“No one here is giving in to panic” —Wolfgang Porsche
The family's links to the company began with Ferdinand Porsche, who designed what became the VW Beetle under a contract with Hitler to develop a “people’s car.” After the war, Porsche was jailed in France for almost two years due to his ties to the Nazi regime, but was released without charges in 1947. When he died four years later, his son Ferry took over as the company was ramping up production of a sporty two-seater called the 356. In 1963, Porsche introduced the slinky 911, and the family prospered from building those iconic speedsters -- original U.S. list price $5,500 -- and pocketing a licensing fee from VW for the Beetle's design.
In 2008 -- a time when VW sold more cars in a week than Porsche did in a year -- the sports car maker said it planned to buy its bigger rival. As the financial crisis devastated markets worldwide, Porsche was forced to abandon the bid, and Volkswagen soon turned around and swallowed the smaller company. On a rainy summer day in 2009, Wolfgang Porsche's voice trembled and his eyes brimmed with tears as he told 5,000 workers gathered in the factory courtyard that the company would be folded into the Volkswagen Group. Despite that moment of anguish, the family emerged with control of Europe’s largest automaker, a colossus that last year sold 9.9 million cars and had revenue of 213 billion euros.
Though the Porsches were never poor -- at least a half-dozen have attended the Lyceum Alpinum, an $83,000-per-year boarding school in the Swiss Alps -- the VW deal has proven a windfall. In 2014, family members got 307 million euros in dividends from their holding in Porsche SE, roughly four times what they received eight years earlier.
Nonetheless, the Porsches and Piechs keep a low profile. Many drive Porsches, of course, but they get no discounts on the cars. Wolfgang Porsche usually attends the annual Opera Ball in Vienna, when the city's gilded opera house is transformed into a sparkling ballroom. And they are prominent backers of the Gaisberg Rally, a vintage car race up a mountainside just outside Salzburg every May.
With VW's dividend all but eliminated due to the crisis, the family holding company will also take a hit. On April 22, Porsche SE said it would slash its dividend by 90 percent, then three days later shifted gears and said it will only be decreased by half. Though the company wouldn't say whether the change was made at the family's behest, any cut will mean tough choices for some of them, says Ernst Piech, Ferdinand's brother.
Family members “have gotten used to that income,” said Piech, who sold his stake in the company to his siblings in the 1980s and now runs a vineyard in southern England. “They have other investments where they need the money.”
To maintain stability as the number of family members grows, the patriarchs have created structures designed to encourage the next generation to stick with the company. In 2007, Ferdinand Piech put his stake of about 13 percent in Porsche Holding into two foundations outside the immediate reach of his children, and included a clause that requires nine of the 12 to approve any share sale. The Porsche side of the clan isn’t as restricted, but anyone who wants to sell must first offer their shares to other family members at a discount.
"One or two selling isn't a problem, but if four or five members want to sell, the family won't have enough to buy them out and they'd have to go to external investors," said Tom Ruesen, director of the Wittener Institute for Family Business. "They may see themselves as simple investors rather than thinking of the stake as their destiny to pass on to their kids.''