May 20, 2016 / 4:27 PM / 2 years ago

VW board tried to dilute Lower Saxony influence: Der Spiegel

FRANKFURT/HAMBURG (Reuters) - A power struggle erupted on Volkswagen’s (VOWG_p.DE) supervisory board after the owning Porsche and Piech families joined representatives from Qatar in what proved to be a failed attempt to dilute the voting power of Lower Saxony, German magazine Der Spiegel said.

A Volkswagen logo is pictured at Volkswagen's headquarters in Wolfsburg, Germany, April 22, 2016. REUTERS/Hannibal Hanschke

With 20 percent of voting rights in VW, Lower Saxony, where VW employs more than 100,000 staff, can veto decisions such as factory closures, which require a majority vote of more than 80 percent.

The joint action by the Porsche and Piech families and Qatar centered on an attempt to prevent a dividend payment for preference shareholders for 2015, the weekly said. This would have diluted Lower Saxony’s voting rights.

Lower Saxony blocked the attempt to stop dividend payments by teaming up with VW’s worker representatives, who have 10 of the supervisory board’s 20 seats, Der Spiegel said.

VW and Lower Saxony declined to comment on the report.

A spokesman for Porsche Autmobil Holding SE, the investment company via which the Porsche and Piech families hold 52.2 percent of voting rights in VW, said there was no power struggle among VW’s large shareholders.

“Porsche SE, together with Lower Saxony and Qatar supports VW’s management in its efforts to resolve the emissions issue and develop a new strategy,” it said.

Qatar is VW’s third-largest shareholder with a 17 percent stake and two seats on the supervisory board.

Activist hedge fund TCI has been putting pressure on Lower Saxony to stop blocking efforts to make the carmaker more efficient.

Volkswagen (VW) has a two-tier shareholder structure with 206,205,445 non-voting preference shares and 295,089,818 voting, or ordinary, shares.

If the preference shareholders are denied a dividend payment for two years in a row, their shares gain voting power, which would dilute the power of Lower Saxony, which owns 20 percent of voting rights in VW.

VW on April 22 proposed a dividend of 0.11 euros per ordinary share and of 0.17 euros per preferred share.

Reporting by Edward Taylor and Jan Schwartz. Editing by Jane Merriman

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