07.23.09
Porsche Chief Was Biggest Casualty of His Battle for VW
FRANKFURT — Comfortably in control of his own company and angling for the much larger Volkswagen, Porsche’s chief executive, Wendelin Wiedeking, described the process before him in November 2007 as an intense chess match.
“Even now, none of the players involved knows how many moves will still be required and how long it will take until the game is finally over,” Mr. Wiedeking said during an interview at the time.
But Mr. Wiedeking’s metaphor proved far too playful for what transpired, as financial markets and feuding families took their toll on his attack plan. He had started a war, and ended up as its biggest casualty.
On Thursday, Porsche’s supervisory board fired Mr. Wiedeking and paved the way for a merger with Volkswagen, the company Porsche had dreamed of owning.
The departure of Mr. Wiedeking, 56, marked a tumultuous end for the best-paid chief executive in Germany, a hyper-aggressive manager who ruffled feathers for years but nonetheless showed considerable industrial prowess.
In an ironic twist, Mr. Wiedeking also anticipated a core problem of car companies worldwide — a lack of economies of scale — but his solution of Porsche taking over Volkswagen became his undoing.
He was constantly in the news in Germany, not the least because he earned €77.4 million, or $110 million, last year, a princely sum in a country that was skeptical of high pay packages even during good times. But his contract guaranteed him 0.9 percent of the company’s profit, and in the past few years it was greater than anyone could have anticipated. The provision was granted in the 1990s, when Porsche’s future was in doubt.
Porsche said Thursday that Mr. Wiedeking would walk away with a €50 million severance package, only days after rumors suggested that the figure might be four times that.
Mindful of the austere times, Mr. Wiedeking announced that he would put €25 million into a charitable trust that would promote “socially fair development” at Porsche facilities. He also planned to donate €500,000 each to three organizations that look after infirm journalists.
A mechanical engineer by training, he joined Porsche in 1983 at age 31. He left for an auto-parts maker in 1988 but returned to Porsche as head of production in 1991 and began whipping the nearly bankrupt company back into shape. At one point he made a show of destroying a bin for extra parts along its assembly line to make his point about the need for leaner, Japanese-style production processes online payday loans.
He became chief executive a year later and transformed the company into one of the world’s most profitable automakers, with annual production of around 100,000 vehicles. He dropped the money-losing 928 and 968 models, overhauled the iconic 911 and developed two new models, the Boxster convertible and the Cayenne sport utility vehicle.
Mr. Wiedeking’s protégés rose as well. Michael Macht, who will now succeed Mr. Wiedeking, ran the production lines and was the first head of Porsche Consulting, an enterprise that began by evangelizing Porsche suppliers on the need to cut costs.
In 2005, long before the industry’s current consolidation drive, Mr. Wiedeking had huddled in Salzburg, with members of the two families that control the sports car maker — the Porsches and the Piëchs — and floated the idea of buying VW, on the theory that only a large company could afford the huge investments in new technologies that environmental regulations and fuel-saving imperatives would demand.
Initially shocked at his audacity, the families eventually bought in.
But Mr. Wiedeking’s strategy looked rash rather than bold after financial market chaos last year transformed the landscape for heavily indebted companies.
Though the automaker that Mr. Wiedeking had so painstakingly rebuilt responded flexibly to the sharp drop-off in sales, a €9 billion debt load proved unbearable. Ferdinand Piëch, a member of Porsche’s founding family, a board member, and also chairman of Volkswagen, pounced on the opportunity to reverse the terms of Porsche’s audacious bid. But he insisted that Mr. Wiedeking would have to go, and that Porsche would have to bring in an outside investor. Along with his close confidant and chief financial officer, Holger Härter, the once mighty Mr. Wiedeking departed.
Mr. Wiedeking drew lengthy and thunderous applause before he said his farewell to about 5,000 Porsche workers Thursday.
“We should not look back, no matter what happens,” he said. “We should now work constructively on our future.”
Porsche Chief Was Biggest Casualty of His Battle for VW
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