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Swatch Group investor Steven Wood has said the struggling Swiss watchmaker is “only being run for one shareholder”, as he steps up his campaign to be elected to the board of the family-controlled company.
Wood, founder and chief investment officer of New York-based GreenWood Investors, said in an interview with the Financial Times that the group behind Omega, Harry Winston and Breguet is mired in “a situation where minority shareholders’ rights are being ignored”.
The comments are a thinly veiled criticism of the Hayek family, which own 25 per cent of Swatch’s shares but control 44 per cent of the voting rights. Nick Hayek Jr, son of Swatch founder Nicolas Hayek, has served as chief executive since 2003. His sister Nayla has chaired the board since 2010.
GreenWood, which owns a 0.5 per cent stake in the company worth about Swf37mn, has tabled a resolution for Wood to be elected to Swatch’s board at the company’s annual general meeting on May 21.
The Hayek family are coming under pressure after years of underperformance that has prompted Nick Hayek, the chief executive, to repeatedly raise the prospect of taking the company private. Swatch reported a 75 per cent fall in net profit to Swf219mn last year.
“The undervaluation is eye-opening. Swatch trades at about half its book value,” said Wood, who added he had been engaging with the board since June. “This is a once in a lifetime opportunity in the luxury space,” he said.
Wood’s campaign is a rare example of shareholder activism in Switzerland, where many companies are controlled by powerful families.
Swatch has a dual class share structure. The Hayek family own mostly registered shares, which carry greater voting rights than bearer shares, many of which are held by institutional investors. Wood wants to serve as a representative for holders of bearer shares, which represent 55 per cent of Swatch’s share capital.
Wood describes himself as a “constructivist” rather than an activist. He wants Swatch to communicate more openly with investors, an approach he has also pursued at Italian-listed aerospace and defence group Leonardo, where he has served on the board since 2023.
Many of Wood’s ideas are aligned with analysts and shareholders, according to Jean-Philippe Bertschy, head of Swiss equity research at Vontobel.
“All investors agree with what he says. It is a good thing to have some healthy pressure on the Hayek family,” he said.
Swatch’s board has recommended shareholders vote against Wood’s resolution for several reasons, including that he is not Swiss and does not live in the country. The company said Jean-Pierre Roth, a former president of the Swiss National Bank who has served on Swatch’s board since 2010, is the designated representative of Swatch’s bearer shareholders.
Swiss proxy group Ethos Foundation, which represents Swiss pension funds and has previously expressed concern over Swatch’s corporate governance, has recommended voting in favour of Wood’s election.
However, another proxy agency, ISS, advised shareholders to vote against Wood’s election because he had not laid out a sufficiently compelling case. ISS also advised investors to vote against the re-election of most Swatch board directors on the basis that the company has failed to establish a sufficiently independent board.
Swatch has not given its bearer shareholders the opportunity to elect their board representative, without the input of registered shareholders. This is a violation of their rights under Swiss law, according to Wood.
Swatch said it would ensure the proposal is dealt with in a “legally correct manner” at the AGM and it has acted in full compliance with all national laws and regulations.
Wood said that Orbis Investment Management, which owns a 1 per cent stake in Swatch, had given him its backing.
But if the Hayek family succeed in blocking Wood’s appointment to the board this month, he will consider seeking the required backing of five per cent of shareholders to be able to call an extraordinary general meeting.
He would use that to request a separate vote, among Swatch’s bearer shareholders alone, to be elected as their board representative.
“There are many different paths this could take,” he said. “May 21st is not the end of the story.”
