Telecom Italia investors advised to vote against Vivendi proposal

MILAN (Reuters) - A second influential shareholder adviser has told investors in Telecom Italia (TLIT.MI) to reject proposals by top stakeholder Vivendi (VIV.PA) to allow it representation by enlarging the board.

In a report seen by Reuters, Glass Lewis said the appointment of Vivendi's nominees would significantly change the board's composition.

"We believe unaffiliated shareholders should question whether such changes are beneficial to the interests of all shareholders," it said.

Vivendi is seeking a say over strategy after building up a 20.1 percent stake in the Italian phone incumbent and has proposed adding four seats on the board.

Its request for board seats came after French billionaire Xavier Niel emerged last month as potentially the second biggest shareholder in Telecom Italia thanks to call options that can hand him a 15.1 percent stake in the group.

Vivendi's proposed nominees are Chief Executive Officer Arnaud de Puyfontaine, Chief Operating Officer Stephane Roussel, Chief Financial Officer Hervé Philippe and French consultant Felicité Herzog.

Earlier this week Institutional Shareholder Services (ISS)recommended investors vote against the French media group's proposal to raise the board seats to 17.

Telecom Italia investors meet on Dec. 15 to vote on Vivendi's request as well as on a savings share conversion plan that will dilute the French group's holding to below 14 percent.

Vivendi's proposal has raised the eyebrows of some Telecom Italia fund shareholders which control 65 percent of share capital. They are concerned Vivendi could be over-represented.

Glass Lewis and ISS both recommended shareholders vote in favour of the savings share conversion plan.

(Reporting by Stefano Rebaudo; writing by Stephen Jewkes; Editing by Elaine Hardcastle)