Elliott needs to wait till May for seeking a new board for TIM

The activist fund Elliott will need to wait till May to seek shareholders’ approval to appoint its own board.

This is because a judge ruled in favor of an appeal by Telecom Italia (TIM) and its leading investor Vivendi to block a vote on some board director replacements proposed by activist fund Elliott at an April 24 shareholders meeting, Reuters reported.

Elliott, which has 9 percent equity stake in TIM, aims to replace Vivendi-controlled board members in order ensure that the Italian telecom operator is running better and perform well in stock markets. Vivendi owns 24 percent of TIM.

TIM will hold its AGM on Tuesday to approve financial results for 2017 and confirm Amos Genish as chief executive, but the standoff over the board seats will be delayed to another shareholder meeting scheduled for May.
TIM shop Italy
Paul Singer’s fund had called for six Vivendi-nominated board members, including TIM Chairman and Vivendi CEO Arnaud de Puyfontaine, to be replaced with well-known Italian business leaders to help improve governance and strategy.

Following Elliott’s move, eight board members nominated by Vivendi resigned, triggering a vote on a full board renewal at a separate shareholder meeting called for May 4.

Despite the resignations, TIM’s statutory auditors included Elliott’s proposal on the agenda for this week’s meeting – a decision TIM’s board and Vivendi had challenged in court and which the judge suspended with its ruling.

Explaining the decision, the judge said the mass board resignations made it necessary for shareholders to elect an entire new board rather than vote on partial changes that would be temporary.

Elliott said the ruling was “merely democracy delayed, not democracy denied” and added shareholders would get to express their will in May. TIM said the motions proposed by Elliott would not be discussed on Tuesday and confirmed the May meeting.

In May, shareholders will be asked to pick between Elliott’s slate of 10 independent Italian business heavyweights and Vivendi’s list.

The French investor changed a few names on its slate and kept de Puyfontaine as candidate for TIM chairman, albeit this time in a non-executive role.

The report said Vivendi’s chances of securing a board majority are fading, especially after three proxy advisors recommended backing Elliott’s candidates ahead of the April vote, saying the French group had been damaging for governance and shareholder returns.

However, by postponing the vote to May, Vivendi is assured at least five seats on the new board because shareholders will vote on its candidates as well and not just replacements proposed by Elliott.