Del Vecchio, Mediobanca’s biggest investor; wants more clout

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Leonardo Del Vecchio, Mediobanca’s (OTC: MDIBY) top investor, has recommended amending the Italian merchant bank’s bylaws to give more influence to its board and shareholders over executives, but he has stated that he is not advocating for management or board changes.

Del Vecchio, the Italian eyeglasses millionaire, shocked Italy’s financial elite two years ago when he became the largest investor in Mediobanca, the Milanese bank that used to control Italy Inc. Del Vecchio, 86, one of Italy’s wealthiest men, has consistently increased his Mediobanca holdings after receiving approval from the European Central Bank. Through his holding firm Delfin, he now owns 18.9 percent of the corporation, a stake worth 1.7 billion euros ($2 billion).

Delfin stated that it had no plans to replace Mediobanca’s current board of directors or management. The suggested governance changes are intended to guarantee that Mediobanca’s executives and directors pursue their objectives. “the creation of value for all shareholders … and ultimately leave the right to directors and shareholders … to decide who should run the bank.” In a note, Mediobanca recognized the request and stated that a board meeting would be held within the next few days. Delfin said it wanted Mediobanca to drop a condition in its by-laws that two or three members, depending on the size of the board, must be executives with at least three years of experience. Delfin further stated that more independent directors should be appointed to the board from at least two slates of nominees submitted by minority investors.

“We expect the market to favour the first proposal … but the second proposal could have a less market-friendly outcome,” Citi analyst Azzura Guelfi said that if Delfin recommends one of the slates, the power of other minority investors could be constrained. Del Vecchio has no representatives on Mediobanca’s board of directors, which is set to expire when the bank’s results are approved through June 30, 2023.

Del Vecchio complimented boss Alberto Nagel’s current business plan released in November 2019 after first criticising his strategy when he began buying Mediobanca shares. Del Vecchio and Nagel had previously clashed over a hospital project in Milan. They also have opposing viewpoints on Generali (MI: GASI), Italy’s largest insurance company.

Mediobanca, Generali’s single largest shareholder, is lobbying for incumbent CEO Philippe Donnet to be reappointed. On Monday, Generali’s board of directors approved the move. Del Vecchio, Generali’s third-largest shareholder, is part of a group of investors pressing for a new CEO and strategy. Earlier on Tuesday, the Benetton family of Italy, which owns Mediobanca and Generali with Del Vecchio, stated that it wished to maintain a neutral posture in all of its investments. Mediobanca’s stock was up 1.3 percent by 0753 GMT, outperforming Milan’s blue-chip index.