Aluminum producer Alcoa, Inc. (AA) on Thursday said its Board of Directors elected Klaus Kleinfeld as President and Chief Executive Officer of the company. Kleinfeld succeeds Alain Belda, who will continue as Chairman of the Board. The change is effective immediately.
50-year-old Kleinfeld, who has served as a director of Alcoa since 2003, became President and Chief Operating Officer of the company in August 2007. Prior to joining Alcoa, Kleinfeld served most recently as President and Chief Executive Officer of electronics and industrial conglomerate Siemens AG.
Jack Welch of Germany
In his two-year tenure as President and Chief Executive Officer of Siemens AG, Kleinfeld presided over a dramatic transformation of that company. He reshaped the company’s portfolio around three high growth areas, and revenues increased by over $16 billion in 2006 alone. With Kleinfeld at the helm, operating groups met ambitious profitability targets, and the company’s market capitalization almost doubled.
Prior to serving Siemens AG, Kleinfeld was President and Chief Executive Officer of Siemens Corp., the U.S. division of the company. During his tenure, the United States grew in both size and profitability, becoming the company’s largest region.
During his 20-year Siemens career, Kleinfeld, often called the Jack Welch of Germany, also successfully led one of Siemens global medical diagnostic businesses and developed the well known Siemens Management Consulting organization. He was also critical to the creation of top+, the company’s operating system.
Corruption charges
As CEO of Siemens, Kleinfeld sold off its loss making mobile phone production unit to BenQ Corp. He also established a joint venture between Siemens and Nokia Corp. Despite turning around the company and bringing it back to profit, Kleinfeld had to leave Siemens in unpleasant circumstances.
The company was mired in corruption charges and Kleinfeld’s name also was dragged into it. In one of the cases, it was accused that the company bribed foreign officials to obtain contracts. Another charge was that certain officers of Siemens diverted the company’s money to bribe employees of Enel SpA, Italy's largest energy company.
Most of the alleged payments were made when Henrich von Pierer was the CEO of the company, but the scandals came to light during Kleinfeld's time. Though Kleinfeld’s personal involvement could not be established in these actions, Siemens board called for his resignation, as the company was not able to trace the route of corruption. Sensing that his contract might not be extended, Kleinfeld stepped down, stating that "In times like these, the company needs clarity about its leadership.”
It is also believed that the conservative board did not like Kleinfeld, and that the bribery scandals were used as a façade to get rid of him.
Kleinfeld is a Member of the Board of Bayer AG. He also is a director of a number of international and industry groups. He is a marathon runner and enjoys skiing, tennis and the arts. Kleinfeld will reside with his wife and family in the New York area.
Commenting on the announcement, Belda said, "In the short amount of time Klaus Kleinfeld has been an Alcoan, he has made a significant difference for the company. Our election of him to the position of CEO reflects our confidence in him as a truly global leader, capable of continuing to capture the growth opportunities ahead. Klaus has extraordinary energy, a keen understanding of global issues, is committed to continuing the strong operating performance of Alcoa, and embraces our Values. We are fortunate to have his leadership.”
Kleinfeld’s appointment comes at a time when Alcoa, the largest U.S. aluminum producer, sees its profit eroding. The company revealed not-so-impressive first quarter results in early April, as higher raw material and energy costs, as well as a weaker dollar trimmed profit by about 54%, and sales by nearly 7%.
Stock Movement
AA is currently trading at $39.42, up $1.33 or 3.49%, on 17.38 million shares. For the past year, the stock trended in the range of $26.69 - $48.77.
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