As widely speculated, Porsche SE chief executive officer Wendelin Wiedeking has left the sportscar maker after 16 years, the latest twist in a corporate drama which started with Porsche’s audacious attempt to buy the mighty Volkswagen AG and is likely to end in a merger of the two after debts spiraled out of control.
Wiedeking, 56, Germany’s best-paid manager, accepted a EUR50m (US$70m) severance package – announcing in a rambling statement he would hand over about half to charity – and left the company immediately. He was fully behind the proposed take over of VW during which Porsche accumulated some EUR10bn (US$14bn) in debt in acquiring 51% of the larger carmaker’s shares and taking options on an additional 20%.
He had since opposed the proposed merger under which Porsche would become VW’s 10th brand, perceived by many as professional suicide. Stefan Bratzel, head of the Centre of Automotive Research Institute in Germany, told Bloomberg News that Wiedeking’s course had split the Piech and Porsche families who control the companies and caused “major irritations” in Porsche’s working ties with VW, adding: “Wiedeking has no place in a combined VW-Porsche carmaker.”
Chief ally and chief financial officer Holger Haerter also agreed to step down in exchange for a EUR12.5m (US$18m) pay off.
Wiedeking’s departure was announced after a meeting of Porsche’s supervisory board at which directors supported Porsche’s plan for a capital increase of at least EUR5bn (US$7bn) and a proposal to negotiate an investment by a Qatar investment fund.
Production chief Michael Macht, 48, took over as CEO. He joined Porsche in 1990 and was named to the company’s executive board in 1998. Thomas Edig, board member in charge of human resources, will become Macht’s deputy.
Porsche was almost bankrupt when Wiedeking took over as CEO in August 1993 but by 2005 he had transformed it into the automaker with the industry’s highest profit margins and embarked on his quest for VW shares.
Porsche, which has made more money on every car it sells than any other carmaker since at least 2002, generated an operating margin of 13% last year, compared with 1.5% at BMW AG and VW’s 5.9% according to Bloomberg data.
Wiedeking streamlined production, introduced efficiencies and axed slow-selling models to focus Porsche on its iconic 911 sports car, adding the Boxster roadster in 1996 and Cayenne SUV in 2002 to broaden the brand’s appeal.
In a bid to take over VW, Wiedeking drew up a plan that used unconventional tactics which made Porsche look more like a hedge fund than a carmaker. With Haerter they managed to increase Porsche’s VW holding to almost 51% at a relatively modest cost and a series of so-called cash settlement options in VW shares earned Porsche billions as the shares climbed in value and were at one point quoted at more than EUR1,000 (US$1420) a share, briefly last year making VW the world’s biggest company by market capitalisation.
All went well until the financial crisis started to bite and Wiedeking’s efforts to topple power structures at VW failed. He also failed to win the support of VW union chief Bernd Osterloh and Christian Wulff, the premier of VW’s home state of Lower Saxony, by trying to scuttle Germany’s so-called Volkswagen Law, which gives the state a blocking minority.
The resistance from Lower Saxony prevented Porsche from realising its plan to acquire 75% of VW, a holding that could have given it access to VW’s cash.
He also locked horns with VW chairman Ferdinand Piech who in May openly criticised Wiedeking and Haerter for creating Porsche’s problems.