Institutional Shareholder Services (ISS), a proxy adviser for institutional investors, has recommended that Avio shareholders vote against a set of proposed bylaw amendments, setting up a tense run-up to a 3 March Extraordinary General Meeting.
In September 2025, Italian rocket builder Avio introduced a new ten-year business plan targeting an average annual growth rate of about 10%. A big part of this plan is the opening of a new defence propulsion manufacturing facility in the United States, the construction of which is being funded by a €400 million capital increase that the company completed in November 2025. A significant byproduct of the capital raise was that the company welcomed several new shareholders and broadened the geographic footprint of its shareholder base, with US investors now accounting for 20% of the company’s share capital.
On 29 January, Avio announced that it would convene an Extraordinary Shareholders’ Meeting on 3 March to vote on several amendments to the company’s bylaws. According to the company, the proposals aim to align its governance structure with the company’s growth, evolving shareholder base, and recent changes in Italian corporate law.
The most significant change would fix the board of directors at nine members and alter how those seats are allocated, allowing the largest shareholder group to appoint seven directors while minority shareholders would collectively appoint only two, down from three under the current system. Although two minority groups could share those seats, the second group would need to achieve a minimum level of support, potentially limiting broader representation. The amendments also update the rules to reflect recent Italian legislation that allows outgoing boards to propose their own list of replacement candidates, clarify procedures for replacing departing directors, and strengthen requirements for independent board members.
On 17 February, Avio published a rebuttal letter responding to a recommendation from proxy adviser ISS to vote against the proposed amendments. While it is not publicly known what proportion of Avio’s shareholder base relies on ISS guidance, the company’s decision to address the recommendation suggests it could influence a meaningful portion of the vote. It is also important to note that while Avio’s response is public, the full text of the ISS recommendation has not been disclosed.
In the rebuttal letter, Avio CEO Giulio Ranzo states that the company “strongly” believes certain elements of its proposals appear to have been “overlooked or not fully taken into account by the proxy advisor.”
On the need to reduce the number of board members, Ranzo states that increased exposure to the US market will require it to elect “more experienced independent directors whose remuneration shall be commesurate to their more sophisticated competencies.” As a result, to ensure the company is not burdened with “disproportionate” increases in fixed costs, a limit on the board’s size is necessary.
He also argues that Avio’s ownership has become more diversified and international, with the largest shareholder, Leonardo, reducing its stake from 29% to 19%, free float rising to around 60%, and roughly one-fifth of shares now held by U.S. investors, necessitating a governance model better suited to a global investor base. Ranzo added that the amendments are in line with “market best practices,” citing an independent advisor appointed by the board.
Ranzo concludes his response to the ISS recommendations by stating that the company is confident it will receive shareholders’ support at the 3 March Extraordinary General Meeting. With a large free float and a newly international shareholder base, the result of the upcoming meeting could hinge on how institutional investors weigh ISS’s concerns against management’s insistence that the change is necessary to the company’s future growth.
In addition to getting through a potentially contentious shareholders’ vote, Avio is expected to achieve several key milestones in 2026. The first will be the launch of the first Vega C mission entirely managed by Avio following the company’s split from Arianespace. The company is also expected to launch its single-stage FD1 demonstrator, which will utilise the company’s new MR10 methalox rocket engine. The demonstrator is part of the company’s Space Transportation System (STS) programme, which is being developed with €181.6 million in funding from the Italian government. In addition to the single-stage demonstrator, the programme is expected to include a two-stage demonstrator that will utilise the MR10 engine and its larger counterpart, the MR60. Finally, the company is also expected to break ground this year on its new defence propulsion manufacturing facility in the United States. The facility is scheduled to be completed in 2028.
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