Richemont has strongly advised against allowing activist fund manager Bluebell to maneuver Francesco Trapani onto its board as a a representative of all holders of the Company’s ‘A’ shares.
In a strongly worded letter shared ahead of its AGM on September 7, Richemont chairman Johann Rupert calls for the status quo to hold because current members of the board act on behalf of all shareholders, including those with class A shares.
“Until this year, Richemont’s board did not propose to elect one specific director to represent the holders of its ‘A’ shares, as it considers that directors must act in the interest of all shareholders and not only of one class of them,” he explains.
However, Bluebell does have sufficient shares in the company (described by Mr Rupert as “a relatively small stake”) for Swiss law to allow it to request the appointment of a representative for class A shareholders, and is pushing for a vote on Mr Trapani’s place on the Richemont board.
Richemont’s response is to accede to the request for a representative for class A shareholders, but to put forward its own candidate.
“Although no shareholder ever asked for the appointment of a class representative in the Company’s 34 years of existence, ‘A’ shareholders will this year be asked to formally designate one person to serve as representative of all ‘A’ shareholders on the Board,” Mr Rupert concedes.
Mr Trapani is seen as a fox in the hen coop by Richemont because of his history with rival luxury conglomerate LVMH.
“He is not independent, as he has a long history of close relationship with the LVMH group and its main shareholder,” Mr Rupert describes.
“Mr Trapani was the CEO of Bulgari when it agreed to be acquired by LVMH in 2011. He then served as chairman and CEO of LVMH’s Watches and Jewellery Division from 2011 through 2014, on LVMH’s Board of Directors from 2011 through 2016 and as an advisor to LVMH’s Chairman and CEO from 2014 through 2016. Mr Trapani resigned from Tiffany’s board in November 2019, the day after the merger agreement was executed with LVMH,” he adds.
Having established the role of a representative for class A shareholders, Richemont wants that person to be a loyalist, and is proposing the election of Wendy Luhabe to that role instead of Mr Trapani.
First elected as a non-executive director in 2020, Ms Luhabe’s business experience spans across many industries including in luxury and consumer goods.
“She is highly regarded both for her corporate governance acumen and for her contribution in the areas of diversity, equity and inclusion. She has notably played a pioneering role in South Africa in advancing the economic empowerment of women, through initiatives such as founding ‘Women in Infrastructure Development and Energy’, ‘Bridging the Gap’ and ‘Women Private Equity Fund’ and being a founder member of ‘Women Investment Portfolio Holdings’,” Mr Rupert describes.
In summary, Mr Rupert is recommending the board vote in favour of creating a director-level role to represent class A shareholders and recommends voting for Ms Luhabe rather than Mr Trapani to that role.
Richemont also recommends voting against another of Bluebird’s demands: increasing the minimum number of board members from three to six.