Swatch Group: A US investor shakes up the shareholders' meeting

Swatch Group: A US investor shakes up the shareholders' meeting

At the Annual General Meeting of Swatch Group shareholders, which took place online on May 21, all proposals submitted by the Board of Directors were approved. Furthermore, Steven Wood's candidacy for the Board of Directors was rejected by 79.2 percent of the votes cast.

An American challenges Hayek's dominance

The investor had caused a stir in the run-up to the meeting with his candidacy for the board of directors, which is dominated by the Hayek family. Relatives of Swatch Group founder Nicolas Hayek, who died in 2010, also hold key positions on the executive board.

The Board of Directors consists of seven members. These include CEO Nick Hayek, his sister Nayla Hayek, and their son Marc Hayek. Daniela Aeschlimann represents the Ammann Group. She is the daughter of former Federal Councilor Johann Schneider-Ammann, who himself served on the Swatch Group Board of Directors from 1998 to 2010.

Furthermore, the Hayek and Ammann families have been friends for decades, and the Ammann Group holds a direct stake in the Swatch Group. In terms of voting rights, Aeschlimann belongs to the Hayek side, which thus holds the majority.

The independence of the remaining three members is also repeatedly questioned due to their at least 15 years of service on the Board of Directors. They are Lindt & Sprüngli President Ernst Tanner, astronaut Claude Nicollier, and former Swiss National Bank Director Jean-Pierre Roth.

Two types of shares of the Swatch Group

The Swatch Group offers two types of shares: registered and bearer shares. Swatch registered shares have a nominal value five times lower than the bearer shares listed in the SLI (Swiss Leader Index), but offer the same voting rights. Thus, while the Hayek family holds only 26 percent of the capital, they hold almost 45 percent of the votes.

Wood, through his investment company Greenwood Investors, holds only 0.5 percent of the listed company. This is sufficient to be a candidate for a seat on the board of directors as a representative of the registered shareholders.

"We manage $150 million in assets, and the Swatch Group is our largest position—it currently accounts for over a quarter of our assets. We want to buy more. We're trying to raise more capital to expand our position. We want to invest as much capital as possible in this company at current prices," he explains.

Steven Wood criticizes the Swatch Group strategy

Steven Wood explained what he believes is not going well at the Swatch Group in an interview with the Swiss magazine The Market:

„I have spoken with over thirty industry leaders, both former Swatch Group executives and some who work for competitors such as LVMH or Richemont, and they all confirm my view. Nick Hayek, CEO of the Swatch Group, has done an excellent job building the entry-level brands, but there is still room for improvement with the premium brands.“

"You have the right products, but suffer from a closed culture and missed opportunities for implementation. You should be open to new leaders with fresh ideas."

"I don't know how this closed corporate culture developed at the Swatch Group, but I do know that it is very different from that of its founder, Nicolas Hayek Sr."

Steven Wood, US investor

The background is that the Swatch Group closed 2024 with a massive drop in sales (-14.4% yoy) and profit (-75% yoy). As a result, dissatisfaction is growing among investors, including Steven Wood.

He said he would bring fresh perspectives as a member of the Board of Directors.

"I told Nick Hayek that my philosophy is to expand the diversity of ideas. The reason I nominated myself is that I will always be friendly and collegial and never disruptive. I guaranteed that to Nick," Wood emphasizes in the interview.

LVHM, Richemont – the competition as a role model

His ideas include strengthening prestige brands such as Breguet, Blancpain and Harry Winston.

"They need to invest in a first-class customer experience and implement massive personalization programs that focus on scarcity and exclusivity. This is exactly what their competitors like Richemont and LVMH do very well. The luxury goods market is highly competitive."

His argument: "The market for entry-level watches under 3,000 Swiss francs hasn't grown in the last twenty years. It's even shrunk by 1.3 percent per year. The high-end segment, on the other hand, watches over 3,000 francs, has grown by 6.5 percent annually. The Swatch Group should focus on that. It's almost as if the company has no interest in luxury brands."

The American will now have to wait even longer to contribute his ideas. In the vote on his candidacy for the Board of Directors, he received 79.2 percent of the votes against, as the Swatch Group announced in a brief release today.

However, he was able to secure 62 percent of the registered shareholder votes. This discrepancy can only be explained by the fact that Woods's actual opponent, Jean-Pierre Roth, received more votes. As a result, the Swatch Group announced that the former banker would remain on the Board of Directors.

On the news service X, Wood commented: "I am very grateful to the 61.9 percent of registered shareholders who voted for me and supported new perspectives on the Swatch Group Board of Directors. From the outset, I made it clear to the Swatch Board of Directors that I did not come to replace anyone, including Jean Pierre Roth."

However, Wood criticizes the voting procedure, as the Swiss Tagesanzeiger reports:

"Unfortunately, due to the improper invitation to the Annual General Meeting and the unclear voting instructions, neither the registered shareholders nor I were aware that a vote for Mr. Roth was a vote against me. (...) We will carefully consider our next steps, including the possibility of requesting an extraordinary Annual General Meeting."