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Money News

Swatch slashes dividend as new coronavirus clocks watch industry

ZURICH (Reuters) - Swiss timepiece maker Swatch Group recommended cutting its 2019 dividend by 30% while also trimming board members’ fixed pay for this year, the company said on Friday, citing “drastic” consequences of the new coronavirus.

A closed Swatch store is pictured in Times Square following the outbreak of coronavirus disease (COVID-19), in the Manhattan borough of New York City, New York, U.S., March 23, 2020. REUTERS/Carlo Allegri/Files

The board proposed paying a dividend of 1.10 Swiss francs per registered share and 5.50 francs per bearer share, down from 1.60 per registered share and 8 francs per bearer share last year. The total dividend payout would fall to 287.8 million Swiss francs ($297 million) from 445.2 million francs last year, according to Swatch investor documents.

The world’s biggest watchmaker has been trying to maintain production despite a customer standstill hitting businesses in Europe and the United States, even as the situation in China has improved after the coronavirus outbreak severely hit business there in February before spreading across the globe.

“In view of the COVID-19 situation and the drastic consequences for the economy, the board of directors has decided to take a prudent approach to the company’s financial resources,” Swatch said in a statement ahead of its May 14 annual general meeting.

The board also recommended cutting by around 30% the fixed compensation of board members for board functions for this year to 780,000 Swiss francs from 1.03 million francs for last year, the company said.

That reflects a fraction of the board’s overall fixed pay, since Swatch recommended maintaining fixed compensation for executive functions of board members including Chairwoman Nayla Hayek at 2.6 million francs, identical to last year.

The board also recommended fixed compensation for executive group management for 2020 to be increased to 5.7 million francs from 5.1 million francs.

Bonus recommendations for 2019 were reduced after Swatch’s 2019 net profit slipped almost 14%, margins narrowed and sales dropped, with the board saying executive members of the board and executive group management should get 21.7 million francs, down from 29 million francs.

The Hayek family and associated shareholders control 42.3% of the company’s voting rights, according to the group’s annual report

($1 = 0.9685 Swiss francs)

Reporting by John Miller; Editing by Michelle Martin and Michael Shields

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