Osram CEO Survives Clash With Biggest Shareholder Siemensby and
Siemens voted against approving Olaf Berlien's Osram strategy
Siemens's criticism of Berlien sent Osram shares soaring
Osram Licht AG Chief Executive Officer Olaf Berlien successfully dodged an attack on his strategy from shareholder Siemens AG by securing the backing of a majority of investors in a vote that brought to a head a long-festering dispute.
Siemens used Osram’s annual meeting in Munich on Tuesday to criticize Berlien’s performance last year and push through what amounted to a vote of confidence in the executive. At the end of a six-hour gathering, 71 percent of investors said they supported Berlien’s business plan for Osram, the world’s second-biggest lighting company.
Osram shares closed 0.2 percent lower at 38.51 euros in Frankfurt after rising as much as 8 percent when Siemens called for the vote. About 2.3 million shares were traded, more than quadruple the three-month daily average.
Months of tension between the two companies burst into the public arena when a representative for Siemens Chief Executive Joe Kaeser challenged Berlien’s ability to run Osram effectively. Berlien has presided over a 30 percent decline in the share price since he unveiled a shift in strategy, which some investors said exposed its semiconductor business to less profitable end markets.
Chairman Gives Support
Osram supervisory board Chairman Peter Bauer declared his support for Berlien’s strategy after the result of the shareholder vote was published, saying there was no alternative to the plan in order to secure Osram’s long-term sustainability.
"Although there was a lot of criticism, it was not enough for the supervisory board to discontinue its support," Bauer told reporters. "Of course some investors would see an opportunity in a strategy shift, but it’s questionable whether that would bring the share price up to same level as before, especially if the CEO were to leave."
With a 17 percent stake, Siemens is the biggest investor in Osram, which it spun off in 2013. The partial turnout at the shareholders’ meeting meant that Europe’s largest engineering company controlled 28 percent of the votes cast on Tuesday.
In a procedural move, Siemens lawyer Christian Bleiweiss told shareholders the Munich-based company would vote against Berlien’s actions. Bleiweiss demanded that the annual vote to ratify the decisions made by the whole board last year be exceptionally split into separate votes for Berlien and his finance head Klaus Patzak. Patzak won 97 percent approval in the poll.
A CEO must “carefully direct a company’s actions while keeping in mind its further development and investors’ interests,” Bleiweiss said. “This was not sufficiently the case” at Osram, he added to applause from sections of the auditorium in the convention center where the meeting was being held.
Critics of Osram’s strategy have included Siemens’s CEO Kaeser, who complained in December that the value of his company’s investment had fallen by about 260 million euros ($290 million). Such a public display of dissent as at the meeting is rare in corporate Germany and brought to a fore months of more subtle exchanges in media interviews between managers of the two companies.
Berlien had defended the new business plan earlier on Tuesday, saying that several major investors have increased their holdings, backing his strategy.
“For some weeks now we’ve been speaking with potential new investors and have been able to convince them that our strategy is the right one,” Berlien told shareholders, without naming the investors. “As a consequence, several major investors have increased their stake.”
The comments come less than a month after Kaeser told journalists in response to a question about Osram that it was “important that management enjoys the trust of customers and investors.”
Berlien took over as CEO at the start of 2015 after his predecessor underestimated the pace at which the lighting industry would shift toward light-emitting diodes from traditional lamps. As part of his new program, Osram will invest 3 billion euros in research, development and a new Malaysian plant to make semiconductor chips for LEDs.