ThyssenKrupp: How Cevian dupes the Krupp Foundation

ThyssenKrupp

The beginning of the end of the industry icon ThyssenKrupp as we know it was not the serious management mistakes, for example in Brazil. Good board members and supervisory board members could have made up for that. In our opinion, the beginning of the end was the entry of the financial investor Cevian in 2013, which was acclaimed by the stock market, as this left too little time to get the company back on track: The impatient Swedes have built up more and more pressure and now, according to the Handelsblatt, have even pushed for a generous special dividend. According to the report, CEO Guido Kerkhoff strongly opposed this request, as did the employee representatives on the Supervisory Board.

Shareholder Value Ideology vs. German Governance Culture

This makes Cevian CEO Lars Förberg’s prayer mill-like assertions that the company is a long-term investor concerned with the well-being of the company appear in a new light. Because the longer the hoped for abundant returns failed to materialize, the more aggressively the financial investor demanded the destruction. The fact that the friendly Swedes apparently didn’t even shy away from pushing for high payouts despite empty coffers can be seen as unmasking. The company ranks second; at ThyssenKrupp the shareholder value ideology clashed with the German governance culture.

What supervisory boards can learn from the drama…

Unfortunately, the major shareholder, the Krupp Foundation, has so far had little to offer Cevian: Construction errors have led to a shortage of high-calibre experts with entrepreneurial experience on the Board of Trustees. We therefore sincerely hope that the Foundation will bring more competent entrepreneurs or managers on board. In addition, the ThyssenKrupp drama should be a lesson to all supervisory boards confronted with investors à la Cevian. It is not just a question of critically questioning their intentions – supervisory board members have to stand up to them in the event of an emergency. In any case, the long silence of Ursula Gather, the head of the foundation, meant that Heinrich Hiesinger and Ulrich Lehner no longer saw any support and resigned. In retrospect, everything indicates that this was the decisive stage win for Cevian.

… and why they should come to the 15th DART

However, any confrontation should be preceded by dialogue. We are therefore pleased that Cevian’s German CEO Jens Tischendorf will attend the “Dinner & Talk” at the 15th German Supervisory Board Meeting (#DART15) on November 4 in Düsseldorf. There’s a lot to discuss.