SWEDEN

SBB Faces Backlash With ISS Saying to Vote Against Chairman


Charles Daly and Christopher Jungstedt
Tue, Jun 11, 2024

(Bloomberg) -- Struggling Swedish landlord SBB is set for a showdown with shareholders at the end of the month after an influential proxy adviser said investors should vote against the company’s proposal to appoint a new chairman

Institutional Shareholder Services Inc. isn’t supporting Lennart Sten as chairman at the annual general meeting of Samhallsbyggnadsbolaget i Norden AB, as the company is formally known, because the candidate is “overboarded,” meaning he sits on an excessive number of boards, according to a report seen by Bloomberg News.

ISS also is recommending voting against the reelection of directors Ilija Batljan, Lennart Schuss and Sven-Olof Johansson at SBB’s annual general meeting, scheduled for June 28 in Stockholm. Their support “is not warranted due to a lack of gender diversity on the board,” the adviser said.

The stance by ISS could pose a serious setback to SBB as it seeks to draw a line under a tumultuous 18-month period that’s seen its share price plummet amid a spate of credit-rating downgrades. Last year, company founder Batljan was replaced as chief executive officer by Leiv Synnes, who has since embarked on a strategy to split the firm into three units in an effort to pay off some of its $5.6 billion pile of debt.

An SBB representative declined to comment on the ISS report.

It’s unclear how investors intend to vote on other agenda items, including discharging SBB’s directors from liability. Seven institutional investors in SBB that were contacted by Bloomberg News declined to disclose their voting plans. Under Swedish law, shareholders can refuse to grant the discharge of liability — and hence claim damages concerning a director’s management — provided they represent more than 10% of a company’s capital base.

The Swedish Shareholders’ Association, representing some 70,000 retail investors, has yet to decide on its position for how to vote during the annual meeting, said Sverre Linton, the group’s chief legal officer.

“Whether it was responsible or not to push through the dividend proposal at last year’s AGM is one of the important factors when we’re assessing how management has been handled during the past year,” Linton said, adding that there may also be reason to look at the responsibility of the accountant who signed off on the dividend proposal.

Linton, however, defended the Swedish system of different share classes entailing different weights in terms of voting power, which has repeatedly been a source of contention from foreign voting advisers such as ISS.

“This structure is functioning well, and has been historically,” he said.

 Bloomberg Businessweek