Swatch Group AG is set for a shareholder showdown at its annual meeting on Tuesday after two key proxy advisers backed an activist investor's challenge to the Hayek family's control.
"A vote for Mr. Wood would be a constructive step toward improving oversight and rebuilding investor trust," Institutional Shareholder Services (ISS) said in its recommendation.
The challenge comes from Steven Wood of GreenWood, a fund holding about 0.5% of Swatch shares. Both ISS and Glass Lewis have recommended investors support Wood for a board seat over the company's nominee, Andreas Rickenbacher. The Hayek family controls over 40% of voting rights through a dual-class share structure.
The vote highlights investor dissatisfaction with Swatch's lagging share performance and governance. While the Hayek family's voting power makes Wood's election unlikely, strong support from other shareholders could force the board to consider reforms.
The push for change follows a period of significant underperformance for the watchmaker. Swatch's stock has underperformed peers like Richemont and Kering, and the company reported an 89% drop in net profit last year, weakened by slow demand in China.
Wood has argued that the board, with an average tenure of about 20 years, requires renewal and a clearer succession plan for its aging leadership. In addition to his board nomination, Wood has submitted six proposals aimed at increasing minority shareholder representation and strengthening board independence.
Swatch has defended its "proven and competent" board and stated that Wood is focused on short-term gains. The company has resisted calls for broader changes, asserting there is no need to alter its bylaws beyond Swiss legal requirements.
The outcome of the vote on Tuesday will be a critical test of the Hayek family's grip on the company. A substantial vote for Wood, even in a loss, would increase pressure on management to address governance concerns and strategic shifts to improve performance.
This article is for informational purposes only and does not constitute investment advice.
