There are many faces of injustice. A member of Volkswagen's executive board recently said that he thought it was unfair that he earned €6 million ($7.8 million) last year. Only €6 million.
In 2011, he and his colleagues had earned between €7.2 and 8.1 million. Yet in 2012, Europe's largest carmaker did even better, with record-high revenues, sales and profits. According to their contracts, the board members should also have seen their earnings increase. Instead, their pay was cut by about 20 percent.
The supervisory board of the Wolfsburg-based company wanted to set an example. The salary of VW Chief Executive Martin Winterkorn was reduced to €14.5 million, and the salaries of the remaining top executives fell as well. Several of them were unable to understand why. After all, they argued, it was only the salary of their boss, which would have increased to €20 million without the cuts, that had trigged the current debate over executive pay.
It's not that he needs or desperately wants the money, says the executive whose salary was reduced to €6 million, but that he initially perceived the cut as an affront. In the mean time, he says, he has come to understand that there is more at stake when it comes to executive pay, namely the social acceptance of managers and the company. He now feels that the salary cut is "completely okay."
VW CEO Winterkorn and his fellow executives believed the matter to have been settled. At the Geneva Motor Show early last week, they expected to be talking about a new one-liter car (a car that gets 235 miles to the gallon). Instead, they were constantly asked about their salaries. Full story...
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In 2011, he and his colleagues had earned between €7.2 and 8.1 million. Yet in 2012, Europe's largest carmaker did even better, with record-high revenues, sales and profits. According to their contracts, the board members should also have seen their earnings increase. Instead, their pay was cut by about 20 percent.
The supervisory board of the Wolfsburg-based company wanted to set an example. The salary of VW Chief Executive Martin Winterkorn was reduced to €14.5 million, and the salaries of the remaining top executives fell as well. Several of them were unable to understand why. After all, they argued, it was only the salary of their boss, which would have increased to €20 million without the cuts, that had trigged the current debate over executive pay.
It's not that he needs or desperately wants the money, says the executive whose salary was reduced to €6 million, but that he initially perceived the cut as an affront. In the mean time, he says, he has come to understand that there is more at stake when it comes to executive pay, namely the social acceptance of managers and the company. He now feels that the salary cut is "completely okay."
VW CEO Winterkorn and his fellow executives believed the matter to have been settled. At the Geneva Motor Show early last week, they expected to be talking about a new one-liter car (a car that gets 235 miles to the gallon). Instead, they were constantly asked about their salaries. Full story...
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