Klaus Kleinfeld

Klaus Kleinfeld
Born	Klaus-Christian Kleinfeld 1957-11-066 November 1957 (age 68) Bremen, West Germany
Nationality	German
Education	University of Göttingen (business) University of Würzburg (Ph.D.)
Alma mater	University of Göttingen University of Würzburg (PhD)
Occupation	Business executive
Years active	1982-present
Employer	Siemens (1987-2007) Alcoa (2007-2016) Arconic (2016-2017) Neom (2017-2018)
Title	Chairman and chief executive officer
Term	2005-2007 (Siemens AG) 2008-2016 (Alcoa) 2016-2017 (Arconic)
Predecessor	Heinrich von Pierer (Siemens) Alain Belda (Alcoa)
Known for	CEO of Siemens AG CEO of Alcoa and Arconic First director of Neom
Spouse	Birgit Kleinfeld
Children	2

Klaus-Christian Kleinfeld (born 6 November 1957) is a German business executive who served as chief executive officer of Siemens AG from 2005 to 2007, of Alcoa from 2008 to 2016, and of Arconic from 2016 to 2017. He was subsequently the first director of Neom, the Saudi Arabian development project, and later an adviser to Crown Prince Mohammed bin Salman.

Kleinfeld led two major industrial companies through structural transformation, and both tenures ended in contested circumstances. He resigned from Siemens in 2007 amid a bribery investigation in which he was not personally implicated, and from Arconic in 2017 after sending an unauthorised letter to an activist investor that the board judged to show poor judgement.

Early life and education

Klaus-Christian Kleinfeld was born on 6 November 1957 in Bremen, then in West Germany. His father died when Kleinfeld was young, and he has described a modest upbringing in which his mother supported the family.

He studied business at the Georg August University of Göttingen, earning a degree in business administration. He subsequently completed a doctorate in management at the University of Würzburg, writing on corporate identity and strategic management; his dissertation was published in 1994.

Career

Early career

Kleinfeld began his career in 1982 at a marketing consulting firm. In 1986 he joined Ciba-Geigy, the Swiss pharmaceutical and chemicals company based in Basel, working as a product manager in its pharmaceutical division.

Siemens

Kleinfeld joined Siemens AG in Munich in 1987, initially as a marketing research manager in the corporate sales and marketing unit.

In 1990 he founded and led Siemens Management Consulting, an internal consultancy that worked with the company's business units worldwide on restructuring. The unit gave him exposure to the full breadth of the Siemens portfolio and became a route through which he built a reputation as a turnaround specialist.

Siemens in the United States

Kleinfeld was appointed chief operating officer of Siemens in the United States in January 2001 and subsequently led the American business. The recession of the early 2000s had damaged profitability, and he pursued a restructuring that involved fixing, selling or closing underperforming operations, integrating recent acquisitions and developing cross-selling between units. The number of unprofitable operations was reduced from 24 to eight, and cost reductions were estimated at approximately $100 million.

The American turnaround established his standing within the company. In January 2004 he was appointed to the Siemens corporate executive committee and to the managing board of Siemens AG, becoming deputy chief executive.

Chief executive of Siemens AG

Kleinfeld became chief executive of Siemens AG in January 2005, succeeding Heinrich von Pierer.

He pursued a programme of portfolio restructuring and margin improvement, setting profitability targets for each of the company's operating groups and divesting or restructuring businesses that could not meet them. By April 2007 all Siemens groups had reached or exceeded their target margins for the first time.

The programme brought him into conflict with elements of the company's traditional culture and with its labour representatives. Under German codetermination law, the Siemens supervisory board included union as well as shareholder representatives, and several of his restructuring proposals met resistance. In 2004 he had argued publicly for extending the German working week from 35 to 40 hours without additional pay, saying that German workers had to adjust to international competitive conditions. The remark drew sustained criticism in the German press, where he was characterised as insufficiently attentive to the company's social obligations. International financial press coverage was generally more favourable, and over two years sales rose 16 percent, profits 35 percent and the share price 40 percent.

Bribery investigation

In November 2006 a German government fraud investigation into Siemens became public. Investigators established that the company had maintained slush funds in secret bank accounts outside Germany and had used them to win contracts. Payments of this kind had been legal under German law, and tax deductible, until 1999.

Kleinfeld responded by engaging external legal and auditing advisers to conduct an independent investigation and to overhaul the company's accounting and internal control practices. The independent investigation found that the company had paid hundreds of millions of dollars in bribes but reported no indications of personal misconduct by Kleinfeld or evidence that he had knowledge of the relevant events.

The U.S. Securities and Exchange Commission brought corruption charges against Siemens. Kleinfeld and other former executives and board members were accused of failing to prevent corruption. No charges were brought against Kleinfeld personally, and the U.S. Department of Justice cited the company's cooperation and the independent investigation he had initiated as factors in reducing the penalty imposed on Siemens.

In June 2007 Kleinfeld announced that he would leave Siemens, citing uncertainty about his position after divisions among supervisory board members over the renewal of his contract became public. In September 2009 Siemens sought compensation from former executives for supervisory failings; Kleinfeld settled the civil matter for 2 million euros without admission of wrongdoing.

Alcoa

Kleinfeld had joined the board of directors of Alcoa, the American aluminium producer, in 2003. In August 2007 he was appointed president and chief operating officer, and in May 2008 he became chief executive, succeeding Alain J. P. Belda. He was named chairman in April 2010.

He took charge shortly before the financial crisis, which cut demand for aluminium sharply and drove prices down. His response combined cost reduction with a change in the company's strategic position.

Portfolio transformation

From 2012 Kleinfeld closed a number of high-cost, outdated smelting facilities, reducing Alcoa's exposure to commodity-grade aluminium production. In parallel he expanded the company's downstream engineered products business, arguing that a shift toward fuel efficiency in aerospace, automotive and construction was creating structural demand for lightweight engineered metal components.

He directed acquisitions intended to strengthen the company's position in aerospace, including businesses supplying jet engine components and fastening systems, and invested in multi-material engineering capability. The stated objective was to reduce Alcoa's dependence on the aluminium price cycle.

On 28 September 2015 Alcoa announced that it would separate into two publicly traded companies. The separation completed on 1 November 2016: Alcoa Corporation took the upstream bauxite, alumina and primary aluminium operations, while the existing entity was renamed Arconic and retained the downstream engineered products businesses serving aerospace and automotive markets.

Kleinfeld remained chairman and chief executive of Arconic. He had proposed also serving as chairman of the upstream company during a transition period, but the proposal was declined and he had no role at Alcoa Corporation.

Advanced manufacturing and STEM advocacy

During his Alcoa tenure Kleinfeld supported workforce development programmes in science, technology, engineering and mathematics. In July 2012 he co-authored an opinion piece with Richard Haass, president of the Council on Foreign Relations, arguing for closer collaboration between business and government to address the skills gap facing manufacturers. In September 2013 President Barack Obama appointed him to the steering committee of the Advanced Manufacturing Partnership.

Arconic and resignation

On 31 January 2017 Elliott Management Corporation, the activist hedge fund led by Paul Singer, launched a proxy contest against Arconic. Elliott called publicly for Kleinfeld's removal, citing the share price, missed profit forecasts and what it characterised as inefficient spending.

On 17 April 2017 Kleinfeld resigned as chairman and chief executive by mutual agreement with the board. The immediate cause was a letter he had sent to Paul Singer without board authorisation. The letter made oblique references to an incident said to have occurred during a trip to the 2006 World Cup in Germany, involving a Native American feather headdress and a rendition of "Singin' in the Rain" performed in a fountain. The board concluded that sending the letter showed poor judgement, and Arconic stated that it had not been reviewed or approved in advance.

The episode was widely covered and is cited in accounts of activist investor campaigns as an example of how the personal conduct of a chief executive under pressure can determine the outcome of a contest.

Neom

In October 2017 Kleinfeld was named the first director of Neom, the planned development on Saudi Arabia's Red Sea coast announced by Crown Prince Mohammed bin Salman as part of the Vision 2030 programme.

In July 2018 it was announced that from 1 August he would move from director of Neom to become an adviser to the Crown Prince, with Nadhmi Al-Nasr succeeding him as director.

Later activity

Kleinfeld co-founded Constellation, a special purpose acquisition company listed on the New York Stock Exchange in 2021. He founded K2 Elevation, an investment company that invests in and develops technology and biotechnology enterprises, with holdings in Germany, Austria and the United States. He advises a number of corporations and organisations.

Board memberships

Kleinfeld has served on the supervisory board of Bayer from 2005 to 2014, as a director of Citigroup from 2005 to 2007, and on the boards of Morgan Stanley and Hewlett Packard Enterprise until April 2017. In 2009 he became chairman of the U.S.-Russia Business Council, and in 2013 he joined the board of the U.S.-China Business Council.

He is a member of the Bilderberg Group steering committee, the board of trustees of the Brookings Institution, the foundation board of the World Economic Forum, and the advisory board of the Metropolitan Opera in New York. He is an honorary senator of the Lindau Nobel Laureate Meetings.

Business philosophy and management style

Kleinfeld's method across both major tenures was consistent: set explicit profitability targets for each business unit, divest or restructure what could not meet them, and redirect capital toward segments with structural rather than cyclical demand. At Siemens this took the form of margin targets by operating group; at Alcoa it meant closing smelters and buying aerospace suppliers.

He was an advocate of what he described as adapting to international competitive conditions, a position that generated friction in Germany, where the social obligations of large employers are more strongly codified, and less friction in the United States.

His communication style attracted comment in both roles. The 2004 remarks about the German working week and the 2017 letter to Paul Singer were each, in different ways, instances in which his direct approach produced consequences beyond what he appeared to anticipate.

Controversies

Siemens bribery scandal

Although the independent investigation found no evidence of personal misconduct by Kleinfeld and no charges were brought against him, the scandal occurred partly during his tenure and during that of his predecessor, and contributed to the circumstances in which his contract was not renewed. The 2009 settlement of 2 million euros related to alleged supervisory failings rather than to participation in the payments.

Remarks on German labour

Kleinfeld's 2004 argument for extending the working week without additional pay drew criticism from unions and in the German press, and is frequently cited in accounts of the tension between his approach and the German model of codetermination.

The letter to Paul Singer

The unauthorised letter that ended his Arconic tenure was characterised by the board as showing poor judgement. Arconic disclosed that the letter had not been reviewed by the board before it was sent. Kleinfeld said the letter was sent in his personal capacity.

Grenfell Tower

Arconic supplied cladding panels used in the refurbishment of Grenfell Tower in London, the site of a fire in June 2017 in which 72 people died. The fire occurred in the weeks after Kleinfeld's resignation. The company's role in supplying the panels was examined at length by the subsequent public inquiry, which reported in 2024 and was critical of the manufacturer's conduct in marketing the product. Kleinfeld was chief executive during the period in which the panels were supplied.

Personal life

Kleinfeld lives in New York with his wife, Birgit. The couple have two children.

He is a distance runner and has completed marathons, and also skis and plays tennis. He has written or edited works on corporate strategy and on the history of Siemens, including a 1994 book based on his doctoral research and a 2018 volume on Siemens entrepreneurs published by the Siemens Historical Institute.

Awards and recognition

Kleinfeld received a Legend in Leadership Award from the Yale Chief Executive Leadership Institute in December 2014, and a Dwight D. Eisenhower Global Leadership Award from the Business Council for International Understanding in the same month. In May 2014 he was named chief executive of the year at the Platts Global Metals Awards.

Legacy

Kleinfeld's record is a study in the difficulty of transforming large industrial companies with long histories and entrenched cultures. At Siemens he achieved margin targets across every operating group for the first time in the company's modern history, while generating sufficient internal opposition that his contract was not extended. At Alcoa he executed a separation that split a 128-year-old company into commodity and engineered products businesses, a structural change that outlasted his own tenure.

Both departures illustrate a recurring feature of his career: the strategic work was generally completed or well advanced, while the manner of his exit came to dominate accounts of the period. His subsequent appointment as the first director of Neom placed him at the start of one of the largest planned development projects undertaken by any state.

External links

• Siemens AG company history