Incoming Volkswagen Chief to Downsize Company's Board of Directors

Incoming Volkswagen Chief to Downsize Company’s Board of Directors

VW’s new CEO Oliver Blume revealed his idea to reduce the size of the Volkswagen board, making the decision-making process more efficient.

Volkswagen AG’s (OTCMKTS: VWAGY)  incoming CEO Oliver Blume aims to reduce the size of the automotive company’s board as one of his first decisions following his promotion. The number of board seats could be reduced to eight or nine as part of the reshuffle, with some dual functions being reconsidered. Under the leadership of outgoing CEO Herbert Diess, the board swelled to 12 members.

Blume aims to sharpen the focus of the company, which he claims has a bloated management structure following some turbulent years under his predecessor. One major criticism of Mr. Diess was his poor communication, which angered the worker’s council, caused infighting, and led to the company’s lagging share price. Blume is currently the CEO of the Porsche Sports car brand and will take over from Diess on September 1st.

Blume’s appointment reflects efforts by the Porsche and Piech families — who own half the voting rights and a 31.4% equity stake in Volkswagen –- to have a greater say over strategic matters. The families want to return the company to a calmer time, before the Diess years. 

It is unclear who will survive the cull, although that has not stopped analysts from speculating. It is forecast the core team will include: CFO Arno Antlitz, personnel head Gunnar Kilian, legal chief Manfred Doess, and Thomas Schaefer, who heads the volume brand group. 

What does the shake-up of Volkswagen’s board mean for investors?

The board’s shake-up could prove to be a blessing for investors who have grown increasingly frustrated with the company’s large and complex management structure. The trimming of the board should allow Volkswagen to streamline strategic decisions, allowing the company to be more flexible and faster to react to challenges and opportunities. 
Diess started the company on the path of expanding into the electric vehicle industry, however, his communication issues caused friction within the company, while his regular comparisons to Tesla (NASDAQ: TSLA) appeared to anger investors. The new, slimmer board may be able to pick up where Diess left off and work at a more efficient pace while causing less friction amongst stakeholders.

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