- Cutting salaries across upper levels of management are also expected.
- Changes at VW could reduce dividend payouts for ordinary company shareholders.
- VW is also working to lower German production by 734,000 units annually.
In addition to axing as many as 35,000 jobs across Germany over the next five years, VW is also slashing the salaries and bonuses of those sitting on its board as part of its cost-cutting measures. Quite often, companies will cut jobs and pay for their workers while not making similar cuts at the management levels, but that’s not happening at VW.
According to a report out of Germany, VW board members will have their fixed salary and annual bonus reduced by 11% in both 2025 and 2026. Their pay will then follow a tiered model and be cut by 8.5% in 2027, 6.5% in 2028, and 5.5% in 2029. These measures will save the company approximately €15 million ($16.2 million) and come on the back of salaries also being slashed across VW management, contributing a further €300 million ($325 million) in savings.
Read: VW Slashes Manager Bonuses By 10% For Two Years, Plans More Cuts Through 2030
Handelsblatt reports that the nine members of VW’s board of directions earned more than a combined €40 million (~$43 million) in 2023, with approximately €9.7 million ($10.5 million) of this awarded to chief executive Oliver Blume. His compensation will also be reduced alongside the other board members.
Last year, VW’s executive board had offered to have their fixed salary cut by 5%, but the works council criticized this as being the smallest part of their remuneration.
The changes made through VW could be felt by ordinary shareholders, too. The company has been targeting a dividend payout ratio of over 30%, but it’s expected to fall below this figure this year. Moreover, the annual bonus usually enjoyed by VW’s ~120,000 local employees may also be negatively impacted.
In addition to cutting jobs and reducing pay, VW is lowering production capacity in Germany by approximately 734,000 units. The Osnabrück plant will cease production of the T-Roc Cabrio in mid-2027, and while VW has committed to keeping this site open, it hasn’t said what will be built there.
