Volkswagen buyers query plan for CEO to guide Porsche itemizing

By Victoria Waldersee and Ilona Wissenbach

BERLIN/FRANKFURT (Reuters) -Volkswagen buyers consider incoming CEO Oliver Blume will wrestle to guide each the Volkswagen Group and Porsche – and to tug off a deliberate itemizing of the sports activities automobile maker whereas carrying each hats.

Friday’s announcement that group CEO Herbert Diess would get replaced by Porsche boss Blume has rekindled investor considerations about company governance issues at Europe’s high carmaker, which some shareholders have stated weigh on the inventory’s efficiency.

“Blume cannot handle every little thing … this underscores the dangerous company administration at Wolfsburg,” stated Ingo Speich, head of sustainability and company governance at top-20 Volkswagen investor Deka Funding, referring to the German carmaking group’s headquarters.

“It’s poison for the Porsche IPO,” Speich added. Volkswagen plans to checklist the posh automobiles division within the fourth quarter.

Porsche AG could already need to go public at a steep low cost if it decides to go forward with the itemizing as financial obstacles mount, Reuters reported final week.

These considerations have been exacerbated by questions over how Blume can handle his twin position.

“Mr Blume will keep his position as CEO (of Porsche AG) together with after a doable IPO,” Volkswagen stated on Monday in response to Reuters’ questions.

Diess, meantime, will fulfil his contract that runs till October 2025 however in an advisory capability, an individual aware of the matter stated.

Simply days earlier than his appointment was introduced, Blume and different Porsche AG executives talking at its capital markets day bought a doable itemizing of the sports activities automobile model as a way to present it extra independence and entrepreneurial freedom whereas elevating funds for the group.

His twin position calls that independence into query, analysts at Stifel and UBS stated.

“Such a double mandate can solely exist briefly in an emergency scenario – it will not work in the long run,” stated Ulrich Hocker of the German Affiliation for the Safety of Securities (DSW), which represents retail buyers.

Nonetheless, most don’t at this stage count on a delay to the itemizing. Some, together with automobile business veteran Ferdinand Dudenhoeffer speculated Porsche finance chief Lutz Meschke could finally take over from Blume on the sports activities automobile model.

COMPLEX WEB

An individual aware of the matter stated it might take a pair extra weeks to see what the administration adjustments actually meant for the IPO, including Blume would fill each roles for the foreseeable future.

“We belief Blume with the administration of the Group, however it’s laborious to think about that he’ll be capable of fulfil the twin position of managing the pursuits as CEO of Porsche AG and the Volkswagen Group in the long run,” stated Hendrik Schmidt, company governance skilled at asset supervisor DWS.

Schmidt stated that one motive for what he described as problematic choices was the shortage of unbiased members on Volkswagen’s supervisory board. Based on Eikon, DWS owns round 2% of Volkswagen’s choice inventory.

In its assertion on Friday, Volkswagen didn’t define any succession planning for Blume at Porsche.

Volkswagen’s share value has practically halved since March 2021, underperforming a 17% drop within the STOXX Europe 600 Vehicles & Components Index over the identical interval.

The carmaker solutions to a fancy internet of buyers – its supervisory board managed by employees’ representatives and regional authorities, and a holding firm owned by the Porsche and Piech households, staffed partially with Volkswagen executives.

Porsche AG’s Meschke is on the board of Porsche Automobil Holding SE, Volkswagen’s high shareholder and proprietor of greater than half its voting rights, whereas Volkswagen’s chairman Hans Dieter Poetsch is its CEO.

Tensions over who pulls the strings in Wolfsburg have spelled the tip of the highway for a number of Volkswagen executives earlier than Diess, with former CEO Bernd Pischetsrieder and former VW model chief Wolfgang Bernhard pressured out of their jobs within the late 2000s after repeated clashes with the works council.

Whereas Diess is essentially given credit score for Volkswagen’s pivot to electrification – lifting the carmaker from the reputational smash of the Dieselgate scandal to main Europe’s electrical automobile market – the governance points brought on by his confrontational strategy to management in the end weighed on the funding case, analysts at Stifel Europe Fairness Analysis stated.

“Poor company governance makes many buyers shrink back,” Janne Werning, who heads ESG Capital Markets & Stewardship at Union Funding, a top-10 shareholder in Volkswagen, stated on the carmaker’s annual normal assembly (AGM) final yr.

Union Funding, which repeated its criticism of Volkswagen’s governance at the newest AGM in Might, declined to remark for this text.

(Reporting by Victoria Waldersee and Ilona WissenbachAdditional reporting by Emma-Victoria FarrEditing by Christoph Steitz, Matt Scuffham and Mark Potter)

Leave a Comment