Pressure from institutional investors has seen the chairman of the Siemens supervisory board agree to look for a successor.
Pension schemes and institutional equity owners in the German conglomerate have been calling for chairman Gerhard Cromme to stand down.
In advance of the company’s annual general meeting (AGM), Hermes Equity Ownership Services (EOS), an advisory services provider for institutional investors in equity, said aspects of the firm’s corporate governance was concerning.
Cromme was appointed chairman of the Siemens supervisory board in 2007 after acting on the board for four years.
He oversaw the embarrassing departure of former chief executive Peter Löscher last summer, who was publically ousted by the board and replaced by the CFO.
Investors became concerned after Cromme had a hand in the renewal of Löscher’s contract for another five years in 2012, only for his departure a year later.
Concerns increased after Cromme was also removed as chair of the board for fellow German conglomerate ThyssenKrupp, in March 2013.
The chair is currently serving his third five-year term on the board, but, after running again in 2013, told investors his term would be used to find a successor and that he would not serve it in its entirety.
However, in December 2013, Cromme declared a change of heart and said he would remain chair until 2018.
Hans-Christoph Hirt, director of Hermes EOS, said Cromme misled shareholders over when he would stand down.
“It was the implicit understanding of many substantial shareholders of Siemens that he would not serve out the full term,” Hirt said.
“It now appears, though, that Cromme has no intention to step down as chair before 2018.”
However, Cromme has now agreed to look for a successor, after an open statement from Hermes EOS and added pressure from Dutch pension fund APG, the US pension fund CalSTRS and German fund managers.
In his statement, Hirt said there was currently no obvious choice for Cromme’s successor, and that Hermes EOS understood any succession should be structured and planned.
“Gerhard Cromme should present a successor to shareholders at the AGM in January 2015,” he added.