In a dispute, Generali shareholders decide the fate of the CEO

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published on Friday, April 29, 2022 at 09:20

The countdown has begun: Generali’s general meeting is set to decide on Friday on the renewal of CEO Philippe Donnet, which is opposed by two all-powerful billionaires who are steadily increasing their stake in the Italian insurance company.

The slingshot is headed by Francesco Gaetano Caltagirone, 79, a construction and press mogul, backed by 86-year-old Leonardo Del Vecchio, founder of the Luxottica eyewear maker and Italy’s second-largest fortune.

The camp of the two billionaires presented its own list of thirteen candidates competing with that of the outgoing board, which includes Mr. Donnet, a 61-year-old French polytechnic, who is seeking a third term.

Opposite him is Luciano Cirina, 56, the former head of Austria and the Generali region of Eastern Europe, who is seeking the post of CEO. The team, which sees it as a “betrayal”, fired him shortly after the announcement of his candidacy.

The general meeting of shareholders, which takes place via video conference, started at 9 in the morning (07:00 GMT). 70.73% of Generali’s capital is represented at the meeting, a very high percentage of participation.

Voting promises to be limited: Mr Donnet can count on Mediobanca, the main shareholder with 12.8% of the capital but 17.2% of the voting rights, thanks to a share loan, the holding company De Agostini (1, 44%) and a series of investment funds, mainly foreign, that have been publicly lined up behind it.

On the part of the dissidents, M.M. Caltagirone (9.95%) and Del Vecchio (8%) have the support of the CRT Foundation (1.7%) and the Benetton family (4%), which has just joined them, preferring candidates from “entrepreneurs” from the “self”. -announced list “of outgoing directors.

– Quarrel of numbers –

A third list, very small, is presented by Assogestioni, which brings together Italian institutional investors and represents 0.64% of the capital.

The Slingers’ nominee for chairman of the board, Claudio Costamagna, a former Goldman Sachs banker, accused Generali of being “sleepy” with “huge potential” that “should be awakened”.

The slingshots published a strategic plan in March that was presented as “more ambitious” than Mr. Donnet’s, called “Waking up the lion,” alluding to the insurance company’s emblem.

This plan envisions an increase in earnings per share of more than 14% per year by 2024, up from a 6 to 8% target set by Mr Donnet, and is more generous in terms of mergers and acquisitions, with a war budget of € 7 billion. .

Opponents say Generali has lost ground to Allianz, Axa or Zurich Insurance, with a market capitalization that has fallen by 8.2 billion over the past 15 years, where its competitors have increased theirs.

Donnet supporters argue that since its arrival in November 2016, the share price has risen 55%, well above the industry average, and shareholder returns have risen by 106%. And in 2021, for the third consecutive year, the insurance company published record results.

– Does the lion wake up? –

Should Generali wake up? “The lion has already awakened in recent years, significant transformations have taken place,” said Giuliano Nocchi, a professor of strategy at the Polytechnic University of Milan, who called Mr Give’s balance sheet “positive”.

The choice of institutional shareholders, ie 35% of the capital, will be decisive for this unprecedented battle. The two main shareholder advisory firms ISS and Glass Lewis, which were generally widely heard by these investors, recommended that they vote in favor of Mr Donnet’s list, which they believe is more credible.

Glass Lewis considered the slingers’ plan to show “worrying optimism”, without quantifying the costs or risks involved.

But MM. Caltagirone and Del Vecchio, two great figures of Italian capitalism, have strong support in the business world of the peninsula.

And they could also increase pressure on Mediobanca, their main rival in the fight for control of Generali, which they accuse of acting behind the scenes to impose its leaders’ choice.

The accusations against Mediobanca are even more explosive as the main shareholder is Mr. Del Vecchio, with a share of 19.4% and Mr. Caltagirone holds 3.1%.

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