It’s the “biggest change process in Volkswagen’s history”, says VW’s chief executive, Matthias Müller. The company wants to make more electric and self-driving cars and take a slug out of its cost base. This may be big news in Wolfsburg but, as far as VW’s sensible shareholders are concerned, the plan is an elaborate attempt to avoid proper reform in the boardroom.
The fund manager Hermes has been complaining about inadequate corporate governance at VW for more than a decade. It would be forgiven for assuming the diesel emissions scandal would prompt VW’s ruling cabal – the state of Lower Saxony, the Porsche family and Qatar’s sovereign wealth fund – to concede that Hermes was right all along.
Instead, VW has carried on as if nothing has happened. In a year in which VW reported a loss of more than €4bn, the company paid its management board €63m, more than half in the form of performance-related bonuses. The air of corporate insouciance is underlined every time Müller refers to “the diesel issue” as if it were an everyday occurrence. The same mindset has seen Hans Dieter Pötsch, VW’s finance director for 12 years, promoted to a supervisory board whose duties include examining whether claims can be made against former executives. It makes no sense.
Hermes says VW’s disregard of governance principles has “undoubtedly tarnished the reputation of the German two-tier board system and employee representation among foreign investors, resulting in collateral damage to the German economy”. That’s a grand statement, but it’s spot-on.
FTSE leaders and the status quo
Let’s not be churlish. Rounding up 1,270 business folk – including a chair or chief executive from half the companies in the FTSE 100 index – is impressive. The remain-supporting letter to the Times makes no fresh arguments (what is there left to say about the obvious economic risks of Brexit anyway?) but, as a way to demonstrate where the weight of opinion lies in the business world, it does the job.
But why do such dispatches, seemingly, make little impact? Perhaps there is a clue in the first few words of the letter.
“We own and run more than 1,200 businesses” it starts. Well, yes, some of the signatories do indeed both own and run their businesses – they are the entrepreneur-owners on the list. But most of signatories are not owners. They are managers of public companies who serve at the will of the owners, the shareholders. Some will have a few (or quite a few) shares in their employer but that’s not the same as being an owner. To be strictly accurate, the letter should have read: “We own or run.”
A trivial point? Possibly. But it may hint at a reason why these pronouncements from the top of the greasy pole get lost in the general noise. People sense something underhand about the boss co-opting the corporate name when expressing a personal view. When executives are also casually describing themselves as owners of the company, rather than well-paid career men and women, the tone jars.
Any of the 1,000-odd signatories could have insisted on changing “and” to “or” to avoid overstating his or her status. None, it appears, did.
Has Tesco’s Benny Higgins heard of the tube?
“All Tesco colleagues adhere to a clear policy that allows travel and other expenses for business reasons.” That was Tesco’s curious response when this paper revealed last month that Benny Higgins, the £2.2m-a-year head of Tesco bank, had clocked up £18,000 on London taxis in eight months.
The statement was curious because it seemed to say – without stating so explicitly – that Higgins had obeyed the internal rules. Can that really be the case? Was it really OK, for example, for Higgins to claim £389.85 for a trip from the Soho hotel to the Victoria & Albert museum, a journey of five stops by underground? And does Tesco really approve of Higgins’s daughters being named as the passengers in many trips to London airports?
Tesco shareholders gather on Thursday for the company’s annual meeting and have the opportunity to press for clarity. They should. In the end, it’s their money paying for Higgins’s taxis; and, these days, they can’t even console themselves with a dividend cheque twice a year.
The chap to ask is the chief executive, Dave Lewis, who used to trumpet his preference for the train over a chauffeur when travelling from Tesco’s Hertfordshire head office to central London. The policy kept a checkout worker in employment, he used to say. Has he told Higgins to take the tube occasionally, or at least pay his own taxi bills?
