Dec 1, 2007 8:51:42 AM
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Wall Stree Journal Article on Wiedeking's Pay
Porsche CEO Adds to Pay Debate
Fund Critic Wiedeking
Is German Focal Point;
'Something Is Wrong'
By STEPHEN POWER
December 1, 2007; Page A7
FRANKFURT -- Porsche AG Chief Executive Wendelin Wiedeking's Euro 68 million ($100.2 million) in compensation is adding fuel to debate in Germany about executive-compensation levels at a time of stagnant wage levels for ordinary workers.
Porsche's executive-pay levels have drawn attention in Germany in part because Mr. Wiedeking has often embraced populist rhetoric while criticizing hedge funds and accusing some companies of putting the interests of shareholders above those of workers. Some industry analysts say that Porsche itself is behaving like a hedge fund.
* What's Happening: Porsche AG Chief Executive Wendelin Wiedeking's $100.2 million in compensation is adding fuel to debate in Germany about executive pay at a time of stagnant wage levels for ordinary workers.
* Why the Fuss? Mr. Wiedeking has often embraced populist rhetoric while criticizing hedge funds and accusing some companies of putting the interests of shareholders above those of workers. Some industry analysts say that Porsche itself is behaving like a hedge fund.In its most recent financial statement, Porsche disclosed that it made more money in its latest fiscal year from trading derivatives than it did from selling cars. It said earnings from stock-option transactions contributed a pretax Euro 3.59 billion to the overall result.
Earlier this past week, Porsche disclosed that it paid its management board a total of Euro 112.7 million in the most recent fiscal year ended July 31, compared with Euro 45.2 million the previous year. Though Porsche doesn't disclose individual salary levels, a person familiar with the matter said Mr. Wiedeking's own compensation totaled about Euro 68 million. Porsche AG is a subsidiary of Porsche Automobil Holding SE, a recently formed holding company.
Though familiar in the U.S., those kinds of CEO salaries are almost unheard of in Germany. A spokesman for Porsche said that the company wouldn't disclose the pay package of individual managers but added that the formula for determining Mr. Wiedeking's compensation has remained the same for more than a decade. He said it includes performance-related incentives that take into account his individual accomplishments as well as the company's profit and sales levels. Last month, Porsche reported net earnings of Euro 4.24 billion for the latest fiscal year, compared with Euro 1.39 billion a year earlier.
"I think when the company does well, then those who have contributed should share in that," Mr. Wiedeking told journalists attending the company's annual news conference this past week.
In an interview published Thursday in the German newspaper Handelsblatt, Germany's president, Horst Köhler, lamented that "the population has the feeling that something is wrong" with executive-pay levels and that he sees "companies and society drifting away from each other. Germany needs moral leadership by honest managers." A spokesman for Mr. Köhler said the president wasn't referring to "any person individually."
Mr. Wiedeking has often castigated companies for putting shareholders' interests before those of workers'. In 2005 at the height of Germany's nationwide election for chancellor, he caused a small stir when he came to the defense of a prominent left-wing politician who had likened hedge-fund managers to "locusts."
Ordinary workers in Germany have seen little or no growth in wages after inflation for many years, as many companies have tightened cost controls. At the same time, more information is becoming available about the level of executive salaries. Under a new German law, publicly traded German companies must report the compensation of individual top managers unless they get the permission of shareholders representing 75% of votes cast at their annual meeting to withhold individual pay levels. In such cases, companies must then report the total compensation paid to their top executives as a group.
The focus on Mr. Wiedeking is also sharpened by fears among workers at Volkswagen AG that Porsche, already VW's biggest shareholder, may increase its 31% stake further and push for cost cuts at the company.
Announcing its earnings last month, Porsche said earnings at its own core car-making business were burdened by "special factors," including extra costs in the "high three-digit million-euro" range associated with the development of a new model called the Panamera.
With profit at the core business under pressure, Porsche executives are increasingly demanding better results from VW. That has led to public sniping between Mr. Wiedeking and VW labor leaders, who fear that their influence will decline significantly should Porsche expand its stake.
In an interview with The Wall Street Journal this past week, Porsche's chief financial officer, Holger Härter, said that Porsche's core business is "very healthy" but that "there is no doubt Volkswagen will become more and more important for Porsche" in the years ahead.
Fund Critic Wiedeking
Is German Focal Point;
'Something Is Wrong'
By STEPHEN POWER
December 1, 2007; Page A7
FRANKFURT -- Porsche AG Chief Executive Wendelin Wiedeking's Euro 68 million ($100.2 million) in compensation is adding fuel to debate in Germany about executive-compensation levels at a time of stagnant wage levels for ordinary workers.
Porsche's executive-pay levels have drawn attention in Germany in part because Mr. Wiedeking has often embraced populist rhetoric while criticizing hedge funds and accusing some companies of putting the interests of shareholders above those of workers. Some industry analysts say that Porsche itself is behaving like a hedge fund.
* What's Happening: Porsche AG Chief Executive Wendelin Wiedeking's $100.2 million in compensation is adding fuel to debate in Germany about executive pay at a time of stagnant wage levels for ordinary workers.
* Why the Fuss? Mr. Wiedeking has often embraced populist rhetoric while criticizing hedge funds and accusing some companies of putting the interests of shareholders above those of workers. Some industry analysts say that Porsche itself is behaving like a hedge fund.In its most recent financial statement, Porsche disclosed that it made more money in its latest fiscal year from trading derivatives than it did from selling cars. It said earnings from stock-option transactions contributed a pretax Euro 3.59 billion to the overall result.
Earlier this past week, Porsche disclosed that it paid its management board a total of Euro 112.7 million in the most recent fiscal year ended July 31, compared with Euro 45.2 million the previous year. Though Porsche doesn't disclose individual salary levels, a person familiar with the matter said Mr. Wiedeking's own compensation totaled about Euro 68 million. Porsche AG is a subsidiary of Porsche Automobil Holding SE, a recently formed holding company.
Though familiar in the U.S., those kinds of CEO salaries are almost unheard of in Germany. A spokesman for Porsche said that the company wouldn't disclose the pay package of individual managers but added that the formula for determining Mr. Wiedeking's compensation has remained the same for more than a decade. He said it includes performance-related incentives that take into account his individual accomplishments as well as the company's profit and sales levels. Last month, Porsche reported net earnings of Euro 4.24 billion for the latest fiscal year, compared with Euro 1.39 billion a year earlier.
"I think when the company does well, then those who have contributed should share in that," Mr. Wiedeking told journalists attending the company's annual news conference this past week.
In an interview published Thursday in the German newspaper Handelsblatt, Germany's president, Horst Köhler, lamented that "the population has the feeling that something is wrong" with executive-pay levels and that he sees "companies and society drifting away from each other. Germany needs moral leadership by honest managers." A spokesman for Mr. Köhler said the president wasn't referring to "any person individually."
Mr. Wiedeking has often castigated companies for putting shareholders' interests before those of workers'. In 2005 at the height of Germany's nationwide election for chancellor, he caused a small stir when he came to the defense of a prominent left-wing politician who had likened hedge-fund managers to "locusts."
Ordinary workers in Germany have seen little or no growth in wages after inflation for many years, as many companies have tightened cost controls. At the same time, more information is becoming available about the level of executive salaries. Under a new German law, publicly traded German companies must report the compensation of individual top managers unless they get the permission of shareholders representing 75% of votes cast at their annual meeting to withhold individual pay levels. In such cases, companies must then report the total compensation paid to their top executives as a group.
The focus on Mr. Wiedeking is also sharpened by fears among workers at Volkswagen AG that Porsche, already VW's biggest shareholder, may increase its 31% stake further and push for cost cuts at the company.
Announcing its earnings last month, Porsche said earnings at its own core car-making business were burdened by "special factors," including extra costs in the "high three-digit million-euro" range associated with the development of a new model called the Panamera.
With profit at the core business under pressure, Porsche executives are increasingly demanding better results from VW. That has led to public sniping between Mr. Wiedeking and VW labor leaders, who fear that their influence will decline significantly should Porsche expand its stake.
In an interview with The Wall Street Journal this past week, Porsche's chief financial officer, Holger Härter, said that Porsche's core business is "very healthy" but that "there is no doubt Volkswagen will become more and more important for Porsche" in the years ahead.
