VW unions balk at payoff

Martin Winterkorn

Former Volkswagen chief executive Martin Winterkorn might not get the final payout he anticipated amid opposition from labour union leaders. 

He had been among Germany’s highest-paid executives before stepping down last week.

Interim chairman Berthold Huber, an official with the IG Metall union, and other worker representatives are against granting Mr Winterkorn a big payout, said people familiar with the matter, who asked not to be identified because the discussions are private.

Mr Winterkorn’s role in rigging diesel engines to cheat emissions tests remains under investigation, and labour leaders worry that employees could suffer from the cost of the clean-up.

Mr Winterkorn’s close ties with unions, which helped him survive a power struggle with former chairman Ferdinand Piech in April, have rapidly deteriorated as the scandal widens.

Prosecutors in Germany yesterday opened a criminal investigation into Mr Winterkorn’s role in the duping of regulators and customers with software in some diesel engines that artificially cut emissions under test conditions.

His compensation as Volkswagen CEO totalled €15.9m last year, and he has amassed a pension of €28.6m, according to the Wolfsburg, Germany-based car maker’s 2014 annual report.

Under certain circumstances, Mr Winterkorn can collect severance equal to two years of remuneration.

While the severance package kicks in if the supervisory board terminates Mr Winterkorn’s contract early, there is a caveat. If the board ends his employment for a reason for which he is responsible, then severance is forfeited, according to company filings. Mr Winterkorn asked for his contract to be terminated, according to Volkswagen.

The executive committee of Volkswagen’s supervisory board said last Wednesday that Mr Winterkorn had no knowledge of the manipulation of emissions data, backing his own assurance that he wasn’t aware of any wrongdoing on his part.

At a meeting of the 20-person panel on Friday, the group reviewed documents from four years ago that flagged the illegal software and had not been acted on by executives, said one person familiar with the meeting.

Volkswagen is still scrambling to figure out what to do with 11 million VW, Audi, Skoda and Seat vehicles that have rigged diesel engines.

Volkswagen has already set aside €6.5bn in an initial tally of repairs and other expenses in a scandal that has wiped €27bn from Volkswagen’s market value. n Bloomberg


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