Eni top spot in play as Italy prepares to shake up state firms

Reuters News
Posted: Apr 08, 2014 2:24 AM

By Stephen Jewkes

MILAN (Reuters) - The government of Matteo Renzi is looking to wipe the slate clean and seek new names at Italy's main state-controlled groups including oil major Eni as top management comes up for renewal, government, political and industry sources said.

New center-left Prime Minister Renzi, nicknamed 'Demolition Man' for his campaigning for generational change in Italy, came to power in February promising to shake up the country's cozy elites and breathe fresh air into an ageing establishment.

His government has spoken out against widespread corruption and poor corporate accountability, calling on state controlled companies to eject from their boards any director charged with financial crimes.

The 39-year-old Renzi has kept his cards close to his chest on the names that will be proposed as early as this weekend to replace top executives at the likes of Eni, utility Enel and defense group Finmeccanica.

The boards and top managers of these groups are renewed every three years at shareholder meetings typically held in May. The government, as main shareholder, must present its list of nominees at least 25 days before.

One government source told Reuters the positions of Eni CEO Paolo Scaroni and Enel's boss Fulvio Conti, both veterans in the energy sector, looked particularly shaky while political sources said Renzi was looking for new faces.

None of Italy's major state firms, controlled through stakes held by the treasury and state lender CDP, are headed by foreigners or women, with relatively few women directors.


Scaroni, at the helm of Eni since 2005, has already served three terms and has said he would like to do a fourth.

In his nine years in power, Scaroni, a former CEO at Enel, has won plaudits for selling off noncore assets to cut debt and fund upstream growth that in 2011 saw the group make its biggest ever gas discovery, in Mozambique.

But setbacks in Africa and Kazakhstan have slowed production growth while profits and the share price are lower than when he first arrived. The 67-year-old executive was also dragged into a probe last year into alleged corruption at Eni subsidiary Saipem in Algeria and was sentenced to jail for violating environmental norms while CEO at Enel. He denies any wrongdoing in both cases and is appealing against the jail sentence.

"I like what Scaroni has done. I would like to see him reconfirmed but I can see problems with the Saipem probe and Renzi's generational drive," said Roberto Lottici, a fund manager at Ifigest. Eni is 3 percent of his portfolio.

The government is also keen to see a reduction in salaries paid to state firm managers. Scaroni, one of the highest paid, grossed 4.55 million euros in 2013.

Renzi's comments that he will listen to the market in his choice have focused minds on big guns like Vodafone's Vittorio Colao and Luxottica's Andrea Guerra. Eni upstream chief Claudio Descalzi is also a candidate, a financial source said.


But April could be a difficult month for other state managers. Like Scaroni, 66-year-old Fulvio Conti was first appointed CEO of utility Enel by former prime minister Silvio Berlusconi and is looking for his fourth mandate in charge.

It was Conti who engineered the internationalization of Enel with the multi-billion euro acquisition of Spain's Endesa. The deal was transformational, turning Enel into a major European player overnight. But it also saddled it with mountains of debt and when the economic crisis hit home the utility was forced to cut dividends. Enel shares have fallen some 33 percent since 2005.

An Italian ministerial source said Francesco Starace, head of renewable unit Enel Green Power, or Enel CFO Luigi Ferraris, both market favorites, could win the top spot.

Alessandro Pansa, at Finmeccanica since 2001, was promoted to CEO at the group last year to replace Giuseppe Orsi, who was arrested on corruption allegations.

With the group weakened by scandals and a heavy debt burden, Pansa's days could be numbered with Giuseppe Giordo, current head of the group's Alenia unit, and former Telecom Italia chairman Franco Bernabe mooted as possible successors.

(Reporting by Stephen Jewkes; Additional reporting by Paolo Biondi and Danilo Masoni; Editing by Lisa Jucca and Giles Elgood)