Vestas - Analysis of the Leadership and the Governance

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similar to the alternative energy’s industry, for the analogous economic boom in the past and for the comparable involvement of massive infrastructures. (Vestas sacks CEO Engel, 2013). Mr Runevad was entitled, indeed, to concretize the expectations of massive growth thanks also with his task-oriented tendency (Brown, 2003), helping him to focus on revenue growth for the following 3-5, years, as stated by the mid-term strategy mission.

Summarizing, this is a typical case in which core competencies and management skills in absolute terms, are not enough to allow a perfect match for every kind of situation, company or corporate strategy, as happened for Engel. In any case, Vestas lived up to the challenge, suddenly undertaking a radical adjustment firing the former CEO, subsequently hiring a new one, more appropriate and competent. Moreover, a scandal in 2014 shocked the firm: 5 managers had been fired without prior notice for corruption reasons. Also in this case of clear misconduct and unethical leadership, Vestas reacted immediately firing the suspects, recalling the principle of transparency, even strongly remarked a few years earlier, in 2010, joining the Partnering Against Corruption Initiative (PACI). (Vestas, 2017)

The directors took these correct decisions and the results are comforting: from 2014 to 2016 an increase in total revenue of 3,327 million in 2 years and a better performing dividend per share rate of 4,4 (1,8 in 2014) are embracing the expectations of the board. (Vestas, 2016)

CSR Driving the Growth

The socially responsible nature of Vestas cannot be excluded from this analysis, even considering the new financial performance-oriented strategy of the corporation. Every single aspect of the firm seems to be based on a solid pillar of social responsibility. The core principle is the sustainability of the renewable wind energy as the biggest futuristic alternative energy: their internal production supply, for example, is fuelled entirely (100%) by renewable energy (Appendix, Figure 2). In addition, many others categories of responsibility are marked as fundamental e.g. from work injuries, as they are trying to achieve an incredible free-injuries target (6,9 injuries every one million working hour) (Appendix, Figure 3), to raw materials responsibly used passing through life cycle assessment, human rights and labour, waste management, code of conducts and also ethics on the workplace.

Every part of this huge campaign leads to think about a “win-win” view of CSR (first CSR view (Benabou & Tirole, 2010)), i.e. “doing well by doing good” in which is explained the reason why Vestas is able to deliver good financial returns to the owners, starting from doing good for the society, for the employees and for the stakeholders, embracing all-around transparency and ethic.

Additionally, it is evident that the focus is not solely directed to the external responsibilities, intended as carbon footprint and use of renewable energy, but also toward the internal point of view, employees are protected, as owners, through the transparency program, and the management through the enforcement of the code of conduct for the employees (comprehending PACI, too).

Recommendations

Concluding, some recommendations are suggested as follows:

• Regarding the new corporate strategy, is fundamental to maintain the prevalent excellence in Corporate Social Responsibility, and the leadership in the global scene of alternative energy’s players, even though the new direction is slightly more economically-oriented.

• Still relating to the Corporate Responsibility, the program of enhanced transparency is a clear signal of the Board of Director’s willingness to avoid misconduct of the management but also frankly adjust, if needed, wrong behaviours as demonstrated in the change of the CEO and in the layoff of accused top managers.

• Finally, dealing with the shareholders’ voting right, a solution could be to soften the rigid one-share-one-vote control structure, to allow a more direct and unbiased alignment between the major shareholders and the Board of Directors conduct, since both strive for long-term results.

References

Benabou, & Tirole. (2010). Individual and Corporate Social Responsibility.

Berle, & Means. (1932). The Modern Corporation and Private Property.

Block, D. (2016). One-Tier vs. Two-Tier Board Structure.

Bloomberg. (2017). Bloomberg. Retrieved from http://www.bloomberg.com/research/stocks/private/person.asp?personId=30899080&privcapId=36246

Brown, B. (2003). Employees’ Organizational Commitment and Their Perception of Supervisors’ Relations-oriented and task-oriented leadership behaviors.

Harvard Business Review. (2013). Rethinking "one share, one vote". Retrieved from https://hbr.org/2013/01/rethinking-one-share-one-vote

La Porta, R., Lopez‐de‐Silanes, & Shleifer. (1999). Corporate Ownership Around the World.

Oxelheim, Gregoric, Randøy, & Thomsen. (2013). On the Internationalization of Corporate Boards: The Case of Nordic Firms.

Vestas. (2010). Annual Report .

Vestas. (2015). Statutory report on Corporate Governance.

Vestas. (2016). Annual Report .

Vestas. (2017). Vestas - Powering Sustainability. Retrieved from Vestas: https://www.vestas.com/en/about/sustainability#!

Vestas. (2017). Vestas History. Retrieved from Vestas: https://www.vestas.com/en/about/profile#!

Vestas sacks CEO Engel. (2013, 08 21). Retrieved from Wind Power Monthly: http://www.windpowermonthly.com/article/1208227/vestas-sacks-ceo-engel

Vestas scandal continues to widen. (2014, 05). Retrieved from The Copenhagen Post: http://cphpost.dk/news/business/vestas-scandal-continues-to-widen.html

APPENDIX

Figure 1.

Figure 2.

Figure 3