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Swatch Group investor Steven Wood has raised concerns about the management of the Swiss watchmaker, accusing the company of favoring the interests of a single shareholder. Wood, who is the founder and chief investment officer of New York-based GreenWood Investors, has been vocal about the lack of consideration for minority shareholders’ rights within the family-controlled company.
The criticism is primarily directed at the Hayek family, who hold a significant stake in Swatch but control a disproportionate amount of voting rights. Nick Hayek Jr, the son of Swatch founder Nicolas Hayek, has been the CEO since 2003, while his sister Nayla has chaired the board since 2010.
GreenWood Investors, with a 0.5% ownership stake in Swatch valued at approximately Swf37mn, has put forth a resolution for Wood to be elected to the company’s board at the upcoming annual general meeting on May 21. The move comes as Swatch has faced years of underperformance, prompting discussions about potentially taking the company private.
Wood highlighted the undervaluation of Swatch, noting that the company trades at half its book value. He emphasized the importance of engaging with the board to address these issues and unlock the company’s potential in the luxury space.
The campaign led by Wood represents a rare instance of shareholder activism in Switzerland, where many companies are controlled by powerful families. Swatch’s dual-class share structure, with the Hayek family holding mostly registered shares with greater voting rights, has sparked calls for greater representation of bearer shareholders by Wood.
Describing himself as a “constructivist,” Wood seeks to promote more transparent communication between Swatch and its investors. His approach aligns with the views of analysts and shareholders, who support the need for healthy pressure on the company’s leadership.
While Swatch’s board has recommended voting against Wood’s resolution, citing his non-Swiss residency, Swiss proxy group Ethos Foundation has urged shareholders to consider his election. ISS, another proxy agency, has advised against Wood’s appointment, raising concerns about the lack of a compelling case.
Wood remains determined to advocate for the rights of bearer shareholders and ensure their representation on the board. With the support of Orbis Investment Management and other stakeholders, he is prepared to pursue alternative avenues if his initial proposal is rejected.
As the May 21 AGM approaches, the outcome of Wood’s campaign remains uncertain. However, his persistence in addressing corporate governance issues at Swatch reflects a broader push for accountability and transparency in the Swiss business landscape. The story of Swatch Group and Steven Wood’s activism is far from over, with potential developments on the horizon.
