VW chairman sees CEO's job as safe

Volkswagen's powerful chairman, Ferdinand Piech, signalled that Bernd Pischetsrieder's job as chief executive was safe despite his plans for aggressive cost-cutting.

Asked by reporters whether he expected the supervisory board to approve a five-year extension for the CEO's contract, Dr Piech told a news conference: "From my point of view today, that's how I would see it."

The about-face follows a rare newspaper interview Dr Piech gave in March, in which he openly doubted whether Dr Pischetsrieder would survive the united opposition from the half of the board that represents labour interests at Europe's biggest carmaker.

Mr Pischetsrieder said during the news conference that his contract extension would be dealt with at the board's next meeting on May 2, one day before shareholders gather in Hamburg for the annual general meeting.

German shareholder rights group SdK meanwhile attacked Dr Piech in a statement, saying they would seek to persuade shareholders at the AGM not to rubber-stamp approval of Dr Piech's performance.

"It's not acceptable that Dr Piech undermines the authority of Dr Pischetsrieder publicly through deliberate or thoughtless comments and delays his contract extension in an inexplicable manner," the SdK said.

"Dr Piech as chairman bears considerable responsibility that VW has recently developed into a prime example of poor corporate governance," it continued.

Dr Piech and his fellow non-executive board members emerged earlier from a two-day meeting that the company said focused on the strategic positioning of the group and its struggling VW brand within the global car market.

The board stopped short of explicitly supporting management's comprehensive restructuring programme, which could mean cutting up to 20,000 jobs at the brand by 2008.

"Management's proposed measures for improvement were noted with approval," Volkswagen said in a statement.

"The supervisory board agreed to the necessity for improvement at the VW brand and authorised management to continue to hold negotiations with labour representatives and (German trade union) IG Metall if need be," it continued.