Frankfurt - At Volkswagen AG’s shareholder meeting on Tuesday, the elephant in the room has a name: Ferdinand Piech.
The gathering in Hanover, Germany, is the first in more than two decades without the participation of VW’s former chairman and chief executive officer, following his abrupt resignation on April 25. Though CEO Martin Winterkorn said the company has “returned to calmer waters”, the three-week power struggle that led to Piech’s departure will have consequences for the world’s second-biggest carmaker beyond Tuesday’s meeting.
The 78-year-old grandson of VW Beetle creator Ferdinand Porsche still exerts influence behind the scenes. He complained before the meeting that the family members replacing him and his wife on the board don’t have enough automotive experience, Germany’s Bild newspaper reported. The criticism shows how hard it will be to find a new chairman who pleases the factions of the Porsche-Piech clan that controls the carmaker, as well as labour leaders and shareholders Lower Saxony and Qatar.
Piech made an “extraordinary contribution” to Volkswagen’s success, and the family will take its time deciding who will follow him, interim Chairman Berthold Huber, former head of the German labour union IG Metall, said at the meeting.
Replacing Piech
The VW patriarch’s nieces Louise Kiesling and Julia Kuhn-Piech replaced him and his wife, Ursula Piech, on the supervisory board. The Porsche-Piech family occupies half the 10 seats on the investor side of VW’s board and controls 50.7 percent of the voting shares. The investor side of the board represents shareholders, while the other half is made up of worker representatives. Piech also still has a seat on the board of the clan’s investment vehicle, Porsche Automobil Holding SE.
Given Piech’s legacy and his position within the family, “it’s important to find a face-saving solution, and that’s not very easy”, said Frank Biller, an analyst with LBBW in Stuttgart, Germany. “It’s a deadlock to an extent.”
Piech started the fight on April 10 by telling Der Spiegel magazine that he was keeping his distance from Winterkorn. The shareholding families, labour and political leaders quickly rallied to support the CEO, delivering Piech a rare boardroom defeat. Even after the initial pushback, he continued to pursue the ousting of his former confidant. That led to his resignation.
Winterkorn has helped lead VW to within spitting distance of Toyota Motor Corporation’s place atop the global car market, and investors applauded today as he said the company now has clarity about its future direction.
Piech’s cousin Wolfgang Porsche and other board leaders said on April 17 that they plan to extend the CEO’s contract when his current term ends next year. In Germany, top executives’ contracts are generally only extended in their final year.
Bloomberg