Volkswagen strikes CEO power struggle truce in boost to shares

By Jan Schwartz HAMBURG (Reuters) - Volkswagen has defused a power struggle over measures needed to accelerate its expansion in electric vehicles, lifting its shares by 5% on Tuesday as investors welcomed Chief Executive Herbert Diess getting allies appointed to key roles.

Reuters December 16, 2020 00:06:01 IST
Volkswagen strikes CEO power struggle truce in boost to shares

Volkswagen strikes CEO power struggle truce in boost to shares

By Jan Schwartz

HAMBURG (Reuters) - Volkswagen has defused a power struggle over measures needed to accelerate its expansion in electric vehicles, lifting its shares by 5% on Tuesday as investors welcomed Chief Executive Herbert Diess getting allies appointed to key roles.

The conflict had pitted Diess against Bernd Osterloh, Volkswagen's powerful labour boss, whose views differed on the pace required to turn the 83-year old automaker into more of a tech company modelled on Tesla.

Volkswagen's supervisory board provided unanimous support for the 62-year old CEO in a statement on Monday, as well as backing key appointments he had requested, including Arno Antlitz taking over as finance chief from Frank Witter in June.

"The decisive factor is that he (Diess) was able to assert himself on the points that were important in terms of content," Ingo Speich, head of sustainability and corporate governance at savings fund company Deka Investment, said.

Diess, who became CEO in 2018, dropped his demand for an early extension of his contract, which runs until 2023, people close to the supervisory board said, in what was seen as a partial victory for Osterloh.

"Diess is strengthened because he has largely pushed through his demands when it comes to appointments to the board," Frank Schwope, an analyst at Norddeutsche Landesbank, said.

"Whether his contract is extended today or in a year's time is irrelevant."

There was also board agreement that Lamborghini and Ducati will remain part of the Volkswagen Group, which also said it would cut overhead costs by 5% and procurement costs by 7% over the next two years.

VW said that Thomas Schmall would become board member in charge of a newly-created technology division from Jan. 1.

Stefan Bratzel, head of the Center of Automotive Management in Bergisch Gladbach said Diess' position is "not necessarily strengthened" as he has suffered setbacks.

"When he has had to give in, frustration remains, and this is transferred to the managers," Bratzel said.

(Reporting by Jan Schwartz; Writing by Christoph Steitz; Editing by Thomas Seythal, Kirsten Donovan and Alexander Smith)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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