Volkswagen wants to pay its board members up to 25% more, raising greater concerns about Oliver Blume’s role as chief executive of both VW and Porsche.
Blume, head of Porsche since 2015, assumed the dual role in September after Herbert Diess was removed from his position as VW boss by shareholders and union leaders following repeated clashes with the labor council. power of the corporation.
Some investors have criticized Blume’s unusual position as head of both companies, especially as he plans to overhaul VW at a difficult time for the corporation and the auto industry as it transitions to electric technology.
Janne Werning, head of ESG capital markets and management at Union Investment, said: “The dual role of CEO Blume and the capacity constraints on his job at VW raises the question of whether this is true. Is it the right time to increase his maximum salary? The company’s top 15 shareholders.
VW’s supervisory board has proposed increasing the maximum salary for members of the executive board by up to 25% from 12 million euros to 15 million euros, which shareholders must approve in a vote in May. .
Supervisory board members are also eligible to receive substantial salary increases under the proposals, with fixed salaries increasing from €100,000 a year to €175,000, while the maximum salary cap will increase from €7 million to €8. , 5 million euros.
The plan, developed with the help of a “reputable and independent external remuneration consultant”, goes into effect as early as 2023.
According to the German system, there are two tables. The executive board is the main decision-making body that manages the company, while the supervisory board oversees the work of the executive board and advises on strategic planning.
VW’s first battery factory in Germany. The company last year agreed to increase employee pay for 2023 by 5.2% © Fabrizio Bensch/Reuters
Werning says that Union Investment will engage with VW on the underlying goals of the proposed executive compensation strategy, which will see longer-term incentive programs play a relatively more important role.
“Raising the ceiling should not lead to overpayments because the goals are not clear,” he said.
The decision comes amid strikes in Germany and other European countries as workers demand higher wages because of rising costs of living, while companies warn the demands will push push inflation further.
VW last year agreed to increase employee pay for 2023 by 5.2%, following negotiations with unions.
Blume has yet to fully map out its plans for VW, which has struggled with its software strategy and decided to risk making batteries to support its transition to electric vehicles.
VW said two weeks ago that it would increase investment to expand in the US and also in China, where the company relies for most of its profits, pledging 180 billion euros over the next five years.
The automaker also has a notoriously complex ownership structure, but is ultimately controlled by the Porsche-Piëch family, heirs to the Porsche founder.
Porsche’s partial listing in September, one of the largest ever public offerings in Europe, allowed the family, one of Germany’s richest, to win get a larger stake in this sports car brand.
Porsche SE, the vehicle in which the family owns car shares, said last week that it would pay its shareholders a total dividend of 783 million euros.
Blume was paid 7.4 million euros in 2022, while ousted Diess was paid a total of 11.8 million euros.
