‘Shocked’ CEO quits — and takes his $42.5M pension
Martin Winterkorn’s replacement expected to be announced Friday
Volkswagen AG’s chief executive officer Martin Winterkorn resigned Wednesday, saying he was “shocked” and “stunned” by an emissions scandal that has engulfed the world’s largest automaker.
Winterkorn’s departure from VW’s executive suite is just the first of several expected in the coming days as the company moves swiftly to try to repair the damage to the automaker’s global reputation.
The company’s high-powered executive committee “takes this matter extremely seriously” and “recognizes not only the economic damage caused, but also the loss of trust among many customers worldwide,” it said in a statement.
The 68-year-old Winterkorn, who was Germany’s highest-paid CEO, said in a statement he was “not aware of any wrongdoing on my part.” But he accepted responsibility for the “irregularities” that have been found in its diesel engines.
Company spokesman Claus-Peter Tiemann declined to comment on how much money the departing CEO stands to get. Volkswagen’s most recent annual report outlines how Winterkorn, its leader since 2007, could stand to collect two significant payouts.
Winterkorn’s pension had a value of 28.6 million ($42.6 million) at the end of last year, according to the report, which doesn’t describe any conditions that would lead the company to withhold it. And under certain circumstances, he could also collect a severance equal to two years of remuneration.
He was Germany’s second-highest paid CEO last year, receiving a total of 16.6 million ($24.8 million) in compensation from the company and majority shareholder Porsche SE.
Calls for Winterkorn’s resignation had been mounting since Volkswagen acknowledged on Sunday that some 11 million “clean diesel” cars worldwide contain software designed to avert pollution controls.
While the software ensures the cars meet emission requirements during tests, the controls turn off when the cars are on the road, allowing the vehicles to emit up to 40 times the legal limits of polluting chemicals.
The admission has wiped out 25 billion ($37 million) in investors’ equity as the company stock price plunged by a third.
The company has also become the target of numerous investigations and lawsuits in the U.S., Europe, and Canada, where 100,000 of the cars were sold.
Volkswagen dealers are also reeling from the company’s decision to halt sales of the vehicles, which in Canada account for roughly one-fifth of the 65,000 VW cars sold each year.
The scandal has threatened to damage Germany’s global reputation for superior auto engineering, with German Chancellor Angela Merkel urging the company to get its affairs in order quickly.
“Volkswagen needs a fresh start — also in terms of personnel. I am clearing the way for this fresh start with my resignation,” Winterkorn said in a brief statement issued Wednesday after a meeting of the executive committee of the company’s supervisory board.
His replacement is expected to be announced Friday at a full meeting of the board, the executive committee said in a separate statement.
The five-member committee includes Wolfgang Porsche, a member of the Porsche family and chair of Porsche Automobil Holding, which controls nearly 51 per cent of VW’s shares, along with Stefan Weil, president of the state government of Lower Saxony, which owns 20 per cent of VW’s shares.
Union and work councils are also represented on the committee.
A special committee, with outside advisers, is being set up to handle the crisis, which could lead to criminal prosecution, the company said.
The company said it had voluntarily laid a complaint with the state prosecutor’s office in the German city of Braunschweig.
Winterkorn had been CEO since 2007 and joined Volkswagen in 1993. An engineer with a doctorate in metal physics, he was described as a very hands-on executive.
As head of Volkswagen, he vowed to make it the world’s No. 1 automaker, and finally overtook Toyota earlier this year.
A little-known agency that uncovered the discrepancy between VW’s emission tests and road performance says it initially tried to engage European regulators. When that failed, the International Council on Clean Transportation says it conducted tests in the U.S. with similar results.
On Friday, the powerful United States Environmental Protection Agency disclosed the results, saying VW could be fined up to $18 billion (U.S.).
The main concern is nitrogen oxide, a chemical implicated in smog and serious respiratory ailments such as asthma. With files from Star wire services