Volkswagen’s top shareholders closed ranks behind management yesterday, defying a torrent of criticism from smaller investors about the German car maker’s emissions test cheating and its response to the scandal.
Europe’s largest automaker was holding its first annual shareholder meeting since admitting in September to rigging US diesel emissions tests in a scandal that risks costing it tens of billions of dollars.
The crisis has led for calls from some investors for greater openness at a business that is almost 90% controlled by its founding Porsche-Piech families, its home region of Lower Saxony and the State of Qatar.
But yesterday there was little sign of a change in corporate governance, with the main shareholders easily defeating two motions aimed at replacing Hans Dieter Poetsch — Volkswagen’s (VW) chairman and also head of the Porsche-Piech family’s holding company — as chair of the meeting.
Poetsch, who is also VW’s former finance chief, repeated an apology to investors for the emissions test cheating.
“We sincerely regret that the diesel issue is casting a shadow on this great company,” he told the meeting of about 3,000 shareholders in Hanover.
But smaller investors were not mollified.
“We are looking at a shambles,” said Ulrich Hocker of Germany’s DSW association of private investors, citing “collective failure” by top executives for the scandal.
“The stock has plunged 50%, market share keeps shrinking and diesel engines which long have been portrayed as the saviour are just a big bluff,” Hocker said.
Chief executive Matthias Mueller sought to assuage investors by stressing VW’s readiness to change, noting the efficiency drive it has announced to fund an increase in spending on electric vehicles and services such as ride-hailing and car-sharing.
Alexander Scholl of investment firm Deka was not convinced.
“It sounds appealing to aim to become the leader on electric mobility but the actual plans behind this are shallow,” he said at the meeting, which is expected to run late into the evening.
Prosecutors in Braunschweig near VW’s Wolfsburg headquarters said on Monday there were investigating former VW CEO Martin Winterkorn and another unidentified executive over whether they effectively manipulated markets by delaying the release of information about the emissions test cheating.
A person familiar with the matter told Reuters on Tuesday that German financial watchdog Bafin had asked prosecutors to investigate VW’s entire management board at the time the crisis erupted, arguing it was collectively responsible.
That would include both Poetsch and Mueller, who sat on the management board at that time as finance director and head of sports car brand Porsche respectively.
Some critics have argued VW’s current corporate governance would make it difficult for the company’s supervisory board to seek any damages from its former management board, because it would mean Poetsch deciding to sue himself.
However, VW told investors yesterday it was confident it had not violated market disclosure rules.
“VW remains convinced that it met capital markets obligations,” management board member Christine Hohmann-Dennhardt told the shareholder meeting.
Minority investors have strongly criticised a recommendation by VW’s boards to ratify the actions of executives in 2015 at the meeting — at a time when investigations into the emissions test cheating are ongoing.
Such a vote is common at German firms, amounting to a show of confidence.
A source close to the matter told Reuters on Tuesday the vote would go ahead because internal investigations so far have shown that no former management board member was in serious breach of duties in 2015.
“At VW much more will be at stake in coming years than clearing up the diesel issue,” said Hans-Christoph Hirt from shareholder advisory firm Hermes EOS.
“What’s needed besides a new strategy will be a fundamental change in corporate governance including more independent members of the supervisory board,” he said.
VW’s preference shares showed little reaction to the acrimonious debate, up 0.7 % at €124.3 at 1440 GMT.