Ex-Siemens CEO thinking big again
October 25, 2017
With half a trillion US dollars (420 billion euros) at his disposal, Klaus Kleinfeld has been tasked with creating an artificial megacity in the Saudi desert. He calls his job in charge of the NEOM project "a once-in-a-lifetime opportunity." Saudi Crown Prince Mohammed bin Salman praises him as having been at the helm of "some of the most dynamic, advanced and efficient enterprises in the world."
In Germany, Kleinfeld is known above all as a former head of the Siemens conglomerate. The Bremen-born manager started working for Siemens in 1987, and within a few years was promoted to head the projects division. As of 1998, Kleinfeld restructured the loss-making medical appliances segment and helped it turn a profit. After that, he helped loss-making US subsidiary Siemens Corp. return to positive net cash flow.
When he was appointed head of Siemens Group, he initiated a lot of reforms - one of which was to get rid of the telecommunications division. Siemens's mobile phone segment, which had missed the trend toward multimedia smartphones completely, was integrated in Taiwan's BenQ in a joint venture. After BenQ pulled the plug on funding, the brand completely disappeared, leaving thousands of ex-Siemens workers jobless.
Siemens also integrated its struggling fixed-line telephone business into Finland's Nokia, which in the end also meant drastic job cuts.
In 2007, Kleinfeld's work at Siemens ended prematurely after a corruption scandal was made public, involving bribe payments to secure overseas infrastructure contracts and support an employee organization, AUB. In addition, the European Commission slapped a 419-million-euro fine on Siemens for large-scale price collusion in the energy division.
Kleinfeld wasn't in the investigators' crosshairs at the time, but he decided to quit anyway, to allow the company to make a fresh start. There was no golden parachute; Kleinfeld didn't get any compensation on leaving. On the contrary, he contributed 2 million euros to settling damages in 2009.
Aluminum and hedge fund woes
In August 2007, Kleinfeld moved to US aluminum company Alcoa as chief operating officer, and soon went on to become the firm's CEO in May 2008, as well as chief executive officer of metal engineering specialist Arconic, an Alcoa spin-off.
He had to part with Arconic in April 2017 after losing a fierce power struggle with Paul Singer, head of hedge fund Elliot Management.
The investor had for months criticized Kleinfeld for what he believed was unsatisfactory performance on the part of Arconic. Kleinfeld wrote a letter to Singer which eventually cost him his job. As became known later, the letter contained a raft of cryptic allusions accusing billionaire Paul Singer of misbehavior during the 2016 Soccer World Cup in Germany.
Singer's lawyer interpreted those accusations as a blackmail attempt, while Kleinfeld's employers said the German had shown poor reasoning. So Kleinfeld had to step down, but this time, his departure was sweetened with $50 million in compensation money.