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Sunday, July 21, 2024

Giorgio Armani fashions his own legacy with succession plan

Armani, 89, remains CEO and effectively sole shareholder of the business he set up with his late partner in the 1970s, which had a 2.35 billion euros ($2.5 billion) turnover last year.

Giorgio Armani has always kept a tight grip on the firm he founded, and the Italian fashion king’s attention to detail extends to clear rules on how it should be run after his death.

Armani, 89, remains CEO and effectively sole shareholder of the business he set up with his late partner in the 1970s, which had a 2.35 billion euros ($2.5 billion) turnover last year.

With no children to pass it on to, there has been speculation about the long-term future of Armani’s empire and whether, in an industry dominated by luxury conglomerates, it will be able to maintain the independence he treasures.

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But a hitherto obscure document from 2016, held by a notary in Milan and reviewed by Reuters, sets out the future governing principles for those who inherit the group, while another details issues including protecting jobs at the firm.

The first document explains how his heirs should approach a potential stock market listing – though not until five years after his passing – and any potential M&A activity.

For the Armani look itself, the document commits them to the “search for an essential, modern, elegant and unostentatious style with attention to detail and visibility”.

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The document is the product of an extraordinary meeting that Armani called in 2016 to adopt new bylaws for the group which would come into force upon his death.

SUCCESSION PLAN

Armani’s heirs are expected to include his sister, three other family members working in the business, long-term collaborator Pantaleo Dell’Orco and a charitable foundation.

The bylaws divide the company’s share capital into six categories with different voting rights and powers, and were amended in September to create some without voting rights.

The Armani group, which as well as the CEO also represents the family members mentioned in the document, declined to comment on the document or its contents.

It is not clear from the document how the different blocs of shares will be distributed, but corporate governance experts say the guidelines should ensure a relatively smooth transition by giving the board a central role.

“It is an organization that reduces the margins for disagreement between the heirs,” Guido Corbetta, professor of Corporate Strategy at Milan’s Bocconi University, told Reuters.

Armani has a younger sister, Rosanna, two nieces, Silvana and Roberta, as well as a nephew, Andrea Camerana. Dell’Orco is also considered part of the family.

All are currently board members and, apart from Rosanna, all work for the Armani group.

Silvana and Dell’Orco are heads of design, working closely for decades with Armani, who dubbed them his “lieutenants of style”.

The 2016 bylaws set the process for how the board will appoint future women’s and men’s style directors in a company known for its classic tailoring.

Roberta is Head of Entertainment & VIP Relations, while Camerana is sustainability managing director.

Other fashion groups including LVMH, Europe’s most valuable luxury company, also have succession issues, with the five children of LVMH CEO and Chairman Bernard Arnault all having key management roles at brands in the empire.