The chairman of the world’s second largest car company appears increasingly isolated from the rest of his board. Ferdinand Piech appeared to set Volkswagen boss Martin Winterkorn up for a fall earlier in the week, when he said in a newspaper interview that he was ‘at a distance’ from his former protégé, in an extraordinary breach of German corporate discipline.
The 78-year-old, a patriarch of one branch of the Porsche family, which owns 51% of VW, may have hoped that Winterkorn’s position would then become untenable. His fellow patriarch Wolfgang Porsche immediately backed the chief executive, however, and now it seems the firm’s supervisory board has also cast its lot in with Winterkorn.
The board, which Piech chairs, said today that ‘Winterkorn is the best possible’ chief executive and has its ‘full support’. It also recommends his contract be extended when it convenes again in February. One presumes the board’s statement was issued over the dissension of its chair.
This is more than just a vote of confidence. In a labyrinthine twist of German corporate governance, the board has responsibility for senior executive appointments. Its decision to defy Piech is a sign that its major voting blocs – the employees (50%) and the state of Lower Saxony (20%) are also behind Winterkorn.
Piech’s attempted coup has clearly backfired, and now it is the chairman who looks threatened. Could he go early, and Winterkorn take his place, as had been originally intended? Perhaps not. The struggle may not be about personal politics, but about strategy.
VW’s main weaknesses under its current boss have been in breaking the US market and in low-cost cars sold to the developing world. Perhaps Piech thinks Winterkorn should be doing more, but if he does it’s apparent that the other board members don’t agree.
Either way, the other shareholders won’t be impressed at this very public, very un-Teutonic feud. It seems unlikely to resolve until one of the two men leaves, and at present it doesn’t look like it’s going to be Winterkorn.