He speaks softly. With his blue eyes, under dark, raised eyebrows to above his glasses, he looks straight at his interlocutor. He is not a quick quote, but goes into detail quickly. Except when it’s important to sound determined. ” We are going to stop at nothing , ” he told analysts on Wednesday after another hefty profit warning. “ We must, can, and will improve .” Roy Jakobs, 48, has never before been the CEO of a large company. But from this Saturday he is the man who has to pull Philips out of the doldrums. The company that was long a national pride, but is now declining in prestige at record speed. Since April last year, the stock price has fallen by almost 75 percent. More than 37 billion euros went up in smoke: the company is now worth only 13 billion euros. Even before Jakobs’ first day in his new position, he was lectured. At the extraordinary shareholders’ meeting at the end of September, shareholders tumbled over each other to tell him what he should and especially should not do as the new leader. “Don’t underestimate the change you need to radiate,” said Gerben Everts, leader of the investor association VEB. “You certainly have not been given a dowry, but a scouring inheritance. Please communicate openly, honestly and in a timely manner. That is what your predecessor left behind.” Shareholders hate that they are constantly faced with negative surprises. The most recent was from last Wednesday, three days before Jakobs took office: a strong profit warning, as a result of a 5 percent drop in turnover and a write-down of 1.3 billion euros on the Respironics business unit, partly due to a settlement with the US justice system. that is coming. That business unit makes the sleep apnea and breathing machines that have major quality problems. Earlier, almost 900 million had already been allocated for the recall of the devices. Misplaced optimism In the very first instance, Philips had only set aside 250 million for problems with the machines. Investors more often saw that optimism turned out to be misplaced. They were disturbed by the interviews of board chairman Frans van Houten, who, according to them, downplayed the problems. And the fact that the public had to learn not from Philips, but from the American health watchdog FDA that there had been concerns in the company about the safety of the devices since 2015. And that the top of Philips, despite everything – and despite a disapproving advice from about 80 percent of the shareholders – also paid itself bonuses. The new CEO, the youngest ever CEO of Philips, seems to come out of nowhere to the outsider. But analysts have seen Jakobs rise as ‘crown prince’ at the company for years. He was put in charge of Philips’ Middle East branch at the age of 37. A few years later, he became the chief executive of the Personal Health division (toothbrushes and razors). He lived with his wife and sons in Lisbon, Dubai and Shanghai. His career is turbulent and international, but the youth of Jakobs is very different. He lives in Kerkrade until he is eighteen, where he is plagued by severe asthma and allergies. It limits its living environment. Playing outside is not possible, because his body reacts immediately allergic to grasses and fungi. Playing with friends is also not always possible, for example if they have a pet. When he visits his grandma and grandpa, he can only stay there for a few hours, because he quickly gets bothered by dust. He receives immunotherapy three times a week. An affinity with healthcare and the world of patients is born there. His father is German, his mother Dutch. Kerkrade was a nice compromise for them at the border. He worked as an earthquake engineer, she in nursing. A combination of technical and social that Jakobs would seek out later in his career. From his adolescence, Jakobs’ health improves. He gets a lot of pleasure from handball, a sport in which he and his team will later become champion in the student competition. Nowadays he plays football (on artificial grass) at the same club as his three sons, and he lives with his family in The Hague. Also read: Philips helps Jula breathe, but what does she get in her lungs? Appliances Jakobs studies business administration and completes an mba (master’s degree in business management) in Nijmegen. After a career at Shell, among others, Jakobs is hired as head of marketing at Philips Lighting (later the demerged Signify). He is then appointed as top man in the Middle East, where the organization is running poorly and the numbers are disappointing. After that, he gets to revive the home appliances division, which is also struggling after several leadership changes. Then comes the Personal Health division, and when things don’t go well at the Connected Care division, it’s again Jakobs who is flown in to patch things up. That’s where Jakobs is at the helm as the pandemic breaks out, and discussions with the US government over a large order of respirators are underway. In an interview with MT/ Sprout a few months ago, Jakobs described his leadership style as a combination of “ bold strategy and pushing boundaries”, choosing “the right people in the right place” and “continuous respect for how others view the world”. As a leader, he wants to set a clear goal and address people if necessary, and at the same time be ‘people-oriented’ and have an eye for the qualities of his employees. His philosophy is when people grow, the company grows. According to Philips, both Jakobs and his predecessor Van Houten only heard about the problems with the sleep apnea devices for the first time in the first quarter of 2021. The American subsidiary where the controversial sleep apnea devices were made and where the complaints about the machines had been known for years, fell under Jakobs since 2019. He was subsequently given a major role in the recall, and was one of the discussion partners for the American health watchdog FDA. Although investors support his appointment, this also arouses suspicion. “Is Jacob’s part of the solution, or part of the problem?” they wondered at the shareholders’ meeting at the end of September. “Of course we also asked ourselves that question,” replied Feike Sijbesma, chairman of the supervisory board of Philips. “Our research shows that Mr. Jakobs is part of the solution.” Sijbesma holds Jakobs responsible for the “huge increase in the production of the Dreamstation (replacement devices, ed .). We were able to make much more than we thought possible.” The pattern at Philips, according to investors: pushing out the bad news, bringing out the good It is mainly the shareholders who, after seeing their money evaporate, have recently expressed strong criticism. But in the end it is the patients and their families for whom the problems at Philips go much deeper. More than five million people around the world are dealing with the recall of sleep apnea devices or ventilators. Mark de Hek, of the SAP lawyers office in Amersfoort, assists six hundred of them. He says some people still don’t know when their device is due for replacement. “Every night they put on a mask of which they do not know whether it causes health damage,” says De Hek, “Not knowing when they will get a new device, that drives people to despair.” According to Philips, more than half of the appliances in the Netherlands have now been replaced. Among Jakobs, De Hek hopes for “better, more honest communication than hitherto”. He was disturbed, for example, that Philips initially reported that a thorough investigation into the harmfulness of the devices would be published in the second quarter of this year. But the research that appeared – from which Philips concludes that only a small part of the devices can release foam that can end up in the lungs – was not yet complete. “What exactly is follow-up research being done?”, De Hek wonders. “And how independent is that? Patients want to know that.” Allergic Reactions Frans van Houten took an advance on the final study at the shareholders’ meeting in September, saying that it will probably be published this year and looks to be looking favourable. That could count on an allergic reaction from the investor association VEB. “I don’t think you can say that as a CEO,” says Everts. “No one can read it anymore, or know what the research method is.” According to Everts, who has held Philips liable for the investor loss on behalf of investors, it has been a pattern: pushing out bad news, and putting forward good news. Everts: „In our opinion, that has been disastrous in this crisis: there was no good news in the middle of the crisis. Philips comes from a conglomerate, where a lot of focus was on making high-quality products as cheaply as possible. But you can easily replace a broken television. In healthcare you have a huge problem much faster if a product is not good.” Van Houten told De Tijd last February that he expected the price to recover quickly. “At Philips, 90 percent runs like clockwork.” And: “I am convinced that later this year we will look at this situation completely differently.” Jakobs opted for a different language at the shareholders’ meeting on Wednesday: “I fully realize that we are in a major crisis, which we want to get out of as quickly as possible.” Hundreds of claims Jakobs plans to quickly complete the recall and improve the company’s quality control. In addition, an important next question becomes: how are the patients going to be compensated? Hundreds of claims have been made, mainly in the US. The settlement that is imminent with the American judiciary is separate from this. Furthermore, inflation and major problems in the supply chain have forced Philips to issue a second profit warning this year. Shortages of especially electronic components such as computer chips and printed circuit boards mean that hospitals and other customers have to wait longer for their orders. “It strikes me that Philips suffers more from this than other companies that I follow,” says an analyst, who only wants to be anonymous in the newspaper because he considers the situation around Philips uncertain and sensitive. “That may be because of the recall. The supply chain problems have been going on for a year. Many companies immediately started redesigning their products to be less exposed to shortages. I have heard less about Philips about that.” Shareholders also think that Philips is vulnerable to a takeover with such a low share price. “We think we are sturdy, large and strong enough to further shape Philips on our own,” said Sijbesma at the shareholders’ meeting. “But that is not only determined by Philips.” Still, analysts don’t expect it to happen that quickly. In the Netherlands, companies are protected to a certain extent against a hostile takeover, for example by a statutory cooling-off period. Am I to believe that someone will be on the doorstep tomorrow to take them over, Everts wonders. “Probably not in this phase: you also get the inheritance. The best protection after that is a better stock price. The company must ensure that these issues are resolved as soon as possible.” A version of this article also appeared in the newspaper of October 15, 2022