Focus: Giorgio Armani fashions his legacy with a succession plan. Giorgio Armani has always maintained a firm hold on the company he established, and the Italian fashion king’s attention to detail extends to establishing specific regulations for how the company should be governed after his passing.
Armani, now 89 years old, continues to serve as CEO of the company he co-founded in the 1970s with his late business partner. The company, which generated a revenue of 2.35 billion euros ($2.5 billion) in 2018, had a turnover of €2.5 billion in 2017.
Armani does not have any children, so there has been a lot of conjecture about the long-term future of his empire and whether or not it would be able to keep its independence in an industry that luxury conglomerates control. This is something that Armani places a lot of value on.
But a previously unknown document from 2016 that is now being kept by a notary in Milan and was examined by Reuters outlines the future governing principles for individuals who inherit the business, while another document discusses problems such as safeguarding workers at the company. Both of these documents were created in 2016.
The first paper specifies how his successors should handle prospective mergers and acquisitions and a stock market listing, which would not be possible for at least five years after his death.
The pact binds them to “search for an essential, modern, elegant, and unostentatious style with attention to detail and visibility” for the Armani look in and of itself.
Armani asked for an extraordinary meeting in 2016 to adopt new bylaws for the organization that would go into effect after he passed away, and this document is the result of that gathering.
PLAN FOR FUTURE SUCCESS
Armani’s sister, three other family members who work in the firm, long-time partner Pantaleo Dell’Orco, and a charitable organization are all believed to be his heirs.
The firm’s bylaws were changed in September so that a portion of the share capital would be assigned to categories that did not have voting rights. These categories have various voting rights as well as other capabilities.
The Armani Group has declined to comment on the paper or the information included in it. This consists of the CEO, who also represents the family members named in the document.
The paper does not explain how the various share blocks will be split. Still, experts in corporate governance think the principles should ensure a relatively seamless transition because they give the board of directors a significant role.
“It is an organization that reduces the margins for disagreement between the heirs,” Guido Corbetta, a professor of corporate strategy at Milan’s Bocconi University, told Reuters. “It is an organization that reduces the margins for disagreement between the heirs.”
Armani has three female relatives: a younger sister named Rosanna, two nieces named Silvana and Roberta, and a nephew named Andrea Camerana. Additionally, Dell’Orco is regarded as a member of the family.
All are actively serving on the board except Rosanna, whom the Armani company employs. Armani has referred to Silvana and Dell’Orco as his “lieutenants of style” due to their close collaboration with him over several decades in the design industry.
In a firm renowned for its traditional tailoring, the procedures for appointing future directors of women’s and men’s styles are outlined in the bylaws adopted in 2016.
Roberta is in charge of entertainment and VIP relations, while Camerana is the managing director of the sustainability department.
There are also problems with succession at other fashion conglomerates, such as LVMH, Europe’s most valuable luxury goods firm. Bernard Arnault, the CEO and Chairman of LVMH, has five children, all working in senior executive positions at various brands within the empire.
Armani also established a foundation in 2016, which only has a small share in the company at the moment but is slated to play a crucial part in the defense of the enterprise that he co-founded with Sergio Galeotti before going it alone when his business partner passed away in 1985.
The organization’s goal is to continue Armani’s enduring influence on the group while at the same time reinvesting cash in humanitarian causes.
In the foundation’s rules, which Reuters was also able to review, it is stipulated that the foundation is responsible for managing the ownership to produce value, preserve employment levels, and pursue business values. The Armani Group employs close to 9,000 people worldwide.
This structure is reminiscent of the one that Hans Wilsdorf, the founder of Rolex, used when he bequeathed the company to a foundation in 1960; the foundation is still the owner of the premium wristwatch.
Armani has never wavered in his belief that his business should remain independent and has categorically rejected the idea of a merger, particularly with the French companies that have recently acquired Italian brands like Gucci, which is now under the control of Kering (PRTP.PA).
The organization’s rules stipulate a “cautious approach to acquisitions aimed solely at developing skills that do not exist internally from a market, product, or channel point of view.” In addition to this, they provide that stockholders will get fifty percent of the company’s net income.
“After the fifth year following the entry into force of this statute,” a majority vote of approval from the board of directors is necessary for any eventual listing on a stock exchange. The Armani Group did not provide a statement about the possibility of a listing in the medium future.
“The founding principles show Armani’s desire to transmit and prolong his idea of a company, of business; there is a desire for eternity,” Professor Corbetta of Bocconi commented.
Armani has meticulously planned everything, but in the end, he won’t be able to determine whether or not his goals will outlive him. “They (the rules) could restrict the company a little and become incompatible with drastic changes in the market,” according to Corbetta.