Pietro Tantalo is a busy man. Combining work as a corporate lawyer with a position at the coal-face of Italy’s infant proxy solicitation industry is no picnic.
However, the fast-talking chairman of Proxitalia is nothing if not energetic – contagiously so. In fact, his articulate zeal and profuse knowledge of the proxy voting industry is almost enough to make you exclaim, ‘I’ll vote! And I’m not even a shareholder!’
Tantalo, a senior partner at a Rome and Milan-based law firm, says he is celebrating 20 years in the legal profession (if that’s not a contradiction in terms). But proxy solicitation is a time-consuming affair in itself and juggling the two work-loads leaves Tantalo with a diary as tightly packed as a lawyer’s wallet.
Still, returning to the office after a hectic afternoon in court, a breathless Tantalo enthusiastically recounts the genesis of the now burgeoning Proxitalia (before hurrying off to yet another appointment).
‘I incorporated Proxitalia a couple of years ago with some other financial experts and another lawyer,’ he explains. He claims that ‘Proxitalia was – and still is – the only Italian company dealing specifically in proxy solicitation.’
But the company has rapidly widened its horizons. Being a big fish in a small pond is all very well but far better to be a big fish in a big pond: ‘We wanted to grow so I started trying to find the leading company in the world in proxy solicitation,’ Tantalo remarks. ‘So in 1998 I called the chairman of Georgeson. We talked and then arranged a meeting in New York. It was at about that time, in March 1999, that Georgeson merged with Shareholder Communications Corporation.’
Consolidation remained a priority for Tantalo, and at the end of last year Georgeson Shareholder Communications and Proxitalia finally effected their own merger. The result, GSC Proxitalia, now owns 100 percent of Proxitalia, which remains a separate entity. Under Italy’s recent consolidation law, proxy solicitation can only be performed by a company (other than a bank or broker) if that is its exclusive object. ‘GSC normally does both shareholder communications and proxy solicitation but, in this case, we had to incorporate two different companies,’ Tantalo recalls. ‘Of course, you wouldn’t need to do that in the US so we had to explain the reasons carefully.’
So far, so good
All the indications to date are that the union seems to have paid off. Its effective monopoly in the field of Italian proxy solicitation, coupled with the kudos of GSC’s heavyweight name, is reaping dividends for the new business. ‘I want to be conservative but I think I can say that we’ve already had success,’ Tantalo ventures. ‘We’ve had a good response from the market.’
The market for proxy solicitation in Italy is still ripening so there’s plenty to be gained from establishing the company as market leader. But Tantalo is not content with cleaning up in his home country. Europe and the world still have potential business to offer GSC Proxitalia. ‘We do think that there’s a market for what we do here in Italy but we are also looking beyond that. There’s certainly a market for us in France and Germany, for example, too.’
That domestic success is encouraging given the peculiarity of Italy’s shareholder base. ‘Italy is different from the US or the UK,’ Tantalo admits. ‘We don’t really have many [traditional] public companies in this country. That means that companies are normally controlled by a small group of shareholders, who tend to have a shareholder agreement when it comes to voting. So at annual meetings, voting levels can be around 10 or 15 percent. If you compare that with US or international standards, there is a big difference. Resolutions sometimes need around 50 percent of the quorum to be passed. In the US, some resolutions might need the vote to be 80 or 90 percent of the quorum. But I trust in the evolution of the market. I think voting levels will improve.’
The usual suspect
This evolution is moving on apace, with the internet rather predictably at the vanguard of change. ‘I think electronic voting is going to become very important,’ Tantalo soothsays. ‘At the moment we don’t have a very good system. And that’s a problem not just in Italy, but all across Europe. Even the US isn’t perfect but it’s much better than over here. So, at GSC Proxitalia we’re working closely with Italian authorities and the main industry players to establish a new proxy solicitation system, similar to that of the US – and specifically an electronic system.’
Tantalo believes that Italy is well-placed for change. ‘We’re in a good situation,’ he says. ‘As well as having total demutualization of stocks, Italy’s digital signature system is one of the most advanced in the world. And we’re working very hard on developing an electronic system, because this will be the future for companies and also for institutional investors who do actually want to monitor their investment.’
This is often the rub. The absence of what Tantalo describes as ‘a tradition of participation’ can’t always be put down to indifference and apathy on the part of shareholders. Time constraints and other logistical hindrances play their part. And that’s not just an Italian problem. ‘In the UK, when I meet institutional investors they say, We have the same problem. Only a few of us are regularly able to go to meetings and vote,’ Tantalo says.
Fair enough, but apathy and indifference shouldn’t be overlooked. To that end, Tantalo directs his revolutionary ire at both sides. ‘I think that institutional investors and mutual funds are guilty too,’ he argues. ‘They often don’t follow what’s going on or try to participate.’
Either way, Tantalo believes something needs to be done – now more than ever. ‘It’s very important to develop a system that’s going to make voting easier, especially with new corporate governance rules coming in.’
In fact, Tantalo has a keen interest in good governance. ‘We are in discussions with our current and potential clients in Italy to try to convince them to introduce new rules,’ he comments. ‘I think it’s crucial that they adopt international rules and standards of corporate governance. Because at the moment, what I see are a lot of players in that field, each creating their own codes of corporate governance. It’s good that they are interested but I’m afraid we will have too many separate versions.’
Headway is being made though. ‘The Borsa Italiana [the Milan Stock Exchange] has established a corporate governance code and it’s a good one. Although, like everything good, it could be better. If nothing else, though, it demonstrates the effort of the stock exchange to meet international standards. That’s important because Italian companies really do need good corporate governance rules.’
Day of the retailer
And if there’s one thing that brings shareholders out to vote, it’s companies with suspect governance. That goes for private investors as much as for the institutions. ‘There’s certainly an increase in levels of retail shareholding,’ Tantalo considers. ‘And, of course, that’s linked to the growth of online trading. In Italy we didn’t have any online trading until near the end of last year and, since it’s been introduced, there’s been a direct increase in the number of retail investors here. If we are able to get these new investors to vote as well, then there is an extraordinary opportunity for the proxy industry. So the task now is to develop the situation in the next few months so that it becomes more than just an opportunity.’
Electronic voting will help in this development but a fluid system isn’t the only thing needed to generate a tradition of participation. After all, you can take a horse to water but you can’t make it drink. No, Tantalo reckons that a return to the basics of simple communication is also called for.
‘Companies need to establish good, efficient relationships with their shareholders,’ he opines. ‘At the moment, they either don’t have this relationship or it could be a lot better. Many Italian companies don’t recognize the importance of a constant, stable relationship with their shareholders. Telecom Italia demonstrated the importance of having a solid relationship with retail shareholders recently. When the management of the company tried to set up an extraordinary general meeting in order to approve a transaction, they needed a quorum. They found that very difficult to achieve. Of course, it is if you’re talking to your shareholders for basically the first time.’
If Proxitalia manages to influence these changes, it will be, in no small part, down to Tantalo’s 100-word-a-minute energy. Nearly 40 minutes into the 15 minute interview I’ve been granted, Tantalo pauses to take a drink of water. ‘Sorry,’ he says, ‘I just need a sip of water because I always seem to be talking! I don’t need to eat these days but I do need some water now and then.’
