Siemens’ CEO will fight for his job at a board meeting this week after the firm announced it would sack him at the weekend.
Citing company sources, German newspaper Sueddeutsche Zeitung said today that Peter Loescher plans a probably doomed fight for his job at Wednesday's supervisory board meeting.
Pressure had been mounting on Loescher after he repeatedly misjudged demand development in the group's main markets, and last week appeared to provide the final straw when Siemens scrapped its 2014 profit margin targets.
But, in what is quickly shaping up to be one of the most dramatic corporate battles in Germany in years, German daily Sueddeutsche Zeitung cited company sources as saying Loescher was willing to resign only if supervisory board chairman Gerhard Cromme also leaves.
Otherwise, Loescher hoped to pull together the necessary two-thirds majority to prevent being fired, though boardroom sources told the paper he had no hope of succeeding.
A spokesman for Siemens denied Loescher wants Cromme to go down with him. Loescher did not comment on the report.
In a tersely worded statement on Saturday Siemen’s said that Loescher would be leaving the company four years before his contract expires.
Two people familiar with the matter told Reuters the majority of the 20-member supervisory board favoured finance chief Joe Kaeser as a replacement for Loescher, who has failed to deliver on his promises of growth and profitability.
The turmoil at the helm of Siemens, Germany's No. 2 company by market value and a bastion of its manufacturing sector, erupted after the company issued its second profit warning this year, sending its shares plunging 8 per cent.
Some investors believe Siemens veteran Kaeser, if named, could turn the company around.
"Kaeser's experience and detailed knowledge of the company make him suitable to succeed Loescher, and we appreciate the breadth of his qualification and experiences," Commerzbank analyst Ingo-Martin Schachel said.
Others said they expected that Kaeser would quickly tighten the reins on costs at Siemens – whose products range from gas turbines to fast trains and ultrasound machines – and sell more non-core businesses such as those that make rail technology or healthcare software.
Loescher and Kaeser have repeatedly said they worked well together, though Kaeser has been taking the lead at investor conferences, laying out details of Siemens' business while his CEO relied more heavily on broad comments.
When asked in 2012 about rumours of friction at the top, Kaeser said they complemented each other like "light and dark".
Loescher has in the past promised the company would grow faster than rivals such as ABB, General Electric and Philips.
But bungled acquisitions, charges for project delays and a focus on top-line growth have caused Siemens to fall behind. Loescher announced a plan last year to cut €6bn (£5.1bn) in costs over two years and lift core operating profit margin to at least 12 per cent from 9.5 per cent by 2014.
Last week Siemens rattled shareholders by abruptly abandoning its margin target in a brief statement that left investors clamouring in vain for more information. Two days later, Siemens said its supervisory board would decide at a meeting on Wednesday on CEO Loescher's early departure.
Ingo Speich, a fund manager at Union Investment, criticised Siemens for announcing that Loescher would be leaving before the supervisory board had even taken its vote.
"Infighting just unnecessarily worsens the problems at Siemens. This is not good corporate governance," he said.
On Thursday, Siemens is expected to report a 23 per cent drop in quarterly core profit.
The company's failure to keep up with rivals has caused investors to favour companies that were faster to slash their cost base and focus on profitable business rather than on increasing revenue.