Proxy adviser ISS backs Mediobanca's outgoing board slate for board renewal

MILAN (Reuters) - Proxy adviser Institutional Shareholder Services (ISS) said on Wednesday it was recommending that Mediobanca investors vote in favour of the outgoing board's slate of nominees for the Italian bank's new board.

The bank's board is elected for a three-year term and the current term expires on Oct. 28, when Mediobanca shareholders will vote on the renewal of the board, including the chief executive.

Mediobanca's outgoing board has proposed 15 members for the full board, including a new term for current CEO Alberto Nagel and Chairman Renato Pagliaro.

Delfin, the holding company of the late Italian billionaire Leonardo Del Vecchio and the main investor in the bank, with a 19.7% stake, proposed five directors for the new board.

While Delfin's slate does not pose a direct challenge to either Nagel or Pagliaro, its move to put forward its own nominees increases uncertainty in the short term and could lead to a fractured board, analysts have said.

Del Vecchio, who died last year at the age of 87, had criticised Nagel for failing to grow the investment bank's business adequately and holding back expansion at insurer Generali, in which Mediobanca is the main shareholder.

If Delfin, which currently has no direct board representation, wins the most votes at the AGM, it will appoint a third of the directors, getting all its five nominees onto the 15-strong board. It will only get two seats if it is the second most-voted list after the board's one.

A third list was submitted by a group of fund managers with an overall 2% stake in the bank.

Mediobanca's outgoing board's slate of nominees "is adequately positioned to represent the long-term interests of institutional investors and carry out an effective oversight of the management's action", ISS said in a report.

The current board has the support of a group of Italian investors, representing a combined 10.9% stake. Historically, Nagel has also enjoyed the support of institutional investors, who own more than 40% of Mediobanca.

Delfin can count on the support of shareholder Francesco Gaetano Caltagirone, who owns 9.8% of Mediobanca.

(Reporting by Gianluca Semeraro; Editing by Leslie Adler)