Performance Incentives and Bonus Arrangements

Systematically encouraging and recognizing achievements and adapting remuneration systems to allow employees to share in the Company’s success for the long term are important components of our human resources strategy. Universal and uniform criteria for skills development and performance evaluation have been in place at Volkswagen AG since 2010. These criteria apply to the entire workforce – from vocational trainees to senior executives. They are underpinned by concrete incentive systems in the remuneration structure.

Volkswagen AG’s employees covered by collective pay agreements have a remuneration system that comprises three main elements:

• basic pay in the form of a competitive monthly salary;
• a performance-related pay component that additionally recognizes the achievements of each individual employee; and
• the right to a bonus arrangement anchored in the collective pay agreements.

This three-tier remuneration system has proven its worth as a tool for the workforce to participate in the Company’s success. It contributes to rewarding individual performance while maintaining competitiveness at the same time. For this reason, it is increasingly becoming standard practice in the Group – at Audi and ŠKODA, as well as at the Volkswagen Group Rus’ location in Kaluga and at Volkswagen de México, among other places.