WOLFSBURG (Reuters) - Volkswagen (VOWG_p.DE) is shaking up its executive pay with a cap on earnings, it said on Friday, as it looks to quell widespread anger over bonuses paid even as the carmaker suffered record losses in the aftermath of the emissions scandal in 2015.
Under new rules approved by the supervisory board on Friday, Volkswagen (VW) will cap total pay for its chief executive at 10 million euros ($10.6 million) and other top managers at 5.5 million euros.
VW became the target of fierce criticism from the German public and shareholders after its managers only reluctantly accepted a cut to bonus payments of about 30 percent. Bonuses were based partly on VW's performance over the previous two years.
The company did not give details on how remuneration under its revamped policy will compare with last year's pay beyond saying that "theoretical maximum compensation will decline by as much as 40 percent".
VW is due to publish last year's executive remuneration on March 14.
Former Chief Executive Martin Winterkorn was paid 7.3 million euros in 2015, two thirds of which was from bonuses, and the company aims to shift the emphasis towards fixed salaries.
Eligibility for bonuses will be tightened under the new forward-looking system, which will allow for up to a 30 percent increase in fixed salaries, VW said.
Managers will lose their annual bonuses if the automotive group's operating profit stays below 9 billion euros, compared with a current threshold of 5 billion euros, and if the return on sales remains at 4 percent, the company said.
Long-term bonuses, meanwhile, will track share price performance, it added, citing recommendations from Germany's corporate governance code.
VW has taken the axe to executive remuneration in the past.
In 2009 executive pay was cut by 60 percent after profit plunged by 80 percent. In 2012 it adjusted the compensation scheme to limit the annual bonus for the CEO and top management after Winterkorn's pay nearly doubled to 17.5 million euros.
That made Winterkorn's, who quit in September 2015 at the height of the emissions scandal, the highest-paid CEO among Germany's top 30 companies on the DAX .GDAXI index.
VW made headlines again in January with reports that compliance chief Christine Hohmann-Dennhardt was receiving generous severance pay after only 13 months in the job.
Reporting by Andreas Cremer and Jan Schwartz; Editing by David Goodman