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Business

Top VW managers accept bonus cuts

Volkswagen's top executives have agreed to a "significant reduction" in their annual bonuses this year as Germany's largest car maker recovers from the fallout of its diesel engine-rigging scandal.

Volkswagen confirmed on Wednesday that 10 of its highest-ranking managers had agreed to forego a portion of the money they earn each year on top of their fixed salaries.

The automaker said it wanted to send a "signal" about executive pay after a public debate flared up on the morality of awarding top-tier company leaders millions of extra euros as VW counts the costs of "Dieselgate," which could run into the billions.

A company statement said VW was considering "different models which would constitute a reasonable and fair solution for all parties involved." It did not say how much of their bonuses the managers had agreed to forego.

Earlier in the day, German media quoted anonymous company insiders as saying the company's management board, which has nine members including CEO Matthias Müller, was talking of cutting bonuses by at least 30 percent.

Volkswagen added that Hans Dieter Pötsch, the company's former chief financial officer who now chairs the supervisory board, had also requested that his bonus be cut. When he switched jobs last year, he was offered more variable pay to compensate for a lower set salary.

Good pay, better bonuses

In 2014, VW's nine executives earned about 70 million euros ($80 million) in total compensation, including 54 million in variable pay, or bonuses.

Martin Winterkorn, the former chief executive who quit once the emissions scandal broke, was Germany's highest-paid manager for a number of years, earning about 15 millions euros per year. Of his 15.8 million-euro salary, 13.9 million euros were bonuses.

On Wednesday morning, Stephan Weil, the state premier of Lower Saxony, where Volkswagen is headquartered, told his regional parliament in a regular update on the VW affair that the automaker had decided it needed to send a "signal" on the issue of management board remuneration.

"This is in line with the opinion of the regional government, which believes a clear signal is needed on this matter," Weil said.

Tighter belts

Weil's administration had called for executive bonuses to be cut completely. Volkswagen is his state's largest employer and the politician, who holds a seat on the company's supervisory board, has noted that Matthias Müller had been quick to prescribe belt-tightening to VW's 600,000-strong workforce in the wake of its emissions scandal.

"Already in November, chief executive Matthias Müller expressed an expectation that belts would have to be tightened," Weil said on Wednesday.

Volkswagen may also decide not to pay out a dividend to its shareholders this year. It would be the first time that has happened since the early 1980s. As far as bonuses for company employees, which VW usually pays out generously, the automaker has promised to continue the trend but it hasn't said how much those bonuses would be.

cjc/uhe (AP, Reuters, AFP, dpa)

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