Volkswagen vs. Porsche: A Power-Index Analysis

Abstract

The supervisory board of Porsche SE, after a successful takeover of Volkswagen AG, was supposed to consist of three groups: The Porsche shareholders would have been endowed with 6 seats, while the 324,000 Volkswagen employees and the 12,000 Porsche employees would have been represented by 3 delegates each. This paper perceives each of these three groups as unitary players and presents a power-index analysis of this supervisory board. 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 labor court which rejected the request of the Volkswagen works council for more seats than the Porsche employees in the supervisory board of Porsche SE. The request for a more adequate representation can only be granted if a 'randomized decision rule' is introduced.