Volkswagen mulls slashing executive pay

German car giant Volkswagen is considering a cap on executive pay and bonuses in the wake of its "dieselgate" scandal, AFP learned Tuesday. A salary cap "may be on the agenda" for a supervisory board meeting on February 24, a VW source told AFP, partially confirming local media reports.
VW's existing pay and bonus system, based on past performance, meant some executives received multi-million-euro payouts even after the group admitted to having installed software to cheat regulatory emissions tests on some 11 million cars worldwide in September 2015. Under the plans the firm is considering, board members' pay will not exceed 10 million euros ($10.6 million) in any one year, business daily Handelsblatt reported, citing sources close to the supervisory board.
Citing its own anonymous source, news agency DPA said only the chief executive's pay limit would be 10 million euros, with lower caps for other executive board members. A Volkswagen spokesman said the supervisory board "has been considering the question of a new pay system for a long time." Former chief executive Martin Winterkorn, who quit over the cheating scandal and remains under investigation over his role, was paid more than 10 million euros in several of the years he was at the helm.
Fixed salary will make up a larger share of executive pay at VW in future, Handelsblatt said. In the past, variable bonus payments have reached up to four times as high as fixed salaries for some of the car maker's executives. Some of the payout will be in the form of long-term investments in the company, giving executives a "future-oriented view," VW sources told Handelsblatt.
Managers' pay became a political football last week following media reports that VW compliance chief Christine Hohmann-Dennhardt, a former judge and Social Democratic Party (SPD) politician, would leave the board with a golden parachute of more than 12 million euros after just one year. With general elections slated for September, the SPD is battling to present a left-wing alternative to Chancellor Angela Merkel's conservative block.
VW is particularly exposed to social-democratic ire at managers' pay, as SPD ministers from its home state of Lower Saxony, a major shareholder, and powerful labour representatives sit on the group's supervisory board. VW announced earlier this month that it will pay at least $1.2 billion to compensate some 80,000 US buyers of 3.0-liter diesel engines as well as buying back or refitting their vehicles. Along with earlier payouts promised to drivers, car dealers and US states, that brings the total cost of the emissions crisis so far to over $23 billion.