When Volkswagen AG chairman Ferdinand Piëch stated that he was “at a distance” from the company's CEO, Martin Winterkorn, he may have put his own legacy at risk,
Financial Times
correspondent Richard Milne wrote
in an opinion piece.
Milne pointed out that Winterkorn, who has been CEO for eight years, has been “a long-time Piëch loyalist.”
Milne, who covered VW from 2004 to 2010 and is now the
FT's
Nordic correspondent, wrote that Piëch's comments “destabilised VE and triggered an undignified power struggle.” Milne noted that Winterkorn does not intend to step down, and Piëch does not have enough votes on the company's supervisory board to force out the CEO. “[A] prolonged impasse now seems likely,” Milne wrote.
The
FT
correspondent noted that VW can ill afford a boardroom struggle at a time when sales of its cars are declining in the U.S. and in emerging markets. The company's stock price fell 1.5% on the news of Piëch's comments, the article said.
Milne's report noted that since Winterkorn took over in 2007, VW's revenues have nearly doubled and net profit has quadrupled. However, Milne added, these results are mainly due to “three perennial cash cows”: the Audi and Porsche brands, plus strong sales of the VW brand in China. “Such strengths have helped paper over several problem areas likely to displease the perfectionist Mr. Piëch, and these difficulties may go some way to explaining” his comments about Winterkorn, Milne wrote.
Milne wrote that in light of Piëch's comments, the chances that Winterkorn will succeed him as chairman are slim, although Winterkorn has been the presumed successor. Max Warburton, an analyst at Bernstein Research, told Milne that by his comments about Winterkorn, Piëch, 77, “risks damaging, not burnishing, his legacy and it could even mark the beginning of the end for Ferdinand Piëch.”
Milne pointed out that Piëch has an “appalling record in corporate governance,” including the installation of his wife, a former nanny, on the board as well as the “enduring soap opera” of the power struggle between the Piëch family and their cousins, the Porsche family.
“Soon after his verbal attack, Mr. Piëch seemed isolated,” Milne wrote. VW's two largest shareholders, Porsche SE and the government of Lower Saxony, do not support Piëch's assessment of Winterkorn.
However, Milne noted, “history shows above all that VW's chairman takes a long view and is patient enough to endure setbacks on the way to achieving his goals.” (Source:
Financial Times
, April 14, 2015.)
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