Old Mutual’s Hostile Takeover of Skandia
Chapter 3: A Success – and a Crash
SKANDIA 2003 – A TROUBLED COMPANY At the time when Skandia became a target for takeover proposals in 2004, the company was still shaken by its series of recent scandals. The company had been heavily criticized by the Swedish public for handing out 4 billion SEK in bonuses to 100 senior staff during the years 1997–2002. The depth of the bonus scandal had been revealed on 2 December 2003 after seven months of gruesome internal investigations. The greater part of these bonuses was calculated on the basis of expected future profits. These profits had, therefore, not materialized when the bonuses were paid out, and it was uncertain whether there would be any expected profits at all and, if there were, if they would reach the shareholders’ pockets. The shareholders’ upheaval concerning these bonuses was just the tip of the iceberg. Within a period of a few years around the turn of the millennium, Skandia – the oldest listed company on the Stockholm Stock Exchange (SSE) – had been transformed from a success story of international expansion in the life insurance industry to one of collapse and near bankruptcy. In 2002, Skandia lost billions of SEK through the sale of its former ‘golden egg’: its US subsidiary, American Skandia. The following year, the CEO of Skandia and several members of his top management team had to leave the company along with some of its board members, including chair Lars Ramqvist. However, before this deplorable situation emerged and reached its height in the early...
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