondo i lobbisti, ad una più alta accettanza della Commissione tra le proprie file. Allo stesso momento l’industria chiede alla politica di accettare in futuro una volontarietà superiore nell’applicazione del Codice. I membri del DAI sono soprattutto società per azioni. In passato la lobby delle società orientate al mercato dei capitali aveva più di una volta preso delle posizioni su questioni di corporate governance che non coincidevano con quelle della commissione di governo. E’ importante per il DAI trattenersi sui temi della corporate governance per non diventare una sorta di vice-commissione che si pone in concorrenza a quella originale.  Allo stesso momento la Commissione governativa potrà avere un futuro come organo di autoregolazione delle società presenti sul mercato dei capitali ed essere riconosciuta dal legislatore solamente se non viene percepita come una lobby delle società quotate in borsa.


Secondo un portavoce del ministero tedesco per il trasporto la sentenza del Tribunale di Parigi nel  litigio sul fluido refrigerante negli impianti di climatizzazione oltre ad aver avuto esiti positivi per la Daimler, conferma e supporta la tesi giuridica del governo federale. Tuttavia anche dopo la decisione del tribunale contro il rifiuto dell’ammissione alla circolazione di alcuni modelli Mercedes in Francia non si prospetta alcuna soluzione rapida. Il nocciolo della questione tra gli enti francesi e il costruttore tedesco è l’utilizzo di R1234yf negli impianti di climatizzazione delle automobili.  Daimler rifiuta di utilizzare il fluido refrigerante nelle sue vetture perché durante alcuni test interni si sono verificati degli incendi. Il produttore Dupont continua a dichiararsi fiducioso che R1234yf potrà essere utilizzato negli impianti di climatizzazione di automobili. Per quanto riguarda il processo davanti al tribunale, Honeywell aveva parlato di una “manovra amministrativa diversiva con conseguenze negative per l’ambiente”. Fino ad una decisione definitiva le automobili devono essere ammesse alla circolazione.


Dopo la chiusura della parte centrale di un audit speciale sulle manipolazioni del Libor, l’autorità  tedesca per il controllo finanziario, la Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) ha attestato alla Deutsche Bank dei difetti di controllo senza però rivolgere alcuna ammonizione formale a Anshu Jain. Il controllo dei collaboratori sarebbe stato troppo molle, ma non ci sarebbero stati atti di criminalità organizzata al livello del CdA. Con questo le indagine non sarebbero ancora concluse, il comportamento di alcuni collaboratori della banca è ancora sotto osservazione. Il CdA non avrebbe niente da temere. A primavera la BaFin aveva espresso dei dubbi su indagine interna della Deutsche Bank che aveva comunque confermato (discharged)  il CdA e intensificato il controllo del Libor. Ora il Co-Ceo della Deutsche Bank potrà rispondere ai controllori stranieri che, diversamente della BaFin, annunciano dei passi penali e richieste di sanzioni pecuniarie di alto livello.

Fusione tra GSW e Deutscher Wohnen “potrebbe avere un senso”

La GSW Immobilien sembra aperta all’offerta di acquisto per 1,8 miliardi ricevuta dalla Deutsche Wohnen. In vista della propria strategia di crescita focalizzata su Berlino e del possibile consolidamento nel settore delle abitazioni un matrimonio “potrebbe anche aver un senso al livello operativo e d’industria”, dice  il grande locatore di appartamenti di Berlin.  Per poterlo fare gli azionisti della Deutsche Wohnen dovranno votare durante l’assemblea generale straordinaria convocata per il 30 settembre a Francoforte per un aumento di capitale dedicato. La Deutsche Wohnen intende rilevare il concorrente tramite uno scambio di azioni e offre 51 titoli propri contro 20 azioni della GSW che dichiara di voler esaminare l’offerta. Alcuni punti devono ancora essere approfonditi. Se il 75 % degli azionisti della GSW dovesse dare in cambio  le loro quote di partecipazione,  nascerebbe – secondo la Deutsche Annington – il secondo gruppo immobiliare più grande quotato in Germania con 150.000 appartamenti.

Minaccia di sanzioni per Siemens in Cina

Secondo informazioni interne non confermate un alto rappresentante dell’ente governativo NDRC (National Reform and Development Commission) durante un seminario sulla legge antitrust introdotta in Cina circa cinque anni fa avrebbe fatto capire agli avvocati della Siemens e di  altri 30 gruppi stranieri di accettare tutte le accuse di violazione del diritto di concorrenza.  Xu Xinya  asserisce che metà di loro è già soggetto di inchieste o indagini e consiglia alle aziende di dichiararsi colpevoli per evitare sanzioni raddoppiate o triplicate. Il dirigente NDRC avrebbe fatto vedere agli avvocati come possono fare “autocritica” facendo girare le copie di lettere di aziende che nel passato avevano collaborato con le istituzioni. Pare che siano stati presenti anche dei rappresentanti del ministero per il commercio e dell’ente per l’industria e il commercio, che è responsabile per il controllo del mercato. Siemens ha smentito la sua partecipazione all’evento formativo sul diritto della concorrenza tenuto in lingua cinese.


Dal 1 settembre Reinhard Wolf fa parte del CdA della BayWa. Nato nel 1960, il direttore generale della RWA Raiffeisenware Austria AG a Vienna rappresenterà nel board l’affiliata austriaca del più grande gruppo tedesco di distribuzione di prodotti per l’agricoltura e per l’edilizia sostituendo Klaus Buchleitner che fino al 2012  aveva svolto lo stesso ruolo.

Secondo quanto comunicato  da GSW Immobilien il giorno 8 agosto il consiglio di vigilanza ha votato il membro Claus Wisser come suo nuovo presidente. Tre giorni dopo l’offerta miliardaria di takeover da parte della Deutsche Wohnen la GSW ha nominato Jörg Schwagenscheidt e Andreas Segal come Co-CEO con diritti equiparati.

QSC informa dal 1 settembre Stefan Freyer e Henning Reinecke sono stati chiamati nel CdA. Ambedue sono ex membri del board della Info AG, che il 6 agosto è stata fusa con il provider di servizi di telecomunicazione. Freyer era dal 2007 responsabile per Outsourcing, Consulting, Infrastrutture e Innovazione. Nella QSC si occuperà dell’attività aziendale, del business con soluzioni TIC (Information and Communication Technology, ICT) e consulenza IT e spingerà avanti l’integrazione tra servizi IT e TC al livello tecnico. Reinecke era nel board della Info AG dal 2012 come responsabile per la distribuzione e il marketing. Il suo compito in QSC sarà quello di far crescere il segmento del TIC con offerte molto orientate al mercato. Arnold Stender è stato invece chiamato a guidare lo sviluppo della famiglia Cloud QSC-Tengo e lascia il board.

Con effetto dal 9 agosto Volker Feldkamp si è dimesso per sua volontà dal board della STADA Arzneimittel. Secondo il gruppo farmaceutico il manager ha rinunciato alla sua carica per dedicarsi ad altre attività. Le dimissioni sono state accordate con  reciproco consenso con il consiglio di sorveglianza. Fino alla chiusura del contratto il 31 dicembre 2014 Müller sarà esonerato dalla sua carica. Al momento non è previsto un successore.


La magistratura di Monaco ha mandato “numerose citazioni” per interrogare nelle prossime settimane dei “collaboratori di alto rango” della Deutsche Bank sull’accusa di truffa processuale e di false testimonianze fatte senza giuramento  (false statement made while not under oath)  in relazione al procedimento KGL-Pool.  Le citazioni siano state indirizzate anche all’ex capo della banca Josef Ackermann. Le indagini trattano il sospetto che durante il processo Kirch i manager della banca non solo abbiano mentito al Tribunale di Monaco, ma che lo abbiano fatto di comune accordo. La Deutsche Bank non si esprime a riguardo.

Dopo aver fermato a ritroso la fusione di Unitymedia e Kabel BW tramite un’ azione  giudiziaria., il gruppo di Bonn sembra essere vincente anche nel litigio con Kabel Deutschland sulle tariffe di rete verosimilmente esagerate. Il 28 agosto il tribunale di Frankfurt ha rifiutato un ricorso contro la Telekom con la quale il più grande gruppo tedesco di cavi cercava di ottenere il pagamento di circa 350 milioni di Euro. Dopo la sconfitta in prima istanza davanti al Landgericht Frankfurt, la Kabel Deutschland ha annunciato di voler attendere la motivazione scritta per prenderla in esame e decidere un probabile ricorso.


9 September 2013

German Corporate Governance in the teens

11 anni dopo la sua fondazione il passaggio all’adolescenza della Commissione per la Corporate Governance in Germania  Deutsche  Corporate Governance Kodex Kommission) si annuncia con l’arrivo di un  nuovo presidente  e un budget più trasparente.

E vero che iI candidato per la presidenza Manfred Gentz era, come scrive la Börsenzeitung, a suo tempo coinvolto in un grande insuccesso imprenditoriale tra Daimler e Chrysler. Non bisogna tuttavia dimenticare come sono andate le cose.  Ricordo bene il lamentio degli azionisti: alcuni hanno aperto la bocca solo dopo l’Assemblea, altri hanno persino alzato la voce durante l’assemblea … nessuno però ebbe  il polso di votare contro il management.  Gentz – che ricopre anche altre cariche meritevoli, soprattutto fuori Germania – è sicuramente uno tra i candidati migliori, se non il presidente migliore per ristrutturare la commissione sotto tutti gli aspetti: i suoi membri, la trasparenza del loro ruolo e infine anche la responsabilità per il budget che finora era accollata esclusivamente agli  emittenti (issuers).

Mentre il primo presidente della commissione era ancora libero di fare ciò che voleva, Gentz sarà giudicato in base a degli standard ben più definiti.

Secondo me, i membri della commissione for the CG Code dovrebbero dimettersi in toto– non solo per fatti oggettivi, ma anche per permettere alla commissione stessa e al nuovo presidente di respirare aria nuova. Mi piacerebbe una commissione con un presidente presente, esigente e propositivo.   I tempi in cui una Signora ministro si atteggia da comandante perché la Cancelleria non si interessa proprio dell’argomento, dovrebbero essere finiti. La commissione ha bisogno di un presidente con una leadership chiara e articolata.

E’ ovvio che il nuovo presidente dovrà ascoltare tutte le parti coinvolte nelle discussioni, riconoscendo l’importanza degli investitori e facendo sì che la commissione oltre a prendere in considerazione i punti di vista degli emittenti tenga conto anche della corporate governance di chi investe. Gli executives hanno ragione quando si lamentano misure sempre più rigide per la loro corporate governance. Gli investitori dettano le regole senza dover dare alcun resoconto del loro operato e del loro comportamento.  Bisogna arrivare ad un cambio di mentalità che affronti i problemi, anche quelli del denaro: è giusto che gli investitori contribuiscano alle spese per le attività della commissione – non è giustificabile, invece, che pesino solo sulle spalle degli emittenti organizzati nel DAI (Deutsches Aktieninstitut).

La Corporate Governance riguarda tutti.  Penso che se il buon Dio – e non solo il ministro per le finanze tedesco – avesse voluto che gli uomini piantassero del vetro (fotovoltaico) sui loro prati, avrebbe inventato i semi per vetro e non per l’erba Se la Corporate Governance fosse solo una questione economica, la gente di Limburg (cittadina con poco più di 30.000 abitanti ad una settantina di km a nord di Francoforte) non scenderebbe in strada contro il loro Arcivescovo. E’ vero, anche le chiese e i loro fondi sono chiamati ad agire – la chiesa luterana ha già stilato un catalogo di principi. Ci resta che augurarci che la teoria diventi pratica, prima che finisca il mondo.


10 April 2013

Intesa Sanpaolo’s Board election: some funds question the independence of the “minority” slate

On April 22nd, the Intesa Sanpaolo’s AGM will elect the members of the Supervisory Board through the slates of nominees’ mechanism (“voto di lista”). As per the voto di lista, mandatory for all Italian listed companies since 2007, shareholders will vote on slates of nominees submitted by other shareholders, holding at least a threshold of the company’s share capital (defined by the Market Authority for each company). Three slates have been submitted for the renewal of Intesa’s Board: the first one by the banking foundations Compagnia di San Paolo and Fondazione Cariplo (major shareholders, jointly holding 14.7% of the share capital), the second one by three “minor” banking foundations jointly holding 9.9% and the third one by a group of fund managers coordinated by the Italian Asset Managers Association (Assogestioni) with 0.59%. For the first time, the definition of the Assogestioni’s slate raised a strong debate, even about the actual independence of the fund managers. Mr. Guido Giubergia (CEO of Ersel SIM) was one of the main dissenters, so that he resigned from the chairmanship of Assogestioni’s Corporate Governance Committee. The internal crisis seemed to be overcome, and on March 28th the funds submitted the slate to Intesa Sanpaolo. Nonetheless, the debate on Assogestioni’s nominees raised the attention on a mechanism, the “voto di lista”, that so far enjoyed widespread appreciation. The seriousness of the debate seems to be strengthened by the intervention of the Italian Market Authority (Consob), that called Mr. Giubergia for further clarification, as newspapers reported (Vittoria Puledda, Al via le liste per Intesa e Generali bufera sui nomi di Assogestioni, la Repubblica, March 29th, 2013).

Frontis Governance already questioned about the effectiveness of the “voto di lista” mechanism (Election of the Board: is the Italian “voto di lista”, as defined by the By-laws, still valid?, posted on April 24th, 2012). The comment posted almost one year ago highlighted how such mechanism may strengthen the major shareholders’ control of the Boards. Just few examples: Fiat and UniCredit’s major shareholders are able to elect more than 90% of Board members even controlling less than 70% of votes, while Telecom Italia’s major shareholder (Telco) is able to appoint 80% of members with less than 50% of Meeting votes.

Concerns were raised also over the definition of the slates: too often the slates submitted by the major shareholders are complementary to those of the fund managers, represented by Assogestioni, so that all nominees included in the two slates are appointed, regardless the shareholders’ voting direction. The number of Board members to be elected from the “minority” slate is set by the company’s Bylaws, that may provide for just one “minority” member (that’s the case, for instance, of Fiat and UniCredit). Furthermore, as per the Italian law and the Corporate Governance Code, specific independence and gender quotas have to be met. Concerns may arise when the slate submitted by the major shareholder includes a number of nominees lower than the number of Board members, being sure that the Assogestioni’s associates will nominate the ones having the missing independence and gender requisites. Again in Fiat’s 2012 Board election: shareholders had to appoint 9 Directors, of which 2 women; Exor (major shareholder) submitted a slate of 8 nominees, including one woman, and the fund managers coordinated by Assogestioni submitted a “slate” of only 1 nominee and…woman. It was clearly a pure coincidence, but such cases are very frequent on FTSE MIB’s companies, so that concerns may arise over previous discussions (and, why not, agreements) between the association and the major shareholder about the identity of the nominees.

The debate over the Assogestioni’s slate submitted to Intesa Sanpaolo was also related to another delicate issue: the real independence of the fund managers. The slate was signed also by Fideuram and Eurizon, two asset management companies part of Intesa Sanpaolo Group. Both Fideuram and Eurizon representatives correctly did not actively participate to the definition of the slate. Nevertheless, the submission of the slate itself would have been impossible without the support of those shareholders in clear conflict of interests. The independence of asset managers is a real issue for Assogestioni, as more than 75% of its associates are held by large banking groups and less than 10% of total assets are managed by independent institutions.

It seems that the debate involved also foreign institutional investors, none of which signed the Assogestioni’s slate, even the ones that supported the Italian “minorities” over the last couple of years (Fidelity, JP Morgan, Hermes, Amber, Aviva and the Dutch pension fund APG). Did the debate ring an alarm bell on the actual Assogestioni’s independence also through the big international investors? In that case, the association would face another problem, caused by the general non voting policy of Italian fund managers. In fact, most of Assogestioni’s associates prefer not to vote on any items on the Agenda, with the exception of the Board election where they submitted a slate of nominees. So far, the Italian fund managers were able to elect almost all their candidates thanks to the quite unconditional support of foreign institutional investors (by fact delegating to them the decision on the other items on Agenda), that represent approximately 85% of minorities voting at Italian AGMs.

Thanks to the current definition of the slates, all nominees submitted are elected in any case, so that Assogestioni does not really need the support of external shareholders. Nonetheless, if the votes to the Assogestioni’s slates should fall, new scenarios may be possible: foreign institutional investors may take the responsibility to submit their own independent nominees (as already happened in the near past, see Parmalat and Sorin in 2012), or new categories of Italian shareholders, strictly independent, may finally decide to take part of the voting process and to the appointment of Board members.

Sergio Carbonara, Rome


3 February 2013

Derivative scandal at Banca MPS: an accurate governance analysis would have identified the factors of risk in advance

During these days, the entire Italian market community seems to be taken by surprise from the scandal that hit Banca MPS. The Bank Monte dei Paschi di Siena recently discovered huge losses originated by derivatives signed by the former managers with Nomura and Deutsche Bank. Nevertheless, the troubles of the Monte Paschi arose at least 5 years ago, when the third largest Italian lender bought the smaller Banca Antonveneta from Banco Santander at € 9 billion, more than MPS’ market capitalization. Only 2 months before, the Spanish bank paid Antonveneta € 2.4 billion less. In 2008, few voices questioned such egregious deal and the € 5 billion share capital increase, needed to partly finance the acquisition, was approved by 98.99% of voting shareholders.

The entire Board of the Sienna-based bank was renewed only on April 2012, but the signals of an inadequate governance were clear even before that date, or at least an accurate analysis would have revealed it. ECGS and Frontis Governance raised strong concerns about the MPS’ governance at all meeting analysis published over the last few years. The main concerns reported by the proxy advisors regarded the lack of independence at both the Board of Directors and the Board of Statutory Auditors.

Applying the ECGS’ corporate governance guidelines and the scoring system used by the Frontis Governance’s CG Rating Report, the former Banca MPS’ Board would have scored only 30 on a 0 to 100 range (versus a FTSE MIB average of 55), while the Statutory Auditors an equally low 42 (versus a market average of 77).

Main concerns arose over the total absence of strictly independent Directors, as defined by Frontis Governance and ECGS’ guidelines. Such definition strongly differed from the Bank’s assessment of 4 independent Directors, as defined by the Italian Corporate Governance Code: Massimiliano Capece Minutolo and Mario Delfini, who were strongly connected to the Caltagirone Group (at the time relevant shareholder and Vice Chairman of Banca MPS), Graziano Costantini, who sat at the Board of the controlling shareholder Fondazione MPS until 2009 and Carlo Querci, who sat on the Board of the Bank for 15 years including several directorships at MPS Group companies over the years.

No executive Directors sat on the Board, that was therefore more inspired to a strategic and supervisory role. Nonetheless, just because of that peculiarity a majority of strictly independent Directors was needed, minimizing conflicts of interest and connections with all relevant shareholders. Even accepting the MPS’ peculiar definition, 4 “independent” Directors out of 12 wouldn’t have been in any case enough to counterbalance the largest shareholders’ interests.

Frontis Governance expressed concerns also with regards to the members of the Board of Statutory Auditors, the corporate body that is responsible for supervising the respect of the principles of a proper management. As per their very delicate functions, all Statutory Auditors have to fulfil the strictest independence criteria, but some major concerns arose over the former Chairman of the Board, Tommaso Di Tanno. In 2010, the law and tax consulting firm founded by Mr Di Tanno, Studio Di Tanno & Associati, was hired as advisor for the merger of MPS’ fund manager Prima SGR with Anima SGR (that resulted in the creation of Asset Management Holding, the fourth Italian fund management group). Minor concerns regarded also the other two Statutory Auditors: Paola Serpi was Vice Chairman at Mens Sana Basket and executive at SS Mens Sana 1871, both connected with Banca MPS, while Marco Turchi held more than 50 external mandates, so that concerns arose about his time commitment at the controlling duties at the third Italian banking group.

To identify a lack of independence at company boards would have not necessarily prevented unfair management actions, but at least it would have rung an alarm bell on the accuracy of internal procedures. Too often corporate governance is seen as the mere compliance with various regulatory provisions – and the legality of Banca MPS’ procedures is not questioned here. Laws and codes, that have to be applied to all scenarios, need to be generic by definition. A good governance should take regulatory provisions as a starting point, on whose basis the most appropriated procedures and actions should be defined for the specific organization. In this sense, an accurate analysis of all corporate governance aspects can concretely help to identify the factors of risk in the long-term period.

Following the renewal of the corporate bodies in 2012, Banca MPS improved its governance, even if some concerns are still alive. According to the Frontis Governance’s rating methodology, the new Board of Directors scores 42 (from previous 30), while the Statutory Auditors’ score is in line with the Italian market average (75 versus 77). Main concerns now affect the shareholders rights, that risk to be dramatically diluted by the potential capital increases that have been recently approved (of maximum € 1 billion, approved on October 2012 and whose beneficiaries are still unknown, and of maximum € 6.5 billion, approved on January 25th to repay the State loans).

A last note: the Meeting Agenda including the authorization to maximum € 6.5 billion capital increase was issued by the Bank more than one month ago. According to some Italian newspapers, it seems that so many observers and politicians became aware of the amount of the State loans only on the Meeting day. That is another evidence of the serious lack of attention on corporate governance issues: to complain about the results of an unfair action is always easier than to identify the risks in advance.

Sergio Carbonara, Rome


25 October 2012

The renewal season at Italian large banks goes on, but some big players are (still) missing

The Italian banking system has been living a season of deep renewal started on autumn 2011 and continued with the last EGMs of Banca MPS and Intesa Sanpaolo on October 9th and 29th respectively.

The co-operative banks were the most affected, in particular Banco Popolare and Banca Popolare di Milano (BPM), that followed completely different needs and methodologies. Banco Popolare passed from the traditional governance system (including the Board of Directors and the Board of Statutory Auditors, both elected by the shareholders) in order to simplify the decision-making process and to reduce the costs linked to the dual system. BPM moved on the opposite direction, adopting the dual system, because the bank needed to strengthen the level of internal controls and the independence of the governing bodies from internal structure’s interferences.

The amendments to the Banca MPS’ Articles of Association, approved by the EGM held on October 9th, also represented a turning point for the bank’s corporate governance, at least on a “political” perspective. The new Articles of Association reduce the decision power of the shareholders, that are no more able to vote on asset sales. Such provision is in line with the market practice, but it raised large protests due to the quite difficult climate at the Tuscan bank. The employee-shareholders strongly contested the amendments, that strongly reduced the possibility of internal debates on so delicate issues, that involve their own professional future. Independent shareholders should be concerned too by the last EGM’s outcomes, but mostly because of another resolution: the authorization to increase the share capital of maximum €1 billion without pre-emptive rights. The amount of the capital increase represents approximately 30% of the current bank’s market capitalization and it will likely change its ownership structure, by strongly diluting existing shareholders’ rights. Concerns also arise over a statutory provision that was not cancelled: each shareholder’s votes are limited to 4% of the share capital, with the exception of the Fondazione MPS (that is destined to become the former controlling shareholder). Thanks to this provision, all new shareholders coming from the next capital increase will be enabled to only 4% of votes, versus a much higher investment: in order to accept such limitation, they will likely ask a huge discount on the share price, worsening the unacceptable dilution of existing shareholders’ rights.

The upcoming EGM of Intesa Sanpaolo, on October 29th, will likely be held in a more relaxing atmosphere, but it will still involve relevant changes to the dual governance system of the bank. From 2 to 4 managers of the banking group will be appointed as members of the Management Board, together with the CEO. A so strong presence of executives may raise some concerns over the independence of the Board. Nonetheless, an adequate level of internal controls will be provided by the mandatory majority of external members and by the sufficiently independent composition of the Supervisory Board. The strong connection between the Management Board and the operating structure will simplify the decision-making process, aiming to improve the efficiency also through the elimination of the Board’s executive commissions.

UniCredit started a deep reorganization of the operating structure already in 2010, with the definition of the centralized banking structure and the territorial divisions (that will be completed in 2013), but the change is much slower on a corporate governance perspective. Following the €7.5 billion share capital increase of January 2012, the UniCredit’s ownership structure slightly changed: the banking Foundations and the Central Bank of Libya diluted their shares, while the Abu Dhabi sovereign fund became the main shareholder and others, such as Caltagirone and Della Valle, increased their ownerships. The new ownership structure did not affect the governance of the bank: the AGM held on May renewed the UniCredit’s Board of Directors, but the only relevant changes were the reduction of Board members to 19 from 23 and the appointment of the new Chairman, Mr Giuseppe Vita, who is former Chairman of the UniCredit’s partner Allianz SE.

Despite the “large-scale manoeuvres” on the market, at Mediobanca nothing seems to have changed since 2008, when the last business plan was approved and the company abandoned the dual governance system (after only one year). A very good chance for a renewal was given by the new Italian law banning interlocking directorships at financial companies. With 6 resigning directors, Mediobanca is the most affected by the new provisions, but the appointment of the new members are still guided by the allocation of seats among the controlling shareholders: Pier Silvio Berlusconi and Bruno Ermolli are linked to Fininvest, Christian Collin to Groupama, Alessandro Decio to UniCredit, Vanessa Labérenne to Bolloré Group and Alberto Pecci, who is another member of the shareholder agreement controlling Mediobanca. The mandate of all newly appointed directors will expire with the upcoming AGM of October 27th, but the voting outcomes will likely hold no surprises.

Sergio Carbonara, Rome


7 July 2012

The battle on Impregilo: the first Italian proxy fight, where even the smallest shareholders have the power.

The Impregilo’s AGM called on July 12th represents first real proxy fight at an Italian large company, where the outcome is absolutely unpredictable. During the last 9 months, the main Italian competitor, the constructor company Salini S.p.A. (100% owned by Salini family), bought 29.23% of Impregilo’s shares, almost equalling the holdings of Igli S.p.A., the major shareholder with 29.96% (Igli is 100% owned by Gavio Group since March 2012, when the other shareholders Benetton and Ligresti sold their shares).

The declared goal of Salini is to integrate the two constructors’ businesses in order to create a unique large group that would be able to compete on global markets: what Salini defined the “national champion”. On the other side, Gavio strongly contests the business plan of the main competitor: as per the major shareholder, the plan is not clear and Impregilo’s management does not need any change also considering the very good performances of last years.

Actually, over the last 6 years Impregilo’s EBIT increased of more than 40% and Net Results grew of 25%; moreover, the shares’ market value raised of almost 65% during last year. Nonetheless, it is also true that the large increase in the share value is mostly due to the Salini’s activism, while in the last 6 years the shares lost more than 43% of their value. The Total Shareholders Return (TSR, that includes shares’ performances and dividends paid) was not so good as well, equal to approximately -40% in the last 5 years.

The two contenders have also very different views on future industrial opportunities: Salini pushes to exit from the Concessions to focus activities on the core business Constructions, while Gavio finds the Concessions as a relevant business that grew of almost 600% in the last 6 years. Nonetheless, also the firmest belief may change in a so complex situation: on April 2012, Impregilo’s managers strongly opposed the Salini’s proposal to sell the Brazilian company Ecorodovias, but on June 21st they sold 19% out of 29% Ecorodovias’ shares held.

Beyond the different business plans, that are not always clear and realistic, the fight covers the entire Impregilo’s corporate governance, that is the real battlefield. Salini called the upcoming AGM to propose the removal of the entire Impregilo’s Board of Directors and to elect new members. According to Salini, the Directors in charge for the last 6 years did not create shareholders’ value and under-performed the industry. For this reason, the main Impregilo’s competitor believes that there is a right cause to remove the entire Board. But 9 Directors out of 15 resigned after the meeting was called, so that shareholders will vote on the removal of a Board that is substantially different from the one in charge during the last 6 years.

Furthermore, the mandate of all members will expire on April 2013 and Gavio contests that it would be much more convenient for the company to wait other 9 months to re-elect the Board. If it would be proved that the removal was without a right cause, the company might be forced to indemnify the former Directors. In that case, the cost for the Impregilo would be equal to the 9-months residual salary for each Director: as per Salini, a minimum cost compared to the potential synergies coming from an integration of the two Constructors.

Always with regards to the corporate governance, Salini recently contested Impregilo’s procedures on related parties’ transactions, that are considered too generic and not transparent. Nonetheless, at the last EGM held on May, the second Impregilo’s shareholder voted against the proposed amendments to the mechanism of election of the Board members, aimed at increasing the number of Directors to be elected from minorities’ slates of nominees from 1 to at least 3. According to Salini, such proposal represented only marginal aspects not really aimed at improving the very poor Impregilo’s governance.

Finally, Impregilo announced that the Board will propose a new share buy-back aimed at repurchasing 20% of the issued share capital. According to Impregilo, the repurchase will distribute additional resources to minority shareholders, following the sale of Ecorodovias, while Salini will propose the distribution of an extraordinary dividend. Actually, the proposed shares’ buy-back may be considered excessive, as it will largely exceed 10% of the share capital. Furthermore, through the proposed repurchase both major shareholders would increase their holdings up to more than 30% without incurring in a compulsory PTO, at the detriment of minority shareholders’ interests.

A so complex situation had to necessarily involve legal actions, actual or potential. On one hand, Salini announced the intention to sue Gavio, that is suspected to have distributed incorrect information to shareholders with regards to the eventual risks of an unjustified removal of the Board. On the other hand, Gavio Group filed a complaint to Consob (the Italian market authority), stating that Salini’s reasons for the removal of the Board are unclear and not valid.

And what about minority shareholders? As usual, institutional investors will likely have the power of balance, but the outcome is still unpredictable: 5% of the share capital held by Amber Capital may be not enough to win the battle (it represented approximately 52% of minority votes at the April AGM), while Proxy Advisors’ recommendations risk to be too affected by legal issues and not really useful to understand all aspects of the fight.

Therefore, the final outcome will largely depend on the ability of the contenders to communicate their reasons to the shareholders. Knowing that, both Gavio and Salini armed themselves by hiring proxy solicitors: the UK based company ProxyCensus (that is also present in Rome), on behalf of Gavio, and the Italian company Proxitalia (part of Georgeson Group), on behalf of Salini, have been calling all Impregilo’s shareholders for the last weeks in order to gather as much proxies as possible supporting their clients. For the first time ever, each shareholder will have the power to really decide on the future of a large Italian company; even the smallest holdings might make the difference.



2 July 2012

The Italian “shareholders’ spring” is very late, but something is changing

A strongly concentrated ownership structure, local actors that are basically passive and its nature of peripheral market for large institutional investors contributed to keep Italian companies far from the “shareholders’ spring”. No relevant news came from the 2012 proxy season, or at least it seems so looking at the meeting minutes: remuneration policies, incentive plans and share buyback programmes (often needed to service incentive plans) obtained an average of almost 90% favourable votes, at Italian large companies. The only exception was Impregilo, where the remuneration report was rejected with 51% of opposing votes, much more due to the fight between the two major shareholders (Gavio Group and the competing constructor Salini) than to the weight of minorities’ vote. At other 5 meetings, opposing votes and abstentions exceeded 20%, though without causing any relevant effect: Fiat Industrial (38.4%), Telecom Italia (31.9%), Finmeccanica (31.2%), Fiat (26.7%) and Saipem (20.3%).

It might be objected that changes do not necessarily come from “proxy fights”: the voice of opposition may itself push companies to a greater alignment between shareholders’ and top managers’ interests. Actually, several FTSE-MIB companies recently stated they are going to redefine the overall remuneration of the Board members: among others, A2a, Banca MPS and Intesa Sanpaolo announced a reduction of Board’s compensation. Nevertheless, all announcements are related to the non-executive Directors’ remuneration, that is directly subject to shareholders’ vote, while the great concerns are referred to the Executives’ ones, that have a greater impact on the companies’ financials and that seem to be not well enough aligned with the value creation in the long-term period.

The Ministry of Economy and its wholly-owned CDP (Cassa Depositi e Prestiti S.p.A.) solicited their controlled companies Eni, Finmeccanica and Terna to more rigorous remuneration policies. Nevertheless, both the Ministry and CDP voted in favour of all the criticized remuneration reports.

Anyway, beyond the meetings’ outcome and the various announcements, it seems that something is starting to move also in Italy, and ECGS is still on the front line. Even before the proxy season, the international network of proxy advisors and its local partner Frontis Governance raised concerns on the egregious compensations and their misalignment with shareholders’ interests. The letter sent on January 2012 to the Board of UniCredit, asking for the claw-back of the extra-severance payment paid to the former CEO Alessandro Profumo, probably represents the first real engagement in Italy regarding Executives’ compensation.

Also during the proxy season, some investors raised the voice: the hedge fund Amber Capital, one of the most active on the Italian market, strongly contested the acquisition of Lactalis USA by Parmalat (that is 83% owned by Lactalis Group itself…) voting against the financial statements and submitting its own slate of nominees for the election of the Board of Directors. Still Amber reported suspected irregularities of Fondiaria-Sai’s related parties procedures to the company’s Statutory Auditors and, with more than 5% of Impregilo’s share capital, the fund will likely be crucial in the ongoing fight between Gavio and Salini.

The Italian voice of dissent is not so spread to be defined as “shareholders’ spring”, but even few cases may be so loud to push companies to redefine their policies, despite the huge conflicts of interest governing the market.

Sergio Carbonara, Rome


2 February 2012

Recent capital increases at Italian banks: a real success?

UniCredit’s rights issue closed on last January 27th with 99.8% of new shares subscribed by investors. It seems a great success for the bank and such results might demonstrate a high level of trust from shareholders – that is what the UniCredit’s CEO Federico Ghizzoni said to the press. On January 31st, the Managing Director of the Bank of Italy, Fabrizio Saccomanni, stated that “encouraging signals” come from capital reinforcement at Italian banks.

It is absolutely true that Italian banks are now stronger than some months ago, but can we consider the various share capital increases as “successful”? The terms of the last UniCredit’s rights issue did not leave any choice to existing shareholders but subscribing the new shares. UniCredit’s share capital has been tripled at a price 69% discounted versus the market value at the day before the announcement: at such conditions existing shareholders were forced to buy the new shares to avoid further losses and approximately 67% dilution of their rights. Over the last three years UniCredit performed three different share capital increases with pre-emptive rights, collecting approximately €14.5 billion from its shareholders. At current market values and considering the new share capital, the bank capitalizes €22 billion. Shareholders contributions weight for two third of current market capitalization, can we consider this a “value creation” or a “value destruction”?

Trying to give an answer to these questions, or at least to better understand the long-term shareholders point of view, we analyzed the capital increases performed by 6 major Italian banks during the last year: Banco Popolare’s €2 bln in February 2011, Intesa Sanpaolo’s €5 bln and UBI’s €1 bln in June, Banca MPS’ €2.15 bln in July, BPM’s €0.8 bln in November and finally the last Unicredit’s one. Comparing shareholder’s contribution with the current market capitalization of each bank results strongly differ:

  • Banco Popolare’s shareholders contributed to restore almost the entire capitalization of the bank (98%);

  • the current value of Banca MPS and BPM is made of respectively 67% and 62% by last shareholders’ contribution;

  • with the last share capital increase UniCredit’s shareholders contributed to 34% of the current capitalization, but that percentage raises at 66% with the previous deals;

  • shareholders at Intesa Sanpaolo and UBI Banca contributed for only 22% and 32% of respective capitalizations.

When the majority of a company’s value is made of recent shareholder’s contributions the “value creation” is at least questionable.

The weight of shareholder’s contribution to the market value gives us a parameter of a successful corporate management, but we should also consider the share value performances to better understand whether also shareholders can find recent rights issues as “successful”.

To do that, we can imagine to have bought shares of each bank on January 1st 2011 and exercised all our pre-emptive rights. On January 31st 2012 only shareholders of Banca Popolare di Milano (BPM) would have gained: 3% in 13 months. All other investors would have lost: -19% Intesa Sanpaolo, -21% UniCredit, -38% UBI Banca, -44% Banco Popolare, -52% Banca MPS.

It is true that 2011 has been a dramatic year for the Italian market and shares’ value suffered the country’s default risk, but it should be clear that a share capital increase cannot be considered as a “success”, not even a “value creation”. It may create value for shareholders when aimed at expanding the business or at reducing debt exposure. When shareholder’s contributions are only needed to restore the share capital, the management should just say sorry to shareholders and ensure that all future efforts will be aimed at regaining their trust.


21 November 2011

EDF – Edison: another example of useless political interference on Italian capitalism

The French-Italian soap opera regarding the acquisition of the majority of Edison (the second largest Italian utility) by EDF might come to an end by November. But the conditional tense is mandatory in this case, considering that the story should had come to an end six months ago. On March 2011, EDF presented an offer to its Italian partners to take the control of Edison in change of power stations and a put option on 30.65% of the company still in the hands of A2A, Iren and other Italian utility companies and banks. Everybody was happy with that deal, so that someone at Mediobanca (that of course has an interest in Edison) said: “finally we will call a halt to one of the most shining examples of shareholder agreements that caused so great value destruction”.

Unfortunately all parties forgot they also had to deal with the short-sightedness of Italian politicians, always ready to defend the “Italian capitalism”! So the great strategists at the Minister of Finance decided to stop the deal, stating they had the ace in the hole to keep Italian control on Edison. Six months passed since that political stop, but no “aces in the hole” came out: A2A share price dropped more than 30%, Iren marked a -38% and Edison, thanks to speculative trading, limited losses to 7.3%. Another embarrassing political choice, together with the failed attempt to block Lactalis from acquiring Parmalat just by postponing the meeting by means of legislative tricks.

Finally, at the end of October, EDF presented a new proposal to the Italian partners, at slightly different conditions respect to the previous one: Italian partners will receive a put option at three years, at a strike price linked to Edison’s performances, and (likely) two power plants. A2A and Iren’s respective Boards approved the deal and everybody seemed happy again. But a new shadow appeared: EDF, that will control 80% of the company, does not want to grant the same favourable conditions to Edison’s minority shareholders. Therefore they asked to the Consob (the Italian market Authority) the ability to launch a PTO at a price equal to one year’s average market value (currently €0.84). By this way, minority shareholders will receive no premium at all from the deal and will not get any compensation from the devastating governance of Edison during last years. In case the EDF’s request would be accepted, shareholders will not only suffer a lower offer price but they will also see their company’s share price dramatically fall.

The Consob’s decision is expected by the end of November. In the meantime the Italian Government changed and the Edison’s files are now on the desk of the new Minister, Mr. Passera: until November 15th he was the CEO of Intesa San Paolo, one of the creditors of Carlo Tassara S.p.A., the Italian company that holds 10% of Edison’s share capital… For the first time, the nth potential conflict of interests at Italian politics will risk to benefit minorities’ interests too.

Sergio Carbonara, Rome


5 September 2011

Banca Popolare di Milano (BPM) rights issue and the problem of listed cooperative banks in Italy

Last August 25th the Board of Directors of Banca Popolare di Milano (BPM), an Italian listed cooperative bank, has resolved to perform the rights issue approved by BPM’s shareholders at last General Meeting held on June. Next September 13th a new Board meeting will decide the terms of the issuance and, in all likelihood, by the end of October the deal will be completed. Total amount of the deal: 1.2 billion Euros, versus a current market capitalization of approximately 615 million (closing at August 31st).

The issuance will almost triple current BPM’s capitalization.

BPM’s recapitalization will increase Tier 1 ratio up to about 9% (but according to Mr. Andrew Sentance, former external member of the Monetary Policy Committee at the Bank of England, a contextual reduction of adversely classified assets would take the ratio up to 13.9%, much higher than all immediate competitors1) and will allow the bank to negotiate better loan conditions (that in the first six months of 2011 largely influenced 39% drop in net profit).

Many consideration might be made about the real needs of such a huge deal for BPM’s shareholders, but what is relevant here is how such a huge deal has been approved by shareholders and, consequently, the implication of the cooperative nature of the bank.

Italian cooperative listed banks follow a specific regulation, with particular regards to corporate governance: shareowners are differentiated in “members” (those who buy newly-issued shares and request membership status under methods and terms laid down by the Board) and “non-member” shareholders. Only member-shareholders are enabled to vote at General Meetings, provided they are members since 90 days prior the Meeting, in person or through a proxy released to another member. Any member can act as proxy agent, but for a limited number of proxies that is fixed by the bank’s Articles of Association (at BPM the limit is currently fixed at 3 proxies). Finally, any member has just one vote, regardless the number of shares held.

What is the result of a similar governance structure? The 1.2 bln Euros capital increase, almost tripling current capitalization, has been voted by 3,840 shareholders (10% of which were less than 18 years old) representing only 2.02% of shares outstanding.

At the same Meeting of last June 2011, another item in agenda regarded the increase of the number of proxies any member can represent at Meetings, from current 3 up to 5. The approval of the new limit would have meant a potential higher representativeness of the share capital called to approve even relevant issues (such a capital increase is). Surprisingly the majority (55%) of the 3,840 voting members (including 395 underage) rejected the proposal: shareholders controlling 2% of the share capital will keep on controlling voting power. Actually the possibility to increase proxies from 3 to 5 is not a real issue (it would have just been an even feeble signal of improved governance), what is weird is that the major part of the speeches at the Meeting concentrated on this issue and not on 1.2 bln Euros capital increase. And the reason of opposing voters was: “an increase in proxies (from 3 to 5) would mean moving relevance from people to capital”. But, isn’t this the actual essence of a listed company?

Who pays for such a terrible governance? Of course BPM’s (such as any other cooperative bank’s) shareholder-members. Unfortunately, “people” do not decide the share market price, it is mostly driven by big institutional investors. As a matter of fact, investors (even the most long-term growth oriented ones) with no decision power at a listed company will likely tend to see that stock as more speculative than others. Looking at share market prices of six banks listed on Italian FTSE MIB index, the three cooperative ones (BPM, Banco Popolare and UBI Banca) performed worst than the other three (Banca MPS, Intesa San Paolo and Unicredit) during last year: -61% on average the three cooperatives (BPM -58%, Banco Popolare -64% and UBI -62%) versus -49% the others (Banca MPS -49%, Intesa -47% and Unicredit -51%). Shareholder-members do not want institutional investors governing the bank, but institutions make the price of their investment. Moreover, 1.2 bln Euros rights issue will be unlikely subscribed just by “people”, institutions will absolutely be needed, with two possible results: the deal will achieve a great success and retail ownership will be strongly diluted or, in case of high level of unsubscribed shares, the already low price will keep on plunging at the only expenses of shareholder-members (most of which are BPM’s employees). The first scenario is already delineating: on August 30th newspapers reported an interest of Matteo Arpe, former CEO of Capitalia (merged in Unicredit in 2007) now owner of the private equity firm Sator SpA, to guarantee the subscription of 200 mln Euros of the new shares (16.7% of total amount to be issued) in return for a better governance (that’s why it seems the Bank of Italy would support him) and a seat at the Board of BPM. During last days many people at the bank, including some external analysts, already denied a potential (and really desirable) interest of Sator, but the final result will be the same in any case: the strenuous defence of “people” against “capital” will lead “people” (especially BPM’s employees) to lose both money and power.

1 Andrew Sentance, Bpm a corto di liquidità ma Bankitalia troppo severa, Linkiesta, June 25th, 2011

Sergio Carbonara, Rome


18 July 2011

2011 Italian proxy season: a milestone?

On June 28th, with the long-awaited Parmalat General Meeting, the Italian FTSE MIB proxy season has officially closed (just Mediobanca is still missing, as its fiscal year ends on June 30th). This has been the first proxy season under the new Italian shareholder rights’ regulation (Legislative Decree 27/2010, implementing 2007 European Shareholder Rights Directive) that introduced relevant changes to voting procedures, above all, but not only, with the record date mechanism that eliminated any possible share blocking applied by sub custodians. Other relevant changes cut back attendance fees (a physical voting certificate is not needed anymore, being sufficient the direct custodian’s communication to the issuer), simplified proxy voting procedures (allowing unlimited number of proxies per voting agent, that now can also be an issuer’s representative, and considerably simplifying proxy solicitation procedures), shortened the publication of Meeting documentation terms (30 days prior the Meeting for management reports and 21 days for the publication of slates of nominees for Board election). Did all these regulatory changes produce the expected revolution in institutional investors participation at Meetings?

Together with Fabio Bianconi (Corporate Governance Advisor at Georgeson) we tried to answer that question analyzing Meeting outcome of 33 FTSE MIB listed companies (Banco Popolare, Banca Popolare di Milano and UBI Banca have been excluded as per their cooperative nature, STMicroelectronics and Tenaris are not incorporated in Italy and finally Fiat Industrial will hold its first General Meeting in 2012) and compared results with 2010 research findings. Here are main results:

  • average constitutive quorum increased to 61.2% from 52.3%, or 17%: for the first time Italy is in line with European averages (61.5% in 2010 according to ISS data);

  • independent shareholder average quorum increased to 19.9% from 10.7%, or 86%: the highest ever increase in minorities attendance quorum;

  • minorities weight 34% at Meetings, versus 66% represented by controlling shareholders: for the first time controlling shareholders represent less than three quarters of voting rights;

  • in 6 Meetings out of 33 (almost 20%) independent shareholders votes represented the majority and in other 5 their weight was higher than 40%: from 6 to 11 issuers’ independent shareholders, yet for the first time ever, would have been potentially able to control the approval of resolutions!

All reported figures clearly demonstrate Italian market is facing an ongoing revolution. Actually a revolution that still has a long way to come to really change our market’s culture: Italian listed companies are still very concentrated, domestic asset managers are still dormant (even in such a revolution, Italian institutional holders weight for less than 2% at General Meetings), corporate By-laws and market regulation are still linked to a, by this time, outdated idea of very controlled Meetings (e.g. there is no proportionality in the mechanism of election of Directors). In any case, it is an irreversible path and all actors (listed companies, institutional investors, Authorities, advisors etc.) should be prepared to deal with the new challenges.

Sergio Carbonara, Rome


20 June 2011

Board “independence” in Italy

On May 27th the Board of Directors of Generali Assicurazioni ascertained the existence of independence requirements of 12 members out of 17 (70%!), showing a great independence of the Board. Looking at the names and curricula of the “independent Directors”, it is seems anyway that some independence requirements are not completely fulfilled: three of “independents” are owners or Directors of companies that, together with Generali itself, are part of the shareholder agreement controlling Mediobanca (major shareholder of Generali), two of them are managers of Mediobanca, two others are significant shareholders of Generali (controlling more than 2% where free float is 78%), and finally one is the CEO of a company reported in Generali’s Financial Statements as one of “major Companies insured by Assicurazioni Generali”. What remains? A Board with just 4 independent Directors out of 17…from declared 70% to actual 24%. Three quarters of the actual independent Directors in Generali have been elected from the slate of nominees presented by Assogestioni (the Italian Funds Association). Generali’s By-laws provide that just three Directors are elected from the slate of nominees “which obtained the second-largest number of votes” (so the one presented by independent shareholders).

Unfortunately Generali is not the only case in Italy, it seems to be a “normal” behaviour to consider related parties as independent, as Italian law in fact allows it (despite art. 148, para. 3 of Italian Legislative Decree 58/98 provides that “persons who are linked to the company, the companies it controls, the companies it is controlled by and those subject to common control” should be not considered as independent, but this provision just pertains to the internal control body).

What to do to change such behaviours? Probably a legislative intervention would be needed, in order to equalize Directors’ independence requirements to the ones already provided for Statutory Auditors, or in order to oblige companies’ By-laws to provide more proportionality in the mechanism of election of Directors, assuring more representativeness.

Controlling Authorities and legislators are too conditioned by bureaucratic procedures, and so too slow to adequate the regulation. At this stage, the real control on corporate governance behaviours should be a prerogative of shareholders, that exercise such control through their vote at General Meetings. But it seems that asset managers are still far from taking it upon themselves: Italian Mutual and Pension Fund managers still represent less than 3% of independent shareholders voting at Italian Meetings, despite they should be the only accountable for actively protecting their clients’ (subscribers) interests and rights.

Sergio Carbonara, Rome


14 Februaury 2011

Top Management Remuneration – implementation of the EU Directive in Italy

The recommendation of the European Commission on top management remuneration was eventually introduced in Italy by the Legislative Decree approved by the Council of Ministers on 22 December 2010. CONSOB, the Italian Stock Exchange Supervisory Authority, will have now to implement the European recommendation through a systematic framework of regulatory measures to be adopted by the end of 2011 and that will take effect starting from 2012 AGMs.

In mid January Consob has put out for consultation a draft statement with deadline February 7, on some important issues of Corporate Governance, namely that investors are informed about:

  • the existence and the content of executive termination agreements (the so called ‘Golden parachutes’) and the nearest reference is the early termination of former CEO of Unicredit, Alessandro Profumo;

  • the existence of plans for replacement of directors, in case of early leave and senior management shake-up, as was always the case with Unicredit not only with the departure of Mr. Profumo in September 2010, but also of Mr.
    Sergio Ermotti, head of corporate and investment banking, in October 2010 and whose role has remained vacant for more than a quarter until the appointment of Jean-Pierre Mustier early in February 2011;

  • the Board evaluation, by whom it is conducted, how it is conducted and which are its results.

In the consultation Consob is also recommending Italian issuers to provide a better implementation of the rules of transparency on Board compensation as foreseen under Article 78 of the Issuers Regulation.

The above mentioned information should be disclosed to investors within the report on corporate governance and in the notes to the Financial Report that will be released in the next AGM campaign.

As stated by Consob in its introduction notes to the consultation ‘the objective is to improve transparency with regard to aspects of the market corporate governance that are particularly relevant in the current phase of the market and on which, as it emerged from the analysis carried out by Consob, the information currently provided by companies are often incomplete, generic and difficult to compare’.

In this phase the Italian Authority is keen in containing costs of regulation on the broader Italian listed companies and therefore the requirements regarding the improved disclosure on succession planning and Board evaluation are addressed only to the 38 Italian companies belonging to the index FTSEMIB.


14 February 2011

Update on the Italian Code of Corporate Governance – March 2010

The fourth revision of the Code of Corporate Governance of the Italian Stock Exchange was published at the beginning of March 2010. This has regarded exclusively Section 7 on director compensation. With this revision the Italian Code aligns with international best practice and in particular with the Combined Code of the United Kingdom, considered the benchmark in terms of Corporate Governance best practice.

Article 7 is divided into three sections. The first one sets out the 'Principles' in terms of remuneration, the second one the 'Implementation Criteria of ' and the third one the 'Remarks' of the Committee for Corporate Governance according to the 'comply or explain' model of the Combined Code.
The four principles (7.P.1 - 7.P.4) are the following:

7.P.1. the remuneration must be sufficient to attract, retain and motivate talented directors and managers;

7.P.2. the remuneration of executive directors and top managers must be such as to align their interests with those of shareholders in the medium and long term, while that of non-executive directors must be evaluated on the basis of the commitment required and participation in the sub-committees within the Board of Directors;

7.P.3. the composition of the Remuneration Committee shall be exclusively of non-executive directors and a majority of them must be independent;

7.P.4. the Board of Directors has the task, upon proposal of the Remuneration Committee, of drawing up an annual remuneration policy for executive directors and top managers appointed to strategic positions and to prepare a remuneration report to present to the shareholders.
The Criteria are the following seven ones (7.C.1 - 7.C.7).

7.C.1 The guidelines for the remuneration of executive directors or top managers appointed to strategic positions:

- it should be ensured a balance of fixed and variable remuneration depending on the strategic objectives and policy of risk management;

- it should be considered a ceiling on the variable component;

- the performance targets must have a medium to long term horizon;

- the variable component payment is deferred for a significant portion, whereas the size of that portion and the duration are consistent with the work done and risk profiles;

- compensation for early termination or non-renewal (or so-called golden parachute) shall not exceed a fixed amount or any multiple of annual remuneration, and are not due, in case of unsatisfactory results.

7.C.2 Stock option plans must include:

- A maturation period of at least 3 years;

- Pre-determined performance targets and measurable;

- A portion to be paid only the end of the mandate.

7.C.3 The extension of the guidelines defined in 7.C.1. also to key management personnel, in particular the incentive mechanisms of internal control manager and the manager responsible for financial reporting must take into account and be consistent with their tasks.

7.C.4 The remuneration of non-executive directors should not be linked to the results or provide for participation in equity plans.

7.C.5 The responsibilities of the Remuneration Committee, i.e. assessing the adequacy of the remuneration policy for executive directors, making proposals on the objectives of performance, auditing the achievement of performance targets.

7.C.6 The ban for Directors to participate in those Remuneration Committees in which their remuneration is decided upon.

7.C.7 The possible use of Advisers by the Compensation Committee.

What’s new?

On the whole, the main new features include incentives such as bonuses and stock plans, whose time horizon is moved over the medium-long term, more reasonable values of severance pay, the more prudent and moderate use of market benchmarks on which to parameter the variable component pay, the independence of the consultants used by the Compensation Committee and the advisory vote of shareholders on the top management remuneration policies.

In order to avoid the past inflationary spiral in remuneration, also the specific corporation parameters must be taken into consideration and not the mere reference to the average remuneration for similar positions (benchmark). So if there are situations of economic crisis and lack of profits is difficult to justify a high level of variable compensation. In the same way to deflate an inflationary spiral that has been created in the past, especially in the financial sector, it is relevant the introduction of a ceiling to variable pay and the time delay in its payment in consideration of the risk profile of the issuer. The financial crisis of the last three years highlighted the importance of correlating the remuneration incentives also to the risk of the business, whereas the bonuses for the profits of the previous years did not take into account the risk profile of the assets in a longer time frame.

On the issue of symmetry between risk and return a lot has been written at international level, namely:

- The Principles for Sound Compensation Practices published by the Financial Stability Forum April 2, 2009;

- Guidelines on the Remuneration Policies and Practices of the Committee of European Banking Supervisors (CESB) of 10 December 20101;

- The new Code on December 17, 2010 Remuneration published by the British Market Financial Services Authority (FSA).
Finally, the issue of independence of the consultants to the Compensation Committee, on which so much attention is currently paid to in the Anglo-Saxon world.

The question of independence of the consultant is raised, in fact, if the same consultancy company offers more consulting services to the listed company, including that the Compensation Committee.

In the United Kingdom with the introduction of the Directors' Remuneration Report Regulations (2002) since 2003, listed companies must publish details of consultants to the Compensation Committee and indicate whether they have provided further advice to other divisions. The Walker Report - A Review of Corporate Governance in UK banks and other entities of the financial industry November 26, 2009 has recommended independent advisers to the Remuneration Committee. In the United States since 2006, the Securities and Exchange Commission has introduced this disclosure requirement in its Compensation Discussion & Analysis

Institutional investors and say on pay

But the element of absolute novelty is the shareholder advisory vote on remuneration policies. This is also known as 'say on pay'. In the USA last years AGMs the say on pay has been the object of many shareholders resolutions in the AGMs of major U.S. companies, before it becoming mandatory starting form 2011 AGMs following approval of the Financial Reform Act. Whereas in the UK it was already made mandatory in 2003, the say on pay has been introduced in Italy as a best practice and not as mandatory by the revision of Art. 7 of the Corporate Governance Code.

Foreign institutional investors have long been active on the remuneration of top managers. In Europe shareholder opposition to remuneration policies has grown in the last years AGMs in some big companies (Shell, BP, Xstrata, Tesco, Home Retail, Heineken, etc.) with very high proportions. In 2009 Royal Dutch Shell’s AGM 60% of shareholders voted against approving the Remuneration Report, 41% of Tesco shareholders voted against the amendment to its previous discretionary share option plan for senior management and 40% of Home Retail’s shareholders voted against the directors’ resolution to change the company’s Performance Share Plan.

It follows that the visibility of the decisions taken by the Remuneration Committee is set to increase in the very near future, as well as its responsibilities.


12 November 2010

UniCredit case: not a Corporate Governance best practice

There were several Corporate Governance flaws in the handling of the situation at UniCredit which led Mr. Alessandro Profumo to resign last September.

First of all, the departure of Mr. Profumo was rather shocking. He had led UniCredit for 15 years and long been considered one of Italy’s most influential bankers and by the time of his departure no successor had been appointed by the Board. Concern about the vacuum left by Mr Profumo’s sudden departure was of course also related to UniCredit’s place in the Italian financial system and UniCredit share price strongly decreased as a result of the news.

Secondly, the power struggle with some members of the Board was influenced by growing influence of politics within the Board. The rightwing anti-immigration Northern League party criticized Mr. Profumo about Libya (through its Sovereign Wealth Fund and its central bank) taking a stake of about 7.5 per cent in UniCredit with his support. Mr. Profumo called on the Libyans as investors when local shareholders (through the banking Foundations) refused to underwrite a costly capital increase of €6.6bn in the middle of the financial crisis. With the result that Lybia became by far the largest shareholder in UniCredit, followed by the sovereign wealth fund of Abu Dhabi.

The contrast with the Board was also the result of Mrs. Profumo’s stubborn refusal to kowtow to the disparate cultures and local interests within UniCredit. After the merger with HVB both in Germany and Austria there was high disappointment with the banker, former McKinsey consultant, considered to be too arrogant to dialogue.

Last but not least, Mr. Profumo was awarded € 40 m golden parachute which is very high according to European benchmarks. Moreover, the disclosure on the remuneration policy was not mentioning this clause, which was approved by the Board which has to control chief executive pay as well as shareholders have to watch against any excess which is counterproductive to their investment.

Such concerns were expressed by Bank of Italy, the regulator of Italian banking, in a letter to the Chairman, Mr. Dieter Rampl, and the Board. A partial answer came with the appointment of Federico Ghizzoni as a successor to Mr. Profumo. But a full answer concerning Corporate Governance best practice is still due.


22. July 2010

Remuneration Policy in Italy

In a someway unnoticed way, also in Italy starting from 2012 AGM shareholders will have the right to approve the remuneration policy of the Board of Directors and specifically of the executive directors. This is a result of the approval of the new text of article 7 of the Corporate Governance Code, which was approved by the Corporate Governance Committee of Borsa Italiana on March 3 2010. Article 7 is about remuneration of directors and executives with strategic responsibilities and acknowledges recommendations issued by the EU Commission.

Issuers shall have to comply with the new recommendation within end of 2011, which implies that the 2011 Corporate Governance Report to be published in the first quarter of 2012 shall have to already comply with the new recommendations, including a section on remuneration policy. Even if in an unnoticed way, it introduces the so called ‘say on pay’ in Italy, i.e. the required approval by shareholders of the remuneration policy of the company. Of course, it will be interesting to see how it will be implemented by investors.

Concerning the content of remuneration, principle 7.P.2 states that ‘The remuneration of executive directors shall be articulated in such a way as to align their interests with pursuing the priority objective of creating value for the shareholders in a medium-long term timeframe’. And for the variable part of the remuneration of the executive directors the objective can be also referring to non economic criteria such as intangible or ESG criteria, but must be set in advance and disclosed to shareholders in the remuneration policy report. The majority of the members of Remuneration Committee must be independent and at least one of the member must have financial knowledge and experience. Any consultant to the Remuneration Committee must be independent.

Even in unnoticed way, this innovation is supposed to improve Italian corporate governance. Of course, it will depends on how institutional investors will monitor compliance with the new recommendations, but this will be better discussed in the next VIP-Insight.


20 May 2010

CG in Italy

Prepared by Daniela Carosio, May 2010

Italian governance structures are characterised by concentrated ownership, reflecting the influence of banks and financial-industrial groups. There are also many family run/influenced companies.

The primary agency problem is that between large and small shareholders.

Groups of firms are often controlled by pyramidal holding structures, behind which are families, coalitions of corporate shareholders, and the state. Through these structures, a shareholder can control a large company with a minimal amount of invested capital (through owning a small part of each firm).

Takeovers are rarely hostile; instead mediated (often behind the scenes) by the government, large financial groups.

Banks have traditionally been the primary source of financing, owing to owners’ reluctance to cede control. However, this has been changing in recent years.

The Law framework has been considerably improved in the last 12 years since the Draghi reform in 1998 and the Italian CG Code of 1999, which has been updated in March 2006 for the third time.

With the Saving Protection Law of 2005 Italy has extended to all companies slate vote requirement for both the appointment of the Board of Directors as well as the appointment of the Chairman of the Statutory Auditors body. This is a best practice in CG which enables minority shareholders to elect their representative in both Boards.