VW management accepts bonus cuts of at least 30 pct

HAMBURG: Volkswagen’s top management board has agreed to cut executives’ bonus payments by at least 30 per cent, one person familiar with VW’s bonus negotiations has indicated.

Bonuses for senior managers have become a flashpoint in an escalating dispute with the powerful labour leaders of Europe’s biggest carmaker, which is under pressure to cut costs since an emissions scandal broke in September when US regulators said they were investigating VW for violating clean air rules.

Volkswagen’s second-largest shareholder, the German state of Lower Saxony, wants management bonuses to be scrapped while VW’s powerful labour leaders have been pushing for no or lower bonuses, sources familiar with the matter said.

“These are tough times and VW must send a signal also to workers that it’s serious about cost cuts,” M.M. Warburg analyst Marc-Rene Tonn, who recommends holding the stock, said, adding VW needs to make “structural changes” to executive compensation rules.

VW shares closed 4.4 per cent higher, outperforming the 2.7 per cent gain in Germany’s bluechip index.

Lower Saxony Prime Minister Stephan Weil said “intense” discussions on the board were still needed to find a solution on bonuses. Lower Saxony holds a 20 per cent stake in VW and has two seats on its supervisory board which signs off on executive pay.

Earlier, VW confirmed a Reuters report that its management and supervisory boards had agreed to bring about a significant reduction in executive bonuses.

Volkswagen, however, dismissed as wrong a report by a group of German media outlets that the company’s executive board members had offered to have their bonuses slashed by 50 per cent. —Reuters