Generali CEO Donnet Faces Key Test in Face of Opposition From 2 Leading Investors

September 27, 2021 by and

Generali Chief Executive Philippe Donnet’s future at Italy’s biggest insurer faces a key test on Monday at a meeting of its board to discuss putting him forward for reappointment in the face of opposition by two leading investors.

With Donnet due to present a new business plan in December, prolonged uncertainty over his future may have negative repercussions on Generali, analysts have warned.

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Influential Italian businessmen Francesco Gaetano Caltagirone, 78, and Leonardo Del Vecchio, 86, respectively Generali’s second and third largest investors, oppose his reappointment, saying Donnet’s merger and acquisition strategy is too timid.

But top investor Mediobanca backs a third mandate for Donnet, who has steered Generali through the COVID-19 crisis, keeping it on track to meet targets to the end of 2021.

Del Vecchio, founder of Ray-Ban owner Luxottica, and Caltagirone, a construction magnate, have been lifting their stakes in Europe’s third-largest insurer and one of Italy’s most prized financial assets.

In parallel, they have also built stakes in Mediobanca, piling pressure on its boss Alberto Nagel.

And this month Del Vecchio and Caltagirone unveiled an accord to consult over decisions concerning Generali, where they control a combined 12.5% stake after a third smaller investor recently joined their pact.

That threshold is not far from Mediobanca’s 13% stake in Generali, which makes the insurer a major contributor to the profit of the Milanese investment bank, which last week borrowed more shares in Generali to reach 17.2% of the Trieste-based insurer’s voting rights.

Generali’s appointments committee on Friday recommended that the board files a slate of nominees, including Donnet, for shareholders to vote on in 2022. Institutional investors account for around 40% of Generali’s shareholder base.

The resolution passed with four votes in favor and three against, according to people close to the matter.

Del Vecchio, who two years ago rocked Italy’s financial establishment by emerging as the biggest investor in Mediobanca, has criticized its reliance on the Generali stake.

Mediobanca has said it would keep the beefed-up voting stake in Generali until next spring’s AGM, where shareholders will have the last word on the choice of CEO.

(Reporting by Gianluca Semeraro and Claudia Cristoferi; writing by Valentina Za; editing by Alexander Smith)