EssilorLuxottica deadlock continues, mediator appointed

On 24 April EssilorLuxottica’s board of directors rejected two propositions for the appointment of additional board mbers to break the current deadlock: one by Essilor shareholder group Valoptec Association, and another from a group of investors led by investment managent company Fidelity International, Bloomberg reports.A statent released by EssilorLuxottica said the appointment of additional board mbers would be a violation of the merger agreent struck between the two companies.“The board of directors recommended at the majority that the shareholders vote against all the proposed resolutions which, if approved, would result in a clear breach of the Combination Agreent and in a potential disruption for the activities of the board,” the statent read.Following the merger of the Italian frame maker Luxottica and French lens maker Essilor both sides have accused the other of a power grab for control of the conglomerate. According to the terms of the merger, which was completed during October 2018, both factions agreed to share equal weight in the combined company’s leadership until 2021.{{quote-A:R-W:450-Q: The Board of Directors recommended at the majority that the shareholders vote against all the proposed resolutions which, if approved, would result in a clear breach of the Combination Agreent and in a potential disruption for the activities of the Board }} However, who will be appointed the inaugural CEO of the joint company has been a point of contention between Mr Leonardo Del Vecchio, executive chairman of EssilorLuxottica and former boss of Luxottica, and Mr Hubert Sagnières, executive vice-chairman of EssilorLuxottica and former head of Essilor. The disagreent has led to a deadlock in the board.French media have reported that a mediator has been appointed to resolve the power struggle. According to France24, Essilor requested that the Paris Commercial Court assign someone to the case. Mr Frank Gentin, former president of the Commercial Court, has been given the job.Essilor’s request for mediation follows a similar request by Del Vecchio. Del Vecchio lodged a request for arbitration with the International Chamber of Commerce in Paris in March through his family holding company Delfin,On April 17 EssilorLuxottica announced that it has commenced its search for a CEO, and appointed two recruitment agencies to assist the company’s Nomination and Compensation Committee. The organisation has committed to appointing someone to the role by the end of 2020, and until a CEO is found the operating companies of Essilor and Luxottica will rain separate legal entities with different CEOs.Allegations of a power grab have now dragged on for months. In Novber 2018 Del Vecchio nominated Mr Francesco Milleri, CEO of Luxottica, for the position.Sagnières subsequently accused Del Vecchio of orchestrating a takeover by forcing his choice of managing director onto the group. Del Vecchio denied the accusation, and claimed that Sagnières was guilty of violating the merger agreent himself. More reading:EssilorLuxottica locked in leadership dispute, arbitration requestedEssilorLuxottica releases first financial result