SES, a Luxembourg-based satellite operator, has announced plans to streamline its board of directors, reducing the number of members from 11 to nine. The company also proposed two new directors with significant U.S. national security and defense experience. These appointments, SES stated, will help the company “effectively navigate this rapidly changing landscape.” The changes will be voted on at the annual shareholder meeting on April 3rd.
However, this restructuring is not enough for Appaloosa Management, a hedge fund holding over 7% of SES's economic interests. Appaloosa, which also holds a similar stake in Intelsat (which SES is acquiring in a $3.1 billion deal), has called for a more comprehensive overhaul of SES's share capital and board structure. They proposed a structured program for distributing capital to shareholders, a proposal SES will put to a vote despite recommending its rejection.
“The initial steps the SES Board is taking to modernize its structure are long-overdue and only came following shareholder pressure,” Appaloosa stated. “However, much more can, and must, be done — with a greater sense of urgency than is evident from the Board’s incrementalism.” Appaloosa urged shareholders to support their plan for annual return of excess cash flow.
SES countered that their current approach balances capital return with investment for growth, warning that Appaloosa’s proposal could harm their investment-grade credit rating. The company highlighted the Luxembourg government's significant and longstanding shareholding, emphasizing its inability to appoint more than one-third of the board members.
“In any event, SES considers the Luxembourg Government to be a valuable shareholder and stakeholder in the Company and the Luxembourg Government has on numerous occasions confirmed its strong support for the Company,” SES said. The company also rejected Appaloosa's call for a complete board replacement, deeming it unnecessary and disruptive.