07.23.13 6:20 PM ET
Swisscom Head Schloter Dies in Rare CEO Suicide
Carsten Schloter, chief executive officer of Swiss telecom giant Swisscom AG, was found dead in his Freiburg home Tuesday morning. A spokesman for the local police has said preliminary evidence points to suicide.
CEO suicides are rare, though it is not unheard of for abrupt downturns or unearthed scandals to trigger high-ranking executives’ taking of their own lives. About a year ago, Peregrine Financial CEO Russell Wasendorf Sr. was found attempting to kill himself in his car. He was rescued and later arrested. The firm had filed for bankruptcy and was scrambling to account for $200 million in missing customer funds.
In 2009, James McDonald, chief executive officer of investment management company Rockefeller & Co., died of a self-inflicted gunshot wound. Some sources cited the pressures of the job during financially troubled times. Also in 2009, Beneficial Corp. CEO Finn Caspersen committed suicide following a New York Times report that he was suspected of evading millions in federal taxes through offshore accounts. And in 2002, former Enron vice chairman Clifford Baxter shot himself in his BMW.
While Swisscom faces challenges, nobody would put it in the company of Enron. Swisscom is a power player in Swiss telecommunications. It employs 20,000 people and serves 6.3 million mobile customers.
To combat a slowing Swiss market, it acquired Italian provider Fastweb for 6.9 billion Swiss francs in 2010. Swisscom’s bundled offerings like the “Vivo Casa,” which offered TV, Internet, and telephone for one rate, helped to fuel growth. Earlier this year, Schloter projected lower earnings in 2013 as the company invested in mobile phone and internet network infrastructure.
Last week, Weko, the Federal Competition Commission of Switzerland tasked with “monitoring dominant companies for signs of anti-competitive conduct,” launched an investigation of Swisscom pursuant to a 2009 complaint filed by rival Sunrise. The rival alleged Swisscom abused its market position—the company has a 55 percent market share in broadband—in its broadband offerings for business clients. Sunrise charged that Swisscom fixed Internet cable prices too high for telecom rivals to reasonably afford to use them. Swisscom has defended its business practices as in line with fair competition. Telecom Italia was fined upward of $136 million by Italy’s Antitrust Authority in a similar case earlier this year, according to Reuters.
The penalty for violation of Swiss cartel laws can be up to 10 percent of a company’s Swiss-earned revenue for the prior three financial years. That means that in the worst case scenario, the telecom giant could end up paying fines equal to about $3 billion, based on revenue estimates from the company’s annual reports.
In a May interview with a Swiss newspaper, Schloter cited the 24/7 data flow as a significant stress factor. “I find it increasingly difficult to unwind,” he said.
Though the suicide of high-profile executives is a rare tragedy, in America suicide rates among baby boomers are on the rise, according to the CDC. In 2010 more people died from suicide than from motor vehicle crashes. The rate has risen most sharply for men in their 50s, who committed suicide at a nearly 50 percent higher rate in 2010 than they did in 1999.
Schloter, who was 49 years old, began his career at Mercedes-Benz before leaving for the German telephone services provider Debitel in 1992 and moving to Swisscom’s mobile division in 2000. He was promoted to CEO in 2006 with the resignation of Jens Alder, who clashed with the Swiss government. The Swiss government is a majority shareholder in Swisscom with a 56.77 percent stake. Urs Schaeppi, the head of Swisscom Switzerland and Corporate Business, will take over interim management of the company’s operations.