Vodafonewatch Report #89 Extract: Kleisterlee selected to replace Bond
16 March 2011
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Extract from Vodafonewatch, report #89. Click through for: the Executive Brief from this month’s report; the Report Snapshot; or to contact us for more information about the full 82-page report, this industry standard monthly report service, and ongoing subscription access.
Kleisterlee selected to replace Bond
Vodafone named Gerard Kleisterlee, the outgoing President and Chief Executive of Philips, as the replacement for Chairman Sir John Bond — who, as previously reported, is due to step down from the role at the Group’s Annual General Meeting (AGM) in July 2011 (Vodafonewatch, 2010.09).
Kleisterlee will retire from Philips on 31 March 2011, and join Vodafone the day after, first as a Non Executive Director, the Group said. Bond has since been named as the new Chairman of Swiss mining group Xstrata.
In its statement, Vodafone sought to emphasise that it began planning for the succession in February 2010 — well before its rocky July 2010 AGM, which saw Bond take heat from a minority of the Group’s investors over its strategy and share price (Vodafonewatch, 2010.09).
While Kleisterlee’s lack of direct telecoms experience was widely noted in coverage of the appointment, Vodafone pointed to his “deep knowledge of a commercial sector adjacent to Vodafone’s” — namely consumer electronics — as key to the selection. Obvious synergies also lie in Kleisterlee’s experience in medical equipment supply, with Vodafone in the midst of machine to machine communications and connected device pushes.
Born in Germany, and raised in the Netherlands, the 64 year old is clearly a ‘Philips man’, having spent his entire career (spanning back to 1974) at the company, and rising to his present position in 2001. However, he has also been a:
- Member of the Daimler AG Board since April 2009.
- Non Executive Director at Royal Dutch Shell since November 2010.
- Board member at Dell since December 2010.
Vodafone highlighted Kleisterlee’s “international experience, and his familiarity with business in emerging markets” – including time spent in Asia, thus compensating for the loss of Bond’s expertise in that region.
It is interesting, however, that Kleisterlee does not appear to be a USA hand — a notable gap at a time when relations between Vodafone and prize asset Verizon Communications appear to be warming, and realignment of their Verizon Wireless joint venture looks on the cards (Vodafonewatch, passim).
Another operations, efficiency technocrat?
Also noted by the statement was Kleisterlee’s operational skills, highlighting Philips’ “profound transformation” under his leadership, including creation of a “structurally higher level of profitability based on a strong brand, a customer centric approach, and a simpler structure”, and enaction of the “largest acquisition and divestment programme [including the 2006 sale of its semiconductor business] in its long history”.
In this respect, the new Chairman appears quite like Vittorio Colao, Chief Executive of Vodafone — a good prospect for Board harmony, but not necessarily for providing a balance to the now secure and strong Chief Executive, something Vodafonewatch has previously highlighted as a worry (Vodafonewatch, 2010.09). Nor does this suggest Kleisterlee will be a “growth” oriented risk taker, or counterpoint to Vodafone and Colao’s current cautious view on expansion, to implement a Grand Plan for the Group. This may be a very good thing, but it will sadden observers harking back to Vodafone’s racier past.
“ His track record is very good. He’s combined a good strategic repositioning at Philips with a really good operational performance, and quite clever, selective M&A where required. But he’s not a gung ho dealmaker at all. It’s been incremental and about the need to reposition the Group… What he might bring is stronger support from the Board for what Vittorio Colao is trying to do. ”
– Will Draper, Analyst, Execution Noble.
[Further reference: Gerard Kleisterlee to succeed Sir John Bond as Chairman -- Vodafone, 2 February 2011; New Vodafone chairman brings emerging markets focus -- Reuters, 2 February 2011; Vodafone Chairman to join Xstrata -- Financial Times, 7 March 2011.]
About Vodafonewatch
Report: #89
Covering: February-March 2010
Published: March 2011
Next report: April 2011
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