Activist investor TCI says VW campaign its own initiative

Mon May 9, 2016 11:48am EDT
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By Maiya Keidan

LONDON (Reuters) - Activist hedge fund TCI's campaign against German carmaker Volkswagen (VOWG_p.DE: Quote) was launched as its own initiative and not on behalf of a broader investor group, a partner at the firm told Reuters.

In a letter to Volkswagen's executive and supervisory boards on Friday, TCI, founded by Chris Hohn, said it wanted to see a complete overhaul of the carmaker's executive pay structure as part of a plan to boost productivity.

The $10 billion London-based hedge fund says it has a 2 percent exposure to VW's non-voting preference shares and none to the group's ordinary shares. Although acting alone, it would be prepared to speak to fellow investors, TCI partner Ben Walker said.

"We will speak to any investor whose motives and interests are aligned with ours," said Walker.

TCI spoke out ahead of a May 10 meeting of members of VW's supervisory board to discuss issues including whether to allow its third-largest shareholder, the Qatari Investment Authority, a seat on its executive steering committee.

Reeling from a diesel emissions cheating scandal and fresh from posting a record loss of 1.6 billion euros ($1.8 billion) for 2015, investors have been riled by news that Volkswagen's top bosses would get millions of euros in bonus payments.

"We're shining a light on the situation," said Walker. "By shining a light, you expose it to the ridicule that it deserves," adding TCI believed the share price could double if the firm improved productivity.

"In five years -- in a good market for auto sales – efficiency and productivity plummet[ed] because of all the escalating personnel expenses," he said.   Continued...

A worker walks on the roof of a Volkswagen production site in Wolfsburg, Germany, April 28, 2016.    REUTERS/Fabrizio Bensch