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Siemens CEO Quits

Board indecision led to resignation

April 26, 2007

3 Min Read
Siemens CEO Quits

8:00 AM -- The impact of the accounting scandal at Siemens AG (NYSE: SI; Frankfurt: SIE) has led to the resignation of CEO Klaus Kleinfeld, who quit after the Siemens board postponed a decision about whether to extend his contract beyond the end of September. (See Siemens CEO Steps Down.)

That board indecision was the result of the ongoing financial scandal, which began with the Siemens Communications Group but spread to other parts of the business. (See Nokia Slashes, Siemens Still Scandalized and Corruption Probe Targets Siemens Staff .)

Kleinfeld isn't the only major Siemens figure to fall on his own sword this week, as chairman Heinrich v. Pierer has also announced his resignation. (See Siemens Chairman Quits.)

The Siemens CEO says he will stay on until the end of his current contract, September 30, unless a replacement is found and is ready to start before that date. When he steps down he will also relinquish his post as vice chairman of telecom equipment joint venture Nokia Networks , which began operations with a bit of a bump at the beginning of April. (See Nokia Siemens Opens on a Downer.)

Kleinfeld spoke of his decision this morning during a Siemens press conference to address the second quarter financial results. Here's what he had to say:

"In this day and age, employees, customers and shareholders expect strong leadership more than ever. They are looking for clear signs of stability — and rightly so. Confidence in a company's management and its ability to keep the company on course over the long term is essential.

"The current public discussion regarding the future management of Siemens is causing great uncertainty both internally and externally. A clear decision on this issue is expected. However, the Chairman’s Committee of the Supervisory Board informed me of its intention to postpone this decision once again.

"I consider this lack of clarity regarding the company’s management and my own mandate to be burdensome and unacceptable for the company and its employees. For this reason, I have decided to no longer be available for the extension of my contract. The Supervisory Board has requested that I be available until September 30. Of course, I will honor this request. We informed you about this yesterday.

"It has been a great honor for me to have served as President and CEO of this magnificent company for the last two years. At Siemens, we have been able to achieve extraordinary success as a business, and the company is now optimally positioned for the future. I thank all of those who contributed to this success.

"Siemens and the people of Siemens are very dear to me. I regret leaving a company that has been such a large part of my life over the last 20 years. However, Siemens must not be paralyzed — the company's ability to act must not be impeded. I hope my decision makes that possible."

Kleinfeld also had a few things to say about the corruption investigation, the most notable of which was: "People will say later that we have perfectly handled the corruption scandal."

We look forward to hearing from the people.

— Ray Le Maistre, Farewell Speeches Editor, Light Reading

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