The Norwegian oil fund has said it will reject Rome’s choice for the presidency of Enel, in a public affront to the government of Giorgia Meloni before the state utility’s shareholders’ meeting.
The largest sovereign wealth fund in the world, which holds a 2.2% stake. Is in thehe said he will vote against Paolo Scaroni at the May 10 general meeting. Instead, he will support Marco Mazzucchelli, the candidate proposed by the London hedge fund Covalis.
The brawl is a symbolic act of defiance as the Italian state is Enel’s largest shareholder with a 23% stake, meaning Scaroni’s nomination will likely pass. But it is rare for Norway’s normally conservative state fund to publicly endorse an activist on running a business, and especially a government proposal.
“Our starting point in the Italian board elections is to support candidates presented by minority shareholders to strengthen the independence of the board,” the Norwegian oil fund told the Financial Times.
A close ally of former Prime Minister Silvio Berlusconi, the 76-year-old Scaroni is a fixture of Italian corporate life. As CEO of Eni for nine years, he was instrumental in the oil group’s expansion into Russia. He has been targeted by foreign investors, including for criticizing the EU’s handling of the EU energy crisis and its sanctions against the Kremlin. In September, Scaroni said the brakes would benefit big oil exporters “like Norway and the United States, which makes my blood boil”. He was the CEO of Enel twenty years ago.
Enel said it could not comment ahead of the shareholders’ meeting.
Last month Covalis, which holds a 1% stake in Enel and is led by Lithuanian Zach Mecelis, presented an alternative list of candidates for Enel’s board, saying “the selection process lacked transparency”.
Mecelis said he wanted the “toxic” trial to end because it hindered the company’s stock valuation. “Shareholders should choose. It is a matter of governance and transparency,” she added.
Executive advisers Glass Lewis and Frontis have also backed the hedge fund. Mazzucchelli was in a better position than Scaroni to offset the chief executive’s influence on the board, Glass Lewis said.
Mondrian Investment Partners, which holds a 1.7% stake in Enel, also backed Covalis, saying it was “worried” about Rome’s choices and “disappointed” at the lack of transparency.
The Norwegian fund will also support an alternative slate of directors, though not that of Covalis. It has decided to side with the directors proposed by Assogestioni, the national sector body of the fund industry. In Italy, minority shareholders get three out of nine seats on the board of directors.
The ISS proxy advisor, who said that some of the proposed director candidates “lack relevant skills and experience”, also advised shareholders to support Assogestioni’s list.
The state’s candidate for chief executive officer is Flavio Cattaneo, vice chairman of high-speed rail operator Italo and former head of network operator Terna and telecommunications group Telecom Italia.
Covalis, who hasn’t proposed a chief executive, has suggested he might pick a different one if his resolution wins next week. He has fueled speculation that outgoing boss Francesco Starace might stay longer.
Starace, who has held the position of Enel chief since 2014, reiterated on Thursday that he was not available for another mandate.
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