{"id":552,"date":"2013-04-02T13:56:09","date_gmt":"2013-04-02T13:56:09","guid":{"rendered":"http:\/\/frontisgovernanceblog.wordpress.com\/?p=106"},"modified":"2013-04-02T13:56:09","modified_gmt":"2013-04-02T13:56:09","slug":"intesa-sanpaolos-board-election-some-funds-question-the-independence-of-the-minority-slate","status":"publish","type":"post","link":"https:\/\/frontisgovernance.com\/en\/intesa-sanpaolos-board-election-some-funds-question-the-independence-of-the-minority-slate\/","title":{"rendered":"Intesa Sanpaolo's Board election: some funds question the independence of the \u201cminority\u201d slate"},"content":{"rendered":"

On April 22And<\/sup>, the Intesa Sanpaolo\u2019s AGM will elect the members of the Supervisory Board through the slates of nominees\u2019 mechanism\u201cparty vote\u201d<\/i>As per the list vote<\/i>, which has been mandatory for all Italian listed companies since 2007, shareholders will vote on slates of nominees submitted by other shareholders holding at least a certain threshold of the company\u2019s share capital (as defined by the Market Authority for each company). Three slates have been submitted for the renewal of Intesa\u2019s Board: the first by the banking foundations Compagnia di San Paolo and Fondazione Cariplo (major shareholders, jointly holding 14.7% of the share capital), the second by three \u201cminor\u201d banking foundations jointly holding 9.9%, and the third by a group of fund managers coordinated by the Italian Asset Managers Association (Assogestioni) with 0.59%. For the first time, the composition of Assogestioni\u2019s slate sparked a heated debate, including questions about the actual independence of the fund managers. Mr Guido Giubergia (CEO of Ersel SIM) was one of the main dissenters, leading him to resign from the chairmanship of Assogestioni\u2019s Corporate Governance Committee. The internal crisis appeared to have been resolved, and on 28 Marchth<\/sup> the funds submitted the slate to Intesa Sanpaolo. Nevertheless, the debate on Assogestioni\u2019s nominees raised the attention on the \u201cparty vote\u201d\u00a0\u00a0<\/i>mechanism, that so far enjoyed widespread appreciation. The seriousness of the debate seems to be strengthened by the intervention of the Italian Market Authority (Consob), that called Mr. Giubergia for further clarification, as newspapers reported (Vittoria Puledda, Lists for Intesa and Generali start blizzard over Assogestioni names<\/a><\/i>, La Repubblica, 29 Marchth<\/sup>, 2013).<\/p>\n

Frontis Governance has already questioned the effectiveness of the \u201clist vote\u201d <\/i>mechanismElection of the Board: is the Italian \u201cvoto di lista\u201d, as defined by the By-laws, still valid?<\/a>, posted on April 24th<\/sup>, 2012). The comment posted almost a year ago highlighted how such a mechanism may strengthen the major shareholders\u2019 control over the boards. Just a few examples: Fiat and UniCredit\u2019s major shareholders are able to elect more than 90% of board members even though they control less than 70% of the votes, whilst Telecom Italia\u2019s major shareholder (Telco) is able to appoint 80% of directors with less than 50% of votes at the general meeting.<\/p>\n

Concerns were also raised regarding the definition of the slates: too often the slates submitted by the major shareholders are complementary to those of the fund managers, represented by Assogestioni, meaning that all nominees from both slates are appointed, irrespective of the shareholders\u2019 voting direction. The number of Board members to be elected from the \u201cminority\u201d slate is determined by the company\u2019s Articles of Association, which may stipulate only one \u201cminority\u201d member (this is the case, for instance, with Fiat and UniCredit). Furthermore, according to Italian law and the Corporate Governance Code, specific independence criteria and gender quotas must be met. Concerns may arise when the slate submitted by the major shareholder includes fewer nominees than the number of Board members, with the expectation that the funds associated with Assogestioni will nominate those fulfilling the missing independence and gender requirements. Again, in Fiat\u2019s 2012 Board election: shareholders had to appoint 9 Directors, of whom 2 were women; Exor (the major shareholder) submitted a slate of 8 nominees, including one woman, and the fund managers coordinated by Assogestioni submitted a \u201cslate\u201d of just 1 nominee, also a woman. It was clearly a pure coincidence, but such occurrences are very frequent among FTSE MIB companies, leading to concerns about prior discussions (and, why not, agreements) between the association and the major shareholder regarding the identity of the nominees.<\/p>\n

The debate over the slate submitted by Assogestioni to Intesa Sanpaolo also touched on another sensitive issue: the genuine independence of the fund managers. The slate was also signed by Fideuram and Eurizon, two asset management companies forming part of the Intesa Sanpaolo Group. Representatives of both Fideuram and Eurizon rightly did not actively participate in drawing up the slate. Nevertheless, the submission of the slate itself would have been impossible without the support of those shareholders, who were clearly in a conflict of interest. The independence of asset managers is a real concern for Assogestioni, as more than 75% of its members are owned by large banking groups and less than 10% of total assets are managed by independent institutions.<\/p>\n

It appears that the debate also involved foreign institutional investors, none of whom endorsed Assogestioni\u2019s slate, including those that have supported the Italian \u201cminority shareholders\u201d over the last couple of years (Fidelity, JP Morgan, Hermes, Amber, Aviva, the Dutch pension fund APG, etc.). Did the debate raise concerns about Assogestioni\u2019s actual independence, particularly in the eyes of major international investors? If so, the association would face another problem, stemming from the general practice of almost all Italian fund managers not to vote. In fact, most of Assogestioni\u2019s institutional members prefer not to vote on many items on the agenda, with the exception of board elections where a slate of nominees is put forward. To date, Italian fund managers have been able to elect almost all their candidates thanks to the virtually unconditional support of foreign institutional investors (effectively delegating to them the decision on the other items on the agenda), who account for approximately 85% of minority votes at Italian AGMs.<\/p>\n

Thanks to the current definition of the slates, as no real competition occurs, all submitted nominees are elected in any case, so that Assogestioni does not really need the support of external shareholders for the final election. Nonetheless, if the election of Assogestioni\u2019s slates were to fail, new scenarios may be possible: foreign institutional investors may seriously take the responsibility to submit their own independent nominees (as already happened in the near past, see Parmalat and Sorin in 2012), or perhaps one day new categories of Italian shareholders, more independent, may finally decide to take part in the voting process and in the appointment of Board members.<\/p>","protected":false},"excerpt":{"rendered":"

On April 22nd, the Intesa Sanpaolo\u2019s AGM will elect the members of the Supervisory Board through the slates of nominees\u2019 mechanism (\u201cvoto di lista\u201d). As per the voto di lista, mandatory for all Italian listed companies since 2007, shareholders will vote on slates of nominees submitted by other shareholders, holding at least a threshold of […]<\/p>","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[110,111],"tags":[11,23,36,116,112,39,20,119],"class_list":["post-552","post","type-post","status-publish","format-standard","hentry","category-boards","category-english-news","tag-consob","tag-fiat","tag-intesa-sanpaolo","tag-meeting","tag-minority-shareholders","tag-telecom-italia","tag-unicredit","tag-voting"],"acpt":null,"_links":{"self":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/posts\/552","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/comments?post=552"}],"version-history":[{"count":0,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/posts\/552\/revisions"}],"wp:attachment":[{"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/media?parent=552"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/categories?post=552"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/frontisgovernance.com\/en\/wp-json\/wp\/v2\/tags?post=552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}