Due to its shareholding structure, if VW’s preferential shareholders are denied a dividend payment for two years in a row, their shares will gain voting power thus in turn would diluted of other shareholders, in this case Lower Saxony. A German news magazine has reported that the families of Piech and Porsche along with other representatives from Qatar joined forces to dilute Lower’s Saxony’s voting rights.
Der Speigel, a German magazine has reported that Volkswagen’s supervisory board witnessed a power struggle following the joining of forces of Piech and Porsche families with representatives from Qatar who attempted to dilute the voting power of Lower Saxony.
Lower Saxony has 20% voting rights in Volkswagen. Volkswagen employees more than 100,000 employees from Lower Saxony. The state can veto decisions which include the closure of factories, which incidentally requires a 80% majority vote for the measure to sail through.
As per the Germany news outlet, both the families came together so as to attempt a non-payment of dividend for preferential shareholders for 2015, which would have diluted Lower Saxony’s voting rights.
Lower Saxony blocked the attempt by teaming up with VW’s worker representatives who have half of the supervisory board’s 20 seats.
Both, VW and Lower Saxony declined to comment on this report.
Meanwhile a spokesman for Porsche Autmobil Holding SE, an investment company through which the Porsche and Piech families hold 52.2% voting rights in VW, said Volkswagen’s board did not witness a power struggle.
“Porsche SE, together with Lower Saxony and Qatar supports VW’s management in its efforts to resolve the emissions issue and develop a new strategy,” said the spokesman.
Meanwhile, TCI, an activist hedge fund, has been putting pressure on Lower Saxony to stop blocking efforts to make the auto manufacturer’s working more efficient.
Incidentally, Volkswagen has a two-tier shareholder structure with 206,205,445 non-voting preference shares and 295,089,818 voting, or ordinary, shares.
If the preference shareholders are denied a dividend payment for two years in a row, their shares gain voting power, which would dilute the power of Lower Saxony, which owns 20 percent of voting rights in Volkswagen.
On April 22, Volkswagen had proposed a dividend of 0.11 euros per ordinary share and of 0.17 euros per preferred share.
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