Mediobanca, top investor Del Vecchio reach truce on bylaws changes

Mediobanca endorsed a request by its top shareholder Leonardo Del Vecchio to ditch a rule reserving up to three board seats to managers of the Italian merchant bank. The decision was welcomed with deep satisfaction. Del Vecchio in turn withdrew a second proposal to amend the company’s bylaws, which had been criticised by Mediobanca’s board.

Mediobanca also complained that Del Vecchio had failed to discuss with the company proposals he wanted to put to a shareholder vote. Del Vecchio had proposed to modify the Mediobanca’s governance rules. This is to make the board more diverse and independent from management. The 86-year-old founder of spectacles giant Luxottica bought 19% of Mediobanca. And this is after gaining clearance from European regulators. And also, on the condition that he would not interfere with the running of the bank.

Del Vecchio in the past has been critical of the strategy of Mediobanca CEO Alberto Nagel. This is although he has praised Nagel’s latest business plan. The two are also embroiled in a governance tussle at Generali, which is the Italy’s biggest insurer. Both Del Vecchio and Mediobanca are investors in this. Mediobanca said that this was a statutory requirement it had been planning to axe next year in light of discussions with institutional investors and shareholder advisory firms. Mediobanca was critical of Del Vecchio’s second proposal.

Delfin said that it would withdraw the proposal to avoid confusing investors. A majority of Mediobanca’s directors come from the list that gets the most votes from shareholders. Under the alternative proposal by Mediobanca’s board, a fifth of directors would come from minority lists. Delfin has finally been able to set in motion a process to improve Mediobanca’s governance to increase management’s accountability.