Frankfurt: Embattled German auto giant Volkswagen said Friday that it will freeze 30 per cent of the annual bonus for 2015 being paid to its top executives in the wake of the massive engine-rigging scandal it is currently engulfed in.
The regional state premier of Lower Saxony, where VW is based, told a news briefing that the carmaker would initially hold back 30 per cent of the executive board members’ annual bonuses for 2015.
But the money could be paid out three years later in 2018, depending on the subsequent performance of the group’s shares, said state premier Stephan Weil, who sits on VW’s supervisory board.
The cash being held back would first be transformed into preference shares and only then paid out in full in 2018 if the price of the shares on the stock exchange had risen by at least 25 per cent by the end of the three-year period, VW explained.
In concrete terms, the variable part of an executive board member’s annual remuneration would be cut by 39 per cent to €3.2 million (Dh13.2 million, $3.6 million) for 2015, the carmaker said.
Of this, around one million euros would be held back for possible future payout three years later.
Engine-manipulation scandal
Public debate is currently raging in Germany over whether VW’s top executives are morally entitled to performance-related bonuses for 2015 after chief executive Matthias Mueller prescribed belt-tightening to the carmaker’s 600,000-strong workforce in the wake of the engine-manipulation scandal.
Last September, it emerged that VW had installed emissions-cheating software into 11 million diesel engines worldwide.
The costs of the scandal are still incalculable but are expected to run into many billions of euros as a result of fines and lawsuits.
VW posted a loss of €1.6 billion for 2015 and set aside €16.2 billion to cover possible regulatory fines, lawsuits and recall costs so far resulting from the scandal.
