Angry VW shareholders call on CEO to resign
3 May 2006, HAMBURG - Volkswagen chief executive Bernd Pischetsrieder, who has just won a five-year extension to his contract until 2012, told shareholders Wednesday the German company was still "miles away" from its objective of reducing "over-capacity."
3 May 2006
HAMBURG - Volkswagen chief executive Bernd Pischetsrieder, who has just won a five-year extension to his contract until 2012, told shareholders Wednesday the German company was still "miles away" from its objective of reducing "over-capacity."
But he offered no details of the restructuring he seeks, saying the terms were still being negotiated with labour leaders. In February, he said 20,000 jobs at German VW-brand plants, or every fifth position, would be "affected".
The chairman of Volkswagen's supervisory board, Ferdinand Piech, who is a former chief executive, came under withering criticism at the shareholder meeting in Hamburg for publicly saying earlier this year that Pischetsrieder's future was in jeopardy.
Angry shareholders vainly called on him to resign. Some said his membership of the board breached German laws requiring directors to be independent, because he is also a director and part-owner of carmaker Porsche, which holds 21 per cent of Volkswagen stock.
Critical stockholders also demanded that Volkswagen reveal all about corrupt executives in India and other nations as well as the provision of free holidays and prostitutes to labour leaders.
While the group's Audi and Skoda divisions are profitable, VW's Seat and original Volkswagen brand are under-performing.
Pischetsrieder, 58, said Volkswagen had to "optimize its costs and processes" to cope with "tough competition worldwide."
He said most of the world's manufacturers currently had over- capacity, which led to "extreme price pressure."
"I am not saying the whole group's survival is at stake," Pischetsrieder said. "But we have to act today if we are to parry the harder onslaught of our competitors tomorrow."
The group had to restore profit at its Volkswagen brand and could not continue cross-subsidies to it from the other divisions.
On the Frankfurt Stock Exchange, Volkswagen shares gained well over 2 per cent early in the day, after the board had voted unanimously late Tuesday for continuity in management.
But the shares later settled with the rest of the market to 61.39 euros, a decline of 1.3 per cent compared to Tuesday's close.
Subject: German news