Ferrari Chairman Quits

[RRoller123]

Ferrari Chairman Quits After Clash Goes Public

Move Comes Days After Disagreements With Fiat CEO Spilled Out
MARANELLO, Italy— Luca Cordero di Montezemolo is stepping down as chairman of luxury sports car maker Ferrari after 23 years and just days after long-running disagreements with its owner spilled into public view. (See moments that marked his tenure.)

Sergio Marchionne, chief executive of Fiat F.MI +0.32% SpA, which owns 90% of Ferrari, will take over from Mr. Montezemolo effective Oct. 13—the same day that Fiat Chrysler Automobiles, a new company created out of a corporate reorganization, is slated to make its debut on the New York Stock Exchange.

Ferrari has long been the jewel in Fiat's crown and Mr. Marchionne has so far resisted calls for him to sell a stake in the luxury brand to raise cash that could be used to realize Fiat's ambitious €48 billion ($62 billion) five-year plan.

Mr. Marchionne, speaking at a news conference at Ferrari's museum in Maranello on Wednesday, excluded an initial public offering for Ferrari in the near term, though he said that the final decision stood with Fiat's board.

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Ferrari Chairman Luca Cordero di Montezemolo is leaving the sports-car maker after a dispute spilled into the public. Shown, a Ferrari race car during practice runs at the Grand Prix of Italy on Saturday. Getty Images

The executive has long opposed an IPO while Mr. Marchionne is leaving the option open, according to people familiar with the matter. The two executives have often been at loggerheads for a decade over many issues, according to a person who knows both.

Mr. Montezemolo will be paid €27 million, one of the richest severance packages paid to Italian executives in recent years. According to Fiat, he would get €13.7 million under a severance indemnity deal and €13.3 million for the remainder of his contract and an agreement not to compete until March 2017.

While it isn't yet clear what Mr. Marchionne plans to change at Ferrari, there is unlikely to be a significant shift in strategy—specifically the company's decision to cap production at about 7,000 vehicles a year to maintain exclusivity, according to analysts.

Mr. Marchionne, who in May said Ferrari production could be boosted to 10,000 cars a year without hurting the brand, left open the possibility of that increase being eased in over time.

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"An important cycle at the company has ended and another one is opening that I hope will be even more important than the last one," Mr. Montezemolo said on Wednesday. He was occasionally teary eyed and thanked many people—including the former Ferrari driver Michael Schumacher who returned home yesterday after more than eight months in the hospital following a skiing accident.

Mr. Montezemolo said that his wife looked forward to him being less stressed on Saturdays and Sundays, when the Formula One races take place, and that he is happy that he will now have the time to pick up his young son from school.

While the rift between Messrs. Marchionne and Montezemolo has been brewing for some time, it accelerated on Sunday when Mr. Marchionne, speaking just hours before the start of the Italian Grand Prix, praised Mr. Montezemolo for having achieved excellent business results, but said that it wasn't acceptable that Ferrari hasn't won any titles since 2008.

"Sports results are absolutely fundamental for Ferrari and Luca knows that as much as I do," Mr. Marchionne said. "Winning is part of the company's DNA and that must continue."

Mr. Montezemolo said on Wednesday that recent poor results on the racetrack haven't affected Ferrari's bottom line. "They aren't connected," he said in response to a question at the news conference, noting that Ferrari's biggest market is the U.S. where Formula One is a niche sport.

However, Mr. Marchionne, who on several other occasions during the conference corrected Mr. Montezemolo, added: "But they are linked." He went on to say: "When I speak to dealers in the U.S., they're perfectly informed about how Ferrari is doing in Formula One."

Mr. Marchionne said that his appointment as Ferrari chairman isn't temporary and that he had no intention of replacing Ferrari's CEO Amedeo Felisa. Ferrari will remain independent from the rest of Fiat, which also owns Chrysler, he said.

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Sergio Marchionne, left, poses with former Ferrari Chairman Luca Cordero di Montezemolo upon their arrival for a news conference on Wednesday. Agence France-Presse/Getty Images

Rumors of Mr. Montezemolo's departure overshadowed the Italian Grand Prix last weekend at Monza, Ferrari's home race, which took on the feeling of a farewell tour. A large contingent of European media followed Mr. Montezemolo everywhere during the event as he hugged his drivers and held an impromptu news conference on the steps of the team motor home.

At the track, Mr. Montezemolo pledged his love for Ferrari, shared his favorite memories of the circuit and generally skirted questions about any exit. He did say that he would be prepared to stay on for another three years, an indication that he may have held out hope until just the last few days that his tenure at Ferrari might continue.

"We are in front of the best economic and financial year of the Ferrari history this year," he said, pacing the paddock before Grand Prix qualifying on Saturday.

—Manuela Mesco and Christina Rogers contributed to this article.

[4uall]

[SunnySideUp]

Petrolicious article on the subject: http://www.petrolicious.com/why-racing- ... es-ferrari

[btoran]

i feel bad for him. what a terrible severence package.

[azruss]

27 million lira...isnt that like $1200

[Holshot]

End of an era... I actually met him in Cefalu the summer of '11 when he came in my store. He was just in town for the day while doing some touring of Sicily and was a very pleasant guy even while being swarmed by all the fans. I'm very sad to see him go and have no doubt that a change, not necessarily a good one, is a coming. What he has done for the brand over the past 3/4 decades will not be repeated with Marchionne at the helm. We've seen how well he's done with Fiat...

[RRoller123]

I would be amazed if increasing Ferrari production from 7000 cars per year to 10,000 hurts the brand. But the ~30% revenue increase (assuming same product mix), and commensurate productivity improvements (although dubious that this will actually happen with Italian Unions in control of production) could make a big difference. The big opportunity is that low production numbers like this put procured materials on the very steep front portion of the cost curve, and they likely will see some significant cost reductions there.

[Holshot]

I would be amazed if increasing Ferrari production from 7000 cars per year to 10,000 hurts the brand. But the ~30% revenue increase (assuming same product mix), and commensurate productivity improvements (although dubious that this will actually happen with Italian Unions in control of production) could make a big difference. The big opportunity is that low production numbers like this put procured materials on the very steep front portion of the cost curve, and they likely will see some significant cost reductions there.

Not me... That's one of the major rifts between the two. Montezemolo wanted to keep the production capped to maintain exclusivity and keep the demand high which also keeps resale high as to not de-value the brand. Plus it keeps the cars in the hands of those who can really afford them and more importantly maintain them. Marchionne on the other hand wants to up the number to increase profits and doesn't see the big picture in my opinion. I'm really bummed to see this passing of the torch especially to Marchionne, I'm not a big fan of his and seeing what he's done with Fiat the last 10 years doesn't help in changing my opinion.

[RRoller123]

I am shocked, SHOCKED! to hear that there is a difference of opinion on this forum! Anyway, most of these cars seem to go into huge garages on large private estates and are never heard from or seen again....