Volkswagen’s three main shareholders have backed management during the company’s annual general meeting, defying criticism from smaller investors over top executives’ handling of VW’s diesel emissions scandal.
It was the first time that VW shareholders came together for their annual meeting since the Dieselgate scandal involving emissions test rigging on a huge scale unfolded last autumn.
The Hanover get-together was also the first investor meeting since newly elected chief executive Matthias Müller outlined plans to turn Europe’s largest carmaker into a company moving away from diesel technology and towards e-mobility, autonomous vehicles and car-sharing schemes.
VW executives bent over backwards in Hanover to secure a vote of confidence in the board amid angry accusations from a number of investors saying the lack of independent directors on the supervisory board was likely to have stood in the way of a proper scrutiny of VW managers and their role in the scandal.
The crisis has led to calls from minority investors for greater openness in a business that is almost 90-percent controlled by its founding Porsche-Piech families, its home region of Lower Saxony and the Gulf state of Qatar.
Torrent of criticism
During the annual general meeting (AGM), VW’s main shareholders easily defeated two motions aimed at replacing Hans Dieter Pötsch – VW chairman and head of the Porsche-Piech family’s holding company – as chair of the meeting.
Pötsch, who is also a former VW finance chief, repeated an apology to investors for the emissions test cheating. “We sincerely regret that the diesel issue is casting a shadow on this great company,” he told the meeting of about 3,000 shareholders in Hanover. But smaller investors were not mollified.
“We are looking at a shambles,” said Ulrich Hocker of Germany’s DSW association of private investors, citing “collective failure” by top executives for the scandal. “The stock has plunged 50 percent, market share keeps shrinking and diesel engines, which long have been portrayed as the savior, are just a big bluff,” Hocker told the news agency Reuters.
CEO Müller sought to assuage investors by stressing management’s readiness to change, noting the efficiency drive it had announced to fund an increase in spending on electric vehicles and services such as ride-hailing and car-sharing.
Multiple litigation pending
Volkswagen is still far from drawing a line under the scandal, with the costs of the affair still incalculable. The auto giant, which owns 12 brands ranging from Volkswagen and Porsche to Audi and SEAT, still faces a myriad of regulatory fines as well as lawsuits from customers and shareholders.
Two days ahead of the meeting, prosecutors provided more fodder for irate shareholders when they launched an investigation of former VW chief executive Martin Winterkorn for having allegedly manipulated the market by holding back information about the emissions cheating.
A second former member of the board is also included in the probe, prosecutors said, A VW spokesman on Tuesday confirmed that the suspect was Herbert Diess, who is currently in charge of the VW brand.
Listed companies are required to disclose information that could affect market prices immediately. But VW complied with its disclosure obligation only on September 22, 2015 – four days after US regulators went public with emissions cheating charges against the company.
More bad news came on Tuesday, when the German financial watchdog Bafin asked prosecutors to investigate the company’s entire management board, arguing it was collectively responsible.
That charge includes both Pötsch and Müller, who sat on the management board at that time, as finance director and head of sports car brand Porsche respectively.
On Wednesday, management board member Christine Hohmann-Dennhardt told the shareholder meeting that VW supervisors remained “convinced that it met capital markets obligations.”
At the end of the turbulent AGM in Hanover, minority investors also lambasted a recommendation by the VW board aimed at ratifying the actions of executives in 2015. Such a vote is common at German firms, amounting to a show of confidence.
Management was finally exonerated due to the backing of VW’s majority shareholders, who said internal investigations had shown that no former executive board member was in serious breach of duties in 2015.
uhe/jtm (dpa, AFP, Reuters)