After watching Philips’ valuation plummet more than 60% since the onset of the June 2021 recall of millions of its respiratory devices, shareholders aren’t letting the losses slide.
During the Dutch devicemaker’s annual meeting Tuesday, shareholders were asked to vote on a proposal to discharge members of the board of management—a routine vote required for companies in the Netherlands to release directors from liability related to the events of the previous year.
According to the results of the vote, less than 24% of participating shareholders agreed to discharge the board—which is led by Philips’ CEO and counts other executives, including its chief financial and legal officers, among its members—while the remaining 76% voted against the proposal.
Though Reuters notes that the vote is typically a symbolic one and was therefore largely a way for shareholders to express dissatisfaction with the company’s recent actions, it does leave the executives exposed to potential legal challenges over their roles in those actions.
In a statement summing up the day’s votes—the rest of which all went in Philips’ favor—the company said the negative vote followed “the voting guidance from certain proxy advisors to signal discontent in respect of one former member of the board of management.”
Though that member remained unnamed, it’s likely CEO Frans van Houten, the only member who’s left the management board in the last year. He was replaced at the helm last fall by Roy Jakobs, who had previously headed up Philips’ response to the far-reaching respiratory recall.
Van Houten came under fire earlier this year as the tech maker’s 2022 annual report revealed that its board members had all agreed to waive their bonuses for the year “in the context of our company’s performance in 2022.” All, that is, except for the ex-CEO, who took home more than 208,000 euros as an annual incentive payout. Van Houten collected the bonus in addition to a base salary of more than 1 million euros.
Meanwhile, Philips’ market cap shrank to less than half its starting size throughout 2022: It kicked off the year at a valuation of about $32 billion—well below the $50 billion it had reached just before the recall began—and closed out 2022 below the $14 billion mark.
The company’s shareholders used last year’s meeting to send a message to management, too. That time, their pushback came on an advisory vote over the approval of Philips’ executive compensation for 2021, with nearly 80% of the participating shareholders voting against the remuneration report.
Because it was only an advisory vote, the denial wasn’t binding, but Feike Sijbesma, chairman of the company’s supervisory board, said in a subsequent statement, “We take the feedback seriously and will continue the constructive dialogue and consultation with our shareholders.”