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Unfair and amateurish
Apr 26th 2007 | BERLIN
From The Economist print edition
How not to do a boardroom coup
JUST days after the resignation of Heinrich von Pierer as head of the supervisory board of Siemens, the leadership crisis at Europe’s biggest engineering group claimed a new victim. On Wednesday April 25th Klaus Kleinfeld, the chief executive, said he would no longer be available to extend his contract, which finishes at the end of September. “In times like these, the company needs clarity about its leadership,” he said at the meeting of the company’s supervisory board in Munich.
The board’s Machiavellian manoeuvres had given him little choice but to quit. In the six days between Mr von Pierer’s announced resignation and the board meeting, board members circulated rumours about their desire for a successor to Mr Kleinfeld to help the firm make a fresh start as it grapples with three separate criminal investigations into alleged bribery.
One director, Josef Ackermann, the boss of Deutsche Bank, is keen to repair his reputation after a scandal over bonuses awarded to former executives at Mannesmann, a mobile operator that was taken over by Vodafone. And Gerhard Cromme, who replaced Mr von Pierer as head of Siemens’ supervisory board, wants to reinforce his image as the pioneer of corporate-governance reform in Germany.
Faced with persistent speculation about his future as boss of Siemens, Mr Kleinfeld told the 20-strong board before their gathering that he would leave the company if they did not make a firm commitment to renew his contract. When he did not get the two-thirds majority he needed he announced his departure, even before the meeting had ended.
Siemens is losing a capable leader. The group is in much better shape today than it was in January 2005 when Mr Kleinfeld took over. On April 24th Siemens reported a 10% increase in revenue, to ?0.63 billion ($27 billion) and operating profits up by 36% for the three months to the end of March. So far Mr Kleinfeld’s integrity is unblemished. Investigations by Debevoise & Plimpton, a law firm, have found no indications of any misconduct by him.
Mr Kleinfeld’s main problem was his lack of allies in Germany’s chummy corporate elite. His American management methods seemed brash to industrialists and union representatives on Siemens’s board, who were more used to Germany’s consensual style of corporate leadership. The 49-year-old Mr Kleinfeld will have no difficulty finding a new high-profile job in America. He rose to become the heir apparent at Siemens while running its American operations for three years, during which he oversaw its listing on the New York Stock Exchange. As a board member at both Citigroup, a big American bank, and Alcoa, an American aluminium firm, he is well connected.
Who will take his place? Mr Ackermann and Mr Cromme are in touch with Wolfgang Reitzle, the boss of Linde, an industrial-gases group, whom they would like to make boss of Siemens. Mr Reitzle says he wants to stay at Linde. Very few top managers have intimate knowledge of Siemens’s sprawling businesses, ranging from medical equipment to trains. Messrs Ackermann and Cromme may come to regret their attempt to appear as the enforcers of their firm’s “clean hands” policy.