VW raises the cap for manager salaries significantly
In 2017, when the diesel scandal was still deep in the bones of Volkswagen managers, the Wolfsburg-based group rebuilt its system for board remuneration. Stricter upper limits were imposed for salaries, also to avoid the embarrassment that executives quickly earn princely money again after the exhaust gas fraud while the work-up is still going on around the world. Now, about six years later, the Wolfsburg management should be able to collect more money again.
As can be seen from the invitation to the Annual General Meeting on May 10, simple board members such as Human Resources Manager Gunnar Kilian, Technical Director Thomas Schmall and IT Manager Hauke Stars will be able to receive cash payments of up to 7 million euros from now on. The cash remuneration comprises the base salary and variable components such as the annual bonus and was most recently limited to EUR 5.5 million. Including other components such as pension provision, the maximum remuneration for simple board members will increase to EUR 8.5 million instead of EUR 7 million as before.
For the Chairman of the Board of Management of Volkswagen AG, the upper limit for cash remuneration will increase from 10 to 12.5 million euros. Including retirement provisions, he can now earn up to 15 million euros instead of 12 million euros as before. For the incumbent CEO Oliver Blume However, the calculation is more complex in practice because he also manages the Porsche subsidiary. The salary limit is lower there.
Industry pays higher remuneration
Since he henceforth half of Porsche and half of it is to be paid for by VW, there is a disadvantage at the end of the day. In the interaction of both systems, his maximum remuneration is only 12.5 million euros. This includes special bonuses from Porsche’s successful IPO in the fall, which will be paid out up to the third anniversary of the initial listing, according to company sources.
In general, VW justifies the conversion by saying that the remuneration should remain attractive compared to the competition. On average, manager salaries in industrial companies have risen significantly, it is said. Reference is made to car manufacturers such as Ford, Toyota and Stellantis, but also to corporations in other sectors. At the same time, VW wants to tighten the conditions under which board members can reach their maximum limits. The new system sets higher targets for operating profit, earnings per share and return on sales.
The possibility of a “special bonus” will be removed after shareholder protection groups had criticized this instrument for some time because they considered it to be inadequately defined. In addition, goals that are measured over several years are gaining in importance in order to create incentives for long-term performance.
Last year, the upper limit took effect in the case of HR director Kilian. Based on various indicators, he would actually have received a cash payment of almost 6.5 million euros. Instead, VW reduced the amount to 5.5 million euros. Ex-CEO Herbert Diess, who left in the fall, received 10 million euros instead of around 13.3 million euros, which he would have received without a cover. For his successor Blume, the remuneration including pension was 7.5 million euros. For a transitional period after taking office in September, he only received money from VW, although he continues to run Porsche. A model in which he receives money from both companies has been in effect since January.