Ahead of Siemens’s AGM in Munich on 26 January 2016, Dr Hans-Christoph Hirt, Director, explains why Hermes EOS will support the early re-election of three members of the supervisory board and its significance for the succession of the chair.
“Hermes EOS, on behalf of the institutional investors it represents, will welcome the progress Siemens has made in the implementation of its strategy, Vision 2020, the 2015 financial results and vote for the early re-election of three members of the supervisory board at the company’s AGM in Munich. We will also request more tangible evidence that the company’s programme to create an ownership culture has a practical impact.”
Early re-election of three members of the supervisory board
“At the 2014 AGM, we raised strong concerns about the composition and work of the supervisory board, following intensive private engagement with Siemens at all levels, including the chair. We questioned the ability of the supervisory board to challenge and support the management board on key strategic issues.
“The company has reacted decisively to criticism at the AGM in 2014. It carried out an externally facilitated board evaluation, revamped a key committee and proposed to replace two supervisory board members at the 2015 AGM – three years prior to the expiry of their mandates. The replacement of two supervisory board members at the 2015 AGM, following the previous change to its composition in late 2013, is remarkable, given that all 10 shareholder representatives were elected for five-year terms in January 2013, and in our view evidences the company’s commitment to cultural change.
“In light of the refreshment we have seen and the forthcoming chair succession, we welcome the early re-election of three members of the supervisory board, whose mandates currently end in 2018, until 2021. We regard this early re-election as another step in the succession planning process and in ensuring stability and continuity in the supervisory board during the implementation of Vision 2020. We however encourage Siemens to communicate more openly about the process for preparation of succession at the top of the supervisory board, due in 2018.”
Progress in the implementation of strategy Vision 2020 and 2015 financial results
“We are satisfied with the company’s progress in the implementation of the first phase of its strategy Vision 2020 and believe that the 2015 financial results show material movement towards its implementation. We would like Siemens to focus on further progress in all businesses towards achieving margins in line with leading peers, or at least within the target ranges, and ultimately profitable growth.”
Progress towards achieving an ownership culture
“Hermes EOS welcomes Vision 2020’s focus on fostering an ownership culture and commends the company for its employee share programme and the profit sharing pool. In order to obtain more visibility on the company’s progress on culture, we will request more tangible evidence that the company’s ownership culture programme has an impact on employees and their behaviours.”