Volkswagen
For the better paid executives, the monthly increase can be a low four-digit amount.
Wolfsburg For the managers at Volkswagen there is more money in the new year. As the company says, the monthly basic salaries of around 18,000 executives worldwide will be increased by four and six percent in a one-off special campaign from January 1st. For the better paid executives, the monthly increase can be a low four-digit amount.
In the course of the next year, a further increase will probably be added because the upcoming tariff increase after the VW-Home tariff is traditionally also transferred to management. The special increase in monthly fixed salaries is part of a comprehensive reorganization of the remuneration structure for VW executives.
At Volkswagen, the managers below the board of directors worldwide are divided into three classes. The lower level comprises the so-called Management Circle (MK), which includes around 12,000 executives around the world. A larger part of the MK staff is employed by the Volkswagen brand, a smaller remainder by other subsidiaries.
Above this basic level, around 6,000 other managers follow, who belong to the “upper management group” of the VW Group. With more responsibility and higher salaries, they are above the management colleagues from the MK circle.
Then there are the TMK staff, the top management from Volkswagen. With around 350 people, this circle is significantly smaller and more elitist. As a rule, the company also recruits its new board members from this group.
MK and OMK staff can now expect an additional increase in the monthly fixed salary as of January 1, 2020. Then there will be a four percent increase for MK employees, and a six percent increase for OMK managers. For the elite managers from the TMK group, the company had decided a long time ago to add eight percent.
New house tariff 2020
As further reported from corporate circles, Volkswagen pays an MK manager Germany At the entry level today a monthly fixed amount of over 8,500 euros. With a four percent increase, it will come to just under 8,900 euros in the new year. According to information from company circles, a Volkswagen manager can earn around 11,300 euros per month at the highest MK level.
In the entry level of the OMK managers, there are almost 9600 euros fixed monthly in Germany. If six percent are added in the future, the monthly fixed income is expected to climb to just under EUR 10,200. At the highest OMK level, a VW manager will come to around 19,000 euros per month in the new year according to the future calculation mode.
For executives, this is unlikely to be the only expected salary increase in the new year. In 2020, Volkswagen will negotiate a new house tariff for the German group.
Traditionally, the VW managers get this increase, too IG metal negotiates only for the collective workers. “This traditional step ensures that the salary differences between collective bargaining staff and managers remain the same,” a VW manager justified this process.
In spring 2018, a new in-house collective agreement was negotiated at Volkswagen for the last time. The managers had also received an increase in their regular fixed salaries accordingly. At that time it was 4.3 percent, which was paid to VW executives for the first time in May 2018.
Industry observers anticipate that a similar rate could come out again in the upcoming tariff increase in spring 2020. In contrast to most other companies in the automotive industry, Volkswagen did not have to withdraw its own profit forecast despite the ongoing economic problems worldwide.
In addition, the special increase for management may be desirable at IG metal and wake up the works councils. The workers’ side could, at least in part, ask for a similar additional surcharge for the workers.
The special bonus for the 18,000 executives on the monthly fixed salary is basically confirmed by the company’s official side. However, one spokesman for the group referred to the comprehensive change in remuneration for all managers in the group, which from the new year will include not only the fixed salary but also the flexible bonuses.
Managers can expect generous payouts
The model for this is the remuneration system that the Group had introduced for the Executive Board three years ago. The flexible remuneration of the 18,000 executives is also to be linked more closely to current corporate development from next year. In future, the so-called annual bonus will focus on the operating return on sales and the return on capital rather than the operating result.
With the long-term bonus, the second component of the variable remuneration in the VW Group, it’s about earnings per share, share price performance and the dividend, The assessment period is three years. Management is to participate in the company’s value development through this new system.
A spokesman for the group also said that the increase in the monthly fixed salary of four and six percent had been decided in order to compensate for greater fluctuations in the new flexible salary components in the future. With all salary components, no total increase in manager salaries is expected.
The new salary system for management will also introduce a transition period at Volkswagen. In the first three years, the VW managers should not be in a much worse position than under the old system.
That is why at least 100 percent are guaranteed in the first year according to the old calculation, in the second 90 percent and by third 80 percent. Only in the fourth year only the rules of the new remuneration system apply.
Management bonuses As a rule, Volkswagen always pays out in the spring. Since the group has recovered significantly in the four years after the diesel affair and in some cases even set new profit records, the VW managers can expect extremely generous payments next spring. As a rule, members of the OMK group receive six-figure bonuses; if the bonus years are good, the company reports.
“In the future, the new remuneration system will breathe more with the company’s success. Reacts in economically successful years the new compensation system faster with higher payouts; in times of crisis, on the other hand, the payments decrease more directly than in the previous system, ”summarize the CEO Herbert Diess and Chief Human Resources Officer Gunnar Kilian summarized the effects of the new salary rules in a letter to the group’s managers.