MILAN (Reuters) - Proxy adviser Glass Lewis has recommended Telecom Italia (MI:TLIT) investors back a proposal by activist fund Elliott to replace six board members and shake up the way top shareholder Vivendi (PA:VIV) runs the phone group, a document showed.
Elliott, which wants to improve governance and performance at Telecom Italia (TIM), has built a potential holding of 5.7 percent in the company. Last month, it called for six Vivendi-nominated board members, including TIM Chairman and Vivendi CEO Arnaud de Puyfontaine, to be replaced through a vote on April 24.
"Elliott's proposals provide the opportunity to functionally evict those directors clearly serving Vivendi's interests and replace them with new, independent candidates bringing experience and expertise plainly germane to Telecom Italia's operational scope and strategy," the influential proxy adviser said in a report for shareholders seen by Reuters.
TIM declined to comment, while Vivendi could not immediately be reached for comment.
Since first becoming a shareholder in 2015, Vivendi has increasingly tightened its grip on TIM. It now owns 24 percent.
Vivendi eventually appointed two-thirds of TIM's board and named its own chief executive as TIM executive chairman, raising concerns among other shareholders and politicians in Rome who consider the company of strategic national importance.
The stakes in the fight for leadership at TIM were upped last week after Italian state lender CDP said it would buy up to 5 percent in the group to safeguard Rome's interest.
Even if Elliott's board candidates are backed, no clear indication of who will end up calling the shots at Italy's biggest telecoms group is likely to emerge for several weeks.
Following Elliott's move last month, eight board members nominated by Vivendi resigned, triggering a full board renewal at a separate shareholder meeting called for May 4.
Elliott believes there will be no need for TIM shareholders to choose a new board in May if its candidates are elected in April. Meanwhile TIM says even if Elliott's candidates are elected on April 24, a new board would be voted in May.
Shareholders have until Monday to present their slates.
For the April meeting, Glass Lewis recommended that shareholders vote in favor of Amos Genish serving as chief executive for the next two years. Genish was co-opted by the board last September following the resignation of his predecessor, but his appointment has to be approved by shareholders to continue beyond the April AGM.
Most institutional investors approve of Genish, despite him being an ally of Vivendi Chairman Vincent Bollore, because of his track record as a telecoms veteran and dealmaker in Brazil.
Genish already features on the slate put forward by Vivendi.
This may prove a conundrum for some shareholders who may want to weaken Vivendi's grip, but will not want to lose Genish, whose three-year business plan presented last month was welcomed by investors.
At the same time, the Israel-born CEO is unlikely to remain at TIM if it ends up with a board that would not give him the majority backing necessary to push through with his business plan, sources close to the matter have said.