Volkswagen is modifying its executive pay with a cap on revenues, it stated on Friday, as it aims to stop prevalent anger over bonuses paid even as the automaker suffered record losses due to the consequences of the emissions scandal in 2015.
Under new rules authorized by the supervisory board on Friday, Volkswagen will cap overall pay for its CEO at 10 million euros ($10.6 million) and other leading managers at 5.5 million euros.
The automaker ended up being the target of strong criticism from the German public and investors after its supervisors only hesitantly accepted a cut to bonus payments of about 30 percent. Bonuses were based partly on automaker’s performance over the previous 2 years.
The company did not provide information on how remuneration under its revamped policy will compare with 2016’s pay beyond stating that “theoretical maximum settlement will decline by as much as 40 percent”.
Volkswagen is due to release 2016’s executive remuneration on March 14.
Former CEO Martin Winterkorn was paid 7.3 million euros in 2015, 2 thirds which was from bonuses, and the company intends to shift the focus towards repaired incomes.
Eligibility for bonuses are going to be tightened under the new system, which will allow for as much as a 30 percent increase in fixed wages, VW stated.
Managers will lose their yearly bonuses if the automobile group’s operating profit remains below 9 billion euros, compared to a current limit of 5 billion euros, and if the return on sales stays at 4 percent, the automaker said.
Long-lasting bonuses, on the other hand, will track share price performance, it included, mentioning suggestions from Germany’s corporate governance code.
