The stock price of Finmeccanica SpA (BIT:FNC), the Italian state-controlled defense contractor surrounded by controversy, declined more than 5% to €6.35 per share in Italy on Tuesday, an indication the shareholders are concerned with the leadership change in the company announced by Prime Minister Matteo Renzi.

Finmeccanica SpA

According to Bloomberg, Mauro Moretti was recommended by Finance Ministry of Italy to replace Alessandro Pansa as chief executive officer of Finmeccanica SpA (BIT:FNC). Moretti is the current head of Italy’s railway company. The Finance Ministry also recommended Gianni De Gennaro as chairman and announced its nominees to the board of directors of the company.

Pansa became the CEO of the company after the termination of two predecessors last year. He receives favorable views from the investors of the company.

‘Radical re-thinking’

In a note to investors, analysts at Medioblanca opined that the concerns of investors are more operational and the CEO changes could lead to “radical rethinking” of plans to sell non-military assets. The analysts also suggested that it could also result in write-downs of assets in an effort to clean up its balance sheet.

Finmeccanica corruption investigations

Finmeccanica SpA (BIT:FNC) is a global player in the aeronautics and defense industry. The Italian government controls a 30% stake in the company. It is confronted with a series of corruption investigations including the bribery charge against its former CEO Giuseppe Orsi and former head of its Augusta Westland unit Bruno Spagnolini in connection with the sale of helicopters in India. Both executives were arrested last year.

Italy nominates new CEO of Eni and Enel

The Italian government also nominated two chief executive officers for state controlled companies Eni SpA (ADR) (NYSE:E) (BIT:ENI) and Enel S.p.A. (BIT:ENEL). The shares of both companies were also negatively affected by the leadership changes.

The stock price of Eni SpA (ADR) (NYSE:E) (BIT:ENI) dropped 0.38% to €18.39 and the shares of Enel S.p.A. (BIT:ENEL) fell 2.39% to €3.92 per share.

Prime Minister Rezi appointed Claudio Descalsi as CEO of Eni SpA and Francesco Starace as CEO of Enel S.p.A. (BIT:ENEL), according to Bloomberg based on information from a government official who requested anonymity because of internal policy.

The report also indicated that three women were being considered to serve as chairperson for Eni, Enel, and Poste Italiane SpA, the state postal company.  Emma Marcegaglia, former chief of Confindustria, an Italian employers lobby group was nominated to become chairperson of Eni SpA (ADR) (NYSE:E) (BIT:ENI). Patricia Griego was recommend for Enel S.p.A. (BIT:ENEL).