The kind of changes that will be happening in BMW AG’s management over the next few months don’t happen very often. How these changes will affect vehicle production and motorsport participation remains to be seen.
At its meeting on December 9, 2014, the BMW Group’s Board of Supervisors announced some significant changes at the top levels of management. Harald Kruger will become the Chairman of the BMW AG Board of Management on May 13, 2015 following the Annual General Meeting. He will replace the current Chairman, Dr. Norbert Reithofer, who has been nominated to join the Board of Supervisors when he departs his Board of Management position. Furthermore, the Supervisory Board has endorsed a proposal that if Dr. Reithofer is elected to the Board of Supervisors, that he also be elected Chairman of the Supervisory Board. Prof. Joachim Milberg currently serves in that position.
So for those keeping score at home, that’s Reithofer going to the BMW Group Supervisory Board to become its chairman—essentially BMW Group's Chairman of the Board; while Harald Kruger will be chairman of the BMW AG Board of Management—essentially BMW AG's Chief Executive Officer. All of this is scheduled to happen next May.
Once he leaves the Supervisory Board, Prof. Milberg will assume a leading role connected with the BMW Group's worldwide CSR activities and charitable foundations.
"The automotive industry is undergoing a fundamental shift. Those who want to play an active role in shaping tomorrow’s mobility need constantly to find viable solutions to future challenges. The BMW Group plans to maintain its leading role in the premium segment. To achieve this, we have to hand over responsibility to the next generation at an appropriate time,” explained Prof. Milberg on Tuesday, after the Supervisory Board meeting in Munich.
"With today's decision and recommendation for the positions of Chairman of the Board of Management and Chairman of the Supervisory Board, we have taken the first steps for a generational change, which combines the need for continuity and experience with the creative energy of the younger generation,” commented Stefan Quandt, Deputy Chairman of the Supervisory Board and major BMW shareholder, after the meeting. He continued, "We are convinced that this combination will be a decisive factor for the future success of the BMW Group—in the interests of customers, employees, and shareholders alike.”
Manfred Schoch, Chairman of the General Works Council and Deputy Chairman of the Supervisory Board, added, “The excellent spirit of cooperation between the Works Council and company management represents a long tradition at the BMW Group and is one of the underlying reasons for our success. We want to maintain this relationship through the generational change and thus play a continuing role in jointly shaping the BMW Group's future."
The Board of Management Chairman Designee, Harald Krüger, who is 49, joined BMW AG in 1992 after obtaining his degree in mechanical engineering. At one point he was a project engineer for the Spartanburg, South Carolina factory. He joined the BMW AG Board of Management on December 1, 2008, with responsibility for Human Resources. On June 30, 2012, he assumed responsibility for Mini, BMW Motorrad, Rolls-Royce, and Aftersales BMW Group. Since April 1, 2013, he has been responsible for BMW Group Production.
Dr. Reithofer, who is 58, joined BMW AG in 1987 and has been on the Board of Management since March 2000. Like his successor Harald Kruger, Dr. Reithofer was responsible for Production until September 2006, when he became Chairman of the Board of Management. As chairman, he spearheaded BMW’s new strategic direction through Strategy Number One, which included expanding the BMW Group's product and service offerings, significantly larger international sales and production networks, and a commitment to electromobility in the form of the innovative BMW i brand.
Commenting of Dr. Reithofer’s tenure, Prof. Milberg said, “During his time as Chairman of the Board of Management, Mr. Reithofer has raised the BMW Group's performance to new heights, extended the company's lead in the premium segment and, at the same time, taken steps to ensure that the company is strategically prepared for the future. All of these achievements deserve genuine appreciation."
The current Chairman of the Supervisory Board, Prof. Milberg, who is 71, joined BMW AG in November 1993 as the Board of Management member responsible for Production. In February 1999, Prof. Milberg became Chairman of the Board of Management of BMW AG. (Do you see a pattern here?) He was elected to the Supervisory Board in May 2002 and to the Chairmanship in May 2004. The Supervisory Board extended Prof. Milberg's term as Supervisory Board Chairman most recently in May 2013.
But wait, there’s more.
Effective immediately, Klaus Fröhlich, who is 54, is now the newest BMW AG Board of Management, His responsibility is Development. Herr Fröhlich has been with the BMW Group since 1987, during which time he has held various executive management positions. Most recently, he was in charge of the Small and Mid-sized Series Product Line.
Herr Fröhlich replaces Dr. Herbert Diess on the Board of Management. The position became vacant when Dr. Diess left the company to become the chairman of the Volkswagen passenger car brand. For contractual reasons, Dr. Diess will not be able to assume his new duties at Volkswagen until October 1st.
You may notice that we have included the ages of most of the principals mentioned here. That is of interest because of BMW’s policy of having their management people retire when they reach the age of 60. That policy obviously does not apply to the BMW Group Board of Supervisors, and occasionally, the company will make an exception like they did earlier this year for Dr. Friedrich Eichiner, the BMW Chief Financial Officer, who will be allowed to stay beyond his 60th birthday. Since current BMW AG Chairman Reithofer is rapidly creeping up on the magic number, action by the Supervisory Board had to be expected sooner or later. Many assumed it would be in 2016, but as it turned out, it was sooner.
At 49, Harald Krueger will be one of the youngest, if not the youngest major car company CEO. By comparison, other CEOs who are also considered fairly young include GM chief Mary Barra, age 52; Ford's Mark Fields, age 53; and Renault SA and Nissan head Carlos Ghosn, who is 60. Using BMW's management age policy as a guide, Kruger could be there for more than a decade—if he keeps making good cars and lots of money.—Scott Blazey
[Photos courtesy of BMW AG.]
