Swiss industrialist Thomas Schmidheiny says he has no regrets about giving up control of cement company Holcim.This content was published on August 3, 2003 - 12:09
In an interview with swissinfo, Schmidheiny said that if Switzerland is to continue to modernise, voters should use the October general elections to elect politicians who want change.
Schmidheiny, the leader of one of Switzerland’s most influential industrial dynasties, is still Holcim’s main shareholder with 27.1 per cent of the voting rights.
He argues that the principle of “one share, one vote” should be seen as a positive signal for the Swiss economy.
After having led the company, formerly Holderbank, for close on two decades, Schmidheiny gave up the post of chief executive at the end of 2001 and stepped down definitively as chairman of the board last February.
This followed a fine of SFr2.2 million (€1.5 million) imposed by a court in Spain for insider trading.
Schmidheiny was also a member of the board of the SAirGroup, the parent of the collapsed Swissair.
He said he had cooperated fully with Spanish authorities on the insider trading case but would not comment on Swissair, explaining that it would not be correct to do so with possible legal action pending.
A report from consultants Ernst and Young in January was heavily critical of the so-called “Hunter” strategy at Swissair, in which the carrier bought stakes in several other airlines in a failed attempt to lead its own alliance.
It blamed the board for allowing Swissair management to buy airlines, which were financially unsound at excessive prices. And it accused the board of tolerating the fact that in certain airline investments, the SAirGroup had effectively circumvented European Law.
A decision has yet to be taken concerning any legal action against SAirGroup management.
swissinfo: How difficult was it for you within Holcim to vote in favour of one share, one vote? After all this meant giving up control of a company you had steered for the best part of 20 years.
Thomas Schmidheiny: The important word you put in your question is a company I HAVE steered. The logic for me was to be chairman and chief executive for many years and having control of the votes gave Holcim a very stable environment to develop itself. We’ve now worked for two years on a programme to separate the functions of chairman and chief executive. The logic is also to have one vote, one share so that it becomes a real public company. In all that process I have been accustomed to change, so it was not that difficult. The logic behind it all was important.
swissinfo: How much of Holcim still your baby, as it were, because you’re still the company’s main shareholder?
T.S.: Certainly I lived for more than two decades with this company very intensively, so you cannot just drop everything. I’m an ordinary board member today and in that function, I’ll still be able to contribute, with my professional experience, a lot in the development of the strategy. But it’s very clear that the operations are in the hands of Markus Ackermann, our CEO, and an independent person has taken the chair, which I think is a correct decision in today’s world.
swissinfo: How important to you is corporate governance?
T.S.: Looking at the history of corporate governance, I can assure you that in general Switzerland has made a lot of progress. Within Holcim we have made tremendous progress over the past two years. In parallel with the separation of the functions of chairman and CEO, we started a programme to implement all necessary steps outlined in the Swiss stock exchange regulations. I am proud that we fully comply now. We institutionalised five years ago a risk management programme and I am convinced that today Holcim has one of the best such programmes in place. For the board of directors, it is one of the best tools to check what is really happening within the company.
swissinfo: The name Schmidheiny has been synonymous with Switzerland’s most renowned industrial dynasty. Some in the media have said the dynasty’s zenith has been reached and it’s now crumbling. Is that fair?
T.S.: This is an outside view It is also very interesting - to say that somebody has now finished his career rather then to see the positive signs of change connected with my moves. People, for instance, have written that I have lost my power in giving up the majority of the votes in Holcim. I think that decision was a positive signal for the Swiss economy: that I had the power to do exactly that and had the courage to go into a position where I am investor in Holcim but I don’t control. My interpretation is that with this modernisation of the governance of Holcim and of the structures, I have proven that I am a forward looking person and in a sense open to adapt to a changing environment. That has not been reflected in the whole Swiss press but internationally I can say that we have received quite a big acceptance.
swissinfo: What’s wrong with the Swiss economy now?
T.S.: The Swiss economy is not doing too badly. We have to restructure again…to face highly competitive environments, the globalisation. I think it’s a process that Switzerland has in the past been used to. On the other hand, there are institutions whose time has come. Look at the airline industry. There is a fundamental change. If you look back ten years, there were well-defined structures, including pricing, in place. In today’s market, all that is put into question. But in that industry, you still have highly regulated areas, like how many times you can fly to a country, at what times and with how many slots, so it’s an unfinished deregulation. We have to finish deregulation in certain areas.
swissinfo: Does Switzerland have the decision-making processes in place to face the current economic challenges and those of the future?
T.S.: At certain levels we block ourselves with old structures and policies. We have national elections in our parliament this autumn. If the population wants change there is a big opportunity to give the vote to those people who are advocates of change. One of the things we have to introduce into parliament is a bit more risk taking, rather than just maintaining the status quo. But if you look at the candidates today, there is a new generation looking for seats in parliament.
swissinfo: What is Thomas Schmidheiny doing now? I imagine it must be hard for someone who’s been as active as you have to let go without using his energy elsewhere?
T.S.: Certainly there is a change in my personal daily business but I had a transition period of two years to do that. I can now finally concentrate on some investor issues. These range from vineyards, to the extension and further modernisation of our investment in the hotels in Bad Ragaz, some other investments and my collection of art. I also enjoy travelling and visit friends I have not seen for years.
swissinfo: What about your art collection?
T.S.: I have bought out of the inheritance of our family the whole Ferdinand Hodler collection. He’s an important Swiss painter and it’s a major collection. We have restructured it in the sense that we have increased the quality. We filled in some gaps that were there and I think this is a main pillar. Apart from that, I’m still a collector of some modern art, which is another area of our interest.
swissinfo: The Schmidheiny family has been known for its discretion. What is the reason for that?
T.S.: I wouldn’t put myself under that heading. Having quite a big stake of my personal portfolio in Holcim, people have had a big insight into what I have done and how I performed together with my team. If you were an investor with me over the last 20 years, I think you have fared quite well. I have shown quite a lot of transparency. Some assets are privately owned and they should remain private. Well known are investments, like our Cuvaison winery. We bought the Chapel Hill winery in Australia, we’re building up a new winery in Argentina and we have the engagement in Bad Ragaz. The rest is a portfolio management, which is private family stock.
swissinfo-interview: Robert Brookes
Thomas Schmidheiny was born in December, 1945 in Balgach, St Gallen.
He has a masters degree in mechanical engineering from the Swiss Federal Institute of Technology in Zurich. He also holds masters degrees in business administration from the IMD in Lausanne and Tufts University, Medford.
He spent almost two decades building up Holcim to become a leading player in the world cement market.
After the introduction of the new share structure at Holcim – one share, one vote - Thomas Schmidheiny’s holding in Holcim is now 27.1 per cent. Before, he had controlled it with a 57 per cent stake.
Schmidheiny says it was not too difficult to surrender control because there had been a two-year transition period.
He looks after family investments in the Spectrum Value Management company. They include wineries, a hotel spa/resort complex in Bad Ragaz and the world’s largest collection of paintings by Switzerland’s Ferdinand Hodler.
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