FRANKFURT -- VW’s supervisory board has an opportunity to give stakeholders and investors clarity regarding the automaker’s long-term future while simultaneously setting up the world’s second-largest automaker for even bigger financial gains. The trick will be picking the perfect chairman.
“With the right kind of leadership, we believe VW could raise profitability significantly,” wrote Bernstein analyst Max Warburton on Sunday, the day after Ferdinand Piech resigned as VW Group chairman. Piech lost the support of key VW power players when he tried to remove Martin Winterkorn as VW Group CEO.
Ex-union boss Berthold Huber is interim chairman. He will lead the company’s annual meeting on May 5 in Hanover, but he’s not the likely successor to Piech.
No time pressure
A decision on a successor won’t be made by next week’s gathering as the company’s under no time pressure to act, Lower Saxony Prime Minister Stephan Weil said in an interview with newspaper NWZ published on Tuesday.
“The board and the management are totally capable of functioning,” Weil said. “The board’s executive committee plans to approach this calmly.”
Piech remains a board member of the family’s investment vehicle Porsche Automobil Holding SE. He can also exert influence within the family, which has agreements in place to vote as a bloc. That means he could hold up discussions on a successor, said a person familiar with the family’s structure. None of the family representatives would comment on succession.
Piech’s power stems from a holding of about 13 percent of Porsche SE common stock, said the person, who asked not to be identified because the details are private. If he seeks to sell those shares, he’d have to offer them to other family members first.
That would mean the clan -- which has about 35 members, including Piech’s 12 children -- would have to come up with about 1.8 billion euros to buy him out, based on prices for Porsche SE’s publicly traded, non-voting preferred shares.
It will not be easy to find a candidate that appeals to both sides of the Porsche-Piech clan, which has nearly 51 percent of VW’s ordinary shares, as well as 20 percent shareholder Lower Saxony and the Gulf state of Qatar, which owns a further 17 percent of the votes.
Although unions have no direct say in who becomes chair -- a position endowed with a tie-breaking vote -- their delegates take up half the seats on the supervisory board and will be a key negotiating partner for the new boardroom leader.
“To run Volkswagen you need the support of the Porsche family, Lower Saxony and the unions -- no one knew this better than Piech,” a source said.
The only one with the necessary qualifications that all members of the board have united around is Winterkorn, but he still has a contract valid through the end of next year. Promoting him might leave a sudden vacuum as he was widely expected to inherit the post only after finishing his term as CEO of the group.
“We think it’s logical to assume Winterkorn, given his widespread support, will soon be coronated as Chairman,” wrote Warburton, who took a positive spin by viewing his possible replacement as CEO potentially free enough to launch comprehensive Gorbachev-style “Perestroika” reforms with Piech gone.