Outgoing CEO of German car manufacturer Porsche, Wendelin Wiedeking acknowledges the applause of the Porsche employees after he gave a farewell statement.
It's hard to feel sorry for a guy who walks away from a job with a check for €50 million ($71 million). So while a few Germans see Wendelin Wiedeking, departing CEO of German sports car maker Porsche, as the victim of a public lynching by media, few feel bad for him. Wiedeking had a 17-year run at Porsche, the Stuttgart-based sports car icon which has just failed in its bid to take over motoring giant Volkswagen and will now be merged into the VW group. He took the job when Porsche was on the skids and transformed the company into a lean, profitable manufacturer while reestablishing Porsche as a leading global brand.
In the end, though, Wiedeking made one bet too many, leveraging his company in a gambit to acquire the much larger carmaker. He failed because he underestimated the political opposition to a takeover of VW and ended up saddling Porsche with $13 billion in debt. As his star was sinking, Wiedeking went from hero in the German public's eye to a victim of his own massive hubris. In his way, Wiedeking is Germany's symbol of the greed generation, just as Bernie Madoff is in the U.S. or the Royal Bank of Scotland's Fred Goodwin is in Britain. Not a criminal like Madoff, obviously, but someone who overreached, who dreamed too big. "Porsche is another example of how the gambling mentality in global casino capitalism has infiltrated even the most down-to-earth companies and industries in Germany," complained Joachim Poss, a finance expert for the Social Democrats party.
According to the Financial Times Deutschland, Wiedeking was entitled to compensation of $200 million or more. But labor representatives on Porsche's supervisory board's protested at such a huge handout and Wiedeking himself suggested a more modest sum. Before the ink had dried on the check, Wiedeking announced he would donate half the money to a Porsche-sponsored charity. Not without a sense of humor, he also pledged to donate $2.3 million to assist "needy journalists". The German taxman will likely get a big chunk of what is left. "For the first time an executive has responded to the ever louder public criticism of compensation and bonuses for managers," wrote the business daily Handelsblatt. "It could be that the Wiedeking affair is a turning point."
Perhaps. Despite Wiedeking's gestures of charity, though, Germans have already begun grumbling about the huge payout he received. Dietmar Barsch, general manager of the leftist party Die Linke, calculated that even compensation of $35 million was equivalent to 250 Porsche 911 Targa 4 models. "This is not about social envy. The sum is absurdly high and has no relationship to any work he performed," Barsch said.
There is another lesson in Wiedeking's downfall, a lesson unlikely to be lost on automotive executives, investment bankers or even European Union bureaucrats: Volkswagen is not just any German company. Wiedeking lost his bid for control of VW when he lost the support of Ferdinand Piech, the VW supervisory board chairman who initially backed a Porsche takeover. Piech realized that Christian Wulff, the premier of the state of Lower Saxony, which holds a blocking stake in the carmaker, would not support a takeover. All Wulff had to do was use the so-called Volkswagen Law, or "Lex VW" as it is known, which guarantees that Lower Saxony cannot be out voted by any unwanted raider regardless of how many shares the challenger holds.
The European Union has tried to topple the VW law, which it calls protectionist, but in 2008 Germany passed a revised VW law that granted Lower Saxony a veto right in the event of a takeover attempt. Wiedeking underestimated Wulff and the political nature of the battle. That made failure almost inevitable. Still, the money will help soothe his current woes.