Families that control VW and BMW face opposition to dividend payouts

FRANKFURT -- The billionaire families who control BMW and Volkswagen Group have become a stumbling block as German automakers seek to persuade the government to agree to on incentives to revive demand for new cars.

Germans want to know why taxpayer funds should go toward helping the automakers when they are not canceling shareholder dividends or executive bonuses.

The economic hit caused by the coronavirus pandemic means that many family-owned restaurants and small stores across the country face the loss of their livelihoods.

BMW plans a shareholder dividend payment of 1.65 billion euros. The payout was expected to be approved at the automaker's annual meeting on Thursday.

BMW has around 20,000 employees on short-time work where the state pays most of their wages. It said paying the dividend is important for investor confidence. "Reliability towards our investors creates trust and maintains the attractiveness of BMW AG as an investment," the company said in a statement on March 18.

BMW's controlling shareholders Germany's wealthiest woman, ‎Susanne Klatten and her brother, Stefan Quandt, who are listed as owning 46.8 percent of the automaker's shares. They will earn 730 million euros from the payout.

Volkswagen Group is distributing more than 3.27 billion euros to investors for the 2019 calendar year.  About 1 billion euros will go to the Porsches and Piechs, whose holding company has just increased its stake in the automaker to 53.3 percent.

In normal circumstances, such long-term anchor investors are regarded as important for stability and protection from hostile shareholders, speculators or shaky hands who might dump their holdings when times are hard.

The Porsche-Piech and Quandt families are not usually in the public and media spotlight. That's now changed and anger against them is building up.

"With ownership comes responsibility," tweeted former German politician Christopher Lauer, citing a phrase from the country's constitution. “You cannot hold more than 40 percent of BMW, have a net worth of circa 38 billion euros, rake in 9 billion euros worth of dividends from BMW over 10 years and then expect the state to come save you.”

Opponents are organizing under the hashtag #Abfckpraemie on social media.

VW Group CEO Herbert Diess defended the automaker's support for a stimulus program for new-car sales and the automaker's use of state aid for worker salaries even as it still plans to offer shareholders a dividend for the 2019 calendar year.

"We had one of the most successful years in the history of Volkswagen," Diess told the German public broadcaster ARD. The dividend payout was a pledge to shareholders and "you have to carefully consider whether to go back on such a promise," he said.

BMW CEO Oliver Zipse said dividends are being criticized because the coronavirus pandemic affects every part of society unlike the 2008-09 Great Recession. "It is very difficult to explain to the public why you specifically only support one industry,” he told analysts during the company's first-quarter earnings call.