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article imageMajority of Siemens board members want to oust CEO

By Jordan Howell     Jul 28, 2013 in Business
Siemens announced in a press release Saturday that CEO Peter Loescher is expected to leave his post four years before his contract expires. His departure must be approved by a majority of Siemens’ 20-member supervisory board.
“At its meeting on July 31, the Supervisory Board will decide on the early departure of the President and CEO,” Siemens said in the press release. “It will decide on the appointment of a member of the managing board as President and CEO.”
Rumors of Mr. Loescher’s early departure come after Siemens released its second profit warning of the fiscal year, its fifth of the past six years, saying that lower market expectations will keep the German engineering and technology company from reaching a profit margin of at least 12%.
Siemens stocks plummeted Thursday in reaction to the profit warning, but quickly rebounded once word leaked that Mr. Loescher may be facing an early departure.
According to Reuters, persons familiar with the situation said the board is slated to announce Chief Financial Officer Joe Kaeser as Loescher’s replacement. “There have been persistent rumors over the past year that Kaeser, who was already on Siemens' management board when Loescher joined in 2007, had his eye on Loescher's job, though the two have repeatedly said they worked well together.”
Siemens has missed several earnings targets since Mr. Loescher took over in 2007. At the time, Mr. Loescher was seen as a potential savior for the company, which had become embroiled in bribery scandals and was forced to pay US $1.6 billion in fines, the largest for a bribery scandal in modern history.
Despite Mr. Loescher’s efforts to rescue the company’s tarnished image, he quickly lost credibility among his peers and industry insiders because he was unable to return the company to pre-recession profit margins.
The company has been trying in recent years to diversify into green energy projects, but progress has been hampered by cost overruns and project delays.
Siemen’s issued its first profit warning of 2013 in May, in which it claimed losses in the solar sector and a struggling world economy were holding back profits.
“I’m underweight on Siemens and am glad that I am,” said fund manager Carsten Hilck in an interview with Bloomberg “This sort of thing can always happen at Siemens and it doesn’t seem to be getting any better.”
As a result of these problems, Mr. Loescher scrapped plans earlier this year to increase annual sales by thirty per cent in favor of cutting $6 billion Euros in operating costs, a move that unions claim could affect 10,000 jobs.
The shakeup comes as Siemens is set to announce its third-quarter earnings Thursday.
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