The chairman of electrical engineering group, ABB, has told shareholders the company should reverse its acquisition strategy and concentrate on its core businesses.This content was published on March 12, 2002 - 22:31
Addressing the company's AGM, Jürgen Dormann said ABB had made too many acquisitions and had failed to properly incorporate them into its corporate structure.
He said the company should now concentrate on the core businesses of automation and energy, and divest itself of other activities.
Dormann said there had been clear mistakes in the past, among them former CEO Goran Lindahl's drive to turn the company into a "knowledge" group.
He also criticised the company's management structure saying for "too long there was too much power in the hands of one man".
He was referring to another former CEO, Percy Barnevik, who oversaw the creation of the company from the 1988 merger of Sweden's Asea and Switzerland's Brown Boveri.
However, Dormann praised Barnevik for making ABB a global player and said it was thanks to the former CEO that the company developed its Swiss and Swedish roots to become a multinational.
The AGM is Dormann's first as chairman, and comes amid a growing crisis in the group, which last month announced losses of $691 million for 2001.
The company's share price has been in free-fall for the past year, and recent revelations that it paid out SFr233 million in pension benefits to Barnevik and Lindahl have damaged its reputation further.
ABB's shareholders described the pension payments as a complete "rip-off" and a "raid" of the company's finances.
However, the 2,212 minor shareholders gathering in Zürich did not have enough clout to override the majority shareholders and their vote exonerated the management board for the year 2001. The company report and accounts for the same year were also accepted.
ABB's largest shareholder, Martin Ebner, was also voted in favour of exonerating the board. He said the agreed repayment by Barnevik and Lindahl was not really fair but a good solution to get ABB out of this crisis of confidence.
Last Sunday, following an internal and external review, both former executives agreed to pay back a portion of their respective benefits' packages, after a public outcry in both Switzerland and Sweden.
But despite the agreed repayment of SFr137.2 million, shareholder representative, Hans-Jacob Heitz, described the pension benefit payment as "bold theft".
Dormann said recently that the company's decision to go public about the payouts was part of a new "culture of openness", but media speculation has focused on Ebner's role.
The Swiss financier is thought to have the catalyst behind the company's decision to reveal the scale of the payouts. Ebner owns an 11.1 per cent stake in the engineering group and is said to be incensed that his investment has performed so badly.
Dormann noted that ABB's market value had fallen by a third in two years to $10 billion, partly because of the company's exposure to possible asbestos lawsuits in the United States.
In January, the company said it had taken a $470 million charge against its 2001 earnings to increase its provisions against possible asbestos claims from workers and clients related to a US unit.
But in his address on Tuesday, Dormann said asbestos was only part of the problem and that ABB had lost its focus after Barnevik stepped down as CEO in 1996.
"Barnevik knew the company like his trouser pocket... He could keep the parts together and aim it towards the goals," he told shareholders.
All board members are resigning at Tuesday's AGM, with Dormann, CEO Jorgen Centermann and Martin Ebner being put up for re-election.
swissinfo with agencies
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