For what seems like months, stories have burned up the wires about the future of Porsche and Wendelin Wiedeking, its well paid CEO. Rumors of Wiedeking’s imminent departure became reality after nearly two decades of triumphant rule turned tragic through a series of financial missteps and market maneuvers. Had his plan worked, we would have seen “David” (Porsche) gobbling up and taking control of the much larger “Goliath” (VW). Instead, in a flurry of activity late last night (or early morning in Germany), the Supervisory board of Porsche SE announced their approval to recapitalize the debt laden company to the tune of $7.1 billion and at the same time green-lighted plans for an investment by the government of Quatar to provide the much needed capital. As what some might see as the coup de gras, Porsche CEO Wendelin Wiedeking and Porsche CFO Holger Harter were terminated from their positions effective immediately.
Wiedeking, credited for turning Porsche from the brink of bankruptcy in the early ’90s to the “most profitable car company in the world” is not leaving empty handed. While his reported severance package of 50 million Euros is a far cry from the numbers that have been floated over the last few weeks (I’ve read rumors of a package worth as much as 150 million Euros) it is still a very large and very gold Parachute.
Wiedeking has come under intense scrutiny in the past few years as the country’s (and indeed, the industries) best paid executive. Through a profit sharing clause in his contract, Wiedeking was entitled to .09% of the companies profit. As Porsche’s profits grew, so did Wiedeking’s payout; culminating in payments of more than 77.4 million Euros last year. Mindful of the ever growing backlash against huge executive compensation, Wiedeking released his own statement shortly after his termination pledging to donate more than 50% of his severance to various charitable trusts, with the largest portion (25 million Euros) earmarked for promoting “socially fair development” at Porsche facilities and another 1.5 million Euros spread evenly across three charities that benefit journalists.
Michael Macht to Replace Wiedeking as CEO of Porsche AG
Replacing Wiedeking at Porsche AG’s helm will be long time Porsche executive Michael Macht. Macht started his career with Porsche AG in 1990 as a specialist for engine planning. However, he is probably best known for his roles in the development and creation of the Porsche Cayenne and Panamera. Thomas Edig, the Board member in charge of Human Resources of Porsche AG will become Macht’s deputy. Furthermore Macht and Edig have been appointed as Members of the Board of Management of Porsche SE, Macht in charge of technology and products, Edig with responsibility for commercial issues and administration.
For more coverage on this event, you can read:
Bloomberg
The Truth About Cars
The NY Times
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[Source: PCNA: NY Times]
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Porsche-Volkswagen merger may fail over taxes
Volkswagen's planned takeover of Porsche may yet fall apart because of a three billion euro ($4.3 billion) tax bill, reported German newspaper Sueddeutsche Zeitung on Monday.
The newspaper, citing unidentified members of Porsche's supervisory board, said that if Volkswagen had to pay the tax bill, the deal would fall apart.
As it stands a meeting between the two controlling families is scheduled to take place on Thursday (today) where sources say a deal will be struck for Volkswagen AG to pay €8 billion for Porsche AG. At the same time Porsche is discussing a possible tie-up with the state of Qatar which would see the company selling off about 20% of its shareholding to the Arab emirate.
Germany sells the family silver and the kitchen sink…......does not sit well with me.
Hi, Dede,
I agree with your final sentiment, but not sure what the alternative is at this point. I'm comforted by the fact that a few of the statements I've read (that are attributed to known sources) suggest that Porsche will remain independent from a brand stand-point. In the end, this may give them the economy of scale that is needed to allow them to become even more competitive.
Let's not forget, that Bugatti is one of VWs brands and they put out one of the most amazing cars in the world and do so at a loss... If Piech is willing to put this type of capital into the Bugatti projects, imagine what Porsche can do (a profitable company) with that same type of support.
The downside to that sort of thinking, John, is that this leaves VW in a spot where they're less likely to keep all of their bases covered. How many Bugatti cars are sold each year, vs. Porsches? It leaves them wide open for that "diluting of the brand" business people have accused Porsche of doing since the Cayenne came out.
VW Exec 1: Oh man, we gave Porsche too much of our budget and now we don't have any money to develop a upscale sports coupe! What should we do?
VW Exec 2: Damn! I don't know what to do... Let's just take that 911 frame and give it to our engineers to build it up into the new Beetle! It's not like we don't own Porsche or anything!
As they laugh and clink their beer glasses together, the P-car purists nationwide suffer catastrophic heart failure.
Is that likely? No. But it's possible. :-D A more likely scenario would be the world's first *truly* entry level Porsche -- that mid-engined VW/Audi/Porsche concept they were passing around car magazines some six months back.