The tremendous shock created by the scandal of rigged Volkswagen vehicles meets the poor governance of the group, a governance based on a kind of double voting rights, unequal regime tolerated by its shareholders.
Recall that Porsche Automobil Holding holds the majority of voting rights for an investment of only 31.5% of the capital. It is this anomaly that allowed the reign of twenty years without sharing the autocrat Ferdinand Piëch, replaced under the pressure of Lower Saxony, which owns 20% of the group, by the same Martin Winterkorn who is now removed by a scandal that has taken on a global scale .
We’ll see hereunder the rather impressive recognition made by the VW Supervisory Board,.
« Well », says the FT, in a wise article : » Thanks to Volkswagen’s fuel shenanigans, it looks like Team ESG may finally have been awarded its first major alpha point. »
The company and its directors profiles are not improved by the historically high remuneration made by the departing Martin Winterkorn, certainly presumed innocent: a total of 16 million euros last year, a reference for Renault’s CEO Carlos Ghosn, the VW former CEO is likely to add the benefit of a special pension for which the group has put aside 28.5 million euros, and he will further earn, if he is proved innocent, a golden parachute of twenty million plus .
Our partner ECGS DSW had earlier denounced this poor governance situation before the announcement of widespread fraud. His current recommendation facing these improper compensations is that the VW Supervisory Board should sue the former executives for damage to civilian interests against negligent if not guilty top executives. According to the SüddeutscheZeitung, the company is insured up to € 500 millions against the Directors and officers failures.
The convening of an extraordinary general meeting for November 9 promises to be a hot show while the Supervisory Board proposes to appoint the soft Austrian Hans Dieter Pötsch as the new Chairman of the Supervisory Board. But Pötsch was House CFO for »Finance and Controlling » for twelve years was member of the Vorstand (Executive Board) and he simply changes office.
Therefore such proposal becomes unacceptable : how could a person who was jointly associated with such negligence or even suspected of complicity, decently preside over this investigation? As remarkable be the financial competence, how can Mr Pötsch be entrusted for the supervision of the VW reconstruction ?
September 30th. 2015
Statement by the Supervisory Board of Volkswagen AG
The Volkswagen Supervisory Board consulted intensively on the current situation at its meeting today. There is absolutely no excuse for the manipulations which have deeply shocked Volkswagen. The company will leave no stone unturned in getting to the bottom of this, will call those responsible to account, and take the necessary actions.
The first consequences in this regard were agreed upon at today’s meeting:
1. The Supervisory Board has authorized the Chairman to mandate German and US lawyers to objectively investigate and fully clarify the manipulation of emissions data of diesel engines.
2. The Executive Committee of the Supervisory Board will be charged with coordinating and safeguarding all necessary steps to monitor clarification until such time as a proposed committee commences its work.
3. With the information currently available the Supervisory Board recommended the immediate suspension of some employees. This process is already underway.
4. Matthias Müller will lead the Volkswagen Group going forward as the new CEO of Volkswagen AG. He is what the company needs now. Matthias Müller is exactly the right man at the right time to make a fresh start and to drive clarification of the current crisis that has hit our company with decisiveness and to draw the right conclusions. We expressly value his critical and constructive approach.
5. The Supervisory Board resolved to propose to the Extraordinary Meeting of Shareholders on November 9, 2015 to elect Mr. Hans Dieter Pötsch as a member of the Supervisory Board. The Supervisory Board intends to subsequently elect him as its Chairman.
Berthold Huber, Deputy Chairman of the Supervisory Board, said: “The test manipulations are a moral and political disaster for Volkswagen. The unlawful behavior of engineers and technicians involved in engine development shocked Volkswagen just as much as it shocked the public. We can only apologize and ask our customers, the public, the authorities and our investors to give us a chance to make amends.” The Supervisory Board today commissioned an American law firm to assist in further clarification and in preparing the necessary steps.
The Supervisory Board of Volkswagen AG transferred responsibility for Finance and Controlling at Group level in the Board of Management to Dipl. Wirtsch.-Ing. Hans Dieter Pötsch with effect from September 5, 2003.
L’Article https://www.responsible-investor.com/home/article/analysis_vws_gov_failures/
