VW management accepts bonus cuts of at least 30 percent: source
By Jan Schwartz and Andreas Cremer
HAMBURG/BERLIN (Reuters) - Volkswagen's (VOWG_p.DE: Quote) top management board has agreed to cut executives' bonus payments by at least 30 percent, one person familiar with VW's bonus negotiations said, as the carmaker struggles to resolve a dispute over compensation.
Bonuses for senior managers have become a flashpoint in an escalating dispute with the powerful labour leaders of Europe's biggest carmaker, which is under pressure to cut costs since an emissions scandal broke in September when U.S. regulators said they were investigating VW for violating clean air rules.
Volkswagen's (VW) second-largest shareholder, the German state of Lower Saxony, wants management bonuses to be scrapped while VW's powerful labour leaders have been pushing for no or lower bonuses, sources familiar with the matter said.
"These are tough times and VW must send a signal also to workers that it's serious about cost cuts," M.M. Warburg analyst Marc-Rene Tonn, who recommends holding the stock, said, adding VW needs to make "structural changes" to executive compensation rules.
VW shares were up 3.9 percent at 111.65 euros at 1501 GMT.
Lower Saxony Prime Minister Stephan Weil said "intense" discussions on the board were still needed to find a solution on bonuses. Lower Saxony holds a 20 percent stake in VW and has two seats on its supervisory board which signs off on executive pay.
Earlier on Wednesday, VW confirmed a Reuters report that its management and supervisory boards had agreed to bring about a significant reduction in executive bonuses.
Executive bonuses in 2014 accounted for 54 million euros ($61 million) of the 70 million euros in total compensation for VW top managers, according to company data. That's almost double the 37 million euros rival Daimler (DAIGn.DE: Quote) paid its top managers in fixed and flexible salaries last year. Continued...