The Guardian reports that Volkswagen AG CEO Martin Winterkorn nearly doubled his pay last year, to $23.1 million in salary, bonuses and profit incentives. Experts within the automotive industry use many arguments to justify CEO salary levels in excess of $10 million. In the case of Winterkorn, these same experts point to the fact that Volkswagen’s net profits more than make up for it.
Martin Winterkorn earned $12.2 million in 2010
Volkswagen released its annual financial report Monday, and the report noted Winkterkorn’s salary increase, among other facts and figures pertaining to the automaker’s fiscal year. Volkswagen is Europe’s biggest automaker, and fiscal 2011 profits and deliveries hit record levels, according to media analysis of Volkswagen’s financial disclosure.
As such, it may be understandable that Martin Winterkorn’s $12.2 million salary in 2010 went up, based on his company’s performance. When the chief executive of a company makes more than the CEO of any other company in its parent nation of Germany, however, people will talk.
Winterkorn did not respond to media inquiries regarding his salary announcement. Officially, he now earns more than any chief executive among Germany’s top 30 companies listed on the Deutsche Borse AG German Stock Index (DAX).
Volkswagen AG’s banner year
Fiscal 2011 was such a success for Volkswagen that the entire management board nearly doubled its compensation, notes Automotive News. Pay jumped from $47.4 million in 2010 to approximately $93 million last year. The automaker’s net profit more than doubled, from $9 billion to $20.3 billion, which reflects stock gains that resulted from Volkswagen’s options on Porsche. Sales were more than brisk in 2011; Volkswagen moved 8.3 million vehicles, 15 percent more than the previous year.
The Wall Street Journal notes that executives at European automakers like Volkswagen do not receive stock compensation, unlike their U.S., Japanese and South Korean counterparts.
More to come, despite difficult conditions
Volkswagen AG reportedly is continuing to aim high in fiscal 2012, as deliveries and revenues are projected to rise. The automaker’s goal is to at least meet the same level of operating profit that it achieved last year, which was $14.8 billion.
This comes despite difficult trading conditions in Europe, notes The Guardian. Volkswagen is banking on cost controls being what enables it to continue its climb, despite heavy competition across the European automotive market. Germany, which possesses Europe’s richest economy, contracted by a quarterly rate of 0.2 percent at the end of fiscal 2011, and Volkswagen will tighten the belt somewhat to compensate, without throttling production.