new broom Deutsche Börse’s new CEO launches housecleaning

Theodor Weimer has shut down the "kitchen cabinet" set up by his predecessor in a first move to streamline management at the stock exchange operator.
01/31/2018 - 10:56 PM
Channeling Edward G. Robinson: I didn't try and take it over, I took it over.

In the best tradition of a new broom, Deutsche Börse’s new chief executive has begun sweeping clean some of the bureaucracy that has been slowing down Germany’s largest stock exchange operator.

One of the first moves of Theodor Weimer, who took office this month after Carsten Kengeter quit last year amid an insider-trading probe, was to suspend the sprawling “kitchen cabinet” of top executives set up by his predecessor, company sources told Handelsblatt.

The “group management committee,” in the view of many in the company, hindered quick decision-making, watered down measures and diluted responsibility. Mr. Weimer’s decision to suspend the group, which met every two weeks, is likely a step to disbanding it altogether, sources said.

The move is part of the former bank executive’s effort to rehabilitate the image of Deutsche Börse, tarnished by successive failed bids to expand through merger and by the insider trading investigation of Mr. Kengeter. Mr. Weimer is putting an emphasis on streamlining the company to be more nimble in the future even as the board considers ways to maintain stability after a tumultuous year.

Top-Jobs des Tages

Jetzt die besten Jobs finden und
per E-Mail benachrichtigt werden.

Standort erkennen
    The move to suspend the kitchen cabinet got a positive reception among staff.

    One key compromise that appears to be taking shape is to have supervisory board chairman Joachim Faber stand for a new three-year term in May, even though he, too, has come under fire both for last year’s failed merger with the London Stock Exchange and for holding on too long to Mr. Kengeter. There is concern among some major shareholders that changing the board chairman in addition to CEO would be too disruptive.

    The plan would be then for Mr. Faber to step down before his new term is over, after Mr. Weimer has had a chance to settle in and after a suitable replacement as board chairman has been identified.

    In Germany’s two-board system, the supervisory board – composed exclusively of non-executive directors – oversees strategy and selects the management board, which collectively is responsible for executing the strategy. One of the gripes about Mr. Kengeter’s kitchen cabinet was that it diluted the responsibility of the management board by adding department directors and other hangers-on.

    Mr. Weimer’s move to suspend the bigger management committee got a positive reception among Deutsche Börse staff, who see it as a way to strengthen the management board – a much leaner group with just five members – as the locus of executive decision-making.

    The insider trading probe in connection with Mr. Kengeter’s stock purchases before the proposed London merger was announced still hangs over the group, however. A Frankfurt court, following the recommendation of the federal financial regulator BaFin, rejected a deal worked out for the company to pay a fine of €10.5 million and Mr. Kengeter €500,000 because the latter was too small. Prosecutors continue to investigate and now have the choice to suspend it, bring an indictment or propose a new deal.

    Some shareholders are hoping that a deal with a bigger fine for Mr. Kengeter might mean a smaller one for the company. Prosecutors declined to comment.

    Andreas Kröner is a Handelsblatt reporter in Frankfurt. Darrell Delamaide is a writer and editor for Handelsblatt Global in Washington, DC. To contact the authors: [email protected] and [email protected].