German minister criticizes Volkswagen management over bonuses
Germany’s finance minister Wolfgang Schaeuble has criticized the executive board of scandal-ridden carmaker Volkswagen for not waiving bonuses despite bringing the company to the brink of collapse.
“I have no sympathy for managers who first drive a large blue chip-listed company into an existence-threatening crisis and then defend their own bonuses in a public debate,” Schaeuble told German weekly Frankfurter Allgemeine Sonntagszeitung. “That shows that something is not working.”
Volkswagen plans to pay the 12 current and former members of its management board 63.24 million euros ($72.44 million) for 2015, a year when Europe’s largest carmaker posted a record loss due to legal and compensation costs for cheating diesel emissions tests.
The company withheld a small part of bonus payments but will award them later if certain performance criteria are fulfilled, including a recovery of the Volkswagen’s share price.
The bonus payouts have sparked public outrage in Germany and a spat within Volkswagen’s supervisory board. Lower Saxony, VW’s second-largest shareholder, had called for executive bonuses to be scrapped or cut as Europe’s largest automaker counts the multi-billion-euro costs of “Dieselgate.”
Joerg Bode, a former supervisory board member who had represented Lower Saxony, told weekly Welt am Sonntag that ex-CEO Martin Winterkorn and his colleagues should pay back the part of the bonuses that had been generated by “cost cuts through fraud.”
Current supervisory board member Bernd Osterloh said that the carmaker should look beyond contractual obligations and that the management board should volunteer to cut their bonus payments. “It is also about morals,” he said. Osterloh also said that the supervisory board should also discuss changes to its own remuneration system once the dieselgate scandal has been resolved.
“As soon as business is back to normal, we should think about changing the (remuneration) system (of the supervisory board),” Osterloh was quoted by Welt am Sonntag as saying.
A swift change to fixed salaries and abolishing variable pay components tied to dividends would be a wrong signal as that would effectively lead to a hike in remuneration, the Volkswagen labour chief told the paper.
Following its record 2015 loss VW had slashed its dividend to 0.17 euros per preferred share from 4.86 euros.