* VW agrees to “significantly reduce” variable pay
* Shareholders call for bonus payments to be scrapped
* Other DAX firms have scrapped bonuses, cut pay since 2008
FRANKFURT/BERLIN, April 13 (Reuters) - The apparent reluctance of Volkswagen managers to give up their bonuses amid the carmaker’s biggest ever corporate scandal has sparked outrage among the German public and shareholders who have suffered heavy losses.
Volkswagen (VW) said on Wednesday its supervisory and management boards were discussing steps to significantly reduce bonuses, but only after headlines in the German press denouncing senior managers.
“The VW affair has many losers and one winner: Hans Dieter Poetsch” business daily Handelsblatt wrote in a front-page splash last week, calling the chairman and former finance chief the “10 million man”, in reference to his pay deal.
Europe’s biggest carmaker has taken few proactive steps to improve its image since it admitted in September to cheating U.S. diesel emissions tests, sparking a crisis which analysts expect will cost it tens of billions of euros in regulatory fines, vehicle refits and lawsuits.
Top VW managers have now agreed to a cut of at least 30 percent in bonus payments, a person familiar with the matter told Reuters.
But the planned cuts seem modest when compared with measures taken by other blue-chip German companies since the financial crisis, in which executives have waived bonus payments and endured steep cuts to their fixed pay.
In the immediate aftermath of that crisis, Deutsche Bank’s then Chief Executive Josef Ackermann decided to forego his bonus in 2008 out of solidarity with the bank’s employees. Other managers also followed suit.
Germany’s biggest bank also scrapped board bonuses this year after posting a record loss for 2015.
At bailed-out lender Commerzbank, CEO Martin Blessing waived his bonus in 2012 and 2013. Pay for top managers has been capped at 500,000 euros per year since the government took a stake in the bank.
VW, which said last month it still intended to pay employees a bonus for 2015, has taken the axe to compensation in the past. In 2009, executive pay was cut back 60 percent when profit plunged by 80 percent, and in 2012 it adjusted its compensation scheme to limit the annual bonus for the CEO and top management.
Despite the changes, VW is the only company in Germany’s DAX that has a bonus scheme that is backwards looking and based on the performance over the two previous years.
Pay experts say this could reduce the incentive for managers to align their actions to the firm’s long-term success.
Other DAX companies that have reined in fixed pay include carmaker Daimler, which cut management’s basic pay by 15 percent in 2009 as part of a company-wide belt-tightening programme, while chipmaker Infineon cut top managers’ fixed salaries by 10 percent and slashed the CEO’s pay a fifth.
Managers at struggling utility RWE and potash maker K+S also agreed to salary cuts in recent years.
“From our point of view it’s clear that no bonuses whatsoever should be paid to the (VW) board and management,” said Daniel Bauer, spokesman for the SdK investor association, adding management should go without variable pay altogether until the crisis had been cleared up.
VW’s market value has dropped by a quarter, or 20 billion euros ($23 billion), since the scandal erupted. German media have reported that VW could also scrap its dividend this year to conserve money.
$1 = 0.8868 euros Reporting by Alexander Huebner, Caroline Copley, Tom Kaeckenhoff, Ilona Wissenbach and Jan Schwartz; Writing by Caroline Copley; Editing by Mark Potter
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