Declaration of conformity

The Board of Management and the Supervisory Board of Volkswagen AG issued the annual declaration of conformity with the German Corporate Governance Code as required by section 161 of the Aktiengesetz (AktG – German Stock Corporation Act) on November 20, 2015 with the following wording:

“The Board of Management and the Supervisory Board declare that:
1) The recommendations of the Government Commission of the German Corporate Governance Code in the version dated June 24, 2014 (the “Code”) published by the German Ministry of Justice in the official section of the Federal Gazette (Bundesanzeiger) on September 30, 2014 were complied with in the period from the last Declaration of Conformity dated November 21, 2014 until the entry into force on June 12, 2015 of the amended version of the Code dated May 5, 2015 with the exception of the numbers listed below for the reasons outlined therein.

• a) 4.2.3 paragraph 4 (severance pay cap)
  A severance pay cap will be included in new contracts concluded with members of the Board of Management, but not in contracts concluded with Board of Management members entering their third term of office or beyond, provided a cap did not form part of the initial contract. Grandfather rights have been applied accordingly.
• b) 5.1.2 paragraph 2 sentence 3 (age limit for members of the Board of Management)
  An age limit for members of the Board of Management is not considered to be appropriate because the ability to manage a company successfully does not necessarily cease when a specific age is reached. A rigid retirement age could also be deemed discriminatory. It may be in the interests of the company to appoint someone over the age of 65. A rigid retirement age would therefore appear to be inappropriate.
• c) 5.3.2 sentence 3 (independence of the Chairman of the Audit Committee)
  It is unclear from the wording of the German Corporate Governance Code whether the Chairman of the Audit Committee is “independent” within the meaning of number 5.3.2 sentence 3 of the Code. Such independence could be considered lacking in view of his membership of the Supervisory Board of Porsche Automobil Holding SE, kinship with other members of the Supervisory Board of the company and of Porsche Automobil Holding SE, his indirect minority interest in Porsche Automobil Holding SE, and business relations with other members of the Porsche and Piëch families who also have an indirect interest in Porsche Automobil Holding SE. However, in the opinion of the Supervisory Board and the Board of Management, these relationships do not constitute a conflict of interest nor do they interfere with his duties as the Chairman of the Audit Committee. This exception is therefore being declared purely as a precautionary measure.
• d) 5.4.1 paragraphs 4 to 6 (disclosure regarding election recommendations)
  With regard to recommendation number 5.4.1 paragraphs 4 to 6 of the Code stating that certain circumstances must be disclosed by the Supervisory Board when making election recommendations to the Annual General Meeting, the stipulations of the Code are vague and the definitions unclear. Purely as a precautionary measure, the Board of Management and the Supervisory Board therefore declare a deviation from the Code in this respect. Notwithstanding this, the Supervisory Board will make every effort to satisfy the requirements of number 5.4.1 paragraphs 4 to 6.
• e) 5.4.6 paragraph 2 sentence 2 (performance-related compensation of members of the Supervisory Board)
  The remuneration of members of the Supervisory Board is regulated by the shareholders in article 17(1) of the Volkswagen Articles of Association. This regulation includes the linking of remuneration to dividend distribution. We therefore assume that we have complied with the Code and that the variable compensation component is oriented toward the sustainable growth of the enterprise as defined in number 5.4.6 paragraph 2 sentence 2 of the Code. However, as it cannot be ruled out that other views will be taken in this respect, a deviation from this recommendation in the Code is being declared as a precautionary measure.

2) The recommendations of the Government Commission of the German Corporate Governance Code in the version dated May 5, 2015 (2015 version of the Code) that was published by the German Ministry of Justice in the official section of the Federal Gazette (Bundesanzeiger) on June 12, 2015 were complied with in the period from the entry into force of this version on June 12, 2015 and will continue to be complied with, with the exception of the recommendations listed below.

• a) 4.2.3 paragraph 4 (severance payment cap)
• b) 5.1.2 paragraph 2 sentence 3 (age limit for members of the Board of Management)
• c) 5.3.2 sentence 3 (independence of the Chairman of the Audit Committee)
• d) 5.4.1 paragraphs 5 to 7 (disclosure regarding election recommendations, formerly 5.4.1 paragraphs 4 to 6)
• e) 5.4.6 paragraph 2 sentence 2 (performance-related remuneration of members of the Supervisory Board)

The reasons for the exceptions to a) to e) listed above are explained in section 1) above.

• f) 5.4.1 paragraph 2 sentence 1 (objectives for the composition of the Supervisory Board)
  With the entry into force of the 2015 version of the Code, this recommendation regarding the objectives for the composition of the Supervisory Board was expanded to the effect that the objectives for the composition of the Supervisory Board include the specification of a general limit to the length of time that members may serve on the Supervisory Board. During the period from the entry into force of the amended version of the recommendation on June 12, 2015 to the present, the expanded version of this recommendation was not complied with due to its novelty. Following the necessary consultations and declarations by the Supervisory Board, this recommendation will be complied with fully as of today.”

On March 14, 2016, the Board of Management and Supervisory Board of Volkswagen AG issued a supplement to the declaration of conformity with the Code as required by section 161 of the AktG with the following wording:

“The Board of Management and the Supervisory Board declare that:
1) In their Declaration of Conformity dated November 20, 2015, the Board of Management and the Supervisory Board of Volkswagen AG declared that they would fully comply with the recommendations of the Government Commission of the German Corporate Governance Code (DCGK) in the version dated May 5, 2015 that had been published by the German Ministry of Justice in the official section of the Federal Gazette (Bundesanzeiger) on June 12, 2015, with the exception of the following numbers:

• a) 4.2.3 paragraph 4 (severance payment cap)
• b) 5.1.2 paragraph 2 sentence 3 (age limit for members of the Board of Management)
• c) 5.3.2 sentence 3 (independence of the Chairman of the Audit Committee)
• d) 5.4.1 paragraphs 5 to 7 (disclosure regarding election recommendations)
• e) 5.4.6 paragraph 2 sentence 2 (performance-related remuneration of members of the Supervisory Board)

2) Due to the currently still unanswered questions relating to the consequences of the emissions issue and the resulting assessment questions, the Board of Management and the Supervisory Board have decided that the 2015 consolidated financial statements and the interim report for the first quarter of 2016 will not be made publicly accessible within 90 days of the end of the fiscal year or within 45 days of the end of the quarter. As such, the supplement to the Declaration of Conformity from November 20, 2015 will include an explanation of the deviation from number 7.1.2 sentence 4 of the German Corporate Governance Code (deadlines for publication). The deviation is limited to the publications listed and the recommendation will be complied with once again as of the 2016 Half-Yearly Financial Report.”

On April 22, 2016, the Board of Management and Supervisory Board of Volkswagen AG issued a further supplement to the declaration of conformity with the Code as required by section 161 of the AktG with the following wording:

“The Board of Management and the Supervisory Board declare the following:
1) In their Declaration of Conformity dated November 20, 2012, the Board of Management and the Supervisory Board of Volkswagen AG declared that they would comply with the recommendations of the Government Commission of the German Corporate Governance Code (the Code) in the version dated May 5, 2015 published by the German Ministry of Justice in the official section of the Federal Gazette (Bundesanzeiger) on June 12, 2015, with the exception of the following articles:

• a) 4.2.3(4) (severance payment cap)
• b) 5.1.2(2) sentence 3 (age limit for members of the Board of Management)
• c) 5.3.2 sentence 3 (independence of the Audit Committee Chairman)
• d) 5.4.1(5 to 7) (disclosure regarding election recommendations)
• e) 5.4.6(2) sentence 2 (performance-related remuneration of members of the Supervisory Board)

2) In their supplement to the declaration described under 1) above, decided on March 14, 2016, the Board of Management and the Supervisory Board of Volkswagen AG further declared that an exception would be made in respect of article 7.1.2 sentence 4 of the Code (date of publication of financial statements).

3) The Supervisory Board today adjusted the performance targets and comparison parameters used to determine the variable remuneration for the members of the Board of Management in fiscal year 2015 in agreement with the individual members of the Board of Management. Article 4.2.3(2) sentence 8 of the Code excludes retroactive changes to the performance targets and comparison parameters for the variable remuneration components. However, the Supervisory Board and members of the Board of Management were of the opinion that continued adherence to the previous performance targets and comparison parameters would have led to results that do not adequately reflect the current situation of the company. A retroactive adjustment of the performance targets and comparison parameters was therefore considered advisable.

As such, a second supplement to the Declaration of Conformity dated 20 November 2015 is being issued in which the company declares that an exception will be made in respect of article 4.2.3(2) sentence 8 of the Code (exclusion of retroactive changes to the comparison parameters).”

The current declarations of conformity are also published on our website, www.volkswagenag.com/ir, under the heading “Corporate Governance”, menu item “Declarations”.

The suggestions of the current version of the German Corporate Governance Code, with the exception of the suggestion in article 5.1.2(2) sentence 1 (Appointment period for first-time appointments to the Board of Management), are complied with in full. The Supervisory Board decides the appointment period for each first-time appointment to the Board of Management on an individual basis, taking the best interests of the Company into account.

Our listed subsidiaries AUDI AG, MAN SE and Renk AG have also issued declarations of conformity with the German Corporate Governance Code.

At Scania AB, the management and supervisory functions are split between the Annual General Meeting, the Board of Directors, and the President and CEO. They are governed by the articles of association, Swedish company law and other laws and regulations.

The declarations of conformity of our listed subsidiaries can be accessed at the websites shown on this page. In addition, further information on corporate governance at Scania AB can be found at the address provided.