LONDON — Johann Rupert successfully fought off Bluebell Capital Partners at Compagnie Financière Richemont’s annual general meeting, but the activist investor isn’t walking away anytime soon.
On Wednesday, shareholders heeded the advice of Rupert, Richemont’s founder and chairman, and two independent proxy advisory firms that had urged them to vote against Bluebell’s candidate for the board, Francesco Trapani, and against a series of proposals aimed at giving holders of Richemont’s “A” shares a bigger voice.
The “A” shares are publicly traded, while the “B” shares are owned by Rupert and his family.
Rupert controls 10 percent of the company’s capital and holds 51 percent of its voting rights. Although a management team runs Richemont, Rupert remains deeply involved in, and committed to, the business and its ways of working.
Ultimately, Rupert also has the right to veto any board members, if there is a valid reason.
In early August, Richemont agreed to put Bluebell’s requests to a vote. Rupert urged shareholders to pick his candidate Wendy Luhabe, a Richemont board member, to represent the “A” shareholders, who until now have not had a designated advocate on the board.
After the vote, which was overwhelmingly in favor of Luhabe, Rupert said he was grateful to shareholders, and described the result as a “vote of confidence in the leadership and governance of the company.”
He said the board “can continue to work in a collegial manner, in the interest of all our shareholders. We remain focused on building value for shareholders by supporting our maisons as they adapt to clients’ evolving purchasing patterns, while staying true to their heritage.”
Rupert had earlier argued that electing Trapani to the board would have been a bad move, given the Italian luxury executive’s past relationship with rival LVMH Moët Hennessy Louis Vuitton, and its founder, owner and chief executive officer and Bernard Arnault.
On Wednesday, Rupert added that Richemont’s current governance structure “has underpinned the company’s performance and allowed it to take a long-term view on sustainable value creation, unencumbered by short-term considerations.”
He added that the company also realizes “that there are reservations about aspects of our governance which we will continue to address.”
He didn’t say what those aspects were, but Bluebell, which has a small minority stake in Richemont, was agitating for more than just Trapani’s election.
The activist investor also wanted to increase the number of people on Richemont’s board holding “A” shares, and “B” shares. Ideally, it wanted to see at least three from each group, and for the minimum size of the board to increase to six “to ensure a fair board representation” for both cohorts.
In the end, 83.97 percent of shareholders voted in favor of Luhabe, while 9.50 percent said yes to Trapani. In addition, the proposals to amend the company’s articles of incorporation put forward by Bluebell did not achieve majority approval and were rejected by “A” and “B” shareholders alike, according to Richemont.
Marco Taricco, a cofounder of Bluebell, said Wednesday following the meeting that despite the defeat, the fund would remain “patient, long-term investors” in Richemont. “We raised a debate, we raised important issues, and Richemont took the time and effort to reply to us. And we’ll continue to fight for our rights,” he told WWD after the AGM.
Bluebell, the first Richemont shareholder to request the election of a specific director to represent the “A” shareholders, is accustomed to making noise in the boardroom.
Founded in 2019 by Trapani and the former investment bankers Taricco and Giuseppe Bivona, Bluebell turned up the heat on Hugo Boss in 2020, and helped to eject its CEO Mark Langer.
In the span of a few years, it has also invested in, and demanded changes at, companies including Danone, GlaxoSmithKline and Lufthansa.
Although Trapani officially severed his ties with Bluebell late last year, he remains on friendly terms with his former partners, and he knows a thing or two about corporate activism, agitating for change at Tiffany & Co. in the years before its sale to LVMH, and muscling his way onto its board.
Bluebell had also expressed a desire to reshape Richemont, putting the focus on hard luxury and even changing the group’s name. The activist investor believes that its proposed changes could double Richemont’s share price in the medium term.
Richemont shares closed up 0.5 percent at 106.95 Swiss francs on Wednesday.
Taricco added that, following recommendations last month by shareholder advisory firms Institutional Shareholder Services (ISS) and Glass Lewis, Bluebell’s chances of winning were slim.
“We were very surprised by the advisers’ recommendations, and it was impossible for us to win. It was a setback,” he said. “But those advisers were just doing their job, and investors follow the advisers.”
In its report last month, ISS told shareholders that Bluebell “had failed to make a compelling case” that change was needed on the Richemont board. It recommended voting against Trapani and in favor of Luhabe as the person to represent the “A” shareholders.
Richemont’s nomination of Luhabe dovetails with the commitment to new, and higher, ESG and DEI standards.
She was elected to the Richemont board in 2020 and serves as a non-executive director and a member of the board’s nominations committee.
She also has a long relationship with Richemont, having chaired Vendôme South Africa, Richemont’s subsidiary in the region, from 2001 to 2011.
Richemont has described her as a social entrepreneur and economic activist “with multiple honors for her pioneering contribution to the economic empowerment of women in South Africa.”
She is the founding chair of Women in Infrastructure Development and Energy, which focuses on the economic empowerment of women, and of Bridging the Gap, an organization that equips Black graduates with corporate skills.
She is also the founder of the Women Private Equity Fund, South Africa’s first private venture capital fund for women, and helped to start Women Investment Portfolio Holdings, which empowers women to become investors in the South African economy.
Last month, in an impassioned letter to shareholders, Rupert described Luhabe, who is based in South Africa, as an “ideal” candidate. He cited her extensive business and boardroom experience, as well as her contribution in the areas of diversity, equity and inclusion.
In his statement following the AGM on Wednesday, Rupert also addressed Richemont’s recent move to sell Yoox Net-a-porter Group to Farfetch and Alabbar. He said it was an important step in delivering on Richemont’s global digital strategy.
The long-awaited deal, which sent shares in both public companies flying, will see Richemont sell a majority stake in YNAP to Farfetch and Alabbar. Farfetch will then acquire 100 percent of YNAP in three years’ time, subject to certain conditions.
The deal means that Richemont can focus on its core luxury business and benefit from the digital expertise of Farfetch, while Farfetch will be able to sell a slew of new brands; build much-needed inventory, and add digital firepower to the Richemont brands in a market dominated by mega-players such as Amazon and Alibaba.
Richemont said Wednesday that all other matters on the agenda, including the reelection of board members standing for a further one-year term, were approved by the shareholders, most by an overwhelming majority.
Shareholders also accepted the proposal for an ordinary dividend of 2.25 Swiss francs per “A” share, and a dividend of 0.225 Swiss francs per “B” share to be paid. A special dividend of 1 Swiss franc per “A” share and 0.10 per “B” share was also approved. The dividends will be payable on Sept. 23.
The proposals come in the wake of the 2021-22 fiscal year that saw Richemont notch double-digit gains across the business driven by retail sales and strong demand in the Americas region. The luxury giant saw a 44 percent surge in revenue to 19.18 billion euros, while operating profit more than doubled to 3.39 billion euros in the fiscal full year.
Profit after tax rose 61 percent to 2.08 billion euros, while the company’s net cash position was 5.25 billion euros.