Lakshmi Mittal has added the top executive management role to his position as non-executive president at the steel giant Arcelor Mittal, replacing Roland Junck who had been chief executive for just three months.
The company said that making Mr Mittal the chief executive, putting him in charge of day-to-day operations, provided it with "clear leadership". It also further strengthened the Mittal family's hold over the business, in which they have a 43 per cent stake. Mr Mittal's son, Aditya, is the chief financial officer of the group, sitting on the management board, while his daughter, Vanisha, is on the company's supervisory board.
During the protracted takeover battle for Arcelor earlier this year, one of the major objections it had raised against Mittal Steel was poor corporate governance and a concentration of power in the hands of the Mittal family.
Mr Junck was a senior manager at Arcelor before it agreed to be taken over by Mittal Steel in June. He was appointed the chief executive of the combined group on 4 August. He will receive an unquantified pay-off, for loss of office, but will remain on the management board as an adviser.
Mr Junck said that it was his idea to eliminate his own job, because there was overlap with Mr Mittal's role.
"I have said that we should eliminate layers, be leaner [as a company]. We should show the way, walk the talk," Mr Junck said.
Mittal Arcelor pointed out that the management change had been unanimously endorsed by the 18-member supervisory board - which was the only board on which Mr Mittal had held a seat before the changes yesterday.
Joseph Kinsch, the chairman of the supervisory board, said: "We are making these changes to clarify the leadership of the company. It had become clear over the past months that the interests of the company were not best served by the previous structure,"
Mr Kinsch said the integration of the two firms was progressing well but the new role for Mr Mittal would "give new momentum" to the business. "Lakshmi Mittal really is for our company the best CEO. Look at what Lakshmi Mittal has done with his life ... all the success he has had in the steel industry," Mr Kinsch said.
Shareholders will be given a vote on the management change, which was effective immediately, but that will not come until the company's annual general meeting in May 2007.
Colette Neuville, the head of the Adam minority shareholder group, said it was a shame Mr Mittal had not said from the start that he would head the group. "But it doesn't pose a problem as long as there are effective checks and balances in the company and that, for example, board members play their role fully," she said.
Arcelor Mittal also reported third-quarter results yesterday. Ebitda (earnings before interest, tax, depreciation and amortisation) came in at $4.4bn (£2.4bn), a 24 per cent increase over the second quarter.Reuse content