Public appointments: the Terna case 

Recently the list of candidates to lead Terna for the 26/29 three-year period was filed. The outgoing CEO, Giuseppina di Foggia, we recall the only woman at the top of a listed public company, was not reconfirmed and has been designated as chairman of another listed company operating in the energy sector (ENI).

Di Foggia’s request regarding her severance (almost 7 million Euro) is causing considerable debate, since the Government expected that she would renounce it on the basis of her transfer to another public company (where an annual compensation of about 500 thousand Euro awaits her).

The episode raises some questions.

The first: a mystery, the reason for her replacement

The only woman to lead a public company; Terna shares rewarded by the market (for the first time in history the stock exceeded the 10 Euro mark); flawless accounts (after all, how could they not be… Terna operates the Italian electricity grid under a monopoly regime with investments remunerated in tariffs: in short, paid by us citizens on our bills); no delays in the execution of works (at least according to public data).

Result? Di Foggia is removed … but not entirely … at the same time, in fact, she is nominated for the Chairmanship of Eni (hmm). Only time will tell the real reasons for this “necessary” replacement …

The second: the remuneration policy of public companies

From the replacement stems the quarrel over her severance: Di Foggia, in fact, by application of the contract signed with Terna (in which, it is recalled, the CEO is also general manager) requests the application of the severance (which results in a payout of about 7 million). The shareholders (CdP, Mef .. it is not clear) would like to grant a smaller figure on the assumption of having appointed her to another publicly controlled company (not 7 but 5, 4, a discount in short, hmm). While awaiting the outcome of this dispute (which perhaps, for non-experts, one wonders whether it could not have been examined before making the appointments?), the issue to be addressed is more general and does not concern Di Foggia (who requests her contract be applied) and relates to the remuneration policy of public companies (whose top executives are not chosen by the market), especially those that – like Terna – operate under a monopoly regime without any business-related risk.

One therefore asks how it is possible that a manager who runs a public company with such a risk profile can end up receiving over a three-year period (between fixed, variable and severance) a sum that amounts to around 15 million Euro.

And again, how is it possible that the public shareholder approves in the assembly these remuneration policies - in which, in addition to a very high fixed salary there is a variable component based on non-challenging and always attainable objectives and in which a monstrous severance is foreseen. Not to mention the representation expenses incurred during mandates on which sooner or later someone will decide to make things clear …

All this at a time when families are unable to pay their bills …