April 26, 2007
German Corporate Governance
Posted by Gordon Smith

The "ouster" of Klaus Kleinfeld as CEO of Siemens is a big corporate governance story, even though it doesn't register so vibrantly in the US. Kleinfeld was not formally terminated. He left after learning that shareholder representatives on the supervisory board were searching for his replacement. As our readers surely know, Siemens is attempting to move beyond a series of scandals, and even though Kleinfeld has not been directly implicated in any criminal activity, his presence was an obstacle to a fresh start for the company.

In the reports of the events that I have been reading, one of the central characters in the drama is Josef Ackermann, chief executive of Deutsche Bank AG, which is a large shareholder of Siemens. Ackermann is a member of the supervisory board, which has 20 members, half of whom are elected by Siemens' employees. According to the W$J, "Labor representatives on the board had said in recent days they were still undecided on whether to support Mr. Kleinfeld when his contract came up for renewal yesterday."

So this looks like a classic block shareholder story, in which Deutsche Bank monitors the top managers of the company and intervenes in a moment of crisis. Would the same underlying facts have the same result in the US? Well, that's hard to say, but my guess is that Kleinfeld stays if Siemens is a US company. Cf. HP (Mark Hurd) and Apple (Steve Jobs).

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