FTGraphic Hubert Sagnieres, Chairman and Chief Executive Officer of French group Essilor, the global leader in the market for corrective glasses, poses on April 24, 2014 after the inauguration of the Essilor Centre for Innovation and Technologies Europe, a private campus dedicated to research and innovation in the ophthalmic optics industry, in Creteil, south of Paris. AFP PHOTO ERIC PIERMONT (Photo credit should read ERIC PIERMONT/AFP/Getty Images) Leonardo Del Vecchio, president and CEO of Luxottica during an interview with Financial Times in the new headquarter in Milan, September 01,2014. Photo Paolo BonaLeonardo Del Vecchio, president of Luxottica during an interview with Financial Times in the new headquarter in Milan, September 01,2014. Photo Paolo Bona
Tensions between Hubert Sagnières and Leonardo Del Vecchio have simmered for months

EssilorLuxottica says it has reached an agreement to resolve a long-running governance battle between the French and Italian sides of the merged eyewear giant ahead of an annual shareholder meeting this week.

The tension between France’s Essilor and Italy’s Luxottica erupted publicly in March over plans to hire a new chief executive to run the group, which was created from one of Europe’s largest ever cross-border mergers in 2017. 

Tensions between Leonardo Del Vecchio, Luxottica’s founder and executive chairman, and Hubert Sagnières, co-chief executive, had ratcheted up over Mr Del Vecchio’s perceived preference for his lieutenant, Francesco Milleri, to eventually take over as chief executive.

However, EssilorLuxottica said in a statement on Monday that the two sides had reached “a settlement agreement to overcome the governance issues and set the basis for a renewed start”.

That agreement, which had been previously reported by the FT, will see Mr Milleri and Laurent Vacherot, CEO of Essilor, take on more power at the group in order to accelerate integration of “the two operating companies within the next 12 to 24 months”.

Mr Milleri and Mr Vacherot have also “informed the board that they are not candidates” for the job of new CEO. The search for that CEO is now ongoing and expected to be completed before the end of 2020.

“I’m very pleased with this outcome,” said Mr Del Vecchio. “With these decisions leading to a more unified company, EssilorLuxottica is well positioned to accelerate its growth,” added Mr Sagnières.

The deal puts an end to legal action taken to resolve the dispute and comes ahead of an annual general meeting of the group this Thursday when some investors are pushing to shake up the group’s board. 

Valoptec, the Essilor employee shareholder group, said on Monday it will now withdraw its own proposal for governance changes and will “vote against the proposals submitted by certain institutional investors for the appointment of two additional directors”.

However, Peter Montagnon, the corporate governance expert who had been put forward by Valoptec as an independent board member, said that “if the integration proceeds without the governance problems being resolved, the risk of creeping control [by Mr Del Vecchio] may ultimately rise with all that implies for the company’s longer term commercial success”.

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