MILAN/NEW YORK -- On a warm afternoon in Rome last month, Sergio Marchionne walked alongside uniformed officers during a ceremony to hand over a Jeep Wrangler to the Carabinieri military police. Lacking his usual verve, he clasped his hands together at his chest and took halting unsteady steps.
Looking fatigued and short of breath, Marchionne took the podium on June 26 and said: “In this police corps, I find the same values that have been the basis of my education: seriousness, honesty, a sense of duty, discipline, the spirit of service.”
Investors are now questioning the disclosures around the sickness and death of the longtime CEO of Fiat Chrysler Automobiles in a Zurich hospital on July 25, only days after he was replaced following a sudden health decline. The mystery of Marchionne’s condition in the final weeks and months of his life is casting a pall over his achievements in rescuing Fiat from the brink of collapse during his 14-year tenure running Italy’s largest manufacturer.
While it’s unclear how forthcoming Marchionne was about his condition, Fiat Chrysler failed to disclose the fact that the 66-year-old was hospitalized until July 5, then denied plans for a July 21 management meeting to redistribute Marchionne’s powers.
The fallout could have legal consequences as investors question whether they were informed in a timely manner. The stock has dropped 12 percent in Milan since he was replaced just days before his death.
Italy’s market regulator is making a routine check into FCA's handling of communications regarding Marchionne’s illness, a spokesman said by phone on Friday. A preliminary review didn’t turn up elements indicating any violations, said a person familiar with the case.
Fiat Chrysler said in a filing Friday it’ll convene a shareholders meeting in Amsterdam on Sept. 7 to approve newly appointed CEO Mike Manley, who had been running the company’s highly profitable Jeep and Ram brands.
Marchionne, an avid smoker before quitting about one year ago, worked almost around the clock since taking charge of Fiat in 2004. He didn’t tell anyone outside his inner circle that he was seriously ill, according to people briefed on the situation. Even Chairman John Elkann, 42, who appointed him to the post and had almost daily contact with his mentor, was out of the loop, those people said.
Flight to Zurich
After the event in Rome, the Italian-Canadian executive went to Geneva, and then on to Zurich on June 28, according to data from flightaware.com tracking the corporate jet that he used. On the trip, he was accompanied by his partner Manuela Battezzato, who works in Fiat Chrysler’s press department, the people said. The two had been making plans to spend more time together after Marchionne’s planned retirement from the carmaker in 2019.
Unusually, Marchionne had stopped responding to messages and calls from some of his advisers since the end of June, according to people with direct knowledge of the situation. The family also didn’t inform the company about his condition, Battezzato said in a statement to Bloomberg News.
On July 5, the Italian website Lettera 43 reported that Marchionne had undergone surgery in Switzerland. The company confirmed he was indeed hospitalized for “shoulder surgery” and was expected to return to work after a “short period of convalescence,” portraying the situation as undramatic.
But speculation began to swirl, including a report that Marchionne was set to be replaced by outgoing Vodafone Group Plc CEO Vittorio Colao. Over the following two weeks, Fiat Chrysler stuck to the line that its CEO would soon be back to work.
The company denied on July 20 another report by Lettera 43 that Elkann planned to meet with company leaders to divide Marchionne’s responsibilities. The next day, the board met and chose Manley to succeed Marchionne.
Five days later, Marchionne died in Zurich. While lung cancer was widely speculated, the cause of death wasn’t given. People close to Marchionne said he died from complications following the shoulder surgery, including two cardiac arrests, and not from cancer. But the true nature of his health issues remains murky after the Zurich hospital revealed he had been in treatment for unspecified serious health issues for over a year.
Fiat Chrysler said it was left in the dark, but investors may now raise questions with Italian and U.S. financial watchdogs, including whether the company and its former CEO acted appropriately.
“The issue is very fact-specific and may never truly be known unless litigation uncovers more facts,” George Schultze, who oversees $100 million, including Fiat Chrysler shares, as founder of Schultze Asset Management, said in an email.
In his last known public address to the military police on that warm June day, Marchionne recalled his childhood in Chieti, saying he grew up in the same red band uniform of the men and women he was addressing. With that, he bid farewell to the crowd, steadying himself along the podium as he stepped down.