VW Pushes Team Spirit in Management-Bonus Overhaul

(Bloomberg) -- Volkswagen AG wants its managers to be more team-oriented and is eliminating individual performance when determining executive bonus payouts.

Starting next year, the remuneration of more than 400 top managers will be based on overall group performance, indicated through stock prices as well as earnings and operating achievements.

“We are clearly placing the emphasis on joint performance,” Gunnar Kilian, VW’s personnel chief, said Wednesday in a statement. “The group, the brands and the regions will all be pulling in the same direction.”

Key Insights

  • The changes are meant to align Volkswagen’s senior management interests closer to investors.
  • In response to the diesel-cheating scandal three years ago, Volkswagen is making executives more accountable and will now be able to claw back past payouts in the event of individual wrongdoing. In May, CEO Herbert Diess pledged to step up integrity and compliance efforts to make VW a more “honest, more open” company.
  • Long-term payout will be based on virtual shares, which vest after three years and are tied to the stock’s performance and earnings per share. The annual bonus will focus on operating-profit margins and return on investment.

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