Philips chief Kleisterlee to head Vodafone

British telecom giant Vodafone has appointed Mr Gerard Kleisterlee, the chief executive and president of Dutch firm Philips Electronics, as its new chairman, in the latest sign that the company is intent on further international expansion.

Vodafone said that Mr Kleisterlee, who will take over from Sir John Bond on April 1, was picked because of his “international experience” and “familiarity with business in emerging markets.”

“It is an honour and a privilege to be invited by the Board of Vodafone to become its Chairman,” said German-born Mr Kleisterlee on Wednesday.

Long stint in Philips

Mr Kleisterlee, 64, has spent his entire career at Philips, starting with its medical systems division in 1974. Over the next decade, the electrical engineer worked his way up the company, moving to Asia to become the president of Philips Taiwan and the regional manager for its components division in the Asia-Pacific division in 1996.

Shortly afterwards he was also made responsible for all the firm's activities in China up until 1998. Moving back to Europe, he joined the Philips board in 2000, and was made chief executive and chairman in 2001 a position he will hold until March. He is also a member of the Daimler supervisory board, and a member of Royal Dutch Shell's audit committee, and joined the board of directors of Dell late last year.

Mr Kleisterlee proved a popular and successful CEO, winning widespread acclamation for his strategy of transforming Philips from a large unwieldy to a far more streamlined and competitive business focused on lighting, healthcare and consumer electronics, winning him Fortune's European Businessman of the Year award back in 2007. Mr Kleisterlee sold Philips' semi-conductor business to a consortium of private equity investors, including Kohlberg Kravis Robers, Silver Lake Partners and AlphInvest for around $10 billion, a move that helped stabilise earnings.

Vodafone investors will be hoping that he will bring the same acumen “along with his experience in Asia” to the role of chairman. Mr Kleisterlee's predecessor, Sir John, has faced flak over the firm's strategy, with shareholder Ontario Teachers' Pension Plan voting against his re-election as chairman last year.

Though the activist shareholders voted in favour of Mr Vittorio Colao continuing as CEO, they argued that over the past five years the firm had had “significant structural and strategic weakness” which had led to the firm trading well below its asset value, and that board rejuvenation was essential if the firm were to put its history of “poor allocation and disastrous M&A” behind it.

Key challenges

Mr Kleisterlee will face two immediate challenges as chairman: the impasse with Verizon Communications in the US over dividend payments of the joint venture, and the stand off with the Essar Group over its plans to merge part of Vodafone Essar into publicly-listed India Securities.

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