The majority of Telecom Italia’s board announced plans to quit, amid growing scrutiny on its running of the business from activist investor Elliott Management – which slammed the action as a cynical attempt to stall for time.
Among the resignations is chairman – and CEO of largest shareholder Vivendi – Arnaud de Puyfontaine and deputy chairman Giuseppe Recchi.
While seven directors, including de Puyfontaine, will leave on 24 April, former chairman Recchi’s resignation is effective immediately. The part of Recchi’s role which involves matters of national security, and must be taken by an Italian citizen, will be given to another former Telecom Italia chairman, Franco Bernabe.
The mass resignation is set for the same date as originally slated for Telecom Italia’s shareholder meeting, when investors were scheduled to vote on whether to stick with members of the Vivendi-controlled board or elect new executives put forward by Elliott Management.
As the majority of the 15-executive board will have resigned on or by 24 April, a clause is triggered where the whole board are assumed to have quit and a new executive team must be elected. The shareholder meeting to vote for a new board is now 4 May.
Battle for control
The move comes amid scathing criticism from activist investor Elliot Management, which called for sweeping changes in the structure of the business and the election of independent executives – including the removal of de Puyfontaine.
Telecom Italia said its directors hoped their actions would “help to clarify and provide certainty to the governance of the company, passing the responsibility of appointing the new board to the shareholders’ meeting.”
In response, Elliott said it was not surprised by the move, adding: “Unable to advance any meritorious arguments, the board has simply abandoned their posts to stall for time.”
“Elliott regards this action as cynical and self-serving, in that it delays the ability of Telecom Italia shareholders to express their votes at the upcoming AGM. This is yet another example of minority shareholder rights at Telecom Italia being abrogated and the continued disregard of corporate governance best practice,” it added.
Vivendi is Telecom Italia’s largest shareholder with a 24 per cent stake and took control of the operator’s board in 2017. Its stewardship has not been without controversy, with a number of run-ins with authorities in the past year and the departure of two CEOs within two years. Both chiefs left amid reports of disagreements with Vivendi bosses.