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New Volkswagen Group remuneration model rewards ‘compliant, honourable behaviour’

Volkswagen Group

The Volkswagen Group has revised its remuneration system for top management to reflect a stronger link to share prices and reward “compliant, honourable behaviour”.

A statement issued by the German car manufacturing giant revealed that the new model – based on the system used for the Board of Management – aims to “strengthen the Group idea” and foster greater cooperation between brands, regions and countries.

It added: “In addition, the return targets of the Group are taken into account and a stronger link to share prices has been established.

“The main new features include greater emphasis on team performance and greater rewards for compliant, honourable behavior; the system allows the possibility of taking individual wrongdoing into account in reducing remuneration.”

The Volkswagen Group’s board member for Human Resources, Gunnar Kilian, said that the new remuneration system takes into account the change in our corporate culture.

He said that the business was strengthening team spirit by transferring the leitmotiv of its ‘TOGETHER strategy 2025’ into its management remuneration system and focusing on stable profitability and robust development of the Group.

Volkswagen Group has removed its personal performance bonus from its remuneration system.

It has also made Group targets account for at least half of the variable target remuneration in the future.

To date, only a third of the variable target remuneration has reflected the performance of the Group as a whole.

The new remuneration model is based on the structure of the remuneration system for the Group Board of Management, the Group said.

The system will see members of the manufacturing group’s top management assigned virtual Volkswagen shares each year via a performance share plan (PSP).

Only after three years will they receive a payment which will be determined on the basis of the increase in the share price and on earnings per share (EPS).

The Group said that the new link between variable remuneration and the share price gives a positive signal to investors.

It added: “In addition, the annual bonus will focus on return figures with operating return on sales (ROS) and return on investment (ROI) each being given equal weighting.

“The ambitious targets will be derived from strategic planning, regularly reviewed and, when necessary, revised by resolution of the Group Board of Management and the Supervisory Board.

“In future the remuneration system will depend to a large extent on the success of the Group. This will provide prospects of attractive bonuses in years of business success and will entail an immediate reduction in bonuses in times of crisis.”

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