Richemont’s annual shareholder meeting is usually a rubber-stamp affair. After all, the Rupert family holds half the votes with barely 9.1% of the stock. But this year ISS lobbed a no-vote grenade at Johann Rupert, chair of the international luxury goods heavyweight. Don’t expect an uprising in Geneva, think of it more as a carefully aimed PR jab.
Even a proxy advisory firm knows it can’t flip Richemont on a single vote. Still, by calling out a fortress built on dual class super-voting shares and 30.6-million Swiss francs bonus with mystery targets, ISS forces the Swiss luxury giant into the spotlight it loathes. And when a titan of discretion finds itself on the defensive, the optics matter more than any tally.
Far from storming the gates, ISS is rattling the chain. By publicly branding Richemont’s governance as archaic, ISS forces a conversation among institutional investors and the media that Richemont would rather avoid. When headlines mention “family fiefdom” instead of “family business”, asset managers start squirming. Their clients — pension funds, endowments — want returns, to be sure, but they are increasingly allergic to dynamic power plays. Before long, the optics of a family throne may start to feel like a vulnerability rather than a strength.
Directors who once shrugged at dissent now risk being cast as complicit in a lopsided power play. No-one wants to defend a pay package that reads like a governance flaw, as ISS reframes it from being merely a cost line. That shift matters because public companies can withstand entrenched ownership, provided they demonstrate meritocratic leadership. When pay packages lack clear benchmarks, why would anyone believe Richemont’s leadership is anything but self-serving? Unchecked largesse is a luxury no board can afford, especially in a world chasing ESG brownie points.
In most boardrooms, power flows from balance sheets. At Richemont, power flows from perception.
And let’s talk reputation. Asset managers juggle mandates for both return and responsible stewardship. A company that flouts one pillar risks undermining the other. Richemont’s Luxury Maisons deliver strong sales, but sales alone no longer excuse an opaque power structure. Today’s gatekeepers, the likes of BlackRock and peers, tout stewardship credentials to woo clients. They will swallow this dual-class pill — once. Twice maybe. But repeated hits to reputation force hard questions in the executive suites. “Why are we backing this?” becomes the whispered question in boardrooms from London to New York.
Richemont is far from alone. At Naspers a trio of control vehicles — Keerom 30 Beleggings, Naspers Beleggings and Wheatfields 221 — owns the company’s A-class shares. Each commands 1,000 votes, compared with one vote for every N shares, giving those three entities just more than 50% of the votes despite holding only a sliver of equity. The idea behind the arrangement is down to the company’s roots as an Afrikaans language newspaper publisher. It was meant to deter outsiders from building up a stake in the company and dictating editorial policy.
So will the Richemont shareholder meeting ignite a full-blown revolt? Unlikely. Battlements don’t fall overnight. But skirmishes accumulate. Another shareholder might do the same next year. Media outlets beyond Business Day and Reuters will amplify dissent. ISS hits where dual-structures are the weakest — public opinion. And when a handful of heavyweights cast symbolic protest ballots, the Ruperts face a choice: double down on fortress mentality or let a crack become a door.
In most boardrooms, power flows from balance sheets. At Richemont, power flows from perception. And that’s why a symbolic vote can land harder than any share count.
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