Plus, some members of EssilorLuxottica's board have demanded the resignation of Essilor CEO Laurent Vacherot following a $215 million fraud discovered at a plant in Thailand.

(Bloomberg)—EssilorLuxottica’s management dispute flared up again as French directors blocked a plan by their Italian counterparts to oust the head of the Essilor lensmaking business.

The board of directors had a heated meeting Thursday in which some members demanded the resignation of Essilor CEO Laurent Vacherot following a 190 million-euro ($215 million) fraud discovered at a plant in Thailand. The motion was sidelined because the vote was split between representatives of the French and Italian sides of the company, according to people familiar with the board’s discussions.

Essilor didn’t immediately respond to a request for comment. The people asked not to be identified by name because the discussions were private.

A new fight between the Italian and French sides of the world’s biggest eyewear maker could complicate efforts by the maker of Ray-Ban sunglasses to cut costs after its 2018 merger while the coronavirus outbreak weighs on demand.

Earlier this week, co-chief financial officer Hilary Halper stepped down following the fraud. Rather than slimming down management and relying on just one financial director, EssilorLuxottica on Friday named David Wielemans to replace Halper.


Moving production

A governance pact between the French and Italian arms of the company, has limited the power of Chairman Leonardo Del Vecchio, its largest shareholder, but that’s set to expire next year. Asked by analysts whether the dual structure would continue, co-chief integration officer Pierluigi Longo said, “We have no visibility on what the organization will be in the future.”

Revenue for 2019 was 17.4 billion euros ($19.7 billion), the eyewear giant said, slightly above analysts’ average estimate. On a call, executives sought to reassure the market over the company’s resilience in the face of coronavirus. Some production is being moved from Chinese plants where operations have been slightly reduced, to Brazil and Italy, where factories are at capacity, company executives said on a call.

The pace of delivering merger synergies is set to accelerate, they said. The spectacle maker also said it aims to finish its search for a new chief executive officer by the end of the year.


Board clash

Management tussles have plagued the company since the merger of French lens crafter Essilor and Italian frame maker Luxottica in 2018.

In the latest clash, Vacherot abstained from voting as the other seven representatives of Essilor voted against the move to oust him. The request didn’t pass as every major decision should be backed by at least one representative from both the French and Italian sides of the board, the people said.

Del Vecchio, Luxottica’s founder, may eventually gain the upper hand at EssilorLuxottica, in which he has a 32% stake. After the shareholder pact expires next year, Del Vecchio could be in position to impose his leadership, first gaining a majority of representatives on the board, then accelerating operational integration, people familiar with the matter said last month.

The spread of coronavirus will weigh on demand, especially in the first half, the company said. The eyewear maker forecast sales growth of 3% to 5% this year, excluding currency shifts, assuming the disease fizzles out in a few months.


The company, which gets 5% of sales in the greater China region, said it has contingency plans for a prolonged pandemic, and that the impact from the virus will be much less than for rival luxury companies where Chinese clients make up a higher share.

Earnings are expected to grow at 0.7 times to 1.2 times the pace of revenue in 2020.

EssilorLuxottica is No. 104 in the 2019 Digital Commerce 360 Top 1000.