Siemens chief congratulates activists on disbandment of German groups

Siemens boss Joe Kaeser praised activist investors as he prepares to leave the light industrial group its stocks are trading at record highs.

Its position is unusual in Germany, where investors seeking to break up conglomerates were once pilloried like ‘locusts’. But Kaeser said the prospect of activists demanding a change at Siemens had acted as a catalyst for his own restructuring.

“A lot of people, especially in Germany, say, ‘Oh my gosh, there are these activists, they’re bad people,’” he told the Financial Times, “and I always say, well, they’re just people who believe they can do better than management. . . and I think they are wise to listen to them.

After 40 years with the industrial group, including seven as CEO, Kaeser’s final act will be to chair the annual virtual meeting on Wednesday, where, unlike last year’s event, he will be greeted by asset managers.

Shareholders say Kaeser’s transformation of the 170-year-old company has more than created an attractive asset for financial markets. He proved that large sclerotic German companies could be restructured.

“No one else in Germany has ever tried to do something like this,” said Ingo Speich, portfolio manager at Deka, one of Siemens’ top 10 investors. “It was a high risk and it’s a great achievement.”

Speaking by video call from his Munich office, Kaeser praised the investors for their persistence. “They should [push for restructuring] because they own the business, ”he said.

The Siemens lifer also believes the shareholders who called for his ouster will help keep the company on track – and control his successor Roland Busch.

“If things go wrong because the management is slowing down or wondering about the trip, then there will be investors, you know, who will tell them how to continue,” said the 63-year-old. “There is insurance.”

Mr. Kaeser’s strategy seems to be bearing fruit with his plan to transform the German group into an agile “fleet of ships” which is bearing fruit after the spin-off of the health and energy divisions of Siemens.

The spin-off of Siemens Healthineers led to a standalone business worth more than BMW, while September Siemens power unit flotation should benefit the group more.

Siemens’ share price also rose 140% to € 132 from its March low, which is about half of the 40% “conglomerate discount”, where Kaeser insisted. fact that the company once languished, despite having lower multiples to competitors such as ABB, Schneider Electric and Rockwell Automation.

The success is a stark contrast to the chaos that accompanied the break-up of the other German industrial giant Thyssenkrupp, which was forced to sell its flagship asset, an elevators division, after years of mismanagement.

But Mr Kaeser learned from watching Thyssenkrupp become the target of activist investors such as Elliott and Cevian, and “kicked off the business split-off approach,” Speich said.

While Mr Kaeser admits the job at Siemens is only half done, the man who became the de facto ambassador of German industry during his seven years at the helm has no doubts on the time of his departure.

“If people think they’re already perfect, they should go immediately,” he said.

“Should I have done more?” Well, sometimes I think I should have, ”he says. “On the other hand, I needed to balance the doable and the desirable and it doesn’t help me if the unions go on strike in my automation division just because I’m restructuring the infrastructure more.”

He claims to have few regrets, but he has certain grievances, especially in Brussels.

A proud European who often enters political debates on his Twitter thread, the executive was disappointed by the EU’s decision in 2019 to block the merger of the Siemens rail division with its French rival Alstom.

“The competition does not stop at the EU’s borders,” said Kaeser, who argued that the deal was necessary to ward off Chinese rivals.

If Europe does not make it easier for local businesses, the continent will become a “museum where Asian countries come to see how it worked in the past,” he said.

Mr Kaeser’s next act is to take the helm of Siemens Energy’s supervisory board, where he will again face the wrath of trade unions and environmental activists.

Last year, amid a backlash against Siemens’ contract to maintain a new coal mine in Australia, he offered Luisa Neubauer, 23, climate activist a seat on the supervisory board of the new energy company, which it dismissed as a stunt.

But while he said he would continue to engage with the protesters, Mr Kaeser criticized their methods. “Activism is a business model,” he said. “If they start to engage in solutions, they lose the business model of activism.”