VW could bypass board in turnaround showdown

Volkswagen Group chief executive Oliver Blume could attempt to bypass the company’s powerful supervisory board and take his sweeping turnaround plan directly to shareholders if directors again reject deeper job cuts, factory closures, and structural reforms next week.

The 20-member supervisory board is scheduled to meet on September 4 for a second attempt at resolving the most contentious elements of Mr Blume’s restructuring program after rejecting deeper workforce reductions and factory closures at its July 9 meeting.

Management is understood to have prepared a 40-point turnaround plan that could effectively double previously agreed employment reductions from around 50,000 positions to as many as 100,000, while also allowing under-utilised German factories to close and some company divisions to be separated.

Facilities at Emden, Hanover and Zwickau, together with Audi’s Neckarsulm plant, have been identified as particularly vulnerable because they lack competitive long-term production programs beyond their present model cycles.

Works council chief Daniela Cavallo has argued Volkswagen must place greater emphasis on competitive products and technologies rather than relying predominantly on job cuts and site closures to restore profitability.

Lower Saxony premier Olaf Lies has similarly called for a negotiated agreement that preserves Volkswagen’s industrial base while addressing the need to improve efficiency, with talks continuing ahead of the September 4 vote.

According to the report, the supervisory board’s executive committee – including Mr Cavallo, Mr Lies, and representatives of the Porsche and Piech families – will meet on September 3, one day before the full board vote.

Any agreement is expected to centre on reducing the scale or pace of additional job losses and finding alternative uses for factories that currently lack secure production beyond 2030.

The September meeting will also see Volkswagen’s supervisory board return to its full complement of 20 members, with former board member Marianne Heiss replacing Susanne Wiegand on the shareholder side and taking over as audit committee chair.

Her appointment restores the board’s formal 10:10 split between shareholder and employee representatives and could prove important in any tied ballot, where supervisory board chairman Hans Dieter Pötsch may ultimately hold the casting vote.

Shareholder Strategy and Legal Risks

Should the supervisory board reject Mr Blume’s proposal for a second time, management could reportedly convene an extraordinary general meeting as early as October and ask shareholders to approve the strategy directly.

Such a move would be highly unusual in Germany’s consensus-based corporate system and could ignite a lengthy legal dispute over the powers of Volkswagen’s board and shareholders.

The voting arithmetic at shareholder level is markedly different. Porsche Automobil Holding SE, controlled by the Porsche and Piech families, holds 53.3 per cent of Volkswagen voting rights, while Lower Saxony controls 20.0 per cent, Qatar Holding 17.0 per cent, and remaining investors 9.7 per cent.

Without worker representatives holding voting rights at a shareholder meeting, management could theoretically assemble the three-quarters majority normally required for major corporate decisions if it secured support from Porsche SE, Qatar, and sufficient other investors.

But Volkswagen’s special governance arrangements complicate the equation. The so-called Volkswagen Law requires an approval threshold exceeding 80 per cent for certain major decisions, effectively giving Lower Saxony a blocking minority.

According to reports, management may instead seek to use provisions of Germany’s Stock Corporation Act allowing resolutions at a shareholder meeting called against the wishes of the supervisory board to pass with three-quarters of votes cast – potentially opening the door to a court battle over which threshold applies.

Whether Mr Blume can now secure support for the far more politically difficult elements of that strategy – factories and jobs – will become clearer on September 4.