VW owners split for first time on diesel scandal in AGM vote

Bloomberg

Volkswagen AG’s typically close-knit owners publicly split for the first time over the diesel crisis after the German state of Lower Saxony withheld support for two executives under investigation for their role in the scandal.
Volkswagen’s second-largest shareholder abstained from what is typically a ceremonial vote at the annual meeting, declining to back former CEO Martin Winterkorn and current VW brand chief Herbert Diess.
Lower Saxony representatives plan to speak in greater detail about their decision later. “During the current proceedings, the state of Lower Saxony doesn’t want to give the slightest impression that it positions itself in any way,” the German state said in a statement. “That is solely the matter of prosecutors and potentially later the courts.”
Lower Saxony’s move puts it at odds with the Porsche and Piech families, who used their clout to ensure both men were supported by a majority of shareholders. The rift capped a tumultuous annual meeting where Chairman Hans Dieter Poetsch, the chief financial officer when the cheating occurred, bore the brunt of investor dissatisfaction over the automaker’s handling of the scandal.
On Monday, Braunschweig prosecutors opened a probe into whether Winterkorn and Diess were too slow to tell investors about the potential cost of rigging diesel cars to pass emissions tests. Volkswagen said the investigation doesn’t involve new facts or revelations and had previously argued that the company informed investors properly based on the information available at the time.

Stock Drop
Volkswagen shares have declined 23 percent since the scandal broke in September, shaving about €12 billion ($13.6 billion) off the company’s value. The stock was 1 percent higher at 124.30 euros as of 9:15 a.m. on Thursday in Frankfurt trading.
During Wednesday’s annual meeting, which often descended into shouting and arguing, investors questioned when they would get full information about the origins of the crisis and bemoaned the job management has done reacting to it.
“The crisis is a crisis of trust,” said Gerd Kuhlmeyer, who represents a coalition of employee shareholders and described seeing tears in VW workers’ eyes over the scandal. “Customers’ trust has been lost and needs to be won back, and so must the trust of investors.”
As the meeting dragged on for more than 12 hours, scores of investors with non-voting shares encouraged the owners with voting stock not to ratify the performance last year of the entire management and supervisory boards. In a sign of their limited influence, Lower Saxony joined the controlling family and Qatar to sign off on the performance of all the other members of the two boards.

Ownership Structure
The Porsche and Piech families, descendants of the creator of the VW Beetle, own 52 percent of Volkswagen’s voting stock. Lower Saxony holds 20 percent and has special rights, along with workers, that are enshrined in Volkswagen’s bylaws. Qatar, the third-biggest stakeholder with 17 percent of the common shares, backed all of the measures. Regular shareholders “have never fared worse compared to the other VW stakeholders,” Ulrich Hocker, a representative of German shareholder association DSW said in a speech. “I only have one description for this: total failure.”
The automaker has been hit in recent days by another barrage of negative news, with the new allegations emerging in Germany, a settlement with U.S. authorities over the cheating delayed until next week and shareholders filing another suit against the automaker.
The California State Teachers’ Retirement System claimed that VW misled investors about emissions, seeking damages that could reach as high as €700 million if other investors agree to join the action. Another 278 institutional investors sued in March, seeking €3.3 billion in a lawsuit over the timing of market disclosures.