“Giorgio Armani’s Succession Plan: A Strategic Planning of Governance, Family Involvement, and Preservation in the Fashion Empire.”
The Italian fashion king, Giorgio Armani recently detail extends of a clear rule on how his company should be run after his death. Armani, 89, remains in driving seat of business he built with his late partner in the 1970s, which had a 2.35 billion euros (RM12 billion) turnover last year.
With no direct heirs, there had been speculation on the long-term future of Armani’s empire and how to maintain the empire he built should he passed on one day.Â
But in year 2016, a hitherto obscure document, held by a notary in Milan and reviewed by Reuters, has sets out the future governing principles for those who inherit the group, while other details issues including protecting jobs at the firm.
The document explains how his heirs should approach a potential stock market listing, not until 5 years after his passing and any potential M&A activity.
Succession Plan & Lasting Legacy
A carefully selected group of successors include his sister, three other family members working in the business, long-term collaborator Pantaleo Dell’Orco and a charitable foundation.Â
The plan addresses issues such as potential stock market listings, M&A activities, and the appointment process for future style directors.
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.
Its purpose is to reduce the margin of disagreement between the heirs.Â
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.
Armani also created a foundation in 2016 which currently has a tiny symbolic stake but is earmarked to play a pivotal role in protecting the business he set up with Sergio Galeotti before going it alone when his partner died in 1985.
Its purpose is to reinvest capital for charitable causes and to maintain Armani’s lasting influence over the group.
The foundation’s bylaws aim of creating value, maintaining employment levels and the pursuit of company values. The Armani group has almost 9,000 employees.
Armani’s strategic approach includes a cautious stance on acquisitions, focusing on developing skills not internally present in the company.
The succession plan provides a clear and structured framework for the future of the fashion empire, addressing potential challenges such as leadership transition, family disputes, and maintaining the brand’s values.
If you also plan for a succession, what will be your succession framework? Besides profit, business need certainty. Create your own succession plan now!
Source: Focus: Giorgio Armani fashions his own legacy with succession plan | Reuters
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs.
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YF Foong, Eunive (冯玉芬）
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