Title: Volkswagen vs. Porsche: a power-index analysis

Authors: Roland Kirstein

Addresses: Economics of Business and Law, Faculty of Economics and Management, Otto-von-Guericke-University, Bldg. 22/D-003, P.O. Box 1402, 39016 Magdeburg, Germany

Abstract: If Porsche had completed the attempted takeover of Volkswagen, the supervisory board of Porsche SE would have consisted of three groups: Porsche shareholders with six seats, the 324,000 Volkswagen employees and the 12,000 Porsche employees with three delegates each. This paper presents a power-index analysis of the possible supervisory board compositions. It shows that, unless the Porsche employees are made completely powerless, the Porsche and VW employee representatives will have identical power regardless of the actual distribution of seats on the employees| side. This analysis sustains the judgment issued by a German labour court which rejected the request of the Volkswagen works council for more seats than the Porsche employees. Equal power per represented employee could be implemented using a |randomised decision rule|.

Keywords: Banzhaf power index; supervisory board composition; Societas Europeae; Porsche; Volkswagen; VW works council; random decision rule; takeover; corporate governance; shareholders; employees; supervisory board members; Germany; labour courts.

DOI: 10.1504/IJCG.2010.035231

International Journal of Corporate Governance, 2010 Vol.2 No.1, pp.1 - 20

Published online: 16 Sep 2010 *

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