Volkswagen may make significant cuts to bonuses for senior managers, people familiar with the matter said, in an attempt to resolve an internal dispute over executive pay following the diesel emissions scandal at the German carmaker.
Lower Saxony, VW’s second-largest shareholder, and the company’s powerful labor leaders have called for executive bonuses to be scrapped or cut as Europe’s largest automaker counts the multi-billion-euro costs of “Dieselgate”.
VW’s nine executives in 2014 earned about 70 million euros ($80 million) in total compensation, including 54 million euros in variable pay, according to company data. That is almost double the 37 million euros rival Daimler paid its top managers in fixed and flexible remuneration last year.
VW’s supervisory and management boards are discussing models that may entail a significant reduction in variable pay, the people said on Tuesday, without giving more specific details.
The two boards are agreed “that in light of the company’s current situation, an example must be set on the matter of executive compensation,” one of the people said.
Volkswagen declined to comment.
Lower bonus payments would also affect former finance chief Hans Dieter Poetsch who, when taking the lower paid job of chairman last October, negotiated a deal to be compensated for the remainder of his more generous CFO contract which expires at the end of next year, the people said.
The 2015 deal would have earned Poetsch a supplement of at least 10 million euros, sources close to the supervisory board said. News of the payment sparked anger among politicians and labor representatives.
“The different models being discussed and coordinated at the moment represent an appropriate and fair solution for all parties concerned,” one of the people said.
Pressure has been mounting on VW to give way and to trim executive bonuses after a meeting of the supervisory board’s steering committee on Monday ended without an agreement.
Stephan Weil, prime minister of Lower Saxony which holds a 20 percent stake in VW and has two seats on its supervisory board which signs off on executive pay, will brief lawmakers in a debate about the crisis at VW on Wednesday.
The compromise discussed on Tuesday is due to be approved by the supervisory board on April 22 and the details will be published with VW’s annual report on April 28, the people said.
[Source:- Reuters]
