Power Struggle RWE Chief Forces Out Internal Rival

Peter Terium, CEO of German energy giant RWE, has forced the abrupt exit of rival Arndt Neuhaus in a dispute over the future of the troubled utility, Handelsblatt has learned.
Ya fired! 

A power struggle at troubled German energy giant RWE boiled over this week. Chief Executive Peter Terium has forced the abrupt exit of rival Arndt Neuhaus, head of RWE’s German business, in a dispute over the future of the country’s second-largest utility, Handelsblatt has learned.

Mr. Neuhaus, whom RWE’s powerful municipal shareholders hoped would soon succeed Mr. Terium, instead will leave the company within days, sources at the Essen-based utility told Handelsblatt. Several other managers loyal to him will also leave.

According to sources, Mr. Neuhaus had threatened to resign if he was not given charge of RWE’s planned renewable energy spin-off. RWE plans to launch an initial public offering for the new company by the end of this year.

RWE’s split into separate conventional and alternative energy businesses is part of Mr. Terium’s strategy to navigate RWE through Germany’s tricky energy transition away from nuclear and fossil fuels and toward more renewable energy. The RWE boss will now assume responsibility for both traditional and renewable energy businesses, at least for a transitional period.

The shakeup follows months of internal turmoil at RWE, which has been simmering since at least last September.

Mr. Neuhaus had led RWE Deutschland since 2011 and had been with RWE since 2001.

RWE declined to comment on this story when contacted by Handelsblatt.

Speaking on the condition of anonymity, however, company sources said RWE Deutschland’s supervisory board would meet Thursday to discuss personnel and the future role of the German subsidiary.

 The shakeup follows months of internal turmoil at RWE, which has been simmering since at least last September.

That’s when RWE’s municipal shareholders from Germany’s neighboring Rhine and Ruhr regions, which control nearly a quarter of the group’s shares, nominated former economy minister Werner Müller as the utility’s next supervisory board chairman to replace Manfred Schneider, the one-time head of Bayer who is leaving his RWE post in April. The experienced decision-maker, they hoped, would breathe new life into the faltering energy giant.

The move put Mr. Terium on high alert, since the proposed appointment of Mr. Müller was the equivalent of a no-confidence vote for RWE’s Dutch chief executive. As supervisory board head, Mr. Müller, who had been  economics minister under ex-chancellor Gerhard Schroeder, would have the power over the company’s strategy and personnel decisions.

One critical decision was already agreed: Mr. Terium would promptly be sent packing, replaced by Arndt Neuhaus. Municipal shareholders believed the RWE Deutschland chief possessed the necessary vision to lead RWE out of its current crisis that the current group CEO ostensibly lacked.

Given this background, it’s not surprising that sources now confirm Mr. Terium questioned Mr. Neuhaus’ loyalty. But there may also have been a touch of jealousy.

Educated as a financial auditor, the former supervisor at KPMG has battled the stereotype of being a corporate controller without vision ever since he became RWE’s CEO in the summer of 2012.

Mr. Neuhaus, on the other hand, has led RWE’s most powerful subsidiary, which accounts for around two-thirds of the group’s sales. He has done more than simply deliver the profits – thanks to its sprawling transmission and distribution business – that RWE desperately needs to survive Germany’s energy transition.

He also has sought new growth opportunities in future-oriented areas such as smart grid, energy efficiency and services.

But less than five months after RWE’s municipal shareholders hatched their plan to install him at the helm, it is Mr. Terium, 52, who has emerged victorious under the protection of RWE’s current supervisory board boss, Mr. Schneider – at least for now.

In lieu of the former cabinet minister, Mr. Schneider nominated his own candidate, former SAP Chief Financial Officer Werner Brandt, to take over as supervisory board chairman.

Dr. Arndt Neuhaus, former head of RWE Germany.

 

In December, Mr. Terium and Mr. Schneider then forced through their radical strategy shift to divide RWE into two parts, against the wishes of municipal shareholders, which stand to lose influence.

Now fully at the controls of the company’s restructuring, Mr. Terium is handpicking future executives for the group and its new renewable energy company, according to sources, pending supervisory board approval.

This includes an unspecified promotion for Matthias Hartung, who heads power plant unit RWE Generation, and the appointment of RWE Chief Financial Officer Bernhard Günther to the same role at the new company. Together with Mr. Terium, he will prepare the IPO.

Hans Bünting will remain head the group’s renewable energy unit, while Martin Herrmann, who leads RWE’s business in Eastern Europe, will become head of sales. Hildegard Müller, who is leaving her role as chief of the German Association of Energy and Water Industries at the end of this month, will lead RWE’s transmission business.

The mayors and administrators who make up RWE’s municipal shareholders, and who pinned their hopes on Mr. Neuhaus, will view his ouster as a further affront. Unable to prevent it, they are left to mourn the failure of their revolt and accept RWE’s restructuring, albeit begrudgingly.

Since their ownership is in the group, they will lose sway over future-focused businesses, which will move to the new public company, as well as their traditional areas of influence in transmission and distribution. The group, where they maintain influence through their shareholdings, will only have operational responsibility over the wholesale business and ailing coal- and natural gas-fired power plants.

But their suffering likely doesn’t end there. RWE will announce 2015 dividends in about a month. Treasurers of the municipal shareholders expect a significant reduction.

 

Jürgen Flauger covers the energy market for Handelsblatt. To contact the author: [email protected]