Mar 2, 2016
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Luxottica founder to give up executive role 'in a few years'

Mar 2, 2016

The 80-year-old founder of Luxottica, who returned to lead the world's top eyewear maker after the exit of three CEOs in quick succession, sought to address governance concerns on Wednesday, saying he would hand over to internal managers "in a few years".

Leonardo Del Vecchio, who has a 66.5 percent stake in Luxottica through a family holding, has attracted criticism from some analysts and corporate governance experts over his apparent reluctance to cede control of the firm he founded in 1961.

Leonardo Del Vecchio - Luxottica

He tightened his grip by taking on executive powers at the end of January, when Luxottica announced the departure of co-CEO Adil Mehboob-Khan after just a year in the job.

Massimo Vian, who had been joint CEO in charge of products and operations, became the sole CEO, but with a limited remit.

In a message to investors after Luxottica reported results on Tuesday, Del Vecchio said he had not resumed a leading role because the group was in trouble, but to grow its retail and e-commerce businesses as well as top brands Oakley and Ray-Ban.

He also said Luxottica was eyeing the high-margin lens sector, even though the company said on Tuesday it was not in tie-up talks with lens producers Essilor or Carl Weiss.

"In a few years, my plan is to return to my previous role of non-executive chairman and shareholder," Del Vecchio said, adding he would hand over to internal managers backed by a "strong and independent board of directors, as it is now".

Shares in Luxottica, down 12 percent this year, fell a further 3.6 percent on Wednesday after it trimmed its profit guidance to 2018 and said it would not pay a special dividend.

Luxottica also on Tuesday appointed to its board Francesco Milleri, a close associate of the Del Vecchio family, in a move some observers said exacerbated worries about transparency and governance.

In an unusual move, Del Vecchio issued a separate statement to say Milleri, a business and IT consultant, was not "a new CEO" but would assist him in his functions. Sources have said Milleri's growing influence at Luxottica has upset some top executives.

Del Vecchio, who has said none of his six children should carry the burden of such a big firm, is widely respected for having built Luxottica into a global player with revenues of 9 billion euros ($9.8 billion).

In a research note, JP Morgan analysts highlighted ongoing governance concerns and said Luxottica's sales guidance for 2016 of 5-6 percent at constant foreign exchange rates compared with analyst estimates of 7-8 percent growth.


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