Hermes Equity Ownership Services (EOS) has raised a number of corporate governance issues at engineering and electrical conglomerate Siemens, ahead of the firm’s annual general meeting (AGM) today.
Hermes EOS has suggested a change at the top of Siemen’s supervisory board “within the next couple of years” on behalf of the institutional investors and pension funds it represents because the current chairman, Dr Cromme, has served longer than shareholders understood he would.
Hans-Christoph Hirt, director at Hermes EOS, explained: “The current chair, Dr Cromme, has been on the supervisory board of Siemens since 2003, and was appointed chair in 2007. When standing for election for a third five-year term in 2013, it was the implicit understanding of many substantial shareholders of Siemens that he would not serve out the full term. However, it now appears Dr Cromme has no intention to step down as chair before 2018.
“Whilst we recognise the valuable contribution Dr Cromme has made to Siemens in the aftermath of the compliance crisis that unfolded from 2006, we urge him to present a successor to shareholders at the AGM in January 2015, at the very latest.”
Hirt (pictured) said the call for change comes following the “abrupt and messy” departure of the company’s former chief executive, Peter Löscher, last summer after about a year into his renewed five-year contract, which raised fundamental questions about the performance of the supervisory board’s main tasks.
He added: “Though we are pleased with the appointment of Mr Kaeser as CEO in the summer of 2013, the CEO transition appeared ill-prepared and poorly executed and damaged the company’s reputation.
“The strengthening of the supervisory board in 2013, including the most recent addition of Dr Snabe, was welcomed; however, further change is needed, not least because there is at present no obvious successor for the current chair.”
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