By Alessandro Parodi and Oliver Hirt
ZURICH, May 12 (Reuters) – Swatch shareholders on Tuesday rejected a bid by activist investor Steven Wood for an independent director’s seat, the Swiss watchmaker said, opposing the latest challenge to the Hayek founding family’s control over the group.
Wood, whose GreenWood fund owns about 0.5% of Swatch, had challenged the Hayek family’s control of Swatch with the backing of proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis.
Swatch said he was not suited to represent shareholders.
Participants in the annual general meeting rejected his appointment to the board, with 79.6% of votes against and 19.2% in favour.
They instead elected Swatch nominee Andreas Rickenbacher, a former Swiss politician and current director at BKW and Aebi Schmidt.
“Andreas Rickenbacher’s profile and professional background are significant assets that will support the Group’s strategy,” Swatch said in a statement.
The company’s shares extended earlier gains and were up 3.8% after the vote.
Swatch’s dual-class share structure, which gives registered shares outsized voting power over bearer shares, mostly owned by outsider investors and funds, has helped CEO Nick Hayek and Chair Nayla Hayek, children of founder Nicolas Hayek, maintain control.
Their family owns about a quarter of the equity but more than 40% of voting rights, which it has used in the past to block proposals by opponents like Wood.
“For the second time, the shareholders have clearly rejected his election,” Swatch said.
However, among bearer shareholders, support for Wood was at 80.4%, which was higher than the 62% in an equivalent bid last year.
While that was not enough for Wood to win the seat as a bearer shareholder representative, he told Reuters before the vote that he hoped the high level of support would pressure Swatch’s management to pursue incremental reforms.
“It seems like we have momentum,” Wood told journalists on Tuesday, adding he was considering filing an injunction to invalidate future decisions by the board.
Swatch has so far resisted calls for broader board renewal, although it has expanded its board and allowed a separate bearer shareholder representative.
While Rickenbacher’s election represents continuity, he will be the first independent director to join the board in 16 years.
The showdown highlights growing investor dissatisfaction with governance and strategy at the tightly controlled watchmaker, whose shares have lagged peers and earnings were hit by weak demand in key markets including China.
Wood submitted six proposals to the meeting aimed at increasing minority shareholder and independent director representation, preventing the chair from holding executive roles, strengthening independence of remuneration committees and auditors, and requiring in-person annual meetings.
Shareholders rejected all of his proposals, after Swatch said there was no need to change its bylaws beyond Swiss legal requirements.
(Reporting by Alessandro Parodi in Gdansk and Olvier Hirt in Zurich, editing by Milla Nissi-Prussak)
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