[Brucelee]

Porsche chief at risk in rescue
By Daniel Schäfer in Frankfurt

Published: July 22 2009 20:55 | Last updated: July 22 2009 20:55

Porsche’s feuding family owners were on Wednesday night locked in a board meeting trying to hammer out the terms of a rescue of the debt-ridden sports carmaker and debating the future of Wendelin Wiedeking, its chief executive.

One person close to Porsche said that the prospect of Mr Wiedeking’s departure had become likely.

EDITOR’S CHOICE
European View: Porsche and VW are spinning out of control - Jun-30Jonathan Guthrie: An industry running on romance alone - Jul-22Porsche chief heads towards showdown - Jul-19In Depth: Car industry in crisis - Jun-16Fiat still considering partners - Jul-22Mr Wiedeking is one of the highest paid managers in the world. If he were to leave, he is expected to be compensated with at least a double-digit million euros sum. Porsche declined to comment.

Its pugnacious chief executive, whose contract expires in 2012, has earned almost €80m in the past financial year on the back of a contract that grants him a 0.9 per cent share of the company’s profits.

Thanks to large option bets with Volkswagen shares, Porsche’s pre-tax profit increased to more than €8.5bn in the last financial year. But to fund the acquisition of a 50.76 per cent stake in Europe’s largest carmaker, Porsche was left struggling to meet its more than €10bn net debt obligations.

People close to the situation said the families were on Wednesday aiming to decide on a framework for integration with VW. This would be in line with a family agreement from May on the formation of an “integrated car manufacturing group” – a family-controlled car empire with 10 marques, including Porsche, Seat, Bentley and Audi.

It would also catapult the Porsche and Piëch families into the league of the biggest car dynasties, such as the Fords or the Agnellis.

Until Wednesday, the families were at loggerheads over the route to a merger. Wolfgang Porsche, the sports carmaker’s chairman, favoured a deal that would see the Emirate of Qatar take a stake in Porsche ahead of a merger. His cousin Ferdinand Piëch, chairman at VW, wants to buy Porsche’s sports car business to relieve the family holding of its debt load.

The Financial Times revealed last week that the families were eyeing a compromise that could include an initial sale of half of Porsche’s sports car business to VW for about €4bn, a capital injection into Porsche Holding and the sale of a 20 per cent package of VW share options to the Emirate of Qatar.

This would still be a victory for Mr Piëch, grandson of Ferdinand Porsche, designer of the VW Beetle. Mr Piëch aims to reunite his family legacy.

VW’s supervisory board is meeting on Thursday in Stuttgart, where Porsche is based