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Eighteen months ago, two billionaires lined up against the board of Italy’s largest insurer, Generali — and lost. This weekend, the emissaries of the country’s influential Del Vecchio family and building tycoon Francesco Gaetano Caltagirone will find themselves on the same side of a fight against another prestigious Italian financial institution: Mediobanca.
On Saturday the investment bank’s shareholders will have to choose between a list of 15 board directors brought forward by chief executive Alberto Nagel and a competing minority roster picked by the Del Vecchios’ vehicle, which is expected to secure Caltagirone’s support.
At stake is not just Mediobanca’s governance but also the future of Generali, in which the Milanese lender, the Del Vecchios’ holding company Delfin, and Caltagirone are the largest shareholders.
The machinations at the top of Italian finance could also have wider repercussions for Corporate Italy, where Mediobanca, Generali and a select few billionaire families with crossholdings spanning companies and industries have long been power brokers.
Mediobanca’s boardroom struggle has more than a few echoes of the Generali tussle last year. In April 2022 — two months before he died — eyewear entrepreneur Leonardo Del Vecchio lent his backing to Caltagirone’s unsuccessful attempt to overhaul the insurer’s board when it was put up for re-election, an occasion that only comes along every three years.
It is usual practice for many listed companies in Italy to present shareholders a list put together by the outgoing board of directors which includes a chief executive and chair candidate and one or more slates that supply directors representing minority shareholders.
On paper the situation at Mediobanca is no different. In reality, it represents a watershed moment for the Milanese financial institution and potentially for Italy’s corporate governance system.
Delfin is Mediobanca’s largest shareholder with just under a 20 per cent stake. It is putting forward five candidates on top of the slate suggested by Assogestioni, the funds association; a sign that it wants to shake up an entrenched management team. Mediobanca’s chair is on course for his fourth three-year term and the chief executive has been in post for 15 years.
It is unlikely that Delfin will secure all five of the board seats it is seeking: proxy advisers including Glass Lewis and Institutional Shareholder Services have recommended that investors back the Mediobanca-endorsed list.
But the Italian parliament is discussing changes to corporate governance rules to curb the ability of the existing board to renominate directors and expand the influence of minority investors such as Delfin and Caltagirone, who hold substantial minority stakes, in determining who sits on the board.
Proponents say the amendments would safeguard the interests of long-term minority investors who are often neglected as board directors concentrate too much power into their own hands.
The reforms could, in future, provide a spur to Delfin and Caltagirone’s efforts at Mediobanca and Generali — as well as potentially giving French media conglomerate Vivendi the upper hand at telecommunications group Telecom Italia, for example, where it owns a 23 per cent stake.
For the time being, however, Delfin is barred from acting as anything other than a financial investor in Mediobanca because of its lack of a banking licence. Under the terms of a 2020 agreement with the European Central Bank, the Luxembourg-based company has agreed not to seek to exercise a dominant influence over the Milanese lender.
People close to Delfin insist its efforts to secure up to a third of the board seats were inspired by disquiet over the bank’s failure to make adequate succession plans.
Delfin has also raised concerns about the bank’s strategy in private conversations with Mediobanca’s management, according to people familiar with the discussions. The expansion of the lender’s wealth management and investment banking businesses have been sticking points, they said.
Mediobanca’s share price performance is not helping the rebels: shares have climbed more than 80 per cent during the three-year term of the current board, while annual revenues have increased from €2.5bn in 2020 to €3.3bn in the year to June 2023.
“Mediobanca’s profits have risen and it has been paying a good dividend, so in such a scenario it’s unusual for a financial investor to take such a stance,” said Azzurra Guelfi, analyst at Citigroup.
Delfin — and EssilorLuxottica — chief executive Francesco Milleri said in an interview with local media this week that Delfin was “an institutional investor that aims for excellent returns on investments and wants to give a push to our country and Mediobanca”.
The rebellion could nonetheless prove disruptive.
“The attempted overhaul of Mediobanca’s board is Delfin’s way to put pressure on Nagel [to come up with a succession plan], and consequentially Caltagirone’s first step to gain the upper hand over the future of Generali,” said one Milan-based banker.
Delfin, Caltagirone and Mediobanca declined to comment.
Last year, Mediobanca’s top management opposed the campaign to replace the top management at Generali, on which it relies for one-third of its annual profits. Caltagirone and Del Vecchio have for years accused the bank of holding back Generali’s expansion.
After a bitter exchange of letters this summer with Mediobanca’s Nagel about the upcoming renewal of the bank’s board, Caltagirone has taken a back seat in the drive against the lender’s management.
But people familiar with his thinking say that is because Mediobanca is just one piece of the puzzle. His end game is taking control of Generali, they say, where he has another opportunity to shake up the board in 18 months’ time.
As one of the people involved in the conversations put it: “This is a poker game.”
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