WOLFSBURG Feb 24 Volkswagen is
shaking up its executive pay with a cap on earnings, it said on
Friday, as it looks to quell widespread anger over bonuses paid
even as the carmaker suffered record losses in the aftermath of
the emissions scandal in 2015.
Under new rules approved by the supervisory board on Friday,
Volkswagen (VW) will cap total pay for its chief executive at 10
million euros ($10.6 million) and other top managers at 5.5
VW became the target of fierce criticism from the German
public and shareholders after its managers only reluctantly
accepted a cut to bonus payments of about 30 percent. Bonuses
were based partly on VW's performance over the previous two
The company did not give details on how remuneration under
its revamped policy will compare with last year's pay beyond
saying that "theoretical maximum compensation will decline by as
much as 40 percent".
VW is due to publish last year's executive remuneration on
Former Chief Executive Martin Winterkorn was paid 7.3
million euros in 2015, two thirds of which was from bonuses, and
the company aims to shift the emphasis towards fixed salaries.
Eligibility for bonuses will be tightened under the new
forward-looking system, which will allow for up to a 30 percent
increase in fixed salaries, VW said.
Managers will lose their annual bonuses if the automotive
group's operating profit stays below 9 billion euros, compared
with a current threshold of 5 billion euros, and if the return
on sales remains at 4 percent, the company said.
Long-term bonuses, meanwhile, will track share price
performance, it added, citing recommendations from Germany's
corporate governance code.
VW has taken the axe to executive remuneration in the past.
In 2009 executive pay was cut by 60 percent after profit
plunged by 80 percent. In 2012 it adjusted the compensation
scheme to limit the annual bonus for the CEO and top management
after Winterkorn's pay nearly doubled to 17.5 million euros.
That made Winterkorn's, who quit in September 2015 at the
height of the emmissions scandal, the highest-paid CEO among
Germany's top 30 companies on the DAX index.
VW made headlines again in January with reports that
compliance chief Christine Hohmann-Dennhardt was receiving
generous severance pay after only 13 months in the
($1 = 0.9443 euros)
(Reporting by Andreas Cremer and Jan Schwartz; Editing by David