Italy rules Pirelli's Chinese top investor Sinochem cannot choose CEO

Italy's government has ruled that China's Sinochem cannot designate the chief executive of Pirelli despite being its main shareholder with a 37% stake, the Italian tyremaker said on Sunday.

The decision is part of the measures announced this week by Rome's right-wing administration to shield the autonomy of Pirelli and its management.

Rome's move came after Sinochem notified the Italian government in March of plans to renew and update an existing shareholder pact with fellow investor Camfin, the vehicle of Pirelli's CEO Marco Tronchetti Provera.

Pirelli said Rome had concluded that any changes to the company's corporate governance, including the failed renewal or signing of its shareholder agreement, should be subject to government scrutiny.

Prime Minister Giorgia Meloni's administration examined the pact under the so-called "Golden Power" rules aimed at protecting assets deemed strategic for the country, at a time when relations between China and Western countries have become more strained.

Rome has ruled that only Camfin could nominate CEO candidates for Pirelli, the company said.

Under the revised pact between Camfim and Sinochem, which will now need to be amended to reflect the government's steps, Tronchetti Provera would lose powers he currently enjoys to designate the group's CEO from 2026, leaving that task to Pirelli's Chinese-controlled board.

Rome also said Sinochem should pick no more than eight members of Pirelli's 15-strong board, leaving four to Camfin.

A further limit established that Pirelli should not be subject to instructions from the Chinese group.

Announcing the remedy on Friday, the government said that "some" strategic decisions by Pirelli's board would require approval from at least 80% of its directors.

Pirelli shareholders vote to pick a new board on July 31, with current deputy CEO Giorgio Bruno set to replace Tronchetti Provera, who would stay on as executive vice-chairman.

Camfin, which has options to buy a further 4.6% of Pirelli, earlier this year signed a separate shareholder agreement with Italian brakes maker Brembo, which owns a 6% stake in the tyremaker.

Analysts see the move as an initial step to build an alternative and stable group of Italian shareholders for the company.