Volkswagen’s decision to pay a bonus to its board leads to public outcry in Germany.
The German finance minister, Wolfgang Schaeuble, has come down heavily on Volkswagen’s board for not waiving bonuses despite the fact that the diesel emission scandal has brought the company to its knees.
“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,” said Schaeuble to German weekly Frankfurter Allgemeine Sonntagszeitung.
He went on to add, “That shows that something is not working.”
Volkswagen’s board plans on paying its current 12 member board along with former members $72.44 million (63.24 million euros) as bonus for 2015, despite the fact that the company has made record losses arising out of legal and other compensation related costs for its diesel emission cheating fiasco.
Volkswagen has withheld a small portion of the bonus pay-out, on certain performance related criteria, which include amongst others, the recovery of VW’s share price.
The news of the bonus payments have sparked a public outcry in German and within its supervisory board.
Its second largest shareholder, Lower Saxony, has called for these payments to be cut if not scrapped, since Volkswagen, Europe largest automobile manufacturer, is still in the process of picking up costs arising out of the “Dieselgate” scandal.
Case in Point: Joerg Bode, a former supervisory board member who had earlier represented Lower Saxony, Martin Winterkorn, the ex-CEO, along with his colleagues should be directed to pay back the part bonuses that had been generated through “cost cuts through fraud”.
Bernd Osterloh, a current member of VW’s supervisory board, had told last week that VW’s management board should voluntarily cut their bonus payments.
“It is also about morals”.
As per Osterloh, once VW gets a grip on the Dieselgate scandal, once it can quantify its liabilities arising out of this scandal, its supervisory board should discuss what changes it needs to bring about in its remuneration system.
“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.
As per Volkswagen’s labour chief, abolishing components of variable pay tied to dividends and making sudden changes to fixed salaries could send a wrong signal as it would effectively lead to a hike in remuneration.
Having made a record loss in 2015, due to the “Dieselgate” scandal, Volkswagen had slashed its dividend to 0.17 euro from 4.86 euros for preferred shares.
Categories: HR & Organization, Regulations & Legal, Strategy
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