(Inserts full name and title of PM Renzi in 17th paragraph)
* Corporate governance improving in Italy
* Companies need to be more transparent to attract investors
* New PM Renzi looking to modernise business world
By Lisa Jucca
MILAN, April 16 Eager to attract foreign
investors as it slowly emerges from its longest recession in 70
years, cash-strapped Italy Inc. is taking the first steps to end
decades of opaque management and shoddy governance.
Drastic overhauls this week at big state-controlled
companies such as Eni and Enel are just the
latest of a series of changes - some induced by lawmakers, some
by investors - that are gradually transforming the way Italian
In three years, Rome has enacted legislation that ended the
long-standing practice of allowing directors to sit on multiple
bank boards. Listed companies have been asked to reserve a third
of their board seats to women in Italy, which has the largest
employment gender gap of all EU countries bar Malta.
The web of cross-shareholdings that was central to Italy's
business world is melting after Mediobanca - the
pillar of this system - announced in June it was exiting all
holdings except insurer Generali, parting from
unprofitable investments to focus on its banking business.
In another big shift of corporate governance, minority
investors forced core investors at Telecom Italia to
name a slate of independent directors. The change is set to free
up Chief Executive Marco Patuano to focus his attention on
"The crisis has accelerated the need for Italian companies
to seek external financing from investors more attentive to
corporate governance," said Enzo De Angelis of executive search
consultant and government advisor Spencer Stuart.
These investors include giant money manager BlackRock, the
top shareholder in banks Monte dei Paschi, UniCredit
and Banco Popolare. BlackRock also has large
stakes Telecom Italia and motorway operator Atlantia.
China's central bank last month bought 2 percent of Eni and
Enel and buyers from France, Qatar and the United States have
snatched key portions of Italy's fashion empire.
According to the World Bank's Ease of Doing Business Index,
Italy now ranks 52 in the world in terms of investor protection
compared with 57 in 2009, better than fellow Group of Seven
members France and Germany but lagging the best performers such
as Canada, Britain and the United States.
Last year, construction company Salini seized control of
Italy's largest builder Impregilo from rival Gavio after a
public proxy battle staged at shareholder meetings, a rare event
in a country where dealmaking takes place behind the scenes.
In a sign of corporate renewal, data from Spencer Stuart and
investor lobby Assonime showed the number of independent and
first-time directors has increased in the past three years.
Female board members, previously a meagre 5 percent of the
total, have doubled in number between 2010 and 2012.
But there is more to be done to reinforce investor
confidence in Italy, where large listed companies are routinely
embroiled in judicial probes of corruption and financial crimes.
For a start, boards in Italy do not have the power to throw
out their CEO without the approval of controlling shareholders
and pay is not always linked to performance. Italian
shareholders cannot vote down management pay packages.
In Italy, independent directors make up about half of board
members, better than in Spain and Belgium but well below
participation levels seen in Britain or the United States, and
only 7 percent of directors are foreigners.
Despite a law encouraging female participation, women only
make up 10.6 percent of board members against 18 percent in
Britain and the United States and higher levels in Scandinavia.
To help more women climb up the corporate ladder, Italy's
new Prime Minister Matteo Renzi named three prominent
businesswomen at the top of large state-controlled corporations,
though none was appointed CEO.
"In the past, these appointments were made through political
horse-trading. This was a very negative element that helped fuel
prejudices against Italy among foreign investors," said Arturo
Albano from corporate governance consultancy Talete.
"The answer is to base the appointments on real competence."
(Editing by Tom Pfeiffer)