After the firing of Ericsson’s CEO Hans Vestberg yesterday, the hunt for a new CEO begins, a process that could take a long time, reports DI.
Criticism against Vestberg had increased in recent months and one of the major reasons for Vestberg’s departure is that he did not succeed in lifting the company’s share value. Among other things Vestberg has been criticised for his extravagant travel and excessive salary, while the company’s share price was idling. Furthermore he was under fire for taking on the role of chair of the Swedish Olympic Committee, taking focus away from Ericsson.
Chair of the board Leif Johansson wants the successor to have knowledge of technology, someone who can develop Ericsson outside the traditional telecoms industry. “On the media side, for example administering TV channels, but also connecting cars with networks and other services,” he says.
Ericsson’s CEO Hans Vestberg is to leave his position as CEO at the telecoms company with immediate effect after a board decision.
“Hans Vestberg has led the company for seven years through huge transformations in both the industry and the company. He has built strong relationships and partnerships with important clients around the world and his leadership and energy has been inspirational for both employees and managers in Ericsson. However given the current market situation and the increased tempo in executing the company’s strategy the board has decided that the time is right for a new leader,” says chairman Leif Johansson.
During Hans Vestberg’s time at the helm Ericsson’s shares have fallen by 3.6% while the Stockholm OMXSPI index has risen by 65%.
Two of telecom group Ericsson’s main shareholders, Investor and Industrivärden, have decided that the current chief executive Hans Vestberg needs to step down as soon as a replacement can be found, reports Dagens Industri, citing unnamed sources.
“The problem is that it can be difficult to find a suitable successor who would take the job. There are no internal candidates and the external candidates may be discourage by the situation in Ericsson,” a source told DI.
Both Investor and Industrivärden have declined to comment the information. Vestberg has been CEO since 2010.
Telecoms giant Ericsson’s CEO Hans Vestberg’s journeys by private jet, via Blue Chip Jet, owned together with AB Volvo, cost shareholders SKr 50 million per year.
SvD reports that Hans Vestberg’s expensive flying habits stand in stark contrast to the rules for other employees, who must travel economy class. “You feel extremely disappointed when you know that there are completely different conditions for the management and directors. For them there seems to be no limits at all,” reports an anonymous source from Ericsson.
Now Ericsson has taken the decision to close Blue Chip Jet. However Albin Rännar from the Swedish Shareholders’ Association (Aktiespararna) is critical: “It is strange that Ericsson took a very hurried decision to wind this down. If it has now been justified to put in SKr 300 million over the past six years, why is it suddenly not justified now?”