The tug of war over whether to extend the contract for the head of Europe's biggest car maker ended Tuesday night with Bernd Pischetsrieder remaining CEO of Volkswagen until April 2012.
It will be up to Pischetsrieder to bring the shine back to VW
Pischetsrieder, who still had about a year left in his old contract, received the unanimous support of the 20-member VW supervisory board during a meeting in Hamburg on Tuesday, one day before the company's annual general meeting.
The ink hardly dry on the new contract, the 58-year-old manager called on stockholders to give him time to enact his plans to increase the struggling VW brand profits to 5.1 billion euros ($6.44 billion) by 2008, quadrupling 2004's 1.1 billion euros.
Pischetsrieder, in the driver's seat for five more years
Employee representatives had originally said they would not agree to extend Pischetsrieder's contract without getting more details about the reorganization plans that would cut up to 20,000 jobs, 20 percent of the company's German workforce, over the next three years.
After the supervisory board meeting, Bernd Osterloh, head of the VW's works council, said representatives agreed to lend Pischetsrieder their support in exchange for guarantees that certain jobs and factories would be safe. He did not give additional details as to which jobs or plants would be spared the cost-cutting measures.
Questio n s a n swered, VW ready to move o n
"The mood is okay," said Christian Wulff, premier Lower Saxony, which is one of VW's largest shareholders, trying to put an end to the boardroom battle that has divided Volkswagen for months. "Everything is now in place for the company to move forward."
VW stocks got a lift Wednesday morning
The contract extension was put into question in March when Supervisory Board Chairman Ferdinand Piech said it was still an "open issue." Piech took a more supportive position after a supervisory board meeting in April saying he was "very satisfied" with Pischetsrieder's work.
Market analysts reacted positively to the new contract, hoping Pischetsrieder and the rest of the board will be able to turn Volkswagen around.
"A major obstacle no longer exists, and they can hopefully move forward in restructuring the company," Patrick Juchemich, an analyst at Sal Oppenheim in Frankfurt, told Reuters. "It's what the markets wanted to hear."
Volkswagen shares opened 2.42 percent higher at 62.65 euros when trading started in Frankfurt on Wednesday.