The succesful billionnaire founder of Luxottica, 80 years old Leonardo Del Vecchio has been credited for turning Luxottica which he owns 66.5 percent into a global player notably by acquiring Ray Ban sunglasses with total revenues of 9 billion euros ($9.76 billion). But he certainly has a problem with governance as the company changed CEO three times in 17 months, with latest CEO to leave after 15 months in office despite €11.8 million in fixed compensation plus a severance pay of €6.8 million, while maximum variable compensation can reach 926% (200% STI + 726% LTI) of basis pay.
Item 4 of the up-coming AGM is an advisory vote on the company’s remuneration policy including the above former CEO Mr. Adil Mehboob-Khan severance pay of € 6.8 million, after only 15 months in charge in addition to an egregious fixed remuneration of € 11.8 million in 2015 plus an executive variable remuneration exceeding our voting policy limit of 300% of the base salary with a bonus capped at 200% and the long-term incentive amounting to 726% of the CEO’s base salary on the date of grant…
In item 5, the Board proposes to ratify the appointment of Mr. Francesco Milleri as Deputy CEO, to assit the Chairman now also CEO, Mr. Del Vecchio, Mr. Mehboob-Khan is the third CEO of Luxottica that resigned in the last two years: Mr. Andrea Guerra resigned in September 2014 and Mr.Enrico Cavatorta resigned in October 2014. Therefore, ECGS recommends to oppose the appointment of a new executive Director to support the dominating Chairman-CEO, and we urge the Company to effectively separate the roles of control and management through the appointment of an independent Chairman of the Board.
Once again as says the British Institute of Directors “Strong performance is no excuse for ignoring the corporate governance rules without a very convincing explanation.”
April 15th 2016
