But the importance of results should not be ignored. This is a victory for transparent corporate governance in Italy. This is to be celebrated as it means there could be more reforms to come.
One of the striking lessons of the row is that it signals that global institutional investors now have the upper hand in Italy. According to a breakdown of votes, institutional investors overwhelmingly voted for Generali’s Donnet and the existing board. Among them: Norges Bank Investment Management, one of Generali’s main institutional investors with a stake of around 1.4%; Research on ISS special situations; and Glass Lewis. Defeating the wealthy clique of Italian investors is crucial. This signals a sea change in the status quo of the country’s affairs.
Generali has been at the pinnacle of Italian crony capitalism for decades. Boards of directors have been plagued by decades of board games and infighting — the kind of instability inherent in Italy’s system of cross-shareholding and clubby influence that has discouraged institutional investors from engaging in the third largest economy in the Eurozone. This has prevented the most talented executives from even considering taking a job in Italy or sticking to it.
Generali was one of many chess pieces in the provincial world of Italian finance centered on Milan. And because of that, it has been relegated to provincial prominence in the world of finance. Today, the insurer’s market capitalization of 29 billion euros ($30.56 billion) is half that of Axa in France and roughly a third of that of Allianz SE in Germany. Two decades ago, it was a close rival of the two.
Caltagirone and Del Vecchio were right to complain that Generali under Donnet had missed chances. But the ego-driven, opera buffa modus operandi that these score-settling dramas ultimately resemble as they unfold in the press is part of the problem. The latest feud involved months of off-the-record briefings and unattributed leaks about a boardroom meltdown as various company operatives took sides in the row between Donnet and the dissidents.
Ten years ago, Caltagirone and Del Vecchio were overtaken by the ousting of Generali chairman Cesare Geronzi and another CEO, Giovanni Perissinotto. Mario Greco, who is considered Generali’s most capable CEO in recent years, served only one term because he was angered by the influence schemes on him by big shareholders. Greco is now the boss of Zurich Insurance Group AG.
Given the outsize egos at stake, the drama could move on to another stage: Mediobanca Banca di Credito Finanziario SpA, which owns a major stake in Generali. Del Vecchio is the main shareholder of Mediobanca and he could focus on its management and, more specifically, on his stake in Generali. Caltagirone may have a supporting role in the next opera buffa: he also owns around 3% of the bank.
All this could lead to the transformation of Mediobanca, itself an established player in Milan. Its 11% stake in Generali is a powerful reminder of its central role in the web of cross-shareholdings designed to protect Italian companies from foreign takeover after World War II. If Mediobanca were to cut that stake, it would pull Generali even further out of the Milanese finance infighting.
Either way, Italy’s cozy, rattling capitalism is finally wearing thin.
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Rachel Sanderson was Milan correspondent for the Financial Times from 2010 to 2020. She has also written about Italy for The Economist and reports for Reuters and Reuters TV from Rome, Paris and London.
More stories like this are available at bloomberg.com/opinion