Telecom Italia's shareholders rejected an attempt by dissident investors to remove the current board of directors at a meeting on 20 December. According to a company statement, around 50.3 percent of shareholders present at the eight-hour meeting voted against the proposal of the Findim Group of rebel investor Marco Fossati to dismiss the board, with 42.3 percent backing the motion and 7.4 percent abstaining. In total, 54.26 percent of the company's shareholders attended the meeting.
The decision allows CEO Marco Patuano to continue with the strategy outlined last month to reduce debt by disposing of assets including the company's stake in Telecom Argentina and wireless towers in Italy and Brazil, and to issue a convertible bond. Fossati had cited conflicts of interest between leading shareholder Telefonica and Telecom Italia as a reason for his bid to dismiss the board and said the company needed an alternative project that would protect minority investors.
Fossati told reporters after the vote that it was a strong signal from the market and it must be listened to. He said they got very close and would go on. He added that he will submit a proposal to give minority investors greater representation on the company’s board at the next meeting, scheduled for April. He had earlier hinted before the vote that, if it were not successful, he would consider pursuing a legal challenge, because, he said, it might be necessary to promote the company's interest in different ways than via the shareholder vote.
Patuano, however, continued to deny the allegations that the board was being directed by Telefonica. He told the meeting that Findim had stated without any proof that Telefonica was trying to direct Telecom Italia's board from the outside, basing the argument on an unproven theory. Debate is always worthwhile, “but manipulation is not," he added.
Fossati initially appeared to have little chance of success but backing from two groups who advise institutional investors on which way to vote at such meetings, MSCI’s ISS and Glass Lewis, had made the outcome more uncertain. Telefonica currently has 66 percent of Telco, the investment vehicle that runs Telecom Italia via a 22.4 percent stake, and has an option to gradually take over the stakes of its partners Assicurazioni Generali, Intesa Sanpaolo and Mediobanca from 2014.
The meeting also rejected the appointment of Stefania Bariatti and Angelo Tantazzi as directors proposed by Telco, meaning that the current board will continue unchanged until April 2014. The decision to increase the company’s share capital by EUR 1.3 billion via a mandatory convertible bond was approved with 81.06 percent of the votes.
