The Hermes family’s creation of a controlling family holding has once again come under scrutiny, with French lobby group L'association de défense des actionnaires minoritaires (Adam) questioning decisions to spend company cash on buying back shares.
Hermes was given the go ahead to set up a controlling family holding in January, a move seen by many as a bid to deter a takeover from luxury goods company LVMH.
More than 50 members of the founding family who directly own shares in Hermes, which was established in 1837 by Thierry Hermes, formed the holding company.
Adam opposes the holding, and this week it raised concerns over the company’s decision to buy back its own shares at high prices – leading to a new record price.
Speaking to Reuters, Colette Neuville, founder and head of Adam, said: “In light of the size of the buybacks since June, one can ask: ‘What goal is the company pursuing in spending so much money on buying back its own shares?’”
She also questioned whether family members were selling some of their own shares back to the company.
Hermes said it was unable to comment on the recent buybacks or the holding company, as the people involved were not available.
In May, the French family, which is the majority owner of the luxury goods company, said it has no intentions of giving up control of the business, following an Adam application to deprive the Hermes family of its voting rights during the company’s annual general meeting.
“The Hermes family group assures all Hermes shareholders and employees that it controls the company and that it is determined to retain its control over the long term,” the family said at the time.
After the meeting, the company announced the new buyback programme, saying it would aim to purchase 10% of its shares at a maximum price of €250 a share.
Family member Bertrand Peuch currently serves as Hermes’s executive chairman, while non-family Patrick Thomas is chief executive.