Siemens chief faces exit as board votes on his job
Group last week issued its second profit warning this year
The fate of Siemens chief executive Peter Loescher will be decided today when the board votes for his early dismissal. Photograph: Bloomberg
The supervisory board of Siemens will seal the fate of chief executive Peter Loescher today when it votes for his early dismissal in one of Germany’s most dramatic boardroom battles in years.
The board meeting comes after Siemens last week issued its second profit warning this year, adding to signs that Mr Loescher was struggling to turn around one of Germany’s biggest engineering conglomerates.
Mr Loescher had in the past promised that the company, whose products range from gas turbines to fast trains and ultrasound machines, would grow faster than rivals such as ABB, General Electric and Philips.
But bungled acquisitions, charges for project delays and a focus on sales growth caused Siemens to fall behind.
Last week, Siemens rattled shareholders by abruptly abandoning its target of boosting its core operating profit margin to at least 12 per cent from 9.5 per cent by 2014.
That turned out to be the straw that broke the camel’s back.
A majority sided against Mr Loescher in emergency meetings of supervisory board members over the weekend, prompting Siemens to issue a tersely worded statement saying that the board would decide at its meeting today on Mr Loescher’s early departure.
A newspaper cited sources on Monday as saying Mr Loescher was not yet prepared to give up and would fight for his job or else drag supervisory board chairman Gerhard Cromme, who hired him six years ago, down with him.
A spokesman for Siemens denied at the time that Mr Loescher wants Mr Cromme to leave as well, while Mr Loescher did not comment.
The most likely candidate to replace Mr Loescher is finance chief Joe Kaeser, a Siemens veteran who was already on the management board when Mr Loescher joined.
Having earned a reputation as a hands-on pragmatist during his 33 years with the company, Mr Kaeser is seen as having an understanding of Siemens’ business and culture that Mr Loescher, an Austrian who was brought in as an external candidate, has always been felt to lack.
Analysts said Mr Kaeser should be well-placed to gradually get Siemens back on track by tightening project control, by selling off more non-core businesses, such as those that make rail technology or healthcare software, and by setting more conservative and realistic targets.