Volkswagen Board Clears Management Actions After Diesel Scandalby
Board considered duty breaches ahead of 2015 annual meeting
VW’s top worker representative demands annual employee bonus
Volkswagen AG’s efforts to move beyond the diesel-emissions cheating scandal involves largely continuing as if it never happened, with workers demanding an annual bonus and the supervisory board provisionally exonerating executives’ actions last year.
The board, preparing for the June 22 annual shareholders’ meeting, didn’t find serious breaches of duty among the carmaker’s most senior managers, including Chief Executive Officer Matthias Mueller, and recommends that investors ratify their decisions in 2015, Volkswagen said Wednesday in a statement. The recommendation was based on currently known facts from an investigation that’s still under way into the diesel-emissions test rigging that came to light in September, the board said.
Volkswagen, Europe’s biggest automaker, is struggling to emerge from the scandal that has led to the departure of top managers and the biggest loss in the company’s history. It has set aside 16.2 billion euros ($18.5 billion) so far to help cover the costs of the deception, and cut its annual dividend 97 percent to the lowest level since at least 2000. The search for the culprits who devised the cheating plan hasn’t yet concluded, and law firm Jones Day won’t publish results of its investigation until the fourth quarter.
German corporate law requires shareholders at the annual meeting to vote whether to ratify the previous year’s actions by the supervisory board, which represents investors and labor, as well as the management board, comprised of the company’s top executives.
The supervisory board said that it can’t provide details of why it’s recommending ratification because the Jones Day investigation is continuing. The decision to seek shareholder approval reflects confidence that managers can steer the carmaker out of the crisis, the board said.
Top executives have held onto bonus payments, albeit at a reduced level. The payouts were the target of intense debate from the company’s powerful labor unions and politicians from the German state of Lower Saxony, one of the carmaker’s biggest shareholders.
The compensation remains an issue for authorities and investors. German Economy Minister Sigmar Gabriel told reporters Wednesday that the bonuses are “appalling” and show “how far these people are removed from a sense of fairness.” Activist shareholder TCI Fund Management called last week for executives’ pay to be cut.
Bernd Osterloh, Volkswagen’s chief labor representative and a supervisory board member, said Wednesday that management’s remuneration claims must be matched with an annual bonus for its workers. Osterloh, who has clashed with VW-brand chief Herbert Diess over restructuring efforts, said that while he had received backing for a worker payout from CEO Mueller, some other executives want to place conditions on the payment.
“The workers have always clearly stated: either there’s a bonus for no one, or a bonus for everyone,” Osterloh said in the text of a speech at a workers meeting to discuss strategy for pay talks currently taking place. “We want that our work from last year be recognized. We want to see a sign of the fact that each and every one of us here carries the flag for Volkswagen.”