Mediobanca - AGM 28 October 2020
In item 2.b of the Ordinary Agenda, shareholders are called to appoint the Board of Directors on slates of nominees submitted by the outgoing Board and shareholders holding, even jointly, at least 1.0% of the share capital. Three slates of nominees have been submitted, respectively by the Board, a group of institutional investors holding 4.9% and the investment firms BlueBell Capital Partners and Novator Capital Limited, jointly holding 1.0%.
BlueBell Capital Partners is an activist investor, which sent a letter to Mediobanca in June 2020 criticising some governance practices as well as suggesting changes in the Bank's strategy and operational efficiency. In particular, BlueBell criticises the lack of separation of management and control within the Board, due to the statutory provision that the "majority slate" shall include 3 senior managers (2 if the Board is made up of less than 14 members) employed by the Group for at least 3 years, which represents a tool for management entrenchment (also see item 1 of the Extraordinary Agenda).
We share BlueBell's concerns over Mediobanca's corporate governance. All the 4 candidates included in the slate submitted by BlueBell and Novator are independent from the Bank and its shareholders and, in our opinion, they hold a range of skills and experiences which may effectively support the Board in its management and supervisory roles. Therefore, we recommend shareholders to vote FOR the slate submitted in sub-item 2.b.3.
In item 4.a, shareholders are called to a binding vote on the remuneration policy. The quality of disclosure is good (all terms and conditions are disclosed and long-term targets are quantified), and in our opinion the variable remuneration is effectively structured to align the interests of executives and shareholders in the long term. However, we have concerns over the possibility to pay extraordinary variable remuneration to the non-executive Chairman, and we find as excessive the base salary of the CEO (€1'900'000), which is used to define the amount of the variable remuneration. Therefore, we recommend opposition.
Mediobanca Banca Di Credito Finanzario's core businesses are lending and investment banking. Co. helps its clients by providing them with advisory services in addition to medium-term bank credit. Co. is the parent company of the Mediobanca Banking Group, which has operations in consumer credit, retail banking, leasing, and private banking. Co.'s business divisions are comprised of: Corporate and Investment Banking, which comprises Wholesale Banking and Private Banking; Principal Investing, which brings together all equity investments in associates (IAS28) and available for sale assets; and Retail and Consumer Banking, which comprises consumer credit and retail banking activities.
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