Schneider fails first test of CEO succession plan
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Pierre Briancon
BERLIN, Nov 4 (Reuters Breakingviews) -In France, even CEOs retire early. Jean-Pascal Tricoire was barely 60 in 2023 when he gave up his job as chief of Schneider Electric SCHN.PA, the 135-billion-euro French electrical equipment maker he had led for 17 years. He, however, kept the chairman role – a retirement route popular in French boardrooms. The rationale was that it would help smooth the transition with Peter Herweck, his appointed successor.
That didn’t work as planned. Schneider’s board on Monday announced Herweck’s ouster “due to divergences in the execution of the company roadmap”. The unusually direct formulation suggests Herweck resisted the move. That’s not surprising since he was the one who had detailed the company’s strategy in November 2023, six months after his appointment. Schneider insiders hint that he may have been too slow in implementing his own blueprint, even though the shares rose 50% during his tenure.
The need for speed and agility in the hot markets Schneider competes in is undeniable. The company’s systems division, which notably caters to the data centres that power the AI boom, makes up nearly a third of its revenue and is growing at 19% a year. The green transition, which relies on a widespread electrification of industrial processes, offers double-digit growth prospects for companies with a strong China presence like Schneider.
The specific areas where the board wanted Herweck to be quicker on his feet are unclear. Schneider’s talks with Bentley Systems BSY.O, a U.S. engineering software maker it was interested in acquiring, ended in May but that may have been due to the reluctance to cede control by the target’s controlling family. Like competitors such as Siemens SIEGn.DE, which announced last week it would acquire Altair Engineering ALTR.O for $10.6 billion, the French group is eager to expand in software, a hotly disputed and fast-growing sector.
Herweck may have struggled to adapt to Schneider’s decentralised governance structure and decision-making. His successor Olivier Blum, as the board carefully noted, is a 30-year veteran of the company. Herweck, who hailed from Aveva, the UK software group Schneider acquired in 2022, may also have found it difficult to work under Tricoire, who still has strong ideas about the company.
Under Tricoire, Schneider had become a kind of finishing school for French CEOs. Orange ORAN.PA chief Christel Heydemann and EDF CEO Luc Rémont are both company alumni. Such a track record makes the Schneider chairman’s apparent inability to pick a suitable CEO for his company all the more puzzling. He will wish to be luckier this time around.
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CONTEXT NEWS
Schneider Electric has ousted CEO Peter Herweck with immediate effect, the French industrials giant said on Nov. 4, citing differences in how the company’s strategy was being executed.
“The Board of Directors decided to remove from office Peter Herweck as Chief Executive Officer due to divergences in the execution of the company roadmap at a time of significant opportunities,” the company said in a statement.
He will be replaced by Olivier Blum, current chief of Schneider’s energy management business. Schneider’s shares were down 0.8% at 0912 GMT. They have risen by more than 50% since Herweck took the top position.
Graphic: Schneider total returns since ousted CEO Herweck took over https://reut.rs/4hzr7hu
Editing by Francesco Guerrera and Oliver Taslic
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