VW is facing challenging year amid cost cuts. Volkswagen brand Chief Herbert Diess said 2017 would be a good but strenuous year as the automaker grapples with putting in place a turnaround plan. “Above all we must implement the future pact swiftly and consistently,” Diess said in an emailed statement published earlier this week.
Separately, the head of VW’s core autos division said more than 40 percent of 5.8 million brand vehicles affected by the diesel emissions scandal had been refitted with a software update. The carmaker has a goal to complete refitting affected models in Germany by the autumn, Diess said.
While try to make savings in production VW is generous to the executives
Volkswagen is shaking up its executive pay with a cap on earnings, it said on Friday. Under new rules approved by the supervisory board on Friday, VW will cap total pay for its CEO at 10 million euros ($10.6 million) and other top managers at 5.5 million euros. 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 years.
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.” 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. Former CEO 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.
VW has cut executive compensation 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. 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 job.