Holcim CEO says austerity means him too as demand lags

Wed Oct 2, 2013 2:53pm EDT
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By Caroline Copley

ZURICH (Reuters) - If you are taking a short-haul flight from Switzerland, there's a chance you might find yourself sitting next to the Chief Executive of Holcim HOLN.VX, the world's largest cement maker - in economy class.

The unassuming Frenchman, who became the first outsider to lead the 101-year-old Swiss company last year, has implemented a strict cost-cutting regime that extends right up to himself.

The austerity measures coincide with a difficult business climate for the company, whose shares are lagging behind its competitors in Europe, and a growing distaste for corporate excess.

"I respect the policy which we set, which is (a flight of) more than five hours is business, less than five hours is economy, and I apply the same policy to myself as to everybody," Bernard Fontana said in an interview at the firm's Zurich headquarters.

This attitude goes down particularly well with a Swiss public fed up with a seemingly self-serving culture among executives who have awarded themselves lavish bonuses despite poor performances.

Outraged by a proposed $78 million pay-off to former Novartis NOVN.VX chairman Daniel Vasella, the Swiss overwhelmingly voted in a referendum in March this year to impose some of the toughest controls on executive pay.

Fontana, by contrast, is keen to cultivate an image of propriety: "Is this compliant?" he asked when receiving a bottle of wine for speaking at a lunch in Zurich in August.

Last year, the 52-year-old Fontana launched a cost-cutting program with the aim of restoring Holcim's return on invested capital (ROIC) to at least 8 percent after tax and boosting operating profit by at least 1.5 billion Swiss francs ($1.7 billion) by the end of 2014.   Continued...

Bernard Fontana, chief executive of Swiss cement maker Holcim talks to Reuters during an interview in Zurich September 23, 2013. REUTERS/Ruben Sprich