Siemens boss Joe Kaeser has praised activist investors as he stepped down from the slimmed-down industrial group with its shares trading at all-time highs.
His stance is unusual in Germany, where investors seeking to break up conglomerates were once pilloried as “locusts”. But Mr Kaeser said the prospect of activists demanding change at Siemens had acted as a catalyst for his own restructuring.
“Many people, especially in Germany, say ‘Oh my God, there are those activists, they are bad people’,” he told the Financial Times, “and I always say, well they are just people who believe they can do better than management . . . and I think they are well advised to listen to them.”
After 40 years at the industrial group, seven as chief executive, Mr Kaeser’s final act was to chair the virtual annual meeting on Wednesday, where, in a stark contrast to last year’s event, he was praised by asset managers.
Shareholders say Mr Kaeser’s transformation of the 170-year-old company has done more than create an attractive asset for capital markets. It has proven that large, sclerotic German companies can be restructured.
“Nobody else in Germany ever tried to do something like this,” said Ingo Speich, a portfolio manager at Deka, a top-10 Siemens investor. “It was high risk and it is a big achievement.”
Speaking via video call from his Munich office, Mr Kaeser lauded investors for their persistence. “They should [push for restructuring] because they own the company,” he said.
The Siemens lifer also believes shareholders who once called for his ousting will help keep the company on course — and keep his chosen successor Roland Busch in check.
“Should things go wrong because management gets slower or have second thoughts about the journey, then there will be investors, you know, telling them how to continue,” said the 63-year-old. “There is an insurance.”
Mr Kaeser’s strategy appears to be paying off with his plan to transform the German group into an agile “fleet of ships” bearing fruit after the spin-off of Siemens’ healthcare and energy divisions.
The spin-off of Siemens Healthineers has led to a standalone company worth more than BMW, while the September flotation of Siemens’ energy unit is expected to further benefit the group.
Siemens’ share price has also risen 140 per cent to €135 from its March lows, making up roughly half of the 40 per cent “conglomerate discount”, where Mr Kaeser insisted the company once languished, despite trading at lower multiples to rivals such as ABB, Schneider Electric and Rockwell Automation.
On Wednesday, Siemens reported a 38 per cent rise in net income for the last three months of 2020 to €1.5bn, and raised its forecasts for the financial year.
The success is a stark contrast to the chaos that has accompanied the break-up of Germany’s other industrial giant Thyssenkrupp, which was forced to sell its prize asset, a lifts division, after years of mismanagement.
But Mr Kaeser learnt from watching Thyssenkrupp become the target of activist investors such as Elliott and Cevian, and “started the approach to split the company up”, said Mr Speich.
While Mr Kaeser admits that the job at Siemens is only half done, the man who became the de facto ambassador for German industry in his seven years at the helm has no misgivings about the timing of his departure.
“If people believe they are perfect already, they should go immediately,” he said.
“Should I have done more? Well, sometimes I think I should have,” he said. “On the other hand, I needed to balance the do-able and the desirable and it doesn’t do me any good if the unions go on strike in my automation division just because I do more restructuring on infrastructure.”
He claims to have few regrets, but he does bear some grievances, particularly with Brussels.
A proud European who often wades into political debates on his Twitter feed, the executive was disappointed by the EU’s decision in 2019 to block a tie-up of Siemens’ train division with French rival Alstom.
“Competition doesn’t stop at the borders of the EU,” said Mr Kaeser, who had argued that the deal was necessary to stave off Chinese rivals.
If Europe fails to make it easier for homegrown companies, the continent will become a “museum where Asian countries come to see how it used to work in the past”, he said.
Mr Kaeser’s next act is to take the helm of the Siemens Energy supervisory board, where he will face the ire of unions and environmental activists once again.
Last year, amid a backlash against Siemens’ contract to service a new coal mine in Australia, he offered 23-year-old climate campaigner Luisa Neubauer a seat on the new energy company’s supervisory board, which she dismissed as a stunt.
But while he said he would continue to engage with protesters, Mr Kaeser was critical of their methods. “Activism is a business model,” he said. “If they start engaging in solutions, they lose the business model of activism.”