# Volkswagen investors question plan for CEO to lead Porsche listing
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-25
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Investor Concerns Grow Over VW CEO's Dual Role with
Meta Description: Investors worry incoming CEO Oliver Blume may struggle to manage both Volkswagen and Porsche, casting doubt on the planned Porsche IPO. Corporate governance concerns persist.
URL: https://financedigest.com/volkswagen-investors-question-plan-for-ceo-to-lead-porsche-listinghtml

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By Victoria Waldersee and Ilona Wissenbach

BERLIN/FRANKFURT (Reuters) -Volkswagen investors believe incoming CEO Oliver Blume will struggle to lead both the Volkswagen Group and Porsche – and to pull off a planned listing of the sports car maker while wearing both hats.

Friday’s announcement that group CEO Herbert Diess would be replaced by Porsche boss Blume has rekindled investor concerns about corporate governance problems at Europe’s top carmaker, which some shareholders have said weigh on the stock’s performance.

“Blume can’t take care of everything … this underscores the bad corporate management at Wolfsburg,” said Ingo Speich, head of sustainability and corporate governance at top-20 Volkswagen [investor Deka Investment](https://www.financedigest.com/why-are-investors-checking-out-of-uk-buy-to-let-and-checking-in-to-hotel-investment.html "WHY ARE INVESTORS CHECKING OUT OF UK BUY-TO-LET AND CHECKING IN TO HOTEL INVESTMENT?"), referring to the German carmaking group’s headquarters.

It is poison for the [Porsche IPO,”](https://www.financedigest.com/porsches-blockbuster-ipo-is-no-gamechanger-for-europes-battered-markets.html "Porsche’s blockbuster IPO is no ‘gamechanger’ for Europe’s battered markets") Speich added. Volkswagen plans to list the [luxury cars](https://www.financedigest.com/mercedes-benz-lifts-profit-forecast-as-luxury-cars-boom.html "Mercedes-Benz lifts profit forecast as luxury cars boom") division in the fourth quarter.

[Porsche AG may already have to go public at a steep discount if it decides to go ahead with the listing](https://www.financedigest.com/volkswagens-antlitz-no-comment-on-valuation-of-porsche-listing.html "Volkswagen’s Antlitz: no comment on valuation of Porsche listing") as economic obstacles mount, Reuters reported last week.

Those concerns have been exacerbated by questions over how Blume can [manage his dual role](https://www.financedigest.com/does-credit-management-have-a-role-in-retaining-the-loyal-customer.html "Does Credit Management Have a Role in Retaining the Loyal Customer?").

Mr Blume will maintain his [role as CEO](https://www.financedigest.com/amazon-ceo-says-job-cuts-to-exceed-18000-roles.html "Amazon CEO says job cuts to exceed 18,000 roles") (of Porsche AG) including after a possible IPO,” Volkswagen said on Monday in response to Reuters’ questions.

Diess, meantime, will fulfil his [contract that runs until October 2025 but in an advisory](https://www.financedigest.com/previous-chief-scientist-of-rsa-releases-smart-contract-connectivity-whitepaper-facebook-director-of-engineering-llvm-creator-joins-chainlink-advisory-board.html "Previous Chief Scientist of RSA Releases Smart Contract Connectivity Whitepaper, Facebook Director of Engineering & LLVM Creator Joins ChainLink Advisory Board") capacity, a person familiar with the matter said.

Just days before his appointment was announced, Blume and other Porsche AG executives speaking at its capital markets day sold a possible listing of the sports [car brand](https://www.financedigest.com/top-expensive-car-brands.html "Top Expensive Car Brands") as a means to give it more independence and entrepreneurial freedom while raising funds for the group.

His dual role calls that independence into question, analysts at Stifel and UBS said.

Such a double mandate can only exist temporarily in an emergency situation – it won’t [work in the long term,” said Ulrich Hocker of the German](https://www.financedigest.com/low-use-of-shortened-work-hours-points-to-mild-german-recession-ifo.html "Low use of shortened work hours points to mild German recession – Ifo") Association for the Protection of Securities (DSW), which represents retail investors.

Still, most do not at this stage expect a delay to the listing. Some, including car industry veteran Ferdinand Dudenhoeffer speculated Porsche [finance chief](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks") Lutz Meschke may eventually take over from Blume at the sports car brand.

COMPLEX WEB

A person familiar with the matter said it would take a couple more weeks to see what the [management changes really](https://www.financedigest.com/with-the-right-active-manager-you-really-do-get-what-you-pay-for.html "With the Right Active Manager, You Really Do Get What You Pay For") meant for the IPO, adding Blume would fill both roles for the foreseeable future.

We trust Blume with the management of the Group, but it is hard to imagine that he will be able to fulfil the dual role of managing the interests as [CEO of Porsche AG and the Volkswagen Group](https://www.financedigest.com/shareholder-group-iss-backs-barclays-board-over-former-ceo-staley.html "Shareholder group ISS backs Barclays board over former CEO Staley") in the long term,” said Hendrik Schmidt, corporate governance expert at asset manager DWS.

Schmidt said that one reason for what he described as problematic decisions was the lack of independent [members on Volkswagen’s supervisory board](https://www.financedigest.com/bottlenecks-supply-problems-improving-at-abb-robotics-division-board-member.html "Bottlenecks, supply problems improving at ABB robotics division – board member"). According to Eikon, DWS owns around 2% of Volkswagen’s preference stock.

In its statement on Friday, Volkswagen did not outline any succession planning for [Blume at Porsche](https://www.financedigest.com/ceo-blume-hails-historic-moment-as-porsche-ag-lists-on-frankfurt-exchange.html "CEO Blume hails ‘historic moment’ as Porsche AG lists on Frankfurt exchange").

Volkswagen’s [share price](https://www.financedigest.com/netflix-cuts-prices-in-some-countries-to-boost-subscriptions-shares-drop.html "Netflix cuts prices in some countries to boost subscriptions, shares drop") has nearly halved since March 2021, underperforming a 17% drop in the STOXX Europe 600 Automobiles & Parts Index over the same period.

The carmaker answers to a complex web of [investors – its supervisory board](https://www.financedigest.com/institutional-investors-back-shell-board-lawsuit-over-climate-risk.html "Institutional investors back Shell board lawsuit over climate risk") controlled by workers’ representatives and regional government, and a holding company owned by the Porsche and Piech families, staffed in part with Volkswagen executives.

Porsche AG’s Meschke is on the board of Porsche Automobil Holding SE, Volkswagen’s top [shareholder and owner of more than half its voting](https://www.financedigest.com/hsbc-board-recommends-shareholders-vote-against-spin-off-resolution.html "HSBC board recommends shareholders vote against spin-off resolution") rights, while Volkswagen’s chairman Hans Dieter Poetsch is its CEO.

Tensions over who pulls the strings in Wolfsburg have spelled the [end of the road](https://www.financedigest.com/exclusive-nissan-seeks-tech-tie-up-without-renault-as-alliance-nears-end-of-road.html "Exclusive-Nissan seeks tech tie-up without Renault as alliance nears end of road") for several Volkswagen executives before Diess, with former CEO Bernd Pischetsrieder and former VW brand chief Wolfgang Bernhard forced out of their jobs in the late 2000s after repeated clashes with the works council.

While Diess is largely given credit for Volkswagen’s pivot to electrification – lifting the carmaker from the reputational ruin of the Dieselgate scandal to leading Europe’s [electric car market – the governance issues caused by his confrontational approach to leadership ultimately weighed on the investment](https://www.financedigest.com/stellantis-to-invest-130-million-euros-in-german-plant-for-new-opel-electric-car.html "Stellantis to invest 130 million euros in German plant for new Opel electric car") case, analysts at Stifel Europe Equity Research said.

Poor corporate governance makes many investors shy away,” Janne Werning, who heads ESG Capital [Markets & Stewardship at Union Investment](https://www.financedigest.com/italys-a2a-trims-green-investment-plan-citing-economy-volatile-markets.html "Italy’s A2A trims green investment plan citing economy, volatile markets"), a top-10 shareholder in Volkswagen, said at the carmaker’s annual general meeting (AGM) last year.

Union Investment, which repeated its criticism of Volkswagen’s governance at the most recent AGM in May, declined to comment for this article.

(Reporting by Victoria Waldersee and Ilona WissenbachAdditional reporting by Emma-Victoria FarrEditing by Christoph


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