Executive Spat Trips Up Ray-Ban Owner -- WSJ
22 March 2019 - 6:02PM
Dow Jones News
By Matthew Dalton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 22, 2019).
PARIS -- The eyewear giant that owns Ray-Ban, LensCrafters and
dozens of other brands is in turmoil as a public fight broke out
between top executives over control of the company, just six months
after they created it in a merger of equals.
Shares of EssilorLuxottica SA, the world's leading eyewear
company with more than EUR16 billion ($18.26 billion) in annual
revenue, fell 6.6% on Thursday in Paris after a top executive, the
Italian billionaire Leonardo Del Vecchio, accused other executives
of violating the pact that created the company out of France's
Essilor and Italy's Luxottica. Mr. Del Vecchio was the controlling
shareholder of Milan-based Luxottica and owns 31% of the new
company.
The merger -- announced in 2017 and completed last year -- made
Mr. Del Vecchio executive chairman of EssilorLuxottica and Hubert
Sagnières, the chief executive of Essilor, the new company's
executive vice chairman. The two men would have equal powers to run
the combined company, EssilorLuxottica said.
On Wednesday, Mr. Del Vecchio said in an interview with the
French newspaper Le Figaro that Mr. Sagnières was taking
consequential decisions at EssilorLuxottica without his approval.
"Hubert Sagnières only accepts what he himself proposes," Mr. Del
Vecchio said. "He is acting as if Essilor bought Luxottica."
On Thursday, Mr. Sagnières fired back, saying it was Mr. Del
Vecchio who was unilaterally trying to control the company.
"A certain number of his actions reflects a de facto attempt to
take control of the new Group, without any premium offered to
shareholders," Mr. Sagnières said.
The public quarrel at the top of a globe-spanning corporation
highlights the perils of a merger that doesn't give clear control
to either side. The merger specified that Luxottica and Essilor
will be maintained as companies inside the merged company, each
with their separate boards of directors. "Decisions relating to the
management of the company shall be made jointly by, or with the
approval of both" Messrs. Del Vecchio and Sagnières, according to
EssilorLuxottica's rules of procedure.
The two men engineered the merger to capitalize on growing
global demand for eyewear. Along with Ray-Ban and LensCrafters,
Luxottica makes sunglasses for fashion brands and owns retail
outlets such as the Sunglass Hut. Essilor produces lens under brand
names such as Transitions and Varilux.
Tensions have been simmering between the two men for months. Mr.
Del Vecchio last year sought to appoint his right-hand man,
Francesco Milleri, the chief executive of Luxottica, as CEO of the
combined company. Mr. Sagnières wanted to hire a headhunting firm
to find a new CEO.
The disagreement has left the combined company without a chief
executive for months. Mr. Del Vecchio on Wednesday said it would
take five years, not three as initially planned, to realize
EUR400-600 million in annual synergies from the merger.
He also said Mr. Sagnières last year hired managers for the new
company without his knowledge, signing them to permanent work
contracts that offered "golden parachute" severance payments. "I
only found out about it two weeks ago," he said. "That's how Hubert
works."
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
March 22, 2019 02:47 ET (06:47 GMT)
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