When Mario Greco took up the job of chief executive of Generali three years ago his decision to move from Zurich Insurance Group to Italy was applauded as a sign of renewal in the country’s clubby corporate culture. It is therefore of relevance not just to Generali — where the share price has almost doubled during his tenure — but as a barometer of change in corporate Italy that Mr Greco may not stick around.
According to several people inside and outside Generali with direct knowledge of the events, Mr Greco has not yet renewed his contract for a second term at the Italian insurer. Generali’s board were slow to agree new terms and in the meantime he has emerged as a top candidate to take up the job of chief executive at Zurich Insurance after the exit of Martin Senn. Insiders say the game will be played out in the next five or six weeks.
The brinkmanship can be seen as part of the rough and tumble of renegotiating a C-suite pay package. Since discovering Mr Greco could head to Zurich, Generali’s board has drawn up a more lucrative contract for Mr Greco to persuade him to stay, say people with direct knowledge of the negotiations. Playing hard to get for Naples-born Mr Greco may pay handsomely.
Shifting to Zurich may also be attractive because his impressive turnround of Generali has started to run out of steam, at least as measured in share performance. Back in 2012, Generali needed capital. So Mr Greco sold nearly €4bn of assets, and slashed costs to improve profits, and the ability to build capital organically. The stock price duly leapt. But in the past year, Generali’s share price has become range bound as Mr Greco embarked on the trickier task of operational fine-tuning in a zero interest rate environment.
If Mr Greco leaves, it may turn out to be latest sign of the difficulties Italy’s top expatriate talents find when they return home. Italy has made progress in corporate governance. But it is still alarmingly common for weak executives who do not rock the boat to remain in their jobs for years, to the detriment of the entire corporate culture.
The most flagrant example was Giuseppe Mussari, discredited chairman of Banca Monte dei Paschi di Siena who was close to politicians and the Catholic Church. He presided over the spectacular decline of the 500-year-old bank during a decade of corruption and ineptitude by top management. On the day he quit, Mr Mussari, who was twice nominated head of Italy’s national banking lobby, said that as a trained lawyer he had never understood the complexities of finance.
By contrast in his three years at Generali, Mr Greco has gained a reputation as an outlier: tough, uncompromising and prickly. He has slashed the insurer’s shareholdings, cracked down on related-party transactions and appointed foreigners — by definition outsiders to the Italian system — to key roles. Generali’s chief investment officer who looks after its €500bn in assets is English-speaking, India-born, Harvard and Cambridge-educated Nikhil Srinivasan.
The Monday Interview
Mario Greco, a change of gear in Italy
From September 6 2015: In an interview in September Generali chief executive Mario Greco presents himself as a straight-talking numbers man, in a deliberate distinction from the avuncular manner of Italy’s older executives.
Mr Greco was brought in by Generali’s board as an antidote to the insurer’s previous chairman and chief executive. Cesare Geronzi was a veteran Italian powerbroker close to former prime minister Silvio Berlusconi, and Giovanni Perissinotto, who employed his own father. The pair were ousted in swift succession after the shares lost two-thirds of their value. Even so, Mr Greco’s independent management style has irritated some in Milan’s corridors of power. While Alberto Nagel, chief executive of Mediobanca, the Milanese investment bank that owns 13.5 per cent of Generali shares has publicly expressed his confidence in Mr Greco, others are not so keen, insiders say.
Crucially, the tension is a two-way street. Mr Greco has not hidden his frustration with being back in his home country. In a recent interview with the Financial Times, he bristled about Generali’s euro-denominated balance sheet and the overhang on his debt rating from the sovereign. At one illuminating point, he railed: “The fact that we are strong in Italy, is this a sin?” and did not sound entirely convinced that it wasn’t.
Mr Greco is in good company in his frustration. Vittorio Colao, did a troubled two-year stint back in Italy as chief executive of RCS Mediagroup, another company at the tangled heart of Italy’s culture of cross shareholdings. There he rubbed up against vested interests before beating a retreat and returning to Vodafone where he swiftly became CEO.
Italy-born Sergio Marchionne, CEO of Fiat Chrysler, has barely disguised his disdain for the clubby world of Italian capitalism and he sped off to Detroit as fast as he could. Italian insiders often noted that Mr Marchionne never owned a home in the country but immediately bought one in the US. Mr Greco has apparently never given up his home in Zurich.