Siemens Revamp

The Talented Mr. Kaeser

Don't worry, he'll handle it.
  • Why it matters

    Why it matters

    Siemens boss Joe Kaeser is consolidating power in the German multinational, but his strong arm approach is worrying some.

  • Facts


    • Joe Kaeser took the top job at Siemens two and a half years ago.
    • Investors are concerned the Siemens chief executive has too much on his plate with CEO, CFO, and now communications responsibilities.
    • Mr. Kaeser’s radical restructuring is beginning to produce its first fruits – with a much-improved earnings for its 2015/2016 fiscal year.
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Two and a half years after seizing the helm at German industrial icon Siemens, headstrong chief executive Joe Kaeser sees 2016 as the beginning of a new golden age for the 167-year-old company.

By returning the slumping energy and electronics giant to sustainable strong growth and profitability, Mr. Kaeser, 58, plans to win over naysayers still skeptical of his restructuring strategy and almost unrestricted consolidation of power.

In his latest move, Mr. Kaeser on Wednesday signed a €180 million, or $202 million, deal with executives of French national railway SNCF to automate a regional train line in Paris. Also on Wednesday, Siemens announced an order for natural gas turbines, generators and control systems at a major new power plant in Nigeria.

If all goes according to plan, the iron-willed and clever Mr. Kaeser could emerge in coming months as the next “Mister Siemens.”

That title had been held by his predecessor Heinrich von Pierer, before a 2006 corruption scandal stripped him of it. At the Siemens AGM two weeks ago, one shareholder suggested Mr. Kaeser now deserves the title.

At the heart of Mr. Kaeser’s agenda is a new form of absolutism he has instilled at Bavaria-based Siemens: I am the company.

When surrounded by the people he trusts, the chief executive can be a team player, sources close to him say.

An MBA in a world of engineers, Mr. Kaeser has tailor fit his powerful post atop Siemens in a way that is almost unprecedented among major corporations listed on Germany’s blue-chip Dax index. Amid the ongoing trend toward power sharing among teams of executives, Mr. Kaeser is heading in the opposite directtion.

After taking the reins as president and chief executive in August 2013, Mr. Kaeser retained key functions of his previous position as chief financial officer, including responsibility for investor relations and acquisitions.  Mr. Kaeser has worked at Siemens for 36 years and appointed close confidants to key positions, such as Ralf Thomas, his dutiful chief financial officer, and Janina Kugel, labor director and head of human resources.

Unwieldy characters like Michael Süss – the former head of Siemens’ lackluster energy division – had no place in the new regime.

Mariel von Schuman, head of governance and markets, and chief strategist Horst Kayser – both members the inner circle – round out the “Joe Kaeser show.” In agreement with Mr. Kaeser, they set and review Siemens’ corporate guidance. When surrounded by the people he trusts, the chief executive can be a team player, sources close to him say.

Evidently, Mr. Kaeser fears almost nothing when it comes to taking on responsibility. The latest example of this came in early February, when, to the shock of Germany’s corporate elite, the Siemens chief executive offered himself as provisional head of communications. He is filling the shoes of public relations chief Stephan Heimbach, who was scheduled to leave at the end of this month, but took an early exit.


It remains to be seen how well the multi-talented Siemens boss stacks up – even if only as a temporary substitute – compared to a communications specialist who cut his teeth working for ex-Chancellor Helmut Kohl.

But one thing is certain, according to a prominent Siemens investor, who wished to remain unnamed: “Kaeser is making himself irreplaceable. That is a risk for a company.”

Mr. Kaeser, who shaved off his moustache just before becoming chief executive, sees a long future at Siemens. When his current contract expires in 2018, the chief executive could imagine a jump to head of the company’s non-executive supervisory board, one close confident divulged. That would give him the power to set corporate strategy and hire and fire top executives.

Following a mandatory two-year cooling-off period, Mr. Kaeser theoretically would be eligible for the post in 2020. Already he may be feeling the pull of the growing power vacuum atop the supervisory board, amid the waning influence of current chief Gerhard Cromme, 72, whose term expires in two years.

Some view the departure of Mr. Heimbach as evidence of Mr. Cromme’s eroding power, since it was his pact with Mr. Kaeser that secured Mr. Heimbach’s position during a board reshuffle less than two years ago.

There is also speculation that ex-Bayer boss Werner Wenning – recently reelected as board member – could emerge as a transitional candidate for supervisory board boss ahead of Mr. Kaeser’s own appointment.

His other option, though, especially if his restructuring strategy continues to yield successful results, is simply to continue business as usual under the motto: the Joe Kaeser show must go on.

Mr. Kaeser sees Siemens in the middle of a digital Darwinism, in a battle with Silicon Valley

That’s exactly what some are demanding. With his restructuring plan titled Vision 2020, Ingo Speich of Union Investment recently called on Mr. Kaeser to see it through to the end. “Jumping ship early would be irresponsible,” Mr. Speich said at the annual general meeting.

For now, Mr. Kaeser is seizing the moment. In Siemens most recent financial report, the company added €200 million ($225 million) to its previously low-balled earnings outlook for the current fiscal year – lifting Siemens long-suffering stock price. The strong dollar and the sale of several larger assets over the past year are buoying its balance sheet. And a €114 billion order backlog – including a record €8 billion order for gas turbines in growth market Egypt – doesn’t hurt.

Mr. Kaeser can use the expected sales surge to further stabilize Siemens’ balance sheet and document his promised growth, which the chief executive has said would outpace rivals – such as General Electric, ABB and Schneider Electric – in 2016.

A chief executive with accounting acumen, Mr. Kaeser counts star equity analysts among his personal contacts, according to industry sources. But when he launched his comprehensive restructuring plan in 2014, analysts and investors, as well as media, were cool to his proposal, even though it streamlined Siemens’ corporate structure by eliminating two levels of hierarchy.

In the face of such skepticism, Siemens’ market value began to decline – sowing displeasure among Mr. Kaeser’s camp. Some of it was aimed at the outgoing Mr. Heimbach.

In December, with its market value down about 1 percent over the past year, placing Siemens in the middle of the pack among the top 100 public companies on Germany’s DAX index, the company decided to refresh its brand.

The new slogan, “Ingenuity for Life,” coincided with the 200th birthday of company founder Werner von Siemens. But it also gained the favor of Mr. Kaeser.

Leading up to the decision, executive and supervisory board members engaged in debates over corporate communications and marketing topics. One insider privy to those conversations cited frequent complaints over Mr. Heimbach’s leadership. Officially, Siemens rejected that version of events, as well as speculation that he was forced out.


111 Siemens-01 WTB 2014 resume


In reality, Mr. Kaeser and Mr. Heimbach met months ago to discuss the end of their rather distant relationship. Since then, the Siemens chief has had time to find a replacement. So far, no one has emerged – which is hardly surprising. Considering his multitude of responsibilities, dealing with the personnel matter apparently got lost in the shuffle.

After a successful annual general meeting in January, Mr. Heimbach bailed to go into business with his wife. That led to the bizarre February 1 press release stating that the Siemens chief executive “will provisionally take over the lead of communication.”

Andreas Föller, founder of consulting company Comites, called it “extremely unusual – even only for a transitional period – to not have an official head of communications.” Moreover, many applicants responded to the job application, according to one insider.

It’s normal for the heads of small- to mid-sized companies to speak for themselves. But for the head of a global corporation such as Siemens to do it is almost unprecedented.

“That is typical Kaeser,” commented one member of Siemens’ supervisory board.

In other words: he is a control freak. Beyond that, the episode documents Mr. Kaeser’s large ego and maybe also the danger of hubris.

Mr. Kaeser sees Siemens in the middle of a digital Darwinism, in a battle with Silicon Valley, where he worked from 1995 to 1999, heading subsidiary Siemens Components. With his American style, Mr. Kaeser considers himself as a born communicator.

Under such circumstances, it’s easy to make mistakes. For instance, in May 2014, with Siemens watchers around the world trying to guess how many jobs could be impacted by his restructuring measures, Mr. Kaeser let slip in front of investors in New York that a total of 11,600 positions would be cut.

Amplified by news wires, word quickly reached Germany, where employees feared for their future, forcing Mr. Kaeser to backtrack in an email sent to all German employees. The reports were “completely false” and took his words out of context, he claimed. “These headlines are creating turmoil and are causing me worries.”

In Mr. Kaeser’s world of turmoil, technology is a double-edged sword. The capabilities of the Internet and smart phones can have positive or negative consequences. He experienced that not only with his inadvertent layoff announcement but also in the high-stakes game of poker with rival GE over the two companies’ bids to takeover France’s Alstom.

After back-and-forth bidding, enabled by today’s light speed of information, Mr. Kaeser succeeded only in raising Alstom’s price tag for GE.

Labor representatives resent the busy Siemens boss for placing parts of Siemens’ rail transport business on the table for possible sale, without taking the time to properly discuss it with them. The issue could come to a head in the near future. Mr. Kaeser is more interested in supplying automation for trains, as in the recent deal with SNCF in Paris, than in building them.

For now, his monopoly of power appears secure – save perhaps for the efforts of activist shareholders bent on destruction. Mr. Kaeser has only to look at their impact among direct competitors to see the threat: ABB, Bilfinger, Thyssen-Krupp and GE all have suffered damage, resulting in the eventual loss of key business units.

Some believe Siemens could also find itself in their crosshairs. So far, Mr. Kaeser has taken the wind from their sails with clever transactions.

Not to be forgotten is Gerhard Cromme, the supervisory board chief. According to one Siemens source, Mr. Cromme is bothered by the public impression that his position rests only on the generosity of Mr. Kaeser.

“It would be a mistake to underestimate Cromme,” said one supervisory board member , as he is still capable of exerting influence – for example on the question of who succeeds him as chief supervisor. One potential alternative to Mr. Kaeser is his chief technology officer, Siegfried Russwurm.

Of course, it is anything but easy to escape from the shadows of the omnipotent Joe Kaeser.


Axel Höpner is the head of Handelsblatt’s Munich office, focusing in particular on Allianz and Siemens. Hans-Jürgen Jakobs is a senior editor at Handelsblatt.  Martin Murphy specializes in the automotive, defence and steel industries. To contact the authors :, and

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