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Board slate nominations open at Fiat

Fiat has released its notice of AGM, with the first call due to be on 26 March and the meeting expected to be held on the second call on Friday 27 March. With the board structure following the traditional Italian model, the AGM will include the election of both the Board of Directors and the Board of Statutory Auditors.

Both elections will be conducted under the Italian slate voting system. The slate which receives the most votes (the ‘majority slate’) receives most of the Board seats, however at least one seat on the Board must be reserved for the slate which receives the second highest number of votes (the ‘minority slate’).

Manifest’s Voting Review 2008 highlighted the difficulty faced by institutional investors in nominating minority slates where the threshold required was above circa 1%.  The threshold for Fiat is set at the legal maximum 2.5%.

Fiat has a large blockholder, EXOR SpA (formed by the merger of IFI and IFIL), who can be expected to submit candidates for both the Board of Directors and the Board of Statutory Auditors and to have sufficient voting power for their slates to become the majority slates. Two institutional investors, Capital Research & Management Co and FMR LLC hold in excess of 5%, and it will be interesting to see whether either takes the opportunity to nominate slates.

Under Fiat’s Articles of Association the legal minimum of one member of the Board of Directors is taken from the minority slate, while one member (who becomes Chairman) of the three member Board of Statutory Auditors is taken from the minority slate. The size of the Board of Directors will be determined by the AGM upon a proposal by EXOR SpA, with the Articles specifying that the Board of Directors should be between 9 and 15 members.

The deadline for filing slates is 15 days prior to the first call of the meeting (i.e. 11 March 2009).

What do you think?