For years we have complained that fund managers do not stand up enough to the boards of the companies in which they invest, but at last that is changing.
On Tuesday Hermes let off both barrels at Gerhard Cromme, chairman of the supervisory board of Siemens, the German industrial giant. Basically it gave him 12 months to pack his bags and go.
In a letter made public on the day of the company’s annual meeting, Hermes noted that Dr Cromme appeared set on staying till 2018. That, it believes, is too long. It wants him to “present a successor to shareholders at the AGM in January 2015 at the latest”.
His time is up, in Hermes’ opinion, because of the way in which the board ousted its previous chief executive last summer. The letter said this transition appeared “ill prepared and poorly executed and damaged the company’s reputation”. Siemens now needs “change at the top” to allow the company to put the past behind it and prepare for the challenges to come.
This is far more direct and personal than you usually get with a fund manager. Perhaps Hermes could consider taking a similar line with some of the less effective boards in this country.