Swatch Group, the renowned Swiss timepiece maker, is taking measures to address the financial impact of the new coronavirus pandemic on the watch industry. The company has announced its plan to reduce its 2019 dividend by 30% and decrease the fixed pay for board members.

The decision by Swatch’s board is a response to the severe consequences of the COVID-19 outbreak, which have taken a toll on businesses in Europe and the United States. While the situation in China has improved since the peak of the virus, the global economy continues to face challenges. Swatch Group aims to manage its financial resources prudently in light of these circumstances.

Specifically, the proposed dividend payment per registered share will be 1.10 Swiss francs and 5.50 francs per bearer share, compared to the previous figures of 1.60 francs and 8 francs per share respectively. This reduction will result in the total dividend payout decreasing from 445.2 million Swiss francs to 287.8 million Swiss francs compared to the previous year.

Alongside the dividend cut, the board has recommended a decrease in the fixed compensation of board members for their roles by approximately 30% for this year. This reduction will lower the fixed compensation to 780,000 Swiss francs from 1.03 million francs in the previous year. However, it is important to note that this reduced compensation only represents a small portion of the board’s overall fixed pay, with fixed compensation for executive functions remaining steady at 2.6 million francs, including for Chairwoman Nayla Hayek.

Additionally, the board has proposed an increase in fixed compensation for executive group management from 5.1 million francs to 5.7 million francs in 2020. However, considering the decrease in net profit, narrowing margins, and declining sales, the bonus recommendations for 2019 have been reduced for the executive members of the board and executive group management. Their expected bonuses for 2019 have been adjusted to 21.7 million francs, down from the previous 29 million francs.

It is worth noting that the Hayek family and associated shareholders possess a significant 42.3% of the company’s voting rights, highlighting their influence within the organization.

Swatch Group’s decision to slash dividends and reduce fixed pay for board members underlines the unprecedented challenges faced by the watch industry during these uncertain times. By taking a cautious approach, the company aims to protect its financial resources and effectively navigate the economic consequences of the COVID-19 pandemic.

Useful links:
Swatch Group official website
Swatch official website