Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Ferrari Board Protects the Prancing Horse Brand
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- Lucas: Ferrari delivered about 13,000 cars globally in 2023. Porsche delivered more than 320,000. And yet Ferrari's operating margin was comfortably above 25 percent — roughly double Porsche's. Luna: That is a wild gap. And it's not just pricing. It's entirely by design, isn't it? Lucas: Completely by design. And that design lives and dies in the boardroom. Ferrari's board has one job that overrides everything else: protect the brand's scarcity. Because the moment a Ferrari feels common, the mystique — and the margin — evaporates. Luna: So how do they enforce that? I mean, you've got shareholders who want growth. The board has to push back on that constantly. Lucas: Exactly. And the structure of the board itself is designed to resist short-term growth pressure. Ferrari is controlled by Exor — the Agnelli family holding company — which owns about 24 percent of the equity but holds roughly 36 percent of the voting rights through a loyalty voting structure. Luna: So the family effectively has veto power on major strategic shifts. That gives the board cover to say no to volume. Lucas: Precisely. The board has 11 members. Exor appoints several, including Chairman John Elkann — he's the great-grandson of Giovanni Agnelli, the Fiat founder. But there are also independent directors with deep luxury and automotive experience. The mix means you get family long-termism checked by independent rigor. Luna: Is there a specific example where that dynamic played out in a really visible way? Lucas: The best one is the SUV decision — or rather, the anti suv decision. In the mid-2010s, every luxury automaker was rushing to build an SUV. Porsche had the Cayenne, Lamborghini had the Urus, even Rolls-Royce launched the Cullinan. Ferrari's board looked at that and said: not yet. Luna: I remember the rumors. Analysts were screaming for it. And the board just waited. Lucas: They waited until 2018 to unveil the Purosangue — and even then, they deliberately positioned it as a 'Ferrari Utility Vehicle,' not an SUV. And they capped production at about 20 percent of total output. The board literally wrote a rule: no model can exceed a certain percentage of total volume. Luna: So they built a vehicle that could have doubled their sales and chose to keep it rare. That takes immense discipline. Lucas: It does. But it's baked into the board's compensation structure too. Executive bonuses at Ferrari are tied not to unit sales growth, but to brand health metrics — customer satisfaction, resale value retention, and waiting list length. The board literally measures how long people are willing to wait for a car. Luna: That is fascinating. Because if your bonus depends on keeping the waiting list long, you're incentivized to undersupply. Lucas: Exactly. And the board has another tool: they control the product plan. Ferrari launches one new model per year, max. And every single one has to go through what they call the 'brand filter' — a set of criteria that includes heritage, performance, and exclusivity. Luna: Has any major proposal ever been killed by that filter? Lucas: Yes. The most famous one is a minivan. Around 2019, some product planners floated the idea of a seven-seat family car — thinking of the Chinese market where wealthy families wanted a Ferrari they could take on weekend trips. The board killed it within a month. Luca di Montezemolo, the former chairman, was reportedly furious it was even suggested. Luna: I can imagine. A Ferrari minivan would have destroyed the brand's DNA. Lucas: But the board's biggest test is happening right now: the transition to electric. Ferrari has committed to launching its first fully electric vehicle in 2025, with a target of 40 percent EV sales by 2030. That's a massive R&D investment — and it's a brand risk. Luna: Because an electric Ferrari doesn't have that V12 roar. That sound is part of the magic. Lucas: Exactly. But the board under John Elkann and CEO Benedetto Vigna — who was hired from STMicroelectronics, not from the auto industry — has been very deliberate. They're not just slapping batteries in an existing chassis. They're building a dedicated EV architecture, and they've filed patents for fake engine sounds that mimic the V12. Luna: So they're trying to engineer the emotional experience even without the internal combustion. Lucas: And they're also managing the phase-out carefully. Ferrari will continue to produce V12 engines as long as regulations allow — they've said some models will keep the V12 through at least 2030. The board's strategy is to offer ICE, hybrid, and EV in parallel, letting the market transition at its own pace. Luna: That's very different from, say, Volvo or Ford, who've set hard dates to go all-electric. Ferrari is treating it as a luxury brand choice, not a compliance deadline. Lucas: And that's exactly the luxury playbook. The board knows that the moment they force a customer into an EV before they're ready, that customer defects to a different brand. Ferrari's retention rate is over 70 percent — one of the highest in automotive — and the board is obsessive about protecting that. Luna: So the board is essentially a brand guardian. But they also had to navigate a major structural event: the 2015 spin-off from Fiat Chrysler. How did the board handle that? Lucas: That was the defining moment for the modern board. Ferrari was listed on the New York Stock Exchange in October 2015 at $52 per share. Today it trades around $400 — and that's after a ten-for-one stock split. The board had to convince investors that Ferrari was a luxury goods company, not a car company. Luna: And they succeeded. The valuation multiple is closer to Hermès than to Ford. Lucas: Exactly. But it required rewriting the governance structure. post ipo, Exor retained controlling interest, but the board added independent directors with luxury experience — like Delphine Arnault from LVMH and later, actually, she's been on the board since 2018. That signals to the market: we think of ourselves as a luxury house. Luna: And they also had to navigate the CEO succession. Sergio Marchionne was the architect of the spin-off, but he died in 2018. That could have been a crisis. Lucas: The board had a succession plan ready within weeks. Louis Camilleri, a former Philip Morris CEO who was already on the board, stepped in. Then in 2021, they brought in Benedetto Vigna from outside the auto industry — a risky move that has paid off. Vigna's background in semiconductors actually helped Ferrari navigate the chip shortage better than most rivals. Luna: So the board is willing to look outside the usual auto executive pool. That's rare in this industry. Lucas: It is. And it's part of a broader philosophy: the board sees itself not as stewards of a car company, but as stewards of a cultural icon. That means they're willing to make decisions that look irrational on a spreadsheet. Luna: Like the time they turned down a five-year waiting list for a special edition because they didn't want to over-saturate the model. Lucas: Exactly. They actually capped the production of the LaFerrari at 499 units — and each one cost over a million dollars. They could have sold 5,000. The board said no. Luna: So what's the biggest challenge the board faces in the next five years? Is it EVs, or is it something else? Lucas: I think it's succession — both at the CEO level and the family level. John Elkann is 50, so he's got time, but the Agnelli family's control through Exor is structured around trust agreements that eventually unwind. The board has to ensure that the family's long-term vision outlasts any one generation. Luna: And also the regulatory pressure. The EU's 2035 ban on new ICE cars is a hard deadline, even if Ferrari sells in low volumes. They can't get a permanent exemption. Lucas: True. But Ferrari's board has been lobbying for a 'specialist manufacturer' carve-out — and they've got allies in Italy. If they win that, they could keep the V12 alive longer. If they don't, the EV transition becomes existential. Luna: You know, it's funny — we talk about boardrooms as boring places, but when you look at Ferrari, every decision is about balancing heritage against progress. It's almost philosophical. Lucas: It really is. And I think that's why listeners find it so compelling. If these conversations have moved your work forward in some small way — helped you think about governance or strategy differently — a couple of dollars a month is genuinely what keeps these going. Buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: Yeah, it's a small thing that makes a real difference. Keeps the show ad-free and independent. Lucas: Right. So back to Ferrari — the board's biggest test may be yet to come, but their track record suggests they'll choose scarcity over volume every time. And that's exactly why the stock trades at forty times earnings. Luna: And why a twelve-year-old's poster still means something. Thanks, Lucas. Lucas: Thanks, Luna. We'll be back with another boardroom story next week.