Good CEO or bad CEO?

Should a company be run with a very long term view even if short term dividends suffer? Wall Street does not care what happens in 20 years.

Associated Press Update 1: Porsche Shares Rise on Details of VW Plan 09.27.2005, 11:51 AM
Porsche AG said Tuesday that it can pay for a plan to raise its stake in Volkswagen with the funds it has on hand and is looking at the possibility of holding some seats on VW's board. Shares in the luxury automaker gained sharply.
Investors had shown their disapproval of Porsche's plans by pushing the stock down 10 percent on Monday. But they appeared mollified by word that Porsche would not have to raise additional capital to fund its increased stake.
Shares in Porsche gained nearly 8.5 percent to close at euro659 (US$791.13) in Frankfurt.
"We will pay everything from our existing liquidity," Porsche spokesman Anton Hunger said.
Another Porsche spokesman, Albrecht Bamler, said the company would not disclose how many seats it was seeking on VW's supervisory board. "It's too early to say," he said.
Stuttgart-based Porsche, which had held less than 5 percent of VW, has said raising its stake to 20 percent would secure ties between the companies and ward off any future hostile takeover of Volkswagen by investors "who do not have the long-term interests of VW as their aim."
That scenario could arise if the European Court of Justice rules against a German law that effectively keeps any VW shareholder's voting rights at 20 percent and protects the company, Europe's largest automaker, from a hostile takeover.
Labor union IG Metall said Porsche's decision wouldn't result in any undue influence on Wolfsburg-based VW.
"I don't think there will be a big impact," union spokesman Hartmut Meine said. "VW is now protected from hostile takeover, hedge funds will lose interest."
Porsche and VW worked together to develop Porsche's Cayenne sport utility vehicle and Volkswagen's Touareg. They recently announced that they, along with Audi AG, were forming an alliance to develop hybrid engines.
Volkswagen is in the midst of a cost-cutting drive aimed at shoring up its earnings amid criticism from investors that the Wolfsburg-based company is inefficiently run.

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