Ferrari still has the family spirit despite flotation


So, Fiat Chrysler Automobiles is to replace the chairman of Ferrari, Luca Cordero di Montezemolo. The new head of the sports car brand, which is 90% owned by the Agnelli family, will be FCA’s chief executive Sergio Marchionne.

Oddly, the decision to get rid of the 67-year-old Montezemolo has been painted as part of a wider Italian drive to replace the old with the young.

Can that be right? Marchionne, at 62, is hardly a new kid on the block. And Montezemolo is not exactly walking off into the sunset. He is still vice-president of Italy’s biggest bank, Unicredit, and is tipped for a top job at airline Alitalia.

Also, the recent news that the 79-year-old Leonardo Del Vecchio is re-taking the reins at luxury goods firm Luxottica, hardly suggests that Italy is ditching “gerontocracy” for smooth-cheeked youth.

The real story is that Italian families are shoring up their ownership of their businesses. As we wrote, Luxottica’s recent changes are designed to make family succession smoother.

Yes, Fiat Chrysler recently listed in the US, but flotation actually strengthened the Agnelli family’s control. Although they own only 30% of Fiat Chrysler, a clause rewarding long-term shareholders means that the Agnellis have 46% of votes. This is viewed as a bad thing by some non-family shareholders (and those in the press who reflect their interests) but Fiat made a virtue of the structure, saying in their SEC filing that this makes it “more difficult for … shareholders to change FCA’s management or acquire a controlling interest in FCA”.

Also, they added Gildo Zegna, chief executive of fashion business Ermenegildo Zegna, and Valerie Mars, a fourth generation member of the American chocolate dynasty, to the FCA board. Both can be expected to support family ownership.

This is anathema to those who believe in pure-bred shareholder capitalism, and who see family ownership as an archaic throwback. But it addresses a serious flaw with the shareholder model, namely that opportunistic shareholders often have as much say in a business as long-term shareholders.

Do families make good owners? As advocates of shareholder capitalism love to point out, sometimes families can make mistakes, such as the Peugeot family who held out too long before taking investments from Chinese firm Dongfeng and the French government early this year. But that proves only one thing: not that families are poor at governance, but that all models are imperfect.

The bigger story behind the changes at Fiat, Peugeot and Luxottica is that the line between public and private ownership is becoming increasingly blurred. For many people shareholder capitalism, at least in its strongest form, is not seem as appealing it once was.

A new kind of hybrid family firms is emerging, which will require non-family shareholders to think about stewardship as much as ownership.