Opinion: How Not to Manage Succession at LVMH

The drama playing out over the estate of the late eyewear billionaire Leonardo Del Vecchio looks far removed from Bernard Arnault’s meticulous planning for the long-term family stewardship of LVMH Moet Hennessy Louis Vuitton. Yet the Italian feud is a real-time reminder of what could go wrong for the owner of Louis Vuitton and Christian Dior. The situation puts fresh pressure on Arnault to provide more clarity on succession and convince investors that the safeguards he’s put in place are robust enough to avoid a similarly unseemly fight over his legacy.

Four years after the death of Del Vecchio, disagreements have frozen a reorganisation of Delfin Sarl, the family holding company that has a stake of more than 30 percent in Ray-Ban maker EssilorLuxottica SA. Del Vecchio divided his fortune equally between eight heirs; one of them, Leonardo Maria Del Vecchio, has proposed buying the combined 25 percent holdings of two of his siblings to create a single dominant shareholder. But this project has run into financing hurdles. Another heir, Rocco Basilico,has also challenged the plan, prompting Maria Del Vecchio to boycott Delfin’s annual meeting last week saying “the conditions for a productive meeting were not in place.”

Bernard Arnault is 77, and last year raised the age limit for being chairman and chief executive officer to 85 from 80. He clearly isn’t planning on going anywhere any time soon. Yet at the same time, he has been paving the way for his eventual handover.

There are two clear differences with EssilorLuxottica and Delfin.

Firstly, all of Arnault’s five children work at LVMH. Delphine, 51, is CEO of Christian Dior Couture, LVMH’s second-biggest fashion brand after Louis Vuitton. Antoine, 49, is head of image and sustainability for LVMH. He also oversaw LVMH’s sponsorship of the Paris Olympic Games in 2024. Younger son Alexandre, 34, is deputy CEO of LVMH’s wines and spirit division, while Frederic, 31, leads quiet luxury favourite Loro Piana. Jean, 27, looks after the watch category at Louis Vuitton. While it’s not clear who Arnault might anoint as his successor, it appears all of his offspring are being groomed for primetime.

At EssilorLuxottica, although both Maria Del Vecchio and Basilico worked in the business, in 2020 the patriarch chose his right-hand man Francesco Milleri as CEO. This followed the disputes between Essilor and Luxottica, after their combination in 2018. Milleri also became chairman after Del Vecchio’s death. Maria Del Vecchio has challenged Delfin’s board led by Milleri, for refusing to backstop the financing for his proposed deal.

The second divergence is that LVMH’s family holding company, Agache, isn’t intertwined with highly charged financial and political situations in France, as Delfin is in Italy. Agache, which controls the family’s over 50 percent shareholding in LVMH, does own some outside assets, and its investment arm has in the past dabbled in corporate sagas. At one time it held shares in French supermarket Carrefour SA and media and publishing firm Lagardare SA. But Agache has since exited these positions. In contrast, Delfin’s €40 billion ($46 billion) of assets include stakes in Italian banks Banca Monte dei Paschi di Siena SpA and UniCredit, as well as insurer Assicurazioni Generali. Its fate has implications far beyond the French eyewear group.

But where money and power intersect, there is always scope for conflict, particularly given that Arnault’s options include picking one child to lead over the others. Of course, all families are unique, but as with the situation at EssilorLuxottica, there’s a potential schism between children of different marriages: Delphine and Antoine are from Arnault’s first marriage to Anne Dewavrin; Alexandre, Frederic and Jean’s mother is Arnault’s second wife, Canadian-born pianist Helene Mercier.

Four years ago, Arnault restructured Agache to tighten family control and prevent sibling infighting. Agache was transformed into a limited partnership, with Bernard Arnault as managing partner, and the share capital split between the five children. According to Bloomberg News, Arnault plans to remain head of the partnership until another newly created company, Agache Commandite SAS, owned equally by the offspring, decides to remove him and take over.

Agache Commandite has a rotating two-year chairmanship with Delphine taking the role first, and a five-member board comprised of the children. They can’t sell their shares in Agache Commandite for 30 years without unanimous board approval, and no partner in the company can come from outside one of the five bloodlines, Bloomberg News reported. After this period lapses, only direct descendants of Bernard Arnault will be able to hold the shares, with the family having preemptive rights.

So Arnault does look as if he has done all he can to avoid things turning messy. No doubt Del Vecchio thought he had done the same. But investors won’t know whether Arnault has been careful enough until the moment arrives. With a market capitalisation of almost €250 billion, three times EssilorLuxottica’s value, LVMH cannot afford any discord over such a sizeable shareholding.

Indeed, succession is already a risk at LVMH. Arnault senior told investors at the group’s annual meeting in April that because shareholders had backed him to remain until 85, he would talk about the transition in “seven or eight years.” But the moment is growing closer when Arnault must make a decision.

If he were to choose the younger Alexandre or Frederic, a non-family member could lead in the interim, echoing the approach adopted by Prada. In 2022, it appointed seasoned executive Andrea Guerra as CEO until power passes to Lorenzo Bertelli, oldest son of Miuccia Prada and Patrizio Bertelli, who transformed the company from a leather-goods business into a leading luxury house. At LVMH, Stephane Bianchi, group managing director, or Pietro Beccari, CEO of Louis Vuitton, are possible caretakers. Antoine Arnault, meanwhile, is emerging as a credible candidate for chairman.

Either way, given the seemingly intractable problems at Delfin, Arnault shouldn’t delay in reassuring investors that LVMH won’t suffer the same familial infighting.

By Andrea Felsted

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