$95.6m: The payout scandal-hit Volkswagen CEO may still get after stepping down

Martin Winterkorn at the Porsche SE annual news conference in Stuttgart, Germany, on Nov 25, 2009.
Martin Winterkorn at the Porsche SE annual news conference in Stuttgart, Germany, on Nov 25, 2009. PHOTO: REUTERS

FRANKFURT (AFP) - He was the second-highest paid CEO in Europe.

Now Martin Winterkorn, the CEO of Volkswagen who stepped down on Wednesday due to a scandal related to cheating on diesel emissions, can still hope to get a 60-million-euro (S$95.6 million) payout, according to company rules.

While Volkswagen declined comment on the subject when contacted by AFP, according to last year's annual report, the company has set aside 28.5 million euros for the retirement of its former chief - a sum that Mr Winterkorn is entitled to get.

Added to that is a possible payout for "early termination" of contract worth "a maximum of two years' remuneration".

Mr Winterkorn, who had been Germany's highest-paid executive, drew a salary of 16.6 million euros in 2014, and 15 million euros in 2013, according to the company's last two annual reports.

It is nevertheless uncertain whether he will get the full sum as "no severance payment is made if membership of the board of management is terminated for a reason for which the board of management member is responsible".

Senior supervisory board members, however, insisted that Winterkorn "had no knowledge of the manipulation of emissions data".

Volkswagen's 20-member supervisory board is due to meet at their headquarters in Wolfsburg to designate the new leader, but according to reports they have already decided to tap the current chief of VW's luxury sports car division, Porsche.

Business daily Handelsblatt, quoting sources close to the supervisory board, said 62-year-old Matthias Mueller has been chosen to take the driving seat vacated by Winterkorn on Wednesday as a consequence of the scandal that has rocked the automobile sector over the past week.

The scandal, which emerged last Friday when US officials publicly accused the company of cheating and launched a probe into the claims, has now gone global with French, South Korean - and on Friday, Australian - authorities also announcing investigations.

It was also threatening to hit other German automakers, as suspicions over diesel car emissions spread for the first time to fellow German manufacturer BMW on Thursday.

Shares in top-of-the-line carmaker BMW skidded nearly 10 per cent at one point Thursday after the weekly Auto Bild reported that emissions from one of its diesel models were 11 times higher than European Union norms.

But BMW said it had not cheated in pollution tests, as Volkswagen has admitted to doing.

Volkswagen sank into its deepest crisis after it revealed that up to 11 million of its diesel cars had been fitted with devices designed to fool emissions tests.

Mr Handelsblatt said senior supervisory board members had agreed on the choice of Mr Mueller on Thursday to replace Winterkorn - a nomination that would have to be approved by the full 20-member board on Friday morning and then be made public in the afternoon.

Born in Chemnitz in former East Germany, Mr Mueller originally trained as a tool maker and then graduated in information technology.

Appointed CEO at Porsche in 2010, the white-haired and blue-eyed Mueller enjoys the backing of the group's family shareholders.

He had been tipped to replace Mr Winterkorn during the latter's bitter feud with his one-time mentor and former supervisory board chief Ferdinand Piech this year.

If the appointment is confirmed, Mr Mueller would then have the unenviable immediate task of tackling a growing tangle of legal threats.

Besides probes abroad, public prosecutors in Germany also said they were examining information and evaluating legal suits already filed against the company by a number of private individuals to decide whether to launch a full criminal inquiry against those responsible at VW.

In the longer term, the new CEO will have to re-think VW's entire strategy.

While it clocked up record sales and earnings in 2014, and in the first six months of this year overtook Toyota as the world leader in terms of sales, VW faces tough challenges.

It is over-exposed to the sharp economic slowdown in China, the group's biggest overseas market.

By contrast, it has long struggled to establish a foothold in the United States where it competes with giants such as Ford and General Motors.

It had been banking on diesel engines for a breakthrough there, but with its reputation now in tatters, industry experts are sceptical whether that will now be possible.