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Luxottica founder and non-family CEO clash over strategic direction

The future of Luxottica’s non-family chief executive is up in the air due to reported tension with the family-owned firm’s founder over the strategic direction of the company.

Luxottica, which has annual revenues of €7.3 billion, includes brands such as Oakley, Ray-Ban and Oliver Peoples among its empire. It also has over 7,000 retail outlets operating under different banners including Sunglass Hut and OPSM.

It’s founder, Leonardo del Vecchio, 79, appointed Andrea Guerra chief executive in 2004 and the non-family CEO is widely considered the reason the firm is now the largest eyewear business in the world.

Profits at the family empire, which has made del Vecchio one of the wealthiest individuals in Italy, have doubled since Guerra came to the helm and the partially-listed company’s shares have tripled.

But the pair has reportedly clashed over a Google Glass deal and Guerra’s political aspirations.

Earlier this year, leaked information revealed Guerra was considering a ministerial position in prime minister Matteo Renzi’s government.

Luxottica has not commented on the rumoured rift, but said in a statement that del Vecchio and Guerra had “debating the best strategic direction for the group" for “some time”.

According to local media, del Vecchio, who owns 66.5% of the company, had disagreed with a deal, led by Guerra, that would see Luxottica design wearable technology for Google Glass.

Luca Solca, luxury analyst at Exane BNP Paribas, said del Vecchio was supposed to be stepping back from managing the business, but had become more involved again, after Guerra’s political ambitions went public.

Solca said that family business founders would often be tempted to meddle in the running of their company, even after they have retired from management. He said thus far del Vecchio had been doing a good job of stepping back from the business.

“Del Vecchio has around one meeting per month with the chief executive and his board,” Solca said. “So he was sitting in the background but staying on top of things that were going on in the company.”

Solca said that family ownership of luxury brands is far more common in Europe than the US, with Burberry the only brand he could think of not associated with a family.

He said while founding family members could be problematic, the involvement of family could also have positive outcomes for luxury brands.

“The European family businesses are more likely to be run for the long term and to preserve equity value, while US companies seem to be run with a stronger focus on shorter-term results because the incentive mechanisms are different,” Solca said.

“If you are remunerated on the back of yearly results this is a very different kettle of fish to working for the next generation.”

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