Posted on 07/23/2009 10:20:34 PM PDT by bruinbirdman
Porsche’s family owners on Thursday ended months of feuding over a rescue of Germany’s debt-ridden sports carmarker by agreeing a merger with Volkswagen and ousting its chief executive Wendelin Wiedeking with a huge €50m pay-off.
The merger, which is planned for 2011, would bring Porsche under the umbrella of Europe’s biggest car and truck empire, where it would join other famous marques including Audi, Bugatti and Bentley.
But the terms of Mr Wiedeking’s payoff, one of the biggest ever in Germany, reignited a fierce public row over executive pay in the country, which is heading towards a general election in two months time. One of the best paid managers in the world, Mr Wiedeking was accused by one politician of “cashing in big time”
The agreement on a merger was a personal victory for Ferdinand Piëch, Volkswagen’s chairman. The grandson of Ferdinand Porsche, the designer of the VW Beetle who helped found Porsche, has long harboured an ambition to unite the two companies. The proposed merger would catapult his family into the league of global car dynasties such as the Fords or the Agnellis.
“Together, Volkswagen and Porsche have all it takes to occupy a leading position in the international automotive industry,” the 72 year-old family patriarch said.
The Porsche families on Thursday decided on the immediate dismissal of Mr Wiedeking and Holger Härter, the sports carmakers’ chief financial officer.
The pugnacious chief executive had fallen out of favour with Mr Piëch, after Porsche’s acquisition of more than 50 per cent of Volkswagen left it with net debts of €10bn.
His €50m compensation package angered some German politicians. “Wiedeking steps down and cashes in big time,” said Joachim Poss, a leading Social Democratic member of parliament and close ally of finance minister Peer Steinbrück, in a blistering statement.
In a bid to avert a public outcry, Mr Wiedeking, who has earned almost €80m in the past financial year, said he would spend half the sum on a newly-formed charity for Porsche employees and a donation for an organisation that helped needy journalists.
Mr Wiedeking, who will act as an adviser to Porsche in the future, will be succeeded by Michael Macht, currently Porsche’s head of production.
The move came as the families hammered out details of Porsche’s rescue. As a first step, Porsche aims to increase its capital by more than €5bn, with the help of the families and the emirate of Qatar, with whom a deal has yet to be finalised.
Qatar is also meant to take over a large VW option package from Porsche, which would make the emirate the third largest shareholder in the company alongside Porsche and the Lower State of Saxony.
VW’s supervisory board also agreed on taking over Porsche’s sports car business in several steps as a prelude to the merger in 2011.
Germany’s powerful IG Metall union demanded workers obtain a sizeable stake in a future combination of Volkswagen and Porsche.
Shares in VW rose 1.2 per cent to €255. Porsche shares were 0.3 per cent higher at €51.75.
The emirate of Qatar? My last two cars have been VW. My next might be Japanese.
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