Swatch Quashes Activist Attempt to Shake Up Hayek Stronghold
(Bloomberg) — Shareholders of The Swatch Group AG rejected US activist investor Steven Wood’s push for a seat on the watchmaker’s board of directors for a second time, reinforcing the controlling Hayek family’s hold on the company.
The founder of US-based Greenwood Investors, who says change is needed to turn the company’s fortunes around and loosen the family’s grip, was defeated when 79.6% of shareholders voted against him at Swatch’s annual general meeting on Tuesday. Wood first tried to acquire a seat at the AGM last year.
Chief Executive Officer Nick Hayek’s family blocked Wood by using their 44% voting rights and three board seats, keeping their tight control of the company intact.
Swatch shares gained as much as 4.9% on Tuesday, outperforming luxury peers. The stock has risen about 40% in the past 12 months.
The Biel, Switzerland-based watch group, which owns 16 brands including Omega, Blancpain and Longines, maintains that Wood’s American citizenship and his seat on Italian defense company Leonardo SpA’s board prevents him from being an acceptable candidate.
“He has no relation to Swiss industry, which is vital for a company like Swatch Group,” Chairwoman Nayla Hayek said at the meeting, adding: “His short-term investor interest is also not compatible with the values of the Swatch Group.”
Swatch reiterated that Wood was also not a suitable representative of bearer shareholders because the GreenWood Builders Fund IV owns just 30,000 of such shares, or about 4% of its overall holdings. Jean-Pierre Roth, who currently represents Swatch bearer shareholders, owns 10 shares.
Although Swatch proposed Andreas Rickenbacher to be the new representative of bearer shareholders, the Swiss business economist was instead appointed as a board member on Tuesday. Roth will remain in his representative role, Swatch said following the meeting, even though his appointment was not voted on by investors.
The board “cannot nominate an unelected representative of the bearer shares given that its other nominee has failed to receive shareholder support,” said Wood after Swatch published a statement following the AGM.
Wood got 80.4% support in the bearer shareholder vote, compared with 62% last year. Meanwhile Rickenbacher got 46% support.
“The only way I would’ve given up is if support would’ve decreased, but 80% is pretty good,” Wood said after the vote. “We’re considering filing an injunction in the following days to invalidate these decisions.”
Ahead of Tuesday’s AGM, key proxy advisers including Institutional Shareholder Services, Glass Lewis and Ethos Foundation had recommended that shareholders vote for Wood.
“There may be expectations that the whole thing will end up in the courts and ultimately there could be a change on the board and the strategic direction of the group,” said Kepler Cheuvreux analyst Jon Cox.
Some investors had hoped for Wood’s election to shake things up at the company whose net income plunged nearly 90% last year to just 25 million Swiss francs ($32 million), after a 75% drop in 2024.
Still, in the past week Swatch shares have gained around 15% after it confirmed an upcoming collaboration with high-end independent watchmaker Audemars Piguet. This is the first Swatch partnership with a major luxury brand outside the Swatch Group and is set to launch on May 16.
Swatch is among Europe’s most-shorted stocks, with short interest at 28.4% of free float as of May 8, according to S&P Global data.
–With assistance from Levin Stamm.
(Updates with additional information on the AGM voting.)
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