Op-Ed: Vote Against Vestas’ Proposed Board

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Vestas’ (VWDRY.PK) Board of Directors intend to grant management share options at a strike price one-third BELOW book value. The Board of Directors is rewarding management for its mismanagement and past profit warnings. This will not help restore investor confidence. Given Vestas’ valuation, it is time for shareholders to stand up for their interests: Investors should vote against all nominees for Vestas Board of Directors at the AGM on March 29th.

The strike price of Vestas’ share option scheme is only the latest in a series of decisions disregarding shareholder interests. Vestas needs to change! Vestas needs a Board of Directors capable of hiring qualified managers and willing to enforce shareholder interests. Vestas’ old Board of Directors has failed to control management, eg in respect of risk taking (capacity expansion, R&D budget), the establishment of suitable organizational structures and the company’s succession planning. Given these failures, no standing member of the Board of Directors should serve an additional term. Nor should investors quickly accept those candidates who have been proposed by the failed board as successors for its departing chairman and his deputy.  While these candidates may be excellent managers, they lack what is needed most in critical times like these. Vestas does not need more Scandinavians on the board; it needs a sound sector background in wind energy, not telecommunications.  Vestas needs the will and determination to replace CEO Ditlev Engel as soon as time and circumstances permit.

I invite Vestas shareholders to join me in voting against a renewal of terms of existing members of the Board of Directors, and their chosen successors. Vestas needs a new start with new people and new ideas.

I support restructuring measures as suggested by management and believe that the company has an interesting investment case IF:

  1. The company is more managed for cash than for growth (lower R&D going forward);
  2. Excess capacity is removed
  3. Business risk is dramatically reduced by cooperating with others on the development and sale of off-shore turbines
  4. Efficient organizational and management structures are implemented
  5. Strong anchor investor or cooperation partner is found for Vestas
  6. The company is managed and management is controlled by people deserving the trust of the investment community.

Disclosure: Long position in Vestas (VWDRY.PK).

The author is an independent financial analyst and investor with more than 15 years working experience in the financial services industry.


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