Decision from the Grave

Most of the men who created Germany's industrial empires were prolific biologically as well as financially. Result: a complexity of heirs who often have neither the managerial ability nor the foresight as shareholders to guide the companies left in their hands. More than one company has withered after its founder's death, and a few--the Stinnes plastics and machinery network is the most recent example--have actually died. To remedy this situation and to avoid huge inheritance taxes, many German firms are turning over ownership to corporate foundations. Last week, in the biggest such move so far, a foundation took over the automotive and electronics empire of Robert Bosch GMBH, one of West Germany's largest appliance makers.

Depressing Profits. The arrangement guarantees the kind of "forceful and rich development" that Founder Robert Bosch hoped for after his death. Now one of Germany's most diversified corporations (3,100 products), Bosch dominates Europe in the automotive-equipment field. From car radios to fuel injection pumps, its products go not only into such German cars as Volkswagen, Mercedes and Opel but into Italian Fiats, French Peugeots and Renaults as well. Bosch is also Europe's biggest refrigerator maker, manufactures other lines from hearing aids to motorized hand tools.

Bosch's 30 plants and $500 million in sales grew from a small Stuttgart electrical shop, where Robert Bosch in 1886 started a modest business to install lightning rods, doorbells and telephones. He soon devised a new magneto-ignition that was superior to existing types, and in 1896 entered the young automobile business. He grew wealthy supplying such auto pioneers as Gottlieb Daimler, but continually worried over the money he made. Bosch gave away $5 million in World War I profits, explaining: "The profit I was making while other people were losing their lives depressed me." An old man by the time World War II broke out, Bosch began to worry about "keeping alive my spirit and will." Shortly before his death at 80 in 1942, he picked seven executors, allowed them 30 years to decide how to keep the company strong.

Predetermined Future. This year, eight years ahead of their deadline, the executors decided to create a foundation, which, under German law, may own a business but not run it directly; a holding company set up by the foundation will do that. Bosch's heirs--a son, three daughters and a grandson --have already turned over 87% of the family's stock to the foundation, will be paid for the stock from future earnings. They will no longer sit on the board automatically, but will have to run for election like ordinary directors.

Son Robert Bosch, a 35-year-old electrical engineer, is only a minor corporation official; able Managing Director Hans L. Merkle, 51, is not even a distant Bosch kin. "Robert Bosch," says Merkle, "did not want the company to be shared among all his heirs. He wanted to predetermine its future course himself." Last week, 22 years after his death, the old man had his way.

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