Aryzta investor caution urged over dual chairman-CEO role

A major shareholder advisory firm has highlighted its concerns about Swiss-Irish baking group Aryzta’s plans to allow its head, Urs Jordi, to continue in his dual roles of chairman and chief executive.

Institutional Shareholder Services (ISS) has said that a “qualified vote” to re-elect Mr Jordi as a director and chairman is warranted at the group’s upcoming annual general meeting on November 30th, after the group failed to find a suitably qualified CEO candidate during a search last year.

Arzyta, the owner of the Cuisine de France brand in Ireland that saw its centre of gravity move from Dublin to Zurich in 2020 following a boardroom coup, said in its annual report for the year to July that its board believes it is “right and prudent” to extend the dual role temporarily as Mr Jordi continues to oversee a turnaround of the business.

Aryzta posted its first annual net profit in six years in the 12 months to July. The €900,000 surplus marked a turnaround from a €235.8 million loss for the previous period

“Separation of power is one of the fundamental principles of good corporate governance, and combining the roles of chairman and chief executive permits an unhealthy concentration of power that blurs what should be distinct responsibilities,” said ISS. However, it said that Aryzta has, in this case, offered a “compelling rationale” for Mr Jordi to continue in both roles for the time being.

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Aryzta posted its first annual net profit in six years in the 12 months to July. The €900,000 surplus marked a turnaround from a €235.8 million loss for the previous period, even as the group dealt with ingredients and energy inflation as a result of war in Ukraine as well as supply chain disruption.

Since a group of activist investors orchestrated the installation of Mr Jordi as the head of Aryzta two years’ ago, the company has sold off its North America and Brazil operations and reduced its total debt by more than 40 per cent to €1.1 billion.

Concerns about a 702,000 Swiss franc (€716,500) discretionary bonus paid to Mr Jordi and €391,000 of retention bonuses to other executives in 2021 drove an investor revolt against the group’s remuneration report at its agm last November. However, ISS has welcomed Aryzta’s “responsiveness to shareholder concerns” by saying that it will refrain from making such payments in future.

However, ISS has recommended that shareholders vote at the upcoming shareholder meeting against the re-election of non-executive director and chairman of the company’s nomination committee, Gordon Hardie, because the board is “insufficiently gender diverse”. Helene Weber-Dubi is the only woman director on the group’s six-member board.

Aryzta said that it “fully intends to comply” with current Swiss corporate governance rules that say each gender must make up at least 30 per cent of the board of listed companies above a certain threshold by the end of 2026.