It’s hard to imagine a CFO in a tougher job right now than Joe Kaeser. Just over a year into his position at $107.4 billion Siemens A.G., the 49-year-old finds himself confronted with a bribery scandal, uncovered last fall, that has shaken the German electronics company—and Germany itself. So far, some $571 million in possible bribes have been disclosed, but Siemens’s own internal review warns of “a significant increase” in that amount. Meanwhile, the Securities and Exchange Commission has launched a formal investigation into the matter; ditto the Department of Justice. Casualties include both the chairman of the supervisory board, Heinrich von Pierer, who resigned in April, and CEO Klaus Kleinfeld, whose contract was not renewed. (Siemens named a new CEO Peter Loescher, current president of Global Human Health at Merck & Co., after the interview was conducted. Loescher takes over July 1.)
Even as Kaeser seems like the proverbial last man standing, it should be noted that the scandal has had little impact on Siemens’s financials. The business has responded well to a restructuring tagged “Fit 4 More,” and the stock has soared more than 50 percent since the program was launched two years ago. Still, even Kaeser admits that Siemens is facing a time of “unprecedented” crisis. And he believes part of his responsibility is to remain visible so “people can see there is someone here to lead the company through hell or high water.”
In the second quarter, all core divisions either met or exceeded margin targets — targets that had been set just two years ago. What was the key decision that allowed that to happen?
Everything started with the Fit 4 More program in 2005. We knew all along that this company needed transformation to just take it to the next level … And if you asked me what the key element was, it clearly has been the leadership of the CEO [Klaus Kleinfeld]. Because he said, “Look, this is what our targets are, and I stand for them and together with my management team and everyone else, we’re going to make it happen.”
What was the biggest hurdle you faced?
From the stakeholder perspective, there were a whole bunch of extremely unpopular actions that had to be taken…[including] the strategic reorientation of one of the [foundations] of the company, the communications business. That certainly caused a huge ripple and caused a lot of questions over whether this new course would not cut at the root of the company. People needed to be reassured and reoriented.
My advice to other CFOs, especially of big companies that are highly diversified, is to have a very centralized financial-control [system]… You cannot do too many financial audits. .”- Joseph Kaeser, CFO, Siemens AG
In announcing targets for the next three years, you were adamant about your own commitment. How you can be so sure “Fit for 2010″ will stay on course given that a new CEO will soon be named?
The major reason I was so adamant [is]that the market needs confidence. The market hates uncertainty. And the Fit 4 More would never have been possible to achieve if we hadn’t had the leadership of Klaus Kleinfeld in the beginning. But Fit for 2010 is different … and the market needs to understand that this is not only related to the leadership of the CEO. [This is about] cultural change in the last two years [that will] carry us forward to achieve those goals no matter who is going to be the new CEO. [Moreover] someone needs to take the helm now and say, look, no matter who is going to come in, I stand for achieving those goals. I have felt compelled to take on that role.