Siemens Board Pay Move Too Late

Siemens AG is set to cancel a controversial 30 per cent executive pay hike and allocate €30 million for employees of its former cell phone business, according to a report citing its CEO published yesterday.

The German electronics and engineering conglomerate ceded its unprofitable handset business to Taiwan’s BenQ Corp. a year ago as part of a restructuring drive under chief executive Klaus Kleinfeld.

However, BenQ unexpectedly pulled the plug last week, saying it could not afford to pump more capital into the business because there was only ‘a very slim chance’ of turning it around. The unit filed for insolvency protection last Friday.

According to a report in the Bild newspaper, Kleinfeld and other top Siemens managers will respond by renouncing a planned 30 percent pay rise that has already drawn allegations of greed.

“We have a new situation now and we want to signal our solidarity with the people” who could lose their jobs, Kleinfeld was quoted as saying. “If BenQ abandons the work force, we want to help them actively and quickly.”

The estimated €5 million (US$6.3 million) saved by giving up the pay rise will flow into a €30 million fund to pay for training to help the 3,000 employees of Siemens’ former cell phone unit find new jobs, Bild reported.

Kleinfeld said at the time of the takeover that he had found a ‘sustainable’ solution for the unit, now called BenQ Mobile. Staff accepted sharp wage cuts and BenQ forecast at the time that the unit could break even in 2006.

Labour leaders, politicians and media commentators at the weekend accused Siemens as well as BenQ of betrayal and put massive pressure on the Munich-based company to step in to help. The Bild am Sonntag newspaper ran its coverage of the affair on Sunday under a picture of a grinning Kleinfeld and the headline ‘The Ruinator.’

“I welcome it if Siemens is now doing everything to give as many employees as possible prospects for the future,” Bild quoted Chancellor Angela Merkel as saying in its Monday edition.

Kleinfeld said BenQ’s handling of the mobile business was ‘unacceptable’ and reiterated that Siemens could take legal action against the Taipei-based firm.

“We were assured that the German facilities would be kept running and strengthened. This promise has been broken. We are examining all legal avenues against BenQ,” he was quoted as saying.

He rejected suggestions that Siemens knew the mobile unit was doomed.

“Our goal was always to give the Siemens mobile business a solid future. To that end, we made funds, patents and even our brand name available,” he said.

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