Professional Documents
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“Yes, of course we have heard of shareholder value. But that does not
change the fact that we put customers first, then workers, then
business partners, suppliers and dealers, and then shareholders.”
Dr. Wendelin Wiedeking, CEO, Porsche
The Cayenne was the single most successful new automobile launch in history.
Units
80,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
Note: Excludes sales of the discontinued 928 and 944/968 models in 1994-1996. These models totaled 1005 in 1995 and 104 in 1006.
Copyright © 2009 Pearson Prentice Hall. All rights reserved. 1-5
Corporate Governance at Porsche
• Porsche says
• The investment of €3 billion in VW is to secure its on-going and future strategic partnership with VW
• VW is currently responsible for roughly 30% of Porsche’s automotive manufacturing and assembly
• VW and major VW shareholders
• See a significant conflict of interest between Porsche and VW, including prioritization of VW’s and
Porsche’s portfolio evolution, as well as the competitive conflicts between Porsche and Audi of VW
• A conflict of interest by Ferdinand Piëch, non-executive chairman of VW, and the grandson of the founder
of Porsche and a major family member of the current owners and leaders of Porsche
• VW is one of the two biggest underperformers in the European auto industry at present, and is in need of a
strong wage reduction and cost reduction initiative which is not consistent with Porsche’s track record of
accommodation of wage demands by auto industry workers
• Auto Analysts and Critics and Stockholders Argue
• That Porsche could have obtained the continuing services of VW and VW’s technical resources in a variety
of much more cost-effective (and shareholder friendly) methods
• That the expenditure/investment of more than €3 billion was an enormous use of corporate financial
resources which would have generated better returns by simply being returned to shareholders (which had
been the hope of much of the marketplace in recent years)
• That this decision is largely motivated by the personal ambitions and preferences and self-interests of
Ferdinand Piëch, rather than indicative of any significant return to German solutions or German cronyism
• In the end may sustain Porsche’s growth and profitability success story at the expense to
non-family shareholders
Source: Porsche.com
Porsche’s share price
performance over the
2004-2005 period, however,
Recovered and was very
good by all comparable
measures.
Source: Porsche.com