VeeDub Board Cashes In. Big-time

Bertel Schmitt
by Bertel Schmitt
veedub board cashes in big time

For a long time, European and Japanese auto execs looked longingly at their American colleagues who command princely salaries (along with a royal air force.) The times and sums, they are a-changing. Chump change we’re talking not. Porsche’s Wendelin Wiedeking and his CFO Holger Härter already come close to benchmark-setting Wagoner. But Porsche is different; after all; they’re a bank with attached sheetmetal-fabrication. Now, it’s raining money on the leaders of Porsche’s takeover target, Volkswagen. The Financial Times learned that “Volkswagen’s five executive board members made $31.7m selling shares in the middle of a controversial share spike at Europe’s largest car maker.” They were not alone.

Volkswagen announced that “large parts of the workforce” sold shares from VW’s options program, and together “collected a three-digit million euros sum.” To deflect criticism, the five execs quickly announced that they would donate 10 percent of their sudden windfall to charity. The Bürgerstiftung in Wolfsburg helps children in need, and only a battalion of Scrooges will deny them $3m before Christmas. (A call to my German CPA revealed that donations to charitable organizations are tax-deductible.)

To cash in on the sudden spike of the VW share required some nimble dealing. In the US, transactions like these would attract the SEC’s insider trading squad, but this is Germany. Bafin, the German securities watchdog, had launched an investigation last month. But since then, no growling, barking, or even excited tail-wagging has been reported. And an entire workforce that received hundreds of millions should have a benign view of those who just made them richer.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Ronnie Schreiber Ronnie Schreiber on Dec 05, 2008

    Vega Employee stock options certainly cost employers money. You think those shares come out of thin air? The hedge funds might have taken a hit, but VW had to acquire those shares (or issue new ones, but there are costs involved there too) in the first place.

  • Vega Vega on Dec 05, 2008

    Ronnie I'm aware of that. In Germany "Mitarbeiteraktien" (employee shares) are usually offered to employees at a FIXED discount towards current share price. This discount is payed by the employer as a bonus. As a result, the share price rally of recent weeks didn't cost VW a dime. Employee shares offer two positive effects compared to wage bonuses: 1.Employees have an inherent interest in the well-being of the company 2.If the company is successful and the value of the shares go up, workers benefit without increasing wage costs for the employers. Your initial comment insinuated that the windfall VW workers received is comparable to high wage levels of US autoworkers. This is simply not true.

  • Geotpf Geotpf on Dec 05, 2008

    I don't even think insider trading charges would be appropiate, even if US security laws applied in this case. Insider trading requires insider information. That simply wasn't the case here. This was a supply/demand thing-Porsche was buying all of VW's shares, stupid hedge funds needed those shares to cover their retarded short positions, so everybody who owned shares in VW would be stupid not to sell. This was all very public, and involved no insider information. I don't see anything legally, morally, or ethically wrong with any part of this situation. The only losers were a bunch of rich morons who should have known better (one has to be quite rich to have money invested in the type of funds that lost money here).

  • Landcrusher Landcrusher on Dec 05, 2008

    I like that doscounted shares in the company thing. Maybe someone who knows more about airlines could give us a rundown on how it failed at United. I have always been curious how a company owned by the employees ended up having such surly customer service.