Volkswagen alters exec remuneration

Volkswagen has altered its bonus structure for its board of management.

Under its variable remuneration framework, members of this board receive a bonus, which relates to business performance over the previous two years, and a long-term incentive plan (L-tip) relating to the previous four fiscal years.

The car manufacturer’s supervisory board has now determined that a bonus will only be paid if the organisation’s operating profit exceeds €5 billion.

It will also introduce caps on bonus payments. The cap for the chairman of the board of management for the fiscal years 2012 and 2013 will be set at €6.75 million, while other board of management members will see their bonus payments capped at €2.5 million (£2.20 million).

Individual members of the board of management may also be awarded a personal performance payment in recognition of special achievements that have contributed to sustained corporate development. These payments, which can total a maximum of 50% of the relevant capped bonus, are intended to take greater account of individual performance when setting remuneration for this group.

The L-tip will remain unchanged.

As a result of the changes, members of the board of management will receive lower remuneration packages for the fiscal year 2012 than in the previous year, despite a rise in Volkswagen Group’s operating profit to €11.5 billion (£10.12 billion) in 2012, from €11.3 billion (£9.95 billion) in 2011. This means chairman of the board Martin Winterkorn will be paid €14.5 million (£12.7 million) for 2012 in fixed salary, bonuses and incentives, compared to €17.5 million (£15.41 million) in 2011.