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Investor Steven Wood has failed in his bid to win a board seat at Swatch Group, after the powerful Hayek family voted against his resolution at the struggling watch group’s annual meeting.
Wood, founder of US firm GreenWood Investors, had campaigned for a board seat to drive a turnaround at Swatch, which owns 16 brands including Omega, Longines and Harry Winston.
While his attempt failed, the meeting exposed shareholder unhappiness with management. Wood won the support of more than 60 per cent of the so-called bearer shareholders, who have fewer voting rights than the holders of registered shares, mainly the Hayeks.
Wood’s push had faced long odds given opposition from the Hayek family, which owns 25 per cent of Swatch’s shares but controls 44 per cent of the voting rights. Nick Hayek Jr, son of founder Nicolas Hayek, and his sister Nayla are group chief executive and chair, respectively.
The board had recommended Wood’s bid be rejected before the company’s annual meeting on Wednesday, and the company said 79.2 per cent of shareholders voted against his election.
Wood, who owns about 0.5 per cent of Swatch stock but has the backing of another investor holding about 1 per cent, said he would consider his options including requesting an extraordinary meeting.
That would require the backing of 5 per cent of shareholders, with Wood then able to ask for a separate vote among Swatch’s bearer shareholders — generally institutions — to be elected as their representative.
Wood said he would over the next few weeks canvass funds and other shareholders who may support an EGM proposal. “I think getting the support of 62 per cent of bearer shareholders is a great result.”
He noted that many investors had also voted against approving the management of the company for the business year 2024, with only 55 per cent in favour. The figure is typically much higher in Switzerland.
“I feel an obligation to fight for minority shareholders,” he said.
Swatch has a dual-class share structure. The Hayek family own mostly registered shares, which carry greater voting rights than bearer shares. Wood wants to be a representative for holders of bearer shares, which represent 55 per cent of Swatch’s share capital.
Swatch shares are down 25 per cent over the past year. At their height in 2013, shares were trading at about SFr600 and it reported profits of nearly SFr1.6n ($1.9bn). Swatch reported a 75 per cent fall in net profit to SFr219mn last year and its shares on Wednesday were trading at SFr148.
Wood also criticised confusing procedures at the meeting and unclear voting instructions for shareholders. Wood said he was not seeking to replace Jean-Pierre Roth, a former president of the Swiss National Bank who has been on Swatch’s board since 2010. Mr Roth is the designated representative of Swatch’s bearer shareholders.
The board presented it as an “either-or” option, instead of Wood being added to the board.
“Given the improper invitation to the AGM and unclear voting instructions, it was not clear to bearer shareholders today, nor me, that a vote for Mr Roth was a vote against me,” Wood said.
Proxy advisers Institutional Shareholder Services and Glass Lewis had recommended voting against the re-election of Swatch’s supervisory board, citing corporate governance concerns.
Martin Kaufmann, a retiree in Switzerland who has been invested in Swatch for many years, said he had voted for Wood. “For me the company is excellent but underperforming. There must be a change,” he said.
He added that the company’s arguments against Wood, for instance that he is not connected to Switzerland, were not valid. “From the way some of the voting went, I think by the next AGM things will have to change.”
