“Day by day Volkswagen… appears less like a public company, and more like a complex oligarchy.” That’s how The Economist began a critique of the German carmaker’s flawed corporate governance – in December 2005.
Not much has changed since, as the latest developments in Wolfsburg suggest. In spite of periodic protests about governance, Ferdinand Piëch, VW’s chairman, has reinforced his hold over the group and is expected to seek another five-year term in the chair. The latest news is that his wife, Ursula, will stand for nomination to the board. This may be, as the FT wrote on Sunday, part of “a fairly well-established tradition of spouses taking up powerful positions at German companies”, citing the board positions held by Friede Springer at Axel Springer, and Liz Mohn, at Bertelsmann. But to anybody outside this tradition of family-controlled companies, it looks distinctly odd. As Dow Jones pointed out in its account, “there are no reports…. that would suggest she has any high-profile corporate management experience“. Read more
Contrast the reaction to rewards paid to UK bank executives – £28m in share bonuses and long-term incentives to nine Royal Bank of Scotland officers, for instance – with the response to stock awards worth almost $100m for Ford Motor’s Alan Mulally and Bill Ford.
Both pay-outs are being made to executives who took on big turnround jobs – and had no responsibility for what went before. Both contain deferred elements. Both, let’s face it, are huge in absolute terms, however you cut them. But whereas many people seem to believe Mulally, Ford’s CEO, deserves his pay-out, his RBS counterpart Stephen Hester and colleagues have attracted mainly brickbats for their rewards. Read more
I admit to having been sceptical about Alan Mulally‘s chances of turning around the ingrained culture and under-performance of Ford when he was recruited from Boeing as chief executive in 2006. But Mr Mulally has been proving me wrong.
Ford’s third quarter results put the company on track to be free of net debt by the end of the year. More importantly, Mr Mulally’s internal restructuring appears to have placed it on a long-term growth path, rather than being a short-term fix.
A lot of conventional wisdom about the industry have been proved wrong recently, including the idea that it would be a disaster for any of the Big Three to go into Chapter 11 bankruptcy. Bankruptcy was the best thing that could have happened to GM. Read more