April 24, 2018 / 6:04 AM / a year ago

Telecom Italia shareholders back CEO as board seat showdown looms

ROZZANO, Italy (Reuters) - Telecom Italia (TIM) (TLIT.MI) Chief Executive Amos Genish was backed by nearly all shareholders present at a general meeting on Tuesday, days before a showdown over board seats between the Italian phone group’s top two investors.

FILE PHOTO: Telecom Italia CEO Amos Genish looks on during a debate at the RAI state television headquarters in Rome, Italy November 10, 2017. REUTERS/Remo Casilli/File Photo

Activist fund Elliott has built a stake of 9 percent in the former state phone monopoly to try to shake up the way Vivendi (VIV.PA) - which owns 24 percent - runs it.

The two investors have been trading blows for the past seven weeks, with Elliott accusing Vivendi of serving only its own interests and the French media group saying the fund was looking only for short-term financial gains.

At Tuesday’s shareholder meeting there was no dispute about backing Genish, who despite being a close ally of Vivendi, is well respected by all given his track record as a telecoms veteran and dealmaker in Brazil.

Nearly 98 percent of those present voted to confirm Genish as a board director.

Genish was co-opted by the board last September following the resignation of his predecessor, but his appointment had to be approved by shareholders to continue beyond the AGM.

His appointment is valid until May 4 when shareholders will be asked to elect an entire new board after the majority of directors resigned last month, triggering a full reshuffle.

In May, shareholders will be asked to pick between Elliott’s slate of 10 independent Italian business heavyweights and Vivendi’s list, that did little to allay governance concerns, but features Genish.

This might prove a conundrum for some investors who may want to weaken Vivendi’s grip but will not want to lose the CEO, whose 3-year business plan presented last month was welcomed.

Elliott on Tuesday reiterated it fully supported Genish. Should Elliott’s slate win the majority, Vivendi could still appoint five board members one of whom would be Genish. However, the Israeli-born executive may choose not to stay if Vivendi, which brought him in last year, does not win the majority.

Three proxy advisers recommended backing Elliott’s candidates ahead of a vote that was initially to take place on Tuesday, saying Vivendi had been damaging for governance and shareholder returns.

Genish has made no firm commitment over his future in the post other than saying that alignment with the board and trust were key for any CEO and he hoped to get that from the new one. He added he “looked forward to working with everyone in the coming years”.

The Tuesday AGM happened as French billionaire Vincent Bollore, who stepped down as Vivendi chairman last week, was being questioned by police as part of an investigation into allegations of corrupt business practices in Africa.


Since becoming a TIM shareholder in 2015, Vivendi has gradually tightened its grip and last year appointed two-thirds of TIM’s board as well as making its own CEO, Arnaud de Puyfontaine, executive chairman.

The hands-on approach has led to friction with Rome, concerned about an asset it considers of strategic importance, and has unnerved other investors at the telecoms group.

Elliott has said TIM’s share price, strategy and governance had suffered under Vivendi’s leadership.

Vivendi in turn had asked investors to trust its long-term strategy, saying it provided “stability and expertise” in contrast with Elliott’s “quick fixes”.

Elliott and Vivendi were meant to face off for the first time on Tuesday after the activist fund had called for six board members nominated by Vivendi to be replaced. However, a judge ruled that the motion should be excluded from the agenda because any such appointments would be temporary.

At the meeting, TIM shareholders approved the 2017 financial statements, the company’s remuneration policy and elected a new board of statutory auditors.

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Vivendi did not comment on Tuesday, while Elliott said the May vote would allow the company “to turn the page on the governance issues” and give TIM the right conditions and team to lead its growth in the interest of all.

In his opening remarks, Deputy Chairman Franco Bernabe urged shareholders to put their conflicts aside to focus on boosting the company’s technological edge and competitiveness.

He said the recent board fights and battle of words have “worsened the climate” at TIM and caused “serious reputational damage”, adding shareholders and employees had a right to expect “support and stability inspired by a long-term vision”.

Reporting by Agnieszka Flak,; Editing by Ed Osmond and Alexandra Hudson

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