Report
Expert Corporate Governance Service (ECGS)
EUR 500.00 For Business Accounts Only

EssilorLuxottica - AGM 16 May 2019

Less than 6 months after the merger between Essilor and Luxottica, executives are in
open conflict regarding the Group’s governance. Leonardo del Vecchio, the largest
single shareholder and Chairman and CEO, has filed a legal arbitration request alleging
the Vice Chairman and CEO, Hubert Sagnières, has “violated” a 2017 merger agreement
that created the world’s largest eyewear maker.
Relationships between the French and the Italian sides seem to have started
deteriorating in November 2018 when Mr del Vecchio indicated that he wanted to
nominate Francesco Milieri (his right-hand man and CEO of Luxottica) as CEO of
EssilorLuxottica so that he could only remain Chairman of the Board. ECGS considers
that having Mr del Vecchio as only Chairman of the board would be more relevant (as
main shareholder) and less confusing for shareholders than the current situation. This
statement from Mr del Vecchio has not been well received by shareholders, analysts and
by Mr Sagnières. The latest has accused Mr del Vecchio of attempting a takeover of
Essilor by Luxottica without paying a premium by forcing on the group his handpicked
confidant as managing director.
As each side was standing his ground, on March 27th, 2019, Mr del Vecchio filed an
arbitration request with the International Chamber of Commerce “to obtain an injunction
to respect this agreement until its expiry” (/content/6a3e8186-50d2-
11e9-9c76-bf4a0ce37d49)

Such arbitration can take a lot of time and could impair interests of the Company, its
employees, its executives and all its shareholders. It would have been preferable that the
Company, since the beginning of the negotiations between Essilor and Luxottica,
implements several good governance principles such as the split between the Chairman
and CEO functions, and a board comprising a majority of independent members. It would
also have been preferable that recruitment of the future CEO be made by independent
directors only (with ratification by the Board).

Underlying
EssilorLuxottica

Essilor International (Compagnie Generale d'Optique) designs, manufactures and sells ophthalmic lenses, ophthalmic optical instruments and equipment. Co.'s activities are divided into three segments: Lenses and Optical Instruments (Co. designs, manufactures and customizes corrective lenses such as: Varilux (progressive lenses); anti-reflective, smudge-proof and anti-static lenses (Crizal); Nikon lenses, Transitions variable-tint lenses and Kodak lenses under agreements; polarized lenses (Xperio) and fog-proof lenses (Optifog)), Equipment (Co. produces, distributes and sells equipment and consumables used by prescription laboratories) and Readers (Co. designs and sells reading glasses).

Provider
Proxinvest
Proxinvest

Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

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Analysts
Expert Corporate Governance Service (ECGS)

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