Rewarding Failure – Volkswagen CEO to Receive $32 Million Pension

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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:

United Airlines CEO Walks Away with $21 Million Exit Package After Resigning Due to Corruption Probe

Well of course you’re going to have income inequality when CEOs literally can’t lose, no matter how much they fail.

In Liberty,
Michael Krieger

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4 thoughts on “Rewarding Failure – Volkswagen CEO to Receive $32 Million Pension”

  1. Mike, the first utterly vacuous taking of responsibility that I remember was Janet Reno in 1993. After the needless siege of the compound of that odd religious group in Waco, Texas ended in 76 people dying, Bill Clinton’s repellent attorney general declared that she was taking full responsibility for the tragic loss of life.

    And what did that mean? What did the lives of 76 almost entirely innocent people equate to in high government official terms? Well, she didn’t resign. She wasn’t fired. She wasn’t suspended for a month, week or even a day. She didn’t lose a penny of salary.

    What did taking “full responsibility” for the tragic loss of 76 lives mean? It meant that official suffering a loss directly equivalent to the value of those lives as seen by high government officials, nothing. Absolutely nothing.

    I have to admit that I was first impressed that Winterkorn was resigning thinking that this was, perhaps, a distinctly different corporate culture from that in which our pampered elites travel. Maybe not.

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