Telecom Italia is set to open legal proceedings in an apparent bid to overturn a decision to hold a vote on the election of board members nominated by Elliott Management at the company’s AGM later this month.
In the latest move in an increasingly fraught and messy row between the activist investor and the Vivendi-controlled board, Telecom Italia vowed to “take every legal action” to protect shareholder interests and slammed an “unlawful” decision by auditors to allow a board election at its 24 April AGM. It also threatened to drag market regulator Consob into the debate.
Should it go ahead, the vote could lead to Elliott Management-nominated directors being elected into positions vacated by board members scheduled to resign earlier on the same day.
Telecom Italia argued the departure of the majority of the board triggered a clause which meant the whole board should be renewed at a separate meeting on 4 May. The delay would likely offer Vivendi and others more time to put forward their own candidates.
In a statement made hours after the board’s legal threats, the operator’s Board of Statutory Auditors defended its decision to allow a vote on Elliot Management-nominated executives. It added it was prepared to explain its judgement to any legal authority.
The board’s comments follow an escalation in the war of words from Elliott Management. The investor yesterday (9 April) accused the company’s management of poor stewardship during their tenure. Adding the result was “deeply troubling corporate governance issues, a valuation discount and no clear strategic path forward.”
Amid increasing pressure from Elliott Management – and following its announcement it intended to nominate independent directors to Telecom Italia’s board, chairman – and Vivendi CEO – Arnaud de Puyfontaine and seven other directors announced their intention to resign in March.
While Elliott Management argued a vote on 24 April should go ahead regardless, the departing board members claim the election should be held at a later date and be for the replacement of the whole executive team.