ROZZANO: Telecom Italia's shareholders backed a special award plan for its new Chief Executive Flavio Cattaneo and other top managers on Wednesday, despite wider investor criticism of excessive boardroom pay.
Cattaneo is set to be paid 1.4 million euros ($1.6 million) annually under the Italian firm's remuneration plan and get a bonus worth between 50-150 percent of his salary if Telecom Italia reaches its business plan goals.
Investors also backed a special award plan that could see Cattaneo receive an additional bonus of up to 40 million euros if Telecom Italia exceeds its goals.
Proxy advisers Glass Lewis and ISS had urged shareholders to reject this special award, criticising the fact that it was linked to short-term results and that a bonus would be granted even in the case of an early departure.
The outcome was heavily influenced by top investor Vivendi , which controls Telecom Italia via a 24.7 percent stake. Arnaud de Puyfontaine, CEO of the French media group, told the meeting the plan was in line with investors' interests. Including Vivendi, around 37 percent of Telecom Italia's overall share capital voted in favour of the special award.
But the fact that around 23 percent of the phone group's share capital voted against it underlined growing frustration among investors about executive pay. Cattano replaced Marco Patuano who resigned in March over what sources said were clashes over strategy with Vivendi.
Only after a month after taking over, the executive pledged to nearly triple cost cutting efforts to boost profitability at the heavily indebted former state phone monopoly.
Cattaneo said on Wednesday that beyond Italy the firm would focus on the revamp of its Brazilian unit TIM Participacoes , which is battling political turmoil and the worst economic recession in decades, adding it was not the right time to decide whether to exit the Latin American country.
"First we restructure it and then we decide whether to sell," he said. Sources have previously told Reuters that Vivendi was pushing for an exit from Brazil and the unit became a source of friction with Patuano who considered it strategic.
De Puyfontaine reiterated that there was no need for a cash call at Telecom Italia, while Chairman Giuseppe Recchi said the company may sell minority stakes in some of the companies it controls as part of ongoing efforts to reduce its debts.
Recchi said Telecom Italia was unfazed by rival broadband plans for Italy unveiled by alternative players, including the one proposed by state-backed power utility Enel.
"We like competition and it motivates us," he said, but added that all should compete on a level playing field. Cattaneo said Telecom Italia may consider collaborating with Enel if there is room to do so.
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