The upcoming departure of VW boss Diess puts his early contract extension in 2021 in a new light. Because Diess could collect another tens of millions of euros from VW. Analysts see this as a well-known pattern.
The replacement of VW CEO Herbert Diess by Porsche boss Oliver Blume, which is planned for September, is causing some investors and industry experts to frown. It is about the question of why Diess, who will be equipped with a consulting function in the future, received a new contract prematurely just a year ago. In July 2021, the Supervisory Board approved the further commitment, which will run until October 2025 – although there had already been considerable criticism of Diess’ management and communication style from several quarters beforehand.
“The contract extension from last year is incomprehensible,” said Ingo Speich, head of corporate management and sustainability at the savings bank fund subsidiary Deka. The resignation of Diess is “a departure with an announcement”, the inspectors could have drawn consequences much earlier. Diess himself is said to have put pressure on the extension. “Once again, the shareholder bears the bill,” said Speich. “The new consultancy contract also raises more questions than answers.” For the year 2021 alone, Diess received more than 10 million euros, including pension entitlements.
VW board salaries are difficult to compare and accurately predict over time because they depend on variable bonuses. Some observers estimate that the previous CEO – although soon no longer in this position – could earn up to a further 30 million euros by autumn 2025. “The golden handshake is a sign of bad corporate governance and unfortunately has a tradition at VW,” criticized Janne Werning from Union Investment. Highly paid continued payments or severance payments had already been agreed with Bernd Pischetsrieder in the 2000s or with the legal director Christine Hohmann-Dennhardt, who stayed for just over a year in 2016/2017.
Another analyst said the practice was a “mess” in his view, especially since rumors of tens of thousands of job cuts had been circulating in the case of Diess at the same time. The protective association of investors spoke of a “supervisory board without a compass, which says Hü in one year and then Hott in the other”. This is equivalent to a “strategic underperformance”.
With reference to the confidentiality of the meetings, members of the body did not want to comment on the decision at that time, not even in the light of the developments before it. In 2020, Diess had even accused parts of the supervisory board of criminal behavior and “lack of integrity” through indiscretions.
Initially, Diess was appointed CEO of Europe’s largest car group until spring 2023. However, there were several conflicts with the works council, IG Metall and the state of Lower Saxony, which, along with the representatives of the Porsche/Piëch owner families, are the most important overseers. In addition, there were recently expensive delays in proprietary software, which are said to have endangered model launches. In the past year, none of the key players dared to break with Diess, it was said in the environment of the inspectors – in hindsight one is often wiser. But now you’ve realized that it just can’t go on anymore.