The fiercest boardroom battle in Europe is a face-off between Volkswagen Chief Executive Bernd Pischetsrieder, 58, and Ferdinand K. Piëch, the strong-willed former CEO and now chairman of the "people's car" company founded by his grandfather, Ferdinand Porsche. Although Piëch, now 69, handpicked Pischetsrieder to be his successor in 2002, he has challenged the CEO's decisions ever since. In particular, the two have fought over the restructuring that is under way at VW and Piëch's decision in the late 1990s to start building luxury cars, especially the Phaeton. The car, which starts at $67,000, was Piëch's pet project; this year Pischetsrieder yanked it from the U.S., where it had flopped.

Adding to the tension, Piëch last year acquired a controlling stake in VW and then stacked the board. At this spring's Geneva Auto Show he publicly questioned whether Pischetsrieder's contract would be extended for five years.

Many assumed that meant it wouldn't be. But behind the scenes, Pischetsrieder made a concession or two -- nobody is saying just what -- and got his new contract. Most likely, he agreed to back off from his threat to sell VW's unproductive factories.

Now the CEO has to exert what power he has to fix the company before the chairman gets all riled up again. And Piëch? He'll be around as long as he wants.

By Susan Berfield

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