Klaus Kleinfeld, the Siemens chief executive, will assume greater control over the future direction of Germany's biggest technology group after the resignation of chairman Heinrich von Pierer late on Thursday over a corruption scandal, insiders and analysts said today.
The youthful Mr Kleinfeld, who is due to deliver better-than-expected second-quarter earnings on Thursday, is expected to set tough new targets for profit margins the same day and enjoy greater freedom to dispose of under-performing businesses built up by Mr von Pierer, his predecessor, during his years in charge.
A leading German industrialist and close confidant of chancellor Angela Merkel, Mr von Pierer stepped down denying any personal responsibility for the scandal that has cost Siemens more than €500m in bribes to win overseas contracts and led to the arrest and trial of several senior managers. There are four separate criminal investigations.
Shares in the group rose to six-year highs of more than €90 as a "deeply affected" Mr von Pierer condemned in a round email to Siemens 400,000 staff the "unfair treatment" meted out to him by the media and the "blanket prejudgments" without regard to the facts made over deserving members of the firm.
Mr von Pierer, who is to keep his role as a government advisor, according to Ms Merkel's spokesman, is to be replaced temporarily - until January 24 2008 - by Gerhard Cromme, ThyssenKrupp chairman who heads Siemens audit committee investigating the scandal and drafted Germany's corporate governance code.
The chairman, whose resignation takes effect next week, said in his email to staff: "We cannot tolerate any violation of existing laws."
He told the group's annual meeting in January of his "deep distress" that it had been unable to comply with corporate governance rules despite his efforts and repeated today that the sole reason for his decision to quit was "to serve the best interests of Siemens".
Mr von Pierer's position became untenable after leading union representatives on the Siemens supervisory board allied with shareholder representatives in urging him to step down in private talks ahead of next Wednesday's board meeting.
Werner Neugebauer, Bavarian head of engineering union IG Metall cast doubt on Mr von Pierer's assertion he knew nothing of the scandals that, the union chief added, had damaged the firm and demotivated employees.
Analysts said the resignation could leave the way clear for Siemens to conclude its investigations of the scandal and to restructure its management board - with which Mr von Pierer was not always in accord.
Ben Uglow, a Morgan Stanley analyst, said: "We believe this resignation hands over the reins of restructuring fully to Kleinfeld and [chief financial officer, Joe] Kaeser."
David Gow in Brussels
Friday April 20, 2007