Ola Rollen, CEO of Swedish technology firm Hexagon AB, might just be the Francois Fillon of European business.
Hexagon market value: $14 billion
Like the French presidential candidate who has stayed in the race despite being indicted for misuse of public funds, Rollen will remain in his post while he goes on trial in Norway over insider trading allegations. The charges stem from personal investments he made in Next Biometrics Group AS, unrelated to his job at Hexagon. Rollen maintains his innocence.
The Hexagon board is standing by their man, issuing a press release this week that declared "business as usual" and pledging to "stand united with Ola to see this ordeal through to the end".
Led by chairman Melker Schorling, the board appears to have put Rollen's stellar track record ahead of concerns over a possible hit to the company's reputation. The 51-year old CEO has been on an acquisition spree to remake the company since 2000.
Rollen has quintupled sales, and helped multiply the company's market value by 50 times to reach 13.3 billion euros ($14.3 billion). Net income has advanced by an average of 15 percent a year since 2012.
Not shabby. Nevertheless, the board has saddled shareholders with a major risk factor until the legal case is resolved, which Rollen's lawyers say won't likely happen till early next year.
Unlike Fillon though, who must compete in an electoral system where every vote counts equally, Rollen has one constituency with more power than other shareholders. His chairman Schorling owns 26 percent of Hexagon and controls 47 percent of the voting rights via a dual class structure. His opinion carries a lot of weight.
Welcome to the wonderful world of super-voting rights, Scandinavian style. Despite their reputation for transparency and corporate virtue, Scandinavia's companies often have structures that depart from the principle of one shareholder, one vote.
According to Bloomberg data, 28 of the companies in the OMX Stockholm 30 Index use similar arrangements, as do six of the biggest in the OMX Copenhagen 20 index. In contrast, only 10 companies in Britain's FTSE 100 have unequal voting rights, and 82 of the S&P 500 in the U.S.
The endurance of these structures in Sweden can be traced to the power of family dynasties such as the Wallenbergs and the Rausings, who hold sway over broad swathes of the economy. Supporters say they help uphold the Swedish notion of "patient capital", which isn't slave to the quarterly earnings statement. It doesn't always work out. Just look at how the controlling shareholders of Ericsson AB have erred in their leadership of the telecoms equipment maker.
At Hexagon, the board has chosen to stick by the CEO who is innocent until proven guilty. Minority shareholders will have to hope their faith is rewarded. So far there's been little penalty, as this chart shows.
The Hexagon share price has proven remarkably resilient since the investigation into Rollen was disclosed on October 31. Even though the CEO was under arrest while he presented earnings to analysts in October, the stock has recovered from its initial slide. Short-sellers who tried to capitalize have probably been burned, with the percentage of shares out on loan now at 4.3 percent, the lowest in a year.
Nevertheless, the shares have contracted from 22 times forward earnings before the scandal erupted to about 19 times now. That means Hexagon trades at a discount to peers instead of its usual premium. The board clearly sees this as a small price to pay to keep a high performer.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Leila Abboud is a Bloomberg Gadfly columnist covering technology. She previously worked for Reuters and the Wall Street Journal.
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