Swatch Group, once a titan of Swiss watchmaking, is facing increasing scrutiny from investors frustrated with falling sales, poor corporate governance, and the autocratic management style of CEO Nick Hayek. As the company heads into its annual shareholder meeting this Wednesday, tensions are peaking over a shareholder proposal that could mark the start of a corporate shake-up, the Financial Times reported.
Swatch shares have lost 24% in the past year, continuing a long-term slide from their 2014 peak of nearly SFr600 to SFr147.85, valuing the group at just SFr7.7 billion. Net profit collapsed by 75% last year, largely due to slumping demand from China, but also, critics say, due to deeper structural issues within the company.
Family-run culture alienates investors
Hayek, CEO since 2003, has long taken a combative stance toward outside shareholders, once telling investors to “go elsewhere” if they didn’t like how the company was run. His sister, Nayla Hayek, chairs the board, and critics argue the company is run more like a private family firm than a public corporation.
Oliver Müller, head of watch consultancy LuxeConsult, summed up the mood: “In German we say beratungsresistent — resistant to advice. That is the essence of the problem. It is a sad story.”
Hayek’s defiance is infamous. He has published financial reports in obscure dialects, berated analysts, and even used tiny fonts in reports to frustrate readers. Shareholder Steven Wood, founder of GreenWood Investors and a nominee for the board, accused Hayek of running Swatch “only for one shareholder” — the Hayek family, which controls 44% of voting rights with just 25% of share capital.
Fading relevance of Swatch’s top brands
Swatch owns a diverse portfolio of 16 brands, including Omega, Longines, Tissot, and the ultra-luxury Breguet. But recent performance has been grim. According to Vontobel, sales of Omega and Longines are down 20% and 29% respectively since 2019. Breguet, once a crown jewel, now loses money and has seen its annual revenue halved to $221 million over the past two decades.
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In stark contrast, rival brands like Rolex and Patek Philippe have thrived. Patek, for instance, has grown sevenfold over the same period, with sales now approaching $2.3 billion.
Caroline Reyl of Pictet Asset Management noted that only the ultra-luxury tier is seeing growth. “The polarisation effect is only increasing,” she said, warning that Swatch’s inability to capitalize on this trend is hurting its competitiveness.
Investors demand corporate governance reform
Calls for change are now growing louder. Wood is seeking election to Swatch’s board as a representative of bearer shareholders — who own 55% of the company’s capital but remain sidelined in voting power. Swatch’s board opposes his nomination, citing his U.S. citizenship and lack of Swiss residency.
Still, many believe Swatch’s governance structure needs urgent reform. “Investors have really started to lose patience,” said Vontobel analyst Jean-Philippe Bertschy, who believes changes at the board level are necessary to restore credibility and unlock value.
Innovation alone may not be enough
To its credit, Swatch retains strong technical capabilities. It owns more than 150 production sites, makes most of its components in-house, and supplies parts to third-party watchmakers. Its Micro Crystal unit remains a global leader in quartz crystal technology. Collaborations like the MoonSwatch, a partnership between Omega and Swatch, have also brought momentary sales boosts.
But these successes are not enough to offset the broader decline. Analysts say neglected heritage brands like Breguet still hold enormous untapped value — if given modern leadership and strategic autonomy.
For now, the Hayek family shows no sign of stepping aside or altering course. Nick Hayek insists the group remains financially solid, more focused on long-term strength than short-term stock performance.
“If you are a shareholder with us, you are part-owner of a company that will not get into trouble if a storm comes up,” he said recently.
But for many investors, the storm has already arrived — and without a clear succession plan or willingness to adapt, Swatch risks falling further behind its competitors.