Telecom Italia (TIM) has announced the resignation of the majority of its board of directors, in what has been seen as a way of pre-empting a move by activist fund Elliott to counter how the operator’s largest investor Vivendi is running the company. In a statement, TIM said its chairman and Vivendi CEO Arnaud de Puyfontaine would step down on 24 April along with deputy chairman Giuseppe Recchi and six other directors, calling on shareholders to vote for a new board on 04 May.
“In resigning, the aforementioned directors have expressed their hope that this move would help to clarify and provide certainty to the governance of the company, passing the responsibility of appointing the new board to the shareholders’ meeting pursuant to the current rule of law and the bylaws,” said TIM in a statement. However, Elliott’s take on the move was that the board “has simply abandoned their posts to stall for time,” adding in its own statement that it regarded the action as “cynical and self-serving, in that it delays the ability of Telecom Italia shareholders to express their votes at the upcoming AGM."
Under Italian law, if the majority of a board resigns, it is has to be dissolved. Each side can subsequently present a slate of at least 10 directors for the company’s 15-member board, with the side that prevails in the shareholder vote granted two-thirds of the seats on the board.
Elliott has built up a 5.75 percent stake in TIM and last week called for the replacement of de Puyfontaine and five other Vivendi-backed members of the board. The fund is preparing to run a slate of at least 10 directors at the annual general meeting in May, according to an unnamed source cited by Bloomberg. The source added that Elliott remains supportive of current TIM CEO Amos Genish.
TIM also confirmed in its statement that its former CEO and current independent board member Franco Bernabe had been appointed deputy chairman with responsibility for the company’s security department, including its international operator Sparkle and ICT subsidiary Telsy, powers that were previously held by Recchi.
