Rewarding Failure – Volkswagen CEO To Receive $32 Million Pension
Last week, I tweeted the following with regard to my prediction about what would happen to the Volkswagen CEO after pretty much destroying the company’s reputation due to the emissions cheating scandal:
It didn’t take long for crony capitalism to kick in. You know, where the most destructive and inept members of society are consistently rewarded for failure. Bloomberg reports the following:
Martin Winterkorn, engulfed by a diesel-emissions scandal at Volkswagen AG, amassed a $32 million pension before stepping down Wednesday, and may reap millions more in severance depending on how the supervisory board classifies his exit.
After Winterkorn disclosed Wednesday that he had asked the board to terminate his role, company spokesman Claus-Peter Tiemann declined to comment on how much money the departing CEO stands to get. Volkswagen’s most recent annual report outlines how Winterkorn, its leader since 2007, could theoretically collect two significant payouts.
Winterkorn’s pension had a value of 28.6 million euros ($32 million) at the end of last year, according to the report, which doesn’t describe any conditions that would lead the company to withhold it. And under certain circumstances, he also can collect severance equal to two years of “remuneration.” He was Germany’s second-highest paid CEO last year, receiving a total of 16.6 million euros in compensation from the company and majority shareholder Porsche SE.
While the severance package kicks in if the supervisory board terminates his contract early, there’s a caveat. If the board ends his employment for a reason for which he is responsible, then severance is forfeited, according to company filings.
Of course, we all know this isn’t going to happen. How do we know? Well this is how…
The supervisory board’s executive committee said in a statement Wednesday that Winterkorn “had no knowledge of the manipulation of emissions data,” and that it respected his offer to resign and request to be terminated. It also thanked him for his “towering contributions” to the company.
The annual report also mentions another piece of his pension: He can use a company car in the years that benefit is being paid out.
This is merely the latest example of the “heads I win, tails you lose” environment that protects corporate CEOs. In case you missed the following post published just last week:
Well of course you’re going to have income inequality when CEOs literally can’t lose, no matter how much they fail.