Page last updated at 08:59 GMT, Thursday, 23 July 2009 09:59 UK

Porsche boss exits with 50m euros

Former CEO of German luxury carmaker Porsche Wendelin Wiedeking
Mr Wiedeking became Porsche chief executive in 1993

German luxury car maker Porsche has said chief executive Wendelin Wiedeking and financial director Holger Haerter have resigned "with immediate effect".

Mr Wiedeking leaves with a 50m euros ($70m; £43m) payoff package.

Earlier this year, Mr Wiedeking failed in his attempt for Porsche to take over larger German rival Volkswagen (VW), despite building a 51% holding in VW.

Now the way is open for VW, Europe's biggest carmaker, to take over Porsche and add it to its brands.

The news comes as the boards of Porsche and VW hold separate meetings on the way forward.

'Reverse bid'

"The news that the Porsche chief executive is resigning is not really unexpected," Credit Suisse automotive analyst Arndt Ellinghorst told the BBC.

He leaves a quarter of a century later a much richer man - but with the manner of his departure casting a shadow over his otherwise hugely successful career

"He has... failed to take over Volkswagen, now Volkswagen is going for a reverse bid of the Porsche car business. I think ultimately this is going to be a good outcome."

Mr Ellinghorst pointed out that Porsche and VW have had close links since they were both founded by Ferdinand Porsche in the 1930s.

"The two companies will merge their operations and I think that this is key for their performance. We are seeing all over the world in the auto industry the need for consolidation."

FROM BBC WORLD SERVICE

And he said, despite the seeming diversity between Porsche and VW cars, that the two firms would be able to work together on platforms and components.

Earlier, Porsche said it would increase its capital by at least 5bn euros ($7.10bn; £4.3bn).

It said that this new sum would "create the foundation of building an integrated car manufacturing group with Porsche and Volkswagen".

Porsche's board also endorsed negotiations for the sale of a stake to Qatar to bolster its balance sheet.

'Strategic development'

The statements came after an all-night meeting on the future of the company. It follows a power battle between Mr Wiedeking and the head of VW's supervisory board, Ferdinand Piech.

Porsche dealership in Qatar
Wiedeking and Haerter came to the conclusion in the last week that the further strategic development of Porsche... would be better when they were no longer the responsible people on the board
Porsche statement

Half of that money will go to a "social foundation". Meanwhile, Mr Haertner will get a payoff of 12.5m euros.

Mr Wiedeking will be replaced by Michael Macht, the management board member responsible for production, while personnel chief Thomas Edig will serve as his deputy.

"Wiedeking and Haerter came to the conclusion in the last week that the further strategic development of [parent firm] Porsche SE and Porsche AG would be better when they were no longer the responsible people on the board," the statement said.

Porsche would not say if the 5bn euros capital increase would come from Qatar.

Mr Wiedeking, 56, joined Porsche in 1983. He left in 1988, but returned to Porsche in 1991 and became chief executive in 1993.

In June, Porsche said demand for its cars had been hit by the worldwide recession.

Global sales at the German carmaker declined 28% to 53,635 vehicles between August 2008 and the end of April, compared with a year earlier.

Mr Wiedeking was credited with turning around the automaker in the 1990s, but it now has some 9bn euros in debt, following his attempts to acquire more shares in Volkswagen.



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