Ericsson Board of Directors unseat Vestberg as CEO to curb a turbulent period

Ericsson's Board of Directors announced that Hans Vestberg steps down as President and CEO and member of the Board of Directors of Ericsson with immediate effect to curb a turbulent period for the company.

Vestberg who was part of Ericsson for 28 years with the last as CEO will be available to support the Board and management during his term of notice of six months according to a statement by Ericsson. Jan Frykhammar takes on the role as CEO until the now initiated recruitment search has been concluded.

Chairman of the Board Leif Johansson says: “In the current environment and as the company accelerates its strategy execution, the Board of Directors has decided that the time is right for a new leader to drive the next phase in Ericsson’s development.”

The Swedish mobile telecoms gear maker according to media reports has been under scrutiny as the stock has declined since reaching a more than seven-year high in April last year and cutting jobs while battling fierce competition from Huawei Technologies Co. and Nokia Oyj.

Ericsson also stated in a statement that in conjunction to presenting its earnings report for the second quarter on July 19, the company presented a strong action plan to significantly reduce cost and adapt to the current market environment.

“As stated in the report the Board fully supports the cost reduction plans. In addition, the Board supports the company business strategy and new company structure,” Johansson continued.

According to reports by¬†Reuters, Vestberg has also faced criticism for his use of a corporate jet to sports events and for taking on the role as chair of Sweden’s Olympic Committee (SOC) at a time when Ericsson is slashing costs and rejigging its strategy, though he said that his trips were with clients and in line with company police and that his SOC role would not affect his job as CEO.

Johansson says: “Jan has made it clear that he is not aspiring to permanently take on the CEO role. However, I am very pleased that he has accepted this assignment. Jan will secure continued strong execution and leadership in the current situation.”

As customary, the search process will comprise both internal and external candidates.

Carl Mellander, currently VP & Group Treasurer, is appointed acting CFO with immediate effect.

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