SWITZERLAND – Food group Nestlé has defeated a corporate governance motion brought against it by a group of pension funds - with outgoing chairman Rainer Gut questioning their motives.
Nestlé shareholders at its annual general meeting in Lausanne rejected a proposal by the Ethos group, which represents Swiss pension funds, to prevent chief executive Peter Brabeck taking on the extra role of chairman.
The motion was rejected by 50.55%, with 35.94% in favour. Ethos had previously told IPE that 15-20% support would be a “great message to the board”.
After the vote confirming him as both chairman fir the next two to three years and CEO, Brabeck said: “I want to congratulate shareholders for having made the right decision. The dogmatic approach to corporate governance issues would have meant a long-term competitive disadvantage for Nestlé.”
Earlier Gut, the former head of Credit Suisse, had rounded on the schemes funds for their “mistrust”.
“I am somewhat disappointed that several public pension funds have chosen to follow the precepts of a fund that specialises in sustainable investments,” he told the meeting.
“I do not believe that the work of the board of directors of Nestlé deserves such mistrust and I must wonder about the true motives that led to the proposals,” Gut who retired yesterday said.
The resolutions were backed by five pension funds including the Canton of Jura, City of Zurich and Canton of Luzern. The shareholders have a combined 0.25% of shares, Ethos chief Dominique Biedermann said.
Ethos was backed at the four-hour-AGM by international consultant Deminor and US group Institutional Shareholder Services.
The Swiss media had speculated about a possible mass resignation if the vote didn’t go through – which the company dismissed. It told IPE it did not regard Brabeck’s dual role as a corporate governance issue.
Spokesman Francois-Xavier Perroud said that in the past 85 years, Nestlé has had 12 years worth of senior management’s “double mandates”.
“Two thirds of our share-holders did not follow Ethos. I think the board looks back with_satisfaction at the general meeting, that was quite long and animated but yielded the result the board feels quite comfortable with,” he said today.