Enel CEO Candidate Aims to Cut Costs, Confirm Dividend Plan

(Bloomberg) -- Italy’s largest utility Enel SpA plans to accelerate cost cuts and maintain its dividend policy under controversial new management chosen by Italy’s rightwing government, people familiar with the matter said.

Prime Minister Giorgia Meloni proposed industry veterans Flavio Cattaneo and Paolo Scaroni as Enel’s next chief executive officer and chairman respectively, as part of a broader shake up of state controlled companies. In an unprecedented move, activist investors led by UK fund Covalis challenged the “opaque process” behind the government’s choice and presented an alternative slate of independent candidates.

Cattaneo, a former CEO of Telecom Italia SpA and Terna SpA, is broadly committed to Enel’s asset sale strategy designed last year by his predecessor Francesco Starace, according to people familiar with Cattaneo’s thinking who asked not to be named discussing private conversations.

But he also wants a detailed examination of the plan, in order to assess the most profitable outcome of already planned transactions, the people added, and a broader review of Enel’s operations to reduce costs and improve efficiency. For Cattaneo, slashing Enel’s debt pile won’t require changing the company’s dividend policy, according to the people. 

Enel shares extended gains to 1.73% in Milan trading at 17:00 after Bloomberg reported on the candidate CEO’s plan.

Enel needs to dismiss assets to cut debt that ballooned under Starace to €70 billion ($76.8 billion) after the company expanded its global presence. Some €21 billion of disposals are envisioned in a plan announced last year. The company is exiting markets in Latin America and Europe, and aims to sell shares in partnerships and energy projects. 

Enel shareholders will vote on the new board on May 10. Cattaneo, 59, was selected earlier this month by head hunting firm Key2People among more than 10 candidates, the people said.

(Updates with share move)

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