VW board members came close to demanding chairman's resignation - paper

FRANKFURT (Reuters) - Senior members of Volkswagen's (VOWG_p.DE) supervisory board were prepared to demand Chairman Ferdinand Piech's resignation had he not agreed to a statement backing Chief Executive Martin Winterkorn, a German newspaper reported on Saturday.

Citing sources on board, the Frankfurter Allgemeine Sonntagszeitung, said Piech, who sparked a leadership crisis at VW last week by openly criticising Winterkorn, had initially resisted pressure from other board members to back the CEO during an emergency meeting on Thursday.

But they refused Piech's demands for concessions in exchange for his support and were ready to ask for his resignation, the report said, before he backed down and agreed to a statement giving Winterkorn the "full support" of the board and signalling that his contract would be extended.

Volkswagen declined to comment on the report.

The statement by the six-member executive committee of the board was seen as an unprecedented defeat for Piech, the powerful 78-year-old chairman and patriarch of the family that founded Volkswagen.

Reuters reported on Friday that Piech had been isolated at the Thursday meeting in Salzburg, with all five of the other board members strongly backing Winterkorn.

Still, the row is seen to have damaged the CEO and some experts are now wondering how the company can operate effectively with its CEO and chairman at odds.

In his first comments since the meeting, Winterkorn told the Bild am Sonntag newspaper: "This vote of confidence gives us a tailwind on our way to make Volkswagen the world's most successful automotive group."

Bernd Osterloh, the influential head of VW's works council and a participant in the Salzburg meeting, called Winterkorn a "godsend" for the company and said it would take years to groom a successor.

"We have other managers in the company that could be considered, but they will need to prove themselves in the years to come," he told trade paper Automobilwoche.

(Reporting by Kirsti Knolle; Editing by Noah Barkin)