Swatch Group’s Ordinary General Meeting today voted down an attempt by Steven Wood, founder and chief investment officer of New York-based GreenWood Investors, to secure a seat on the company’s board.
His stated mission is to rejuvenate what he sees as an under-performing business, particularly at the luxury end of the watch market, in order to unlock greater shareholder returns.
Ahead of losing today’s vote at the OGM, Mr Wood had already said he had alternative paths that can be pursued in his goal to gain influence with Swatch Group.
Mr Wood has been lobbying to be elected to the Swatch Group board so that he can influence the business on behalf of smaller investors that currently own 75% of all shares.
He argues that the fragmentation of these smaller shareholders mean they struggle to be heard and the Hayek family exerts too much control.
Swatch Group says smaller investors already have a representative protecting their interests on the board.
Ultimately, Mr Wood suggests, there is insufficient scrutiny from the board of directors over the $7 billion group because the Hayek family has such tight control of the public company, and this is impacting performance.
His company, GreenWood Investors, has created a manifesto for change at Swatch Group in which it argues the group needs to “increase marketing spend, funded by removing overhead burden, to double-down on storytelling for the incredible historic brands and ongoing innovation within the group”.
In it, the firm presents a six-point plan designed to, “Strengthen and Rebuild Confidence in Swatch”, which lists:
- Breguet: Improve the retail experience, add personalization programs at scale, reduce the wholesale channel variety and improve residual values. We believe these steps can make Breguet once again king of the Swiss watch industry
- Harry Winston: Emphasize the brand’s core design elements through annual collections that both reinforce the icons and the exceptionally rare jewels that the group is known for. With annual collections taking the opposite approach as Van Cleef and Arpels, the goal is to replicate Hermès Birkin playbook for unoccupied ultra-high-end jewelry industry
- Omega: Increase collaborations to expand the collection, and target audience. A key priority is to add new collaborations, staying true to the brand’s core DNA but aimed to make the brand more relevant with Gen Z. Utilize what’s working and “hot” in the vintage market to inform new design trends and take a few more risks with selected exclusive editions
- Capital Markets: Strengthen perception and credibility of the company in the capital markets and media by creating an offensive narrative, as opposed to letting others define the company’s story. Continue to increase transparency and add an entrepreneurial Investor Relations officer to help management stay focused on the business. By regaining a more rational valuation, this will improve stakeholder perceptions of organizational culture, lead to higher employee satisfaction, higher productivity, ultimately benefitting all stakeholders
- Brand Marketing: Increase marketing spend, funded by removing overhead burden, to double-down on storytelling for the incredible historic brands and ongoing innovation within the group. Remove layers in between founding family, executives and the company’s core employees of doers, sellers and inventors
- Technology Innovation: Expand the group’s innovations across the portfolio brands by layering in technology into replaceable and upgradeable bands
Mr Wood insist he is a “constructionist” investor who is far more optimistic about Swatch Group than many of his peers.
“Swatch Group is a high-quality company that has great upside potential. Where many market participants see under-performance, we see a Group that has overcome industry and geographic headwinds. Its iconic brands have high-impact potential,” the GreenWood Investors report records.
Swatch Group reluctantly included the possible election of Mr Wood to its board in the agenda for today’s Ordinary General Meeting (in accordance with art. 14 para. 3 of the Articles of Association), but its position was unequivocally against the motion.
In the agenda for the OGM, signed by Swatch Group chairwoman Nayla Hayek, Mr Wood is described as “a US citizen [with] no apparent connection to Switzerland or to Swiss industry and its products”
It continues: “The current Board of Directors … is composed of members who understand the Swiss Made corporate culture of the Swatch Group. The Swatch Group proudly bears the Swiss cross in its logo. It has been committed to Switzerland as a production location for decades and it is important to it that its Board members are Swiss citizens or live in Switzerland. Mr. Steven Wood does not meet these requirements.”
The agenda went on to state that Jean-Pierre Roth, former president of the Swiss National Bank, is already an official representative of the bearer shareholders on the Board of Directors.
Immediately after the OGM, Swatch Group issued a statement saying its shareholders approved, by a large majority, all proposals submitted by the Board of Directors. Mr. Steven Wood’s candidature for the Board of Directors was rejected by the shareholders with 79.2% voting against his election.