Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Vodafone Names Kleisterlee Chairman to Replace Bond

Vodafone Names Kleisterlee Chairman to Replace Bond
Gerard Kleisterlee, chief executive officer of Royal Philips Electronics N.V. Photographer: Jock Fistick/Bloomberg

Feb. 2 (Bloomberg) -- Vodafone Group Plc named Gerard Kleisterlee, the chief executive officer of Royal Philips Electronics NV, as chairman after some shareholders voted against the re-election of incumbent John Bond.

Kleisterlee, who is 64 years old and slated to step down as Philips CEO in March, will be appointed as a non-executive director of Vodafone on April 1 before becoming chairman at the annual meeting in July, the company said today in a statement.

Kleisterlee joins Vodafone, the world’s largest mobile-phone company, after he revived earnings at Philips. He replaces Bond, 69, whose resignation was called for by more than 6 percent of shareholders in July, with one investor labeling Vodafone’s acquisition record “disastrous.”

“Vodafone has some of the same problems which Philips used to have,” Corne van Zeijl, who helps manage about 40 billion euros at SNS Asset Management, said via phone, adding that Vodafone needs to deal with minority holdings it can’t control including a 45 percent stake in U.S. operator Verizon Wireless. “I think that’s the main reason why Kleisterlee has been picked.”

Verizon Communications Inc., which owns the rest of Verizon Wireless, has withheld a dividend from the joint venture to focus on paying down debt. Verizon last month said it may decide by the end of this year on a dividend for Vodafone.

Reshaping

Kleisterlee got Philips, the world’s biggest lighting company, out of components, semiconductors, corporate communications systems and limited unprofitable television activities by moving into licensing agreements. The company’s three main businesses now are health-care, lighting and consumer lifestyle.

He also reshaped Philips with targeted acquisitions and divestments to focus on industries with higher margins and stable earnings. He reduced the number of units from eight to three.

“It was clear that Philips had to change,” Kleisterlee said in a speech in May, pointing to the turmoil in the 1990s and the bursting of the technology bubble in 2000.

Kleisterlee rose to the position of CEO in 2001 after decades at Amsterdam-based Philips.

”Philips is in much better shape after 10 years of Kleisterlee,” said Marcel Achterberg, an Amsterdam-based analyst at Petercam Bank.

Vodafone shares rose 0.9 percent to 178.6 pence as of 9:42 a.m. in London trading.

‘Disastrous’

The Ontario Teachers’ Pension Plan, a Vodafone investor, in July called for a re-examination of Vodafone’s “disastrous ” acquisition record. OTPP focused on Vodafone’s acquisitions after the company wrote down the value of its Indian purchase by 2.3 billion pounds ($3.7 billion) in May, citing “intense price competition.”

Bond said today that the succession planning process started in February 2010. Kleisterlee’s “track record at Philips speaks for itself,” he said. Bond became chairman in 2006 after retiring as chairman of bank HSBC Holdings Plc.

OTPP, which voted against directors’ pay in 2007, last year didn’t oppose the re-election of Chief Executive Officer Vittorio Colao.

Since the shareholder meeting last year, Colao sold holdings in Japanese wireless operator Softbank Corp. for 3.1 billion pounds and disposed of its stake in China Mobile Ltd. for $6.5 billion in the biggest divestment since Colao took charge.

Higher Sales

Colao is reviewing the company’s 44 holding in French mobile-phone operator SFR, which partner Vivendi SA wants to buy. Vodafone is also considering a sale of its 24 percent holding in Polish mobile-phone operator Polkomtel SA. The owners are sending out a memorandum to potential bidders, one of the shareholders said Jan. 31.

Colao is selling off minority assets at Vodafone as he focuses on selling smartphones and investing in faster networks.

Vodafone may say tomorrow service revenue excluding currency swings and acquisitions rose 2.4 percent in the fiscal third quarter, compared with a 1.2 percent drop a year earlier, according to the average of 11 analyst estimates in a Bloomberg survey. Vodafone returned to growth in the quarter that ended June after a year and a half of declines.

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.