Dusseldorf. At Volkswagen there is still no agreement on the austerity package. Even the last attempt by chief controller Hans Dieter Pötsch to find a compromise before the supervisory board meeting on Friday did not bring any real progress. Handelsblatt learned this from several insiders.
On Wednesday evening, Pötsch spoke to the quarreling parties. Nevertheless, the fronts remain hardened. Volkswagen did not want to comment on this when asked. This amounts to a historic escalation on Friday.
Even those involved no longer believe that an agreement will be reached at the supervisory board meeting. Then, according to Handelsblatt information, the board is determined to let the shareholders vote on the austerity package at an extraordinary general meeting. It has never happened before in German economic history that a board of directors wants to overrule its own supervisory board with such a meeting if a proposal is rejected.
Pötsch first met with the VW Group board members on Wednesday. There the chief controller is said to have once again sworn the management team to a common line. He then sought talks with representatives of the state of Lower Saxony, which holds 20 percent of Volkswagen's shares, and the employees. The talks are said to have ended around 8 p.m.
In the exchange with the state and employees, it was only possible to determine that everyone involved had the will to prevent a “total loss” on Friday - i.e. the calling of an extraordinary general meeting. However, according to people familiar with the process, those involved are not prepared to compromise.
Supervisory Board Chairman Pötsch's negotiating skills didn't help either. All sides emphasize that he is very committed and diplomatic. He seeks to talk to those involved and explores all possibilities. Lower Saxony's Prime Minister Olaf Lies (SPD) is also feverishly looking for a solution.
You play “results football” and if everyone won in the end, no one would care how ugly the game was, says an insider. He is alluding to the difficult conversations of the past few days. On Monday and Tuesday, representatives of the state of Lower Saxony and the Volkswagen Group struggled to reach a minimum consensus in preliminary negotiations. Representatives of the family owners and employees were also there on Monday.
But the mood is tense. The company, the state and the employees publicly accuse each other of not being interested in a solution. Even internally, hardly anyone believes in a Wolfsburg miracle at the last second.
At the center of the conflict is CEO Oliver Blume's future and austerity package. The manager wants to make Europe's largest car manufacturer more efficient. Tens of thousands of jobs and four plants in Germany are up for grabs. Following the example of Audi, Blume also wants to spin off the VW core brand from the entire group in order to speed up decisions. Component production will also be outsourced.
The union is resisting the cuts and points to the billion-dollar austerity program of 2024, which will already cut around 50,000 jobs. The country is also insisting that there will be no factory closures.
This means that there are still three competing draft resolutions – from the board, from the employees and from the state. But there could be a new twist: the union and the country have a threatening scenario in their own hands. According to information from the Handelsblatt, both parties could combine their previously separate proposals and put them to a vote together in the Supervisory Board on Friday. This is reported by several people familiar with the events.
If both camps pull together, they would achieve a majority in the supervisory board meeting - and could therefore enforce a resolution against the representatives of the ownership side in simple majority decisions. There are nine employee representatives on the committee, which usually has 20 members. Lower Saxony has two additional seats. The capital side currently only has eight seats because Susanne Wiegand's vacant seat has not yet been filled.
Employees and the state did not want to comment on the plans, citing the confidentiality of the meeting. However, an insider says: “There is a lot of similarity” between the proposals from the union and the state. It is definitely an option for both parties to join forces.
This variant increases the pressure on CEO Blume considerably. Workers and the country could change or block key parts of his concept. According to information from corporate circles, Lower Saxony is primarily pushing for the planned spin-off of the core brand and the components business to be removed from the current package.
The restructuring, which is complex in terms of corporate law, should therefore first be further examined. In Hanover there is particular concern that the protective effect of the VW law could be weakened by a spin-off. The VW law gives the state of Lower Saxony the right to veto important decisions. The board rejects the accusation of wanting to undermine the law.
If both camps actually push through a joint proposal, the conflict would reach a new level. The board would then have to deal with a supervisory board resolution that excludes central points of its own future plan.
Since the supervisory board also refuses to approve the board's plans in this scenario, the board would have the opportunity under Section 111 of the Stock Corporation Act to call an extraordinary general meeting - and get the majority for its course. However, that would be an affront by the board of directors to the supervisory board, because the board would then override the will of the controllers with the extraordinary meeting.
With the extraordinary general meeting, the owner families Porsche and Piëch want to undermine the special influence of the state of Lower Saxony. According to VW law, the “establishment and relocation of production facilities” requires a two-thirds majority on the supervisory board. The owners on the board do not have this.
At an extraordinary general meeting, fundamental decisions require a three-quarters majority of the votes cast. The family and major shareholder Qatar Holding received more than 70 percent of the votes. If only some of the other shareholders and funds, which amount to 9.7 percent, vote for the austerity package, it would be decided at the meeting.
According to the state and the employees, because of the VW law, even such a meeting requires a majority of 80 percent of the share capital. There would be no getting around the state of Lower Saxony. According to Handelsblatt information, in the event of an extraordinary general meeting, employees are considering suing against the resolutions.
It is now considered likely that there will be an extraordinary general meeting. The group is also likely to convene this meeting if the supervisory board rejects the board of directors' proposal on Friday. According to reports from those around the company, the board's draft should contain largely the same demands as before the meeting in July. Even then, the committee rejected the future plan.
