German companies take knife to traditional ties: Ex-chief executives are no longer guaranteed a future in the brave new business world. John Eisenhammer reports

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The Independent Online
GERMANY'S corporate tradition suffered a further blow today with the failure of Werner Dieter, chief executive of Mannemann, to be elected chairman of the company's supervisory board.

As the most radical restructuring for a long time continues to rock German business, the latest victim of the upheaval is the unwritten rule that when a chief executive retires, his influence automatically carries on for five to 10 years in the powerful role of head of the supervisory board.

The imperative of change over continuity - provoked by a rash of scandals at big corporations, and a heightened sensitivity to questions of corporate governance - has led to increasing instances of this tradition breaking down.

Mr Dieter, who retires as chief executive of Mannesmann, one of Germany's foremost industrial companies, had long expected that today's shareholder meeting would bless his switch to the supervisory board's top post, with little debate.

This transition is traditionally the key element providing cohesion between a management board, which runs the day-to-day business, and the supervisory board.

The latter, containing senior outside executives from the big banks, oversees strategy and has the power to hire and fire management.

Mr Dieter's hopes of prolonging his hold over Mannesmann's developments have been dashed, however.

A flurry of suspicions of fraud and accusations of personal enrichment have recently buffetted the outgoing 65 year-old chief executive.

But Mr Dieter's misfortune is not unique.

Hoechst, the chemical colossus, recently blocked entry to the supervisory board of Wolfgang Hilger when he retired as chief executive. Jurgen Dormann, Hoechst's new boss, wanted a free hand, and he rapidly followed Mr Hilger's departure with a much needed shake-up of the chemical group.

Jurgen Weber, who on Wednesday described Lufthansa's return to profit after five loss-making years as one of the airline business's great turnaround stories, ensured himself room for radical changes by preventing his predecessor, Heinz Ruhnau, from getting the senior position on the carrier's supervisory board.

Volkswagen's strongman, Ferdinand Piech, also made sure his determination to turn Europe's leading car manufacturer upside- down would not be cramped by continuity from his predecessor, Carl Hahn.

Preussag and RWE are another two big corporations where the tradition has recently broken down.

Significantly, there are growing doubts about whether Edzard Reuter will take over the supervisory board's top post at Daimler-Benz when he is succeeded by Jurgen Schrempp as chief executive in May next year.

Mr Reuter's controversial expansion at Daimler has engendered speculation that his successor may need freedom for change more than continuity.

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