Porsche 2005 Annual Report Download - page 35

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Porsche has never published quarterly reports since the com-
pany was first quoted on the Stock Exchange in 1984. For this
reason, the German Stock Market Index struck Porsche off the
M-Dax list and refused the company Prime Standard ranking,
even though Porsche meets all the other requirements. This
refusal to submit quarterly reports has been a matter of princi-
ple. Porsche does not wish to be forced into the associated
short-lived position but prefers the integrity of a policy based
on credible substance and continuous information. The deve-
lopment in the price of Porsche stock demonstrates that the
company’s refusal to submit quarterly reports has not had an
adverse effect. Moreover, Porsche is included in highly reputa-
ble international indices, including the “Morgan Stanley Capi-
tal International” Index, the “Dow Jones STOXX 600”, and the
British “FTSE4Good” Index, which comprises share-issuing
companies that pursue a corporate policy oriented toward
ecological, ethical and social criteria.
Finally, Porsche has also taken a clear stance with regard to
the legal pressure on companies listed on the Stock Exchange
to publish the salaries of their Executive Board members, as
called for by the Federal Government in June 2005. In Porsche’s
view, the publication of individual Executive Board members’
salaries does not provide any extra information that could be
relevant to investors’ purchase or selling decisions. On the
contrary, when taking an investment decision, the investor needs
only to be in a position to decide whether the total amount
paid to the Executive Board is in reasonable proportion to the
company’s success. Porsche is firmly convinced that it is still
sufficient to state the total sum earned by the members of the
Executive Board and the proportions thereof that are fixed or
performance-related.
Porsche’s position is supported by expert legal opinions,
which confirm that a legal obligation to disclose the individual
salaries of Board members is unconstitutional. Both the German
Constitution and the European Human Rights Convention guar-
antee every citizen the basic right to decide on the disclosure
of personal information. According to our legal experts, man-
datory disclosure is a clear infringement of this right. Porsche’s
Annual General Meeting concurred with this opinion and, at
the meeting in January 2006, decided to refrain from publish-
ing the Board members’ individual salaries.
Great Faith on the Capital Market
The great faith enjoyed by Porsche on the international capital
markets was demonstrated by the company’s successful issue
of two bonds in January 2006. One of these was a Euro bond
of over two billion Euro, comprising two tranches of over one
billion each with maturities of five and ten years respectively.
The other was a US Dollar hybrid bond of over one billion US
Dollars. Both bonds placed on the market by Porsche Inter-
national Financing met with an extraordinarily high level of de-
mand from investors and were hugely over-subscribed. This
success was all the more remarkable in that Porsche does not
have a rating and so demonstrated the excellent reputation
enjoyed by the company on the international financial markets.
The hybrid loan will bear interest at a rate of 7.2 percent per
annum; however, it has a perpetual maturity and may only
be terminated by Porsche after a period of not less than five
years. Interest will be constant over the entire term. This
allows planning security; the rate change risk is borne by the
investor. Porsche will decide if and when the bond is to be
repaid. For the two tranches of the Euro bond, interest will be
at 3.5 percent (for the five-year maturity) and 3.875 percent
per annum (for the ten-year maturity).
*Now calculated according to IFRS,
previously by the DVFA/SG formula.
Earnings per Preferred Share in Euro
80
72
64
56
48
40
32
24
16
8
02 ⁄ 03 03 ⁄ 04 04 ⁄ 05* 05 ⁄ 06 *01⁄02