(Corrects to make clear director in para 7 led attack on Geronzi)
By Hugo Dixon and Lisa Jucca
LONDON/MILAN, April 27 (Reuters) - Cesare Geronzi's apparently hefty payoff and his seemingly lavish expenses during 11 months as non-executive chairman of Generali (GASI.MI) are set to come under the spotlight at the insurer's shareholder meeting on Saturday, several directors and other sources said.
Geronzi, a powerful Italian corporate insider who has been close to Prime Minister Silvio Berlusconi, resigned in the face of a boardroom coup on April 6. He was awarded a payoff of 16.6 million euros ($24.3 million) upon leaving Europe's No.3 insurer, several Generali directors and other high-ranking Generali sources told Reuters on condition of anonymity.
Geronzi also ran up bills to cover extensive use of private jets, five secretaries, multiple cars and drivers in four cities, the rent for a flat in Milan, a public relations team separate from the company's main communications office, and sponsorship of events and media outside the company's normal advertising programme, according to the sources.
Generali declined to comment on the details or size of Geronzi's costs, while a spokesman for Geronzi also declined to comment.
Consob, the Italian stock market regulator, has asked Generali to clarify the extent of the payoff, according to several insiders.
Meanwhile, one director said he thought and hoped that the company would disclose information about Geronzi's expenses at the meeting, given the "very big interest" among investors in understanding the issue. "The board is ready; they live with the real market. There is no problem to be clean with the information," the director said.
Tod's founder Diego Della Valle, one of the directors who led the attack against Geronzi, questioned Geronzi's expenses and tried to put them on the agenda of Generali's board meeting on April 6, several sources familiar with the matter said. But Geronzi resigned just before the board meeting and these costs were never officially revealed to directors, three sources said.
Two senior insiders said they had received large unofficial estimates for the former chairman's expenses. A third described them as "mad". A fourth said he expected to receive official information this week. A fifth said the issue of expenses as well as Consob's request for details on Geronzi's termination package was due to be discussed at a board meeting on Friday, the eve of the annual shareholder meeting.
Geronzi is a controversial Italian financier who has in succession chaired three of the country's most important financial institutions: Capitalia, a retail bank acquired by UniCredit (CRDI.MI) in 2007; investment bank Mediobanca (MDBI.MI), which is Generali's top shareholder; and Generali itself.
A Rome court is due to rule in the coming months on whether Geronzi contributed to the 2003 bankruptcy of Italian food group Cirio. Prosecutors are seeking an eight-year sentence for Geronzi. He has denied any wrongdoing. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BREAKINGVIEWS-Generali affair shows why Italy underperforms [ID:nLDE73Q08L] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Geronzi received a base salary of 2.121 million euros for serving as non-executive chairman between April 24, 2010, and the end of 2010, according to Generali's 2010 accounts. This figure rose to a total of 2.322 million euros including membership of and appearances at various board and committee meetings. On an annualised basis, his base salary was 3.05 million euros, according to two sources.
Geronzi's payoff of 16.6 million euros was made up of three elements, according to one director: around 6.6 million euros for the remaining two years of his three-year contract covering base salary and membership of boards and committees; another 6.1 million euros because his contract specified that he would receive two further years of base salary if his appointment was not renewed at the end of the three-year period; and nearly 4 million euros for loss of fringe benefits, including private jets.
Geronzi, who had been given significant communication powers by Generali, employed his own public relations adviser, Luigi Vianello, and Angelo De Mattia, a speech-writer, according to several Generali sources and sources close to the matter.
He also spent money on advertising, sponsorship and events outside Generali's normal advertising programme, which is run by Giovanni Perissinotto, the chief executive. One director said the communication set-up was "very negative because he used communications to weaken the CEO and the management". Another said: "I don't understand why we need two different communication channels; we need one strong communications office under Perissinotto."
Geronzi incurred high expenses for private air transport because he used a particular pilot to fly him whenever possible, according to one director. This meant it was difficult to take full advantage of time-share arrangements for private jets where companies buy the use of aeroplanes by the hour and take whichever plane or pilot is available, the director said.
One director said some of Geronzi's expenses were approved by Generali's remuneration committee. It had approved his flat in Milan, since it was felt reasonable for him to have his own place to stay in Italy's financial capital. The committee had also approved the use of private planes, though without knowing the cost.
A second director said: "Geronzi's package was loosely defined. Nobody would have imagined the costs would have risen to such levels."
Meanwhile, the first director said the remuneration committee didn't properly negotiate Geronzi's salary when he was employed last year because there was a strong push by some shareholders as well as from some influential voices in government to appoint him.
Gabriele Galateri di Genola, Generali's new chairman, will receive a much lower annual salary than Geronzi, according to four sources. Two said it would be between 700,000 and 900,000 euros. One said it had already been fixed by the remuneration committee at around 700,000 euros, including the extra amounts for attending board meetings and committees. This source said the matter would go to the full board for approval on Friday.
Antoine Bernheim, the previous long-standing chairman of Generali, earned 746,000 euros in salary and fees plus 190,000 euros in other emoluments for the final four months of his employment, according to Generali's 2010 financial report. Unlike Geronzi, he had been an executive chairman.
Despite resigning from the Generali board, Geronzi has remained chairman of the Fondazione Assicurazioni Generali, a charitable organisation linked to the insurer that Geronzi relaunched at the end of 2010. At the time, he appointed Antonio Fazio, the disgraced former Governor of the Bank of Italy, as honorary chairman of the foundation's scientific committee. Fazio was forced to resign in 2005 as head of the central bank after appearing to favour domestic bidders in cross-border takeover battles targeting domestic lenders Antonveneta and BNL. He faces charges of favouring market-rigging in two court cases stemming from these banking scandals. Fazio denies the charges.
One director said Generali's board would discuss on Friday details of Geronzi's package at the foundation and approve the foundation's board. "This time the budget of the foundation will be defined in a very precise way," this director said.
(Editing by Alexander Smith)
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