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Swatch Group investor Steven Wood says the struggling Swiss watchmaker is “running solely for one shareholder.”
Wood, the 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 are in a “situation of minority shareholder rights.”
The comment is a thinly veiled criticism of the Hayek family, who owns 25% of Swatch’s stake but manages 44% of their voting rights. Nick Hayek Jr., son of Swatch founder Nicholas Hayek, has been CEO since 2003. Her younger sister Naira has been chairing the board since 2010.
Greenwood, which owns a 0.5% stake in the company equivalent to SWF37MN, presented a resolution at the company’s annual meeting on May 21 to allow Wood to be elected to Swatch’s board of directors.
The Hayek family is under pressure after years of unperformance that prompted CEO Nick Hayek to repeatedly raise the prospects of keeping the company private. Swatch reported a 75% decline in net profit to SWF219mn last year.
“The undervaluation is eye-opening. Swatches trade at about half their book value,” Wood said. “This is a once-in-a-lifetime opportunity in a luxurious space,” he said.
Wood’s campaign is a rare example of shareholder activity in Switzerland, where many companies are controlled by strong families.
Swatch has a dual-class shared structure. Hayek Family owns mostly registered shares and is in charge of a larger voting rights than Bearer shares, many of which are held by institutional investors. Wood wants to serve as a representative of the owners of Bearer Shares, which represents 55% of Swatch’s share capital.
Wood describes himself as a “constructivist” rather than an activist. He hopes Swatch will communicate more openly with investors. This is an approach pursued by Leonardo, an Italian aerospace and defense group who has served on the board since 2023.
Many of Wood’s ideas match analysts and shareholders, according to Jean-Philippe Bertschy, head of Swiss Equity Research at Vontobel.
“All investors agree with what he says. It’s good to put healthy pressure on the Hayek family,” he said.
Swatch’s board of directors recommends shareholder votes against Wood’s resolutions for several reasons, including that he does not live in the country and not Switzerland. The company said Jean-Pierre Roth, former president of Swiss National Bank, who has served on Swatch’s board of directors since 2010, is the designated representative of Swatch’s Bearer shareholders.
On behalf of the Swiss pension fund and previously expressed concern about Swatch’s corporate governance, the Swiss proxy group Ethos Foundation recommends voting in favor of Wood’s elections.
However, another agent, ISS, advised shareholders to oppose Wood’s election because they had not filed a sufficiently convincing lawsuit. The ISS also advised investors to oppose reelection of most sample boards based on the company’s failure to establish a fully independent board.
Swatch does not give Bearer shareholders the opportunity to elect a board representative without the entry of registered shareholders. According to Wood, this is a violation of their rights under Swiss law.
Swatch says it ensures that proposals are handled in the “legally correct way” with AGM and acts in full compliance with the laws and regulations of all countries.
Wood said Orbis Investment Management, which owns a 1% stake in Swatch, gave him the support.
However, if the Hayek family succeeds in blocking Wood’s appointment to the board this month, he will consider that he can call an extraordinary general meeting in search of the necessary support of 5% of shareholders.
He uses it to request another vote, which is elected to represent the board, solely by the Swatch’s bearer shareholders.
“There are many different paths that this can take,” he said. “May 21st is not the end of the story.”
