Valentina Za, Gianluca Semeraro

MILAN (Reuters), – Mediobanca, (OTC) said Friday that it had accepted a request from Leonardo Del Vecchio, its largest shareholder. The company wanted to scrap a rule that allowed up to three directors to be reserved for managers at the Italian merchant bank.

Del Vecchio accepted the decision with deep satisfaction and then submitted a second proposal that would amend the company’s bylaws. The original one had been critiqued by Mediobanca’s board.

Mediobanca complained also that Del Vecchio failed to meet with him to discuss the proposals he was putting to shareholders at an Oct. 28 general assembly. This is in direct violation of what is standard for listed companies.

In his first move since becoming the single largest investor in Mediobanca, Del Vecchio suggested last month that Mediobanca’s governance rules be modified to allow for more diversity within its board and greater independence from management.

After receiving clearance by European regulators, Luxottica’s founder at 86 years old bought 19% shares in Mediobanca. This was subject to the condition that his interference would not affect the functioning of the bank.

Del Vecchio was critical of Alberto Nagel’s strategy at Mediobanca in the past. However, he is now a fan of Nagel’s current business plan.

These two men are involved in an ongoing governance dispute at Generali, Italy’s most important insurer. Mediobanca and Del Vecchio are both investors.

Mediobanca stated that, while it was beneficial for the company to have top directors among them, this was an statutory requirement which it planned to eliminate next year after discussions with institutional investors as well as shareholder advisory firms.

Mediobanca was skeptical of Del Vecchio’s second proposal. It said that it could penalize institutional investors who own half Mediobanca.

Del Vecchio’s holding company Delfin said Friday that it will withdraw its proposal in order to not confuse investors. This was after Mediobanca’s board decided to submit an alternate proposal if Del Vecchio’s one was rejected.

A majority of Mediobanca’s directors currently come from the shareholders’ list receiving the most votes. There are two seats for those on the secondmost-voted list.

Del Vecchio suggested increasing the number to three-four the seats reserved for minorities lists. They would each appoint directors based upon the votes received, subject to a threshold of 5%.

Mediobanca’s alternate proposal for its board would have a fifth of the directors come from minority lists. At least one seat would be reserved for representatives institutional investors. To make the threshold 5% lower, it would go down to 2%.

Delfin stated that “Delfin was finally able to put in motion a procedure to improve Mediobanca’s governance…to increase management’s accountability.”

“In light this fundamental result, Delfin thinks its proposal preferable… It is in the best interest of both the bank and its shareholders that only the proposal be put before shareholders.”