GOLDING’S TAKE: VW retains Pischetsrieder but not its dignity
Earlier this week, the supervisory board of VW reappointed Bernd Pischetsrieder as chief executive for another five years. His supervisory board chairman, Ferdinand Piech, was therefore defeated.
At the following AGM, Pischetsrieder got even more of a boost. Speaker after speaker said that Piech had behaved badly. Two called on him to resign. None were critical of Pischetsrieder. All thought he had been treated badly.
The tension rose. The chairman was becoming isolated. How would he handle the pressure on him to take responsibility for the press campaign that tried to hound his chief ops man out of his job?
VW has a laughably arcane format for its annual shareholder meeting - many Germany companies do. It is characterised by its tolerance for irrelevance and time-wasters. Surely, when Piech's time came to answer his critics, he would do so fully and in minute detail?
He took the microphone to reply to a handful of questions gathered up for him. On the questions on when and whether he would resign, his answer was wonderfully direct and bordered upon the offensive: "I will respond to you on my plans for my life in due course."
Was he really going to get away with that? A second questioner took on the duty of calling him to account. "Will I resign? You will hear what my plans are for the rest of my career." And that was it.
Even Hermes, the huge British pension fund which has been one of the activists attempting to get greater accountability from VW, had to come away with nothing.
Their man complained when he got his turn at the lectern, that the supervisory board had refused to open a dialogue and had not even received an answer to his letter. "In our experience," he provoked, "bad operating performance goes along with bad corporate governance."
Hermes reckons that there is always a conflict when a former MD is made chairman of the supervisory board because he was responsible for much of the current strategy of the company. And Piech had to take the blame for many of VW's problems.
If the chairman was not an independent, then at the very least there should be a senior independent on the supervisory board that could liaise with concerned shareholders on corporate governance issues. "The supervisory board needs someone who enjoys the unlimited trust of overseas investors."
Piech was just as brutal with that one. There is no requirement under German company law, he said, to have an independent.
One of the big open questions was whether there had been discussions between Porsche (now the holder of 24% of the voting shares of the company and Piech's power-base) and the state of Lower Saxony, VW's local authority. If there had been discussion, then that amounted to a concert party because between them they own more than 30% of the shares.
If they are acting in concert, then they are covered by takeover bid regulations that require that all shareholders are given the same information and given the opportunity to sell their shares. Again, a shrug from Piech. There was no evidence that any collaboration existed between the two largest shareholders.
And so it went on. The very serious concern about the way in which Europe's biggest car company is owned and managed was intermingled with the most extraordinary rabble of secular questioners who wanted VW's car buyers to be counselled to pick up hitch-hikers, who wanted hemp to be recognised as a sustainable crop and who wanted mental illness to be recognised as the fault of VW's employment policies.
On the evidence of this public performance, VW still does not have the first clue as to how it is going to cut its costs in Germany and it could not afford to spend eight hours at an annual meeting that is as outdated in format as the restrictive practices of labour. Seat is unprofitable. The US is unprofitable. So is China. VW has its leadership structure confirmed but it is still a long way from having decisive leadership.