Siemens
Age: 52
Year named CFO: 2006
Number of employees: 430,000
2008 earnings: E5.7 billion ($8.3 billion)*
Compensation: E3.5 million ($5.0 million)*
Many CFOs have been tested by the financial crisis. Joseph Kaeser came to it battle hardened.
Kaeser, a veteran Siemens executive, thought he had the best job in the world when he took over as CFO in May 2006. Instead, he immediately found himself on the front lines of a scandal over alleged bribes that company executives had paid to win orders. The affair forced the resignation of chairman Heinrich von Pierer and the early departure of CEO Klaus Kleinfeld in 2007. Kaeser spent most of the next two years overhauling the company’s internal controls and cooperating with German and U.S. investigations into the alleged payments. In December the company pleaded guilty to U.S. charges of circumventing internal controls and violating the Foreign Corrupt Practices Act and agreed to pay a total of $800 million in fines and restitution to settle criminal and civil charges; it also paid €596 million in fines to settle German legal investigations.
“It was a question of whether or not the company would keep its license to do business,” says Kaeser. “Siemens could not afford to fail.”
In addition to addressing legal matters, Kaeser ramped up a corporate restructuring that Siemens had initiated in 2005. The plan consolidated 13 business divisions into three — energy, health care and industry — which it subjected to strict financial targets. The company sold unprofitable or peripheral businesses such as its stake in Fujitsu Siemens Computers and a nuclear power alliance with France’s Areva.And Kaeser set a target of cutting costs by €1.2 billion a year by next year by reducing Siemens’s 1,800 legal entities around the world to fewer than 1,000. “This is about streamlining, making sure there is only one M&A department in the company, not 15, as we used to have,” he says. “It is to make sure there is only one clear chain of command at the accounting level and the reporting level.”
Analysts appreciate the CFO’s tough controls. “Kaeser introduced a much more rigorous system of financial targets that lead to financial discipline at the group level, which is something you don’t often see in companies in continental Europe,” says Christian Frenes, a New York–based analyst at U.S. pension fund manager TIAA-CREF.
* For the fiscal year ended September 30, 2008.
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