VW board happy with Pischetsrieder.

[Deutsch]

By Sabine Ehrhardt

WOLFSBURG, Germany (Reuters) - Volkswagen's powerful chairman, Ferdinand Piech, signalled on Thursday 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, 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 Piech gave in March, in which he openly doubted whether Pischetsrieder would survive the united opposition from the half of the board that represents labour interests at Europe's biggest carmaker.

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 Piech in a statement, saying they would seek to persuade shareholders at the AGM not to rubber-stamp approval of 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.

Piech and his fellow non-executive board members emerged earlier on Thursday 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.

Pischetsrieder and VW brand chief Wolfgang Bernhard hope their "ForMotion Plus" programme will allow the company to nearly triple pretax profit by 2008 through reaching full capacity utilisation, boosting lagging productivity, cutting labour costs and reorganising its component operations.

Despite the lukewarm endorsement for restructuring, VW shares closed up 2.7 percent at 63.85 euros, compared with a 1.1 percent gain in the DJ Stoxx European car sector index.

NO DECISION ON RUSSIA

As he attempts to streamline Volkswagen's monolithic loss-making German operations, Pischetsrieder has earned the hostility of VW's organised labour force, which fears thousands of jobs could be lost in the process.

Labour leaders on VW's board have made their support for an extension of Pischetsrieder's contract conditional on protecting as many jobs as possible.

German media have recently renewed speculation that management might close its Golf assembly plant in Brussels and shift production to its under-utilised plant in Wolfsburg, but Pischetsrieder denied any such plans, echoing earlier comments from Belgian Prime Minister Guy Verhofstadt.

On Thursday, Germany's Sueddeutsche Zeitung newspaper cited company sources as saying that every second job was theoretically superfluous at VW's six western German plants, where roughly 100,000 workers are employed.

Fully aware that the low utilisation rates in Germany endanger jobs there, VW's influential German works council has criticised management plans to build a plant in Russia.

Even so, the company expects to commence construction there next year at the latest, German business daily Handelsblatt reported in an advance copy of its Friday edition, citing political sources in Moscow.

Volkswagen said in its statement that the board approved plans to expand its activities in Russia but that no definite decision on the plant had been made.

The board also authorised management to sell VW's 50 percent stake in Volkswagen Mechatronic, which makes unit injector fuel systems for diesels, to joint venture partner Siemens VDO for an undisclosed sum.

The supervisory board also approved the acquisition of a 49 percent stake in the southern German dealership network MAHAG, following up the earlier purchase of Berlin dealer Winter.

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[siko]

Whaaaaaaat?!?!?!

I was so sure was getting fired!!?!?