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I never realized Bosch was so big (77 billion euros in annual revenue). The corporate structure is also really interesting. 92% owned by charity, 7% by the bosc

• RC_ITR 5y ago
  Like a lot of Family-owned European companies (Ikea comes to mind as well), it's a thinly veiled employment opportunity for the heirs that does very little actual charity. The family is heavily involved in board selection, & it's really just an elaborate tax scheme. Seriously, look at their 'project list,' a film award is #2! https://www.bosch-stiftung.de/en/project-search https://www.bosch-stiftung.de/en/project-search
  • CPLX 5y ago
    Seems sort of better than the alternative though isn’t it, ie the American model where industrial companies are endlessly looted by management, investment bankers, and private equity firms via a never ending series of mergers and divestments and massive debt loads. It may not be charity, but at least it’s stable.
    • rsj_hn 5y ago
      It's not an either-or question. The US has similar style tax-avoidance structures that may sponsor a little-league team or classical music concert to maintain their public image. And Europe has their own corporate raiders -- did you follow the latest drama between Porsche and VW? That failed takeover bid forced out the Porsche CEO but at least he had a $200M golden parachute.
      • realityking 5y ago
        Calling it “the latest drama” might be accurate (I don’t think there’s more recent drama) but it obscures the fact that this particular drama was resolved 12 years ago with VW buying Porsche and the Porsche shareholders becoming the largest VW shareholders.
  • bobsmooth 5y ago
    What's wrong with supporting the arts?
    • andyana 5y ago
      I don't think anything is, but it's a low level endeavor for $77b company, no? I mean, the arts are something I support, because it is something I can afford. If I had more money, Id probably want to try harder to make a difference.
      • chki 5y ago
        I mean it's one project out of 145 featured on their website. Looking at their financial statement for 2019 it's certainly a very small amount compared to other projects which include for example funding medical research.
        • andyana 5y ago
          I didn't look at the rest, but the that they would even put that just makes it more odd. It would be like me putting "voluntarily picks up litter when I go for a walk" on my list of charity activities (which doesn't exist because, if anything, I don't do enough for the world to warrant tooting my horn). That's just my opinion, though. I'm happy they are doing something rather than nothing.
        • rcMgD2BwE72F 5y ago
          And emissions-cheating devices.
      • toomanybeersies 5y ago
        But if everybody tried as hard as they could to "make a difference", then nobody would be supporting the arts.
  • ketzu 5y ago
    I don't really see the problem with an art based cultural exchange grant. Also the other projects don't seem terrible either. Could you elaborate?
    • Ericson2314 5y ago
      But that must be contasted from the value the unpaid taxes would have created.
      • scoopertrooper 5y ago
        Governments also issue similar grants.
        • lmm 5y ago
          But there's a lot more oversight (from opposition parties, media, etc.) to ensure those grants are being done fairly.
        • Ericson2314 5y ago
          I should have "democratic legitimacy". Rich institutions evading taxes to do philanthropy is form of privatization the people didn't necessarily sign up for.
          • hef19898 5y ago
            You can have both, just be the former royal ruling house of Bavaria. They managed to et a law in 1923 that tranferred most of their property into a public foundation, outside public control. Basically, they got to retain the majority of their properity without any strings attached. Law is still upheld and defended by Bavarian parliament. Heck, they even have the right to live in parts of all the famous Bavarian castles. Also, this foundation is owning 12,000 ha of forest. All of that in addition to the stuff they privately own.
            • Ericson2314 5y ago
  • chki 5y ago
    > it's a thinly veiled employment opportunity for the heirs that does very little actual charity I'm looking at their financial report for the year 2019 and that's just not true. They are a very complex organization and simply looking at one film award project and calling the whole thing a scam is very wrong and frankly lazy.
    • RC_ITR 5y ago
      A charity that is receiving $300mn+ a year in untaxed dividends spends $125mn of that on: Personnel and other operating expenses attributable to administration + Financial expenses, depreciation and amortization, and changes in provisions and you're just cool with that?
  • chaostheory 5y ago
    > Like a lot of Family-owned European companies (Ikea comes to mind as well), it's a thinly veiled employment opportunity for the heirs that does very little actual charity. The family is heavily involved in board selection, & it's really just an elaborate tax scheme. I wonder if the Bill & Melinda Gates Foundation has the same criticisms?
    • Quarrel 5y ago
      No, because they're explicitly giving away all their funds, not passing it on to the next generation, nor leaving it in a permanent trust.
  • tengbretson 5y ago
    If you're the founder of a transformative company maybe funding a couple generations of your family's fun projects is a good deal.
    • vlovich123 5y ago
      Why?
      • gscott 5y ago
        So your great-great-great grandchildren don't have to work at McDonald's. Most people never think about leaving a backstop for more then one generation or they let the Government take so much in taxes at death it all has to be sold. Great for the government but bad for future generations of your family who don't have the financial means to quit a job to try a startup because they have to make rent and run on a mouse-wheel all of their life to stay one step ahead of the next bill.
        • RC_ITR 5y ago
          Yeah, but you don’t think that this just perpetuates economic injustices from past generations? Like I’m sure all the black business owners in Tulsa would have loved to do the same for their grandchildren, but were systematically denied that opportunity. Why should we go so far out of our way to support the will of certain dead people but not all of them?
          • gscott 5y ago
            Yes in the Tulsa case if the original owner died then there would be taxes on everything. Either the heir would pony up the money to the government (maybe by getting a loan which would be impossible due to racism). Chances are the heir would have to sell. With the right structuring there would be a generation of black people in Tulsa who would be able to afford college and other things. (of course it was burned by whites but if it wasn't). We need generational wealth in the country. For people who are in top .01% they should have a wealth tax but for those in the top 1% and below they should be able to make sure future generations can have a chance to be successful.
• FabHK 5y ago
  Foundation, not charity. I'd say that it is a good thing that they a) do not have to put profit maximisation above all else, and b) can then decide where to allocate the profits in accordance with their statutes. I like this part of the results: > For example, in 2004, the net profit was US$2.1 billion, but only US$78 million was distributed as dividends to shareholders. Of that figure, US$72 million was distributed to the charitable foundation, and the other US$6 million to Bosch family stockholders. The remaining 96% of the profits were invested back into the company. In its core automotive technology business, Bosch invests 9% of its revenue on research and development, nearly double the industry average of 4.7%.
  • asddubs 5y ago
    >do not have to put profit maximisation above all else too bad that despite that they still decided to help vw fudge the emissions tests numbers
    • andrei_says_ 5y ago
      Is it possible that not everyone in the company had transparency and decision making power on this?
      • stkdump 5y ago
        I get what you are trying to say. But I despise the fact that they tried to blame everything on two engineers.
  • passerby1 5y ago
    >do not have to put profit maximisation above all else What makes you think they don't?
  • adventured 5y ago
    > do not have to put profit maximisation above all else Neither private nor public businesses have to put profit maximization above all else. It's entirely a myth that that is a legal requirement or responsibility. That is especially the case for private companies (ie most businesses), which further do not typically have the pressure of huge numbers of shareholders or large institutional investors / funds. Sometimes one might wish a company would actually focus on sustainable profitability, not just on the short-term appearance of profitability. You'll routinely find incompetent management that does a poor job of focusing on sustainable profitability at all, and the business always suffers for it. From IBM to GE. Instead, their management put a focus on financial engineering - creating a conveniently expedient fake profile of profitability, while the bottom rotted out from under them. Berkshire Hathaway by contrast - a $500 billion company - has openly pointed out to shareholders for 40-50 years now that they had no intention of pursuing a strategy focused on merely maximizing profit above all else. Simultaneously they have one of the greatest records of the last ~200 years for business performance. Berkshire knows the winning formula is to focus on the long-term and focus on having healthy businesses (which always means not only focusing on profitability), that the opposite is like a high sugar diet, maybe a bit of fun in the short run, and it'll kill you in the long run. Most businesses that last a very long time and generate great returns operate more like Berkshire Hathaway, rather than the opposite (and certainly during their heyday they do, which may provide fuel to last a long time even as they rot). There are a seeming infinite number of ways a major corporation can try to focus on profitability at the expense of all else, and that's always a mistake. Smart, long-term thinking managers know that. If you find a company that actually focuses on profitability above all else, sell and don't look back, it won't end well; it never does. Focusing on profitability above all else means paying all of your best employees very poorly, which means you'll always be starved for talent and your business will fail given time. There is a large amount of nuance involved in operating a for-profit business. Choosing to focus on the long-term vs short-term, financial engineering vs investing for the future, sacrificing shorter-term profits for a healthier longer-term business. The best businesses typically focus on the longer-term, not the shorter-term, and do not focus just on how they can blow out quarterly earnings or max out their profits here and now (inevitably that catches up with the business, and it all implodes).
• mikl 5y ago
  It’s not too unusual in Europe. Another big company run by a charitable foundation is Carlsberg: https://www.carlsberggroup.com/investor-relations/shareholders/ https://www.carlsberggroup.com/investor-relations/shareholde... The Carlsberg Foundation spends its proceeds from Carlsberg on funding science and arts, so if you want to drink beer with a good conscience…
• ww520 5y ago
  In estate planning, there's a saying, "own nothing but control everything." The approach is to transfer 99% ownership of the private company into a non-profit trust and to retain 1% ownership which has the controlling vote. The 99% non-profit trust has tax benefit and asset protection benefit. You only have to pay estate tax on the 1% of what you own when passing down to next generation. When someone sues you for your asset, you only have to pay 1% worth of the money since that what you own. But you still retain control of the company and reap benefit from it (directing dividend payment, hiring relatives, etc). Edit: a more proof version is to put the 1% into another entity like a C-corp or a trust that you control. Estate planners have a field day dreaming up these schemes.
  • b9a2cab5 5y ago
    And the only public shares are the weak voting ones, so in order for the lawsuit winner (or the state for taxes) to reap their returns they lose the voting power of the shares. I see a lot of the newer IPO'd companies using this type of scheme.
    • deleted 5y ago
      [deleted]
    • KirillPanov 5y ago
      Do you mean to say that the family-owned shares lose their extra voting power when transferred? A bankruptcy judge would not hesitate to void this clause if those shares were being transferred by virtue of bankruptcy seizure.
      • Xylakant 5y ago
        I’ve seen that in multiple founding contracts for private companies and no lawyer ever flagged that. I doubt a judge will collect it. The mechanism is usually called Einziehung der Geschäftsanteile, basically the remaining shareholders can force-collect the shares of the bankrupt shareholder. A suitable compensation is required. See for example this random reference (German) https://kuhlen-berlin.de/glossar/einziehung-von-gesch%C3%A4ftsanteilen-der-gmbh https://kuhlen-berlin.de/glossar/einziehung-von-gesch%C3%A4f... The shares immediately loose all voting rights in that process. The reason is to prevent a potentially hostile party from entering the shareholder group. Edit: Here’s a better reference with an example what such a clause in the companies charter could look like: https://gmbhg.kommentar.de/Abschnitt-2/Einziehung-von-Geschaeftsanteilen https://gmbhg.kommentar.de/Abschnitt-2/Einziehung-von-Gescha...
• purplepatrick 5y ago
  The operative entity Robert Bosch GmbH is 94% owned by the Robert Bosch Stiftung (which is also a GmbH, but with “common good” focus, so receives some tax advantages, but it’s not a proper foundation despite the name). The Stiftung has no voting rights, however. Its voting rights are with a KG entity, which in turn has no ownership in the operative auto supplier entity. The Stiftung receives a share of the auto supplier entity profit every year. Both entities operate separately, with the Stiftung pursuing various focus areas in healthcare, education, etc. The Stiftung also has a separate board whose mandate it is to execute on the Stiftung’s mission. It has nothing to do with making operative decisions at the auto supplier. In 2020, the auto supplier paid approx 50% of its pretax profit in taxes.
• qznc 5y ago
  (Bosch employee for three years) The Bosch family is not involved. I only notice them via public news essentially. It is nice to know that a big part of our profits goes into a charitable foundation instead of faceless stock holders. Not being a public company means nobody cares about quarterly results. There is rather a yearly rhythm. The downside is that Bosch cannot get big cash infusions quickly. In case of a pandemic, this is an additional risk. Worked out though.
  • Dumbdo 5y ago
    > Not being a public company means nobody cares about quarterly results. And this is why I like Bosch so much (as an employee for a very similar amount of time). The working climate in most places is relaxed compared to most competitors and there's less focus on looking great in random metrics every quarter, which makes actually doing your work easier. > The downside is that Bosch cannot get big cash infusions quickly. In case of a pandemic, this is an additional risk. Worked out though. Yep, it actually worked out much better than anticipated. They were able to generate a free cash flow of 5 billion Euro. AFAIK that was mainly because Bosch has a very good reputation of being financially stable. (Here is the source in corporate speech https://www.bosch-presse.de/pressportal/de/en/bosch-stays-on-course-through-the-coronavirus-crisis-to-achieve-a-positive-result-224064.html https://www.bosch-presse.de/pressportal/de/en/bosch-stays-on...) Btw, I remember your nickname from your lobsters post about software architecture. Pretty cool to see fellow Boschlers active here or on lobsters!