VW to propose CFO Poetsch as chairman

Elisabeth Behrmann
Bloomberg News

Volkswagen AG will nominate Chief Financial Officer Hans Dieter Poetsch as its new chairman, opting for a consensual figure to move beyond a power struggle that led to the abrupt departure of former Chairman Ferdinand Piech.

Poetsch will be proposed for the post at an extraordinary shareholders meeting in November, the Wolfsburg, Germany-based company said on Thursday in a statement. VW’s supervisory board presidium voted to back the proposal from Porsche Automobil Holding SE, which is controlled by the Porsche-Piech family and owns the majority of Volkswagen’s common stock.

“This is good news,” said Arndt Ellinghorst, an analyst with Evercore ISI in London. “Poetsch is well respected within the financial community.”

Poetsch’s appointment as chairman would fill a vacancy that opened in April after Piech tried and failed to oust Chief Executive Officer Martin Winterkorn. While Poetsch, who has been VW’s CFO since 2003, is seen as a safe choice and won’t polarize the power players at Volkswagen, he would shift from day-to-day management to an oversight role without a break.

“While we very much respect Mr. Poetsch as CFO, we are against his direct transition to the head of the supervisory board,” Ingo Speich, a fund manager at Union Investment, said via e-mail. “A supervisory board chairman needs critical distance; that’s not possible without a cooling-off period.”

The transition from CFO to chairman is rare in Germany, but not without precedent. Clemens Boersig, Deutsche Bank AG’s former chairman, made the leap, as did Karl-Hermann Baumann at Siemens AG.

“There may be some corporate governance concerns with a management board member going straight to becoming chairman, but I think it’s more important to be pragmatic and pick a suitable candidate rather than stick slavishly to the rules,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler. “Poetsch is nearly as experienced a Volkswagen man as Winterkorn.”

Volkswagen shares rose as much as 2.7 percent to 167.45 euros and were up 2.4 percent at 4:38 p.m. in Frankfurt. The stock has fallen 9.5 percent this year, valuing the company at 78.7 billion euros ($87.6 billion).

Poetsch and Winterkorn worked closely in guiding Volkswagen to within reach of overtaking Toyota Motor Corp. as the world’s largest automaker. With Poetsch keeping a close eye on finances, Winterkorn was free to focus on the group’s range of vehicles, which include the Skoda Octavia wagon, Audi A6 sedan and Porsche 911 sports car as well as heavy-duty Scania and MAN trucks.

Still, the company has struggled in the U.S. with a lack of vehicles that appeal to American drivers. In China, VW’s largest market, demand has been slowing in recent months, threatening aggressive expansion there.

To be more nimble, Winterkorn intends to shift away from a centralized decision-making structure, giving brand and regional managers more responsibility. The plan is expected in the coming weeks.

Volkswagen said a successor for Poetsch as CFO will be decided soon. Rupert Stadler, head of the Audi brand, could be a candidate for that post. The company said Wednesday that it plans to extend Winterkorn’s contract through the end of 2018, stabilizing management for the coming years.

Julia Kuhn-Piech, a niece of Ferdinand Piech, will make way for Poetsch on Volkswagen’s supervisory board. She was appointed to fill one of the seats vacated by the resignations of Piech and his wife Ursula. Louise Kiesling, another of Piech’s nieces, will be nominated again at the November meeting, Volkswagen said.