Compensation for VW Executives Drops

Volkswagen AG's supervisory board has revamped its executive compensation policy, resulting in lower compensation for top executives for last year.

Chairman Ferdinand Piech's 2012 compensation declined €3 million to total €14.5 million. Combined earnings of the management board's nine members, including CEO Martin Winterkorn, fell 21% to €41.5 million.

The supervisory board has capped 2012 and 2013 bonuses which are tied to VW's performance in the previous two years at €6.75 million for the chairman and €2.5 million for each management board member. The new plan adds potential cash awards for "special achievements" of individual executives of no more than half the manager's main bonus.

The company will pay no bonuses if operating profit, which was €11.5 billion last year, falls to €5 billion or less. VW's formula for long-term incentive payments, which are linked to achieving the company's goals for 2018, is unchanged.

The realignment of executive pay reflects "extremely positive" business development in 2011-2012 and takes into account the increase in results that comes from newly acquired brands, according to the board. It says the new formula represents "sustainable and appropriate" compensation.