By the numbers: 100 icy words

  • Frosty CEO change at Aurubis
  • Push-out Score of 10 indicates forced departure

Aurubis CEO Jürgen Schachler will turn 65 at the end of July 2019 and will leave the largest copper producer in Europe when his contract expires on June 30, 2019.

A glorious retirement? For now, it looks like an ice-cold farewell. The Push-out Score of 10, which was determined by the research firm exechange, suggests an overtly forced departure.

Why must that be? First, Schachler has reached the normal retirement age. Second, he is leaving with a comfortable lead time of up to 202 days. Third, his term of office of three years (as at June 30, 2019) is still acceptable. Fourth, the copper company officially states that he “has made an important contribution to the Aurubis Group’s strategic development and has earned the company’s recognition for his work.”

On closer inspection, the warning signals cannot be overlooked.

First, it is striking that the share price has roughly halved since the beginning of the year 2018.

Second, it casts an oblique light upon the forthcoming CEO change that the news came one day prior to the planned release of Aurubis’ annual results. It is also significant that Aurubis had acknowledged on November 1, 2018, that “the preliminary result of € 63 million for Q4 of the fiscal year (previous year: € 87 million) was weaker than the market expected” and that the reason for this result was “smaller, unscheduled shutdowns at the Hamburg and Lünen production sites, which negatively affected the result for the quarter.”

Third, it raises probing questions related to why the Hamburg, Germany-based Aurubis has only just begun the search for a successor “in a structured process.”

Fourth and fifth, the extremely cold language, even by northern German standards, and the peculiar form of the announcement of December 10, 2018, leave a weird impression. The communication consists of barely 100 words.

These words are to be read carefully, particularly those numbered 6 to 14. They leave no doubt as to who initiated the separation. It was the supervisory board, not the CEO, who took the initiative to separate. The first sentence reads: “During its regular meeting today, the Supervisory Board of Aurubis AG passed a resolution stating that Mr. Jürgen Schachler, who will turn 65 at the end of July 2019, will leave the company when his contract expires on June 30, 2019.”

To put it quite clearly: There are cases in which a CEO at the age of 64 is no longer available for an extension of their contract. The situation seems to be completely different if a supervisory board formally passes a resolution 202 days before the CEO’s contract expires that the CEO will leave the company.

Is there a disagreement? At any rate, the penultimate sentence of the announcement provides deep insight in this regard: “Now is the right moment to set the course for the future with a focus on operating excellence and strategic growth.”

Setting the course for the future, operating excellence, strategic growth: The nameless author of the sentence in the corporate announcement puts his finger exactly on sore spots. This statement makes clear regarding what the supervisory board, headed by Fritz Vahrenholt since March 1, 2018, obviously no longer expects the outgoing CEO (who remains silent in the announcement) can do.

Does this interpretation go too far? This assumption can never be completely ruled out.

The entire story is contained not only in the hard facts, but also in the coded messages, the noisy signals and the gaps. What is not said and who does not speak is always part of the whole story.

Malte Blombach, senior communications manager at Aurubis AG, sent the following responses (A) to an exechange inquiry (Q) by email.

Q: Can you give more information about Jürgen Schachler’s concrete future plans?

A: Jürgen Schachler is considering various professional and private options, but first he will especially focus on a good amount of quality time with his family to compensate for the sacrifices they made during the last few years during his tenure at Aurubis.

Q: Does the company consider both internal and external candidates to find a permanent successor?

A: The search for a successor has begun in a structured process. The supervisory board is looking for the best manager — so there is no special requirement about internal or external.

Q: Will the company engage an executive search firm to select Jürgen Schachler’s permanent successor?

A: The supervisory board is responsible for finding a new candidate. We cannot comment on their way of proceeding.

Q: When does the company want to present the permanent successor?

A: The schedule foresees a seamless transition for the CEO post.

Q: In the announcement from Aurubis, Jürgen Schachler does not get a chance to speak. If possible, please provide a statement from Jürgen Schachler regarding the move.

A: “When I first arrived at Aurubis we immediately after a short analysis phase launched a much needed transformation process that now is already delivering important operational and financial improvements. Without the relentless efforts and the high motivation of the Aurubis employees and the core leadership team this early and outstanding achievement would not have been realized. Nevertheless a transformation program stabilizes not before four to five years after its launch. I am happy to have had the chance to guide the team up to this very good achievement and I hope, the journey will successfully continue without my leadership.”

Q: Why was it necessary for the supervisory board to pass a resolution stating that Jürgen Schachler will leave the company when his contract expires? (If his contract expires anyway on June 30, 2019, it is not understandable why a resolution of the supervisory board is needed to make him leave on June 30.)

A: There was a decision by the supervisory board not to renew the contract. As listed company we are legally obliged to inform the markets via ad-hoc release about this decision. The contract was limited in time, as all contracts of members of the board are in AG companies. And, at a certain point, the supervisory board has to decide if it wants to extend the contract or not. This was done during the supervisory board meeting on December 10.