A. Remuneration of the Members of the Board of Management

In the reporting year, which was overshadowed by the Russia-Ukraine conflict, the Volkswagen Group’s business was impacted by the global economic slowdown, the limited availability of parts and disruptions in the logistics chain. In this environment, the Volkswagen Group’s deliveries declined year-on-year, while the operating result improved due to improvements in the mix and price positioning. The Board of Management members also benefited from this in their remuneration.

I. Principles of Board of Management remuneration

The remuneration of the Board of Management is based on the remuneration system developed by the Supervisory Board and adopted on December 14, 2020 with effect from January 1, 2021. The remuneration system for the members of the Board of Management implements the requirements of the AktG as amended by the Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie (ARUG II – German Act on the Implementation of the Second Shareholder’ Rights Directive) and takes into account the recommendations of the German Corporate Governance Code (the Code). The Annual General Meeting approved the remuneration system on July 22, 2021 with 99.61% of the votes cast.

The new remuneration system has applied since January 1, 2021 to all Board of Management members with service contracts newly concluded or renewed after the Supervisory Board resolution of December 14, 2020. For the Board of Management members already appointed at the time of the resolution by the Supervisory Board on December 14, 2020, the new remuneration system also applies in principle since January 1, 2021. Until such time as their contracts are renewed, however, the following exceptions apply: the performance share plan of the Board of Management members already appointed continues to have only a three-year performance period but otherwise corresponds to the performance share plan described in the remuneration system. Penalty and clawback rules will only apply to Board of Management members already appointed on renewal of their contracts.

The level of the Board of Management remuneration should be appropriate and attractive in the context of the Company’s national and international peer group. Criteria include the tasks of the individual Board of Management member, their personal performance, the economic situation, and the performance of and outlook for the Volkswagen Group, as well as how customary the remuneration is when measured against the peer group and the remuneration structure that applies to other areas of the Volkswagen Group. In this context, comparative studies on remuneration are conducted on a regular basis.

In the Remuneration Report for fiscal year 2021, the Board of Management and Supervisory Board reported in detail on the remuneration paid to members of the Board of Management in fiscal year 2021. The Annual General Meeting on May 12, 2022 approved the Remuneration Report for fiscal year 2021 with a majority of 99.78% of the votes. Comments by investors were taken into account in the preparation of the Remuneration Report for fiscal year 2022, for example by adding an explanation of the composition of the peer group.

In this chapter, we provide an overview of the remuneration system for the Board of Management members in fiscal year 2022 before going into the components of the remuneration in fiscal year 2022.

II. Overview of the remuneration components

The table below provides an overview of the components of the remuneration system applicable for fiscal year 2022 for the members of the Board of Management. The table also outlines the composition of the individual remuneration components and explains their targets, particularly in respect of how the remuneration will promote the Company’s long-term performance. A more detailed description of the remuneration system applicable for fiscal year 2022 for the members of the Board of Management is available at www.volkswagenag.com/en/InvestorRelations/corporate-governance/Remuneration.html.

III. Remuneration of the Board of Management members appointed in fiscal year 2022

1. Board of Management members in fiscal year 2022

The members of the Volkswagen AG Board of Management in fiscal year 2022 were as follows:

• Oliver Blume, member of the Board of Management since April 13, 2018, Chair of the Board of Management since September 1, 2022, also Chair of the Executive Board of Dr. Ing. h.c. F. Porsche AG
• Arno Antlitz, member of the Board of Management since April 1, 2021
• Markus Duesmann, member of the Board of Management since April 1, 2020, also Chair of the Board of Management of AUDI AG
• Gunnar Kilian, member of the Board of Management since April 13, 2018
• Ralf Brandstätter, member of the Board of Management since January 1, 2022, also CEO of Volkswagen (China) Investment Company Limited
• Hauke Stars, member of the Board of Management since February 1, 2022
• Manfred Döss, member of the Board of Management since February 1, 2022
• Thomas Schäfer, member of the Board of Management since July 1, 2022
• Thomas Schmall-von Westerholt, member of the Board of Management since January 1, 2021
• Herbert Diess, member of the Board of Management from July 1, 2015 and Chair of the Board of Management from April 13, 2018, left the Board effective August 31, 2022
• Murat Aksel, member of the Board of Management from January 1, 2021, left the Board effective August 31, 2022
• Hiltrud Dorothea Werner, member of the Board of Management from February 1, 2017, left the Board effective January 31, 2022
• Hildegard Wortmann, member of the Board of Management from February 1, 2022, left the Board effective August 31, 2022

For their work on the Board of Management, its members do not receive additional remuneration for discharging other mandates on management bodies, supervisory boards or similar, especially in other companies of the Volkswagen Group. If such remuneration is nevertheless granted, it is counted toward the remuneration for their work as a member of the Board of Management of Volkswagen AG.

A different arrangement has been reached with Mr. Brandstätter for his work at Volkswagen (China) Investment Company Limited: Mr. Brandstätter receives a separate remuneration for his work as CEO of Volkswagen (China) Investment Company Limited. Mr. Brandstätter’s contractual remuneration under his contract of employment with Volkswagen AG is reduced accordingly for the duration of his work at Volkswagen (China) Investment Company Limited.

2. Remuneration granted and owed in fiscal year 2022

In accordance with section 162(1) sentence 1 of the AktG, the remuneration report must report on the remuneration granted and owed to each individual member of the Board of Management in the last fiscal year. These terms are understood as follows:

• The term “granted” (gewährt) refers to the actual receipt (Zufluss) of the remuneration component.
• The term “owed” (geschuldet) refers to all legally existing liabilities for remuneration components that are due but have not yet been fulfilled.
• This understanding differs from the terms “benefits granted” and “benefits received” used in remuneration reports up to and including December 31, 2020. As per the 2017 version of the Code, “benefits granted” included, regardless of when they were to be paid out, all remuneration components that had been agreed at least in principle for a member of the Board of Management in the fiscal year and for which the amount could be estimated. With the introduction of section 162 of the AktG, it is no longer possible to maintain the distinction between “granted” and “received” as previously understood. Instead, the meaning of the term “granted” in section 162 of the AktG corresponds to the previous understanding of “received”.

2.1. Overview in the tables

The following tables show the remuneration actually received by members of the Board of Management in fiscal year 2022. The time of actual payment is not relevant. The remuneration reported as granted in fiscal year 2022 thus consists of the base salary paid out in fiscal year 2022, the fringe benefits, the annual bonus paid in the month following the approval of the Company’s consolidated financial statements for fiscal year 2022 and the LTI for the performance period 2019 to 2021 paid in fiscal year 2022. As the Company was not in default on the payment of remuneration components, no remuneration owed is reported in the tables.

The relative shares shown in the tables relate to the remuneration components granted and owed in the respective fiscal year in accordance with section 162(1) sentence 1 of the AktG. They thus include all benefits actually received in the respective fiscal year, regardless of the fiscal year for which the Board of Management members received them. The relative shares indicated here are thus not comparable with the respective relative shares of fixed and variable remuneration components as part of total remuneration in the description of the remuneration system according to section 87a(1) sentence 2 no. 3 of the AktG. The shares indicated in the remuneration system relate to the targets agreed for the relevant fiscal year, irrespective of the time at which the respective remuneration component was paid out.

Pension expense is reported as service cost within the meaning of IAS 19. The service cost in accordance with IAS 19 does not constitute remuneration granted or owed within the meaning of section 162(1) sentence 1 of the AktG as it is not actually received by the Board of Management member in the reporting year.

Maximum remuneration corresponds to maximum remuneration within the meaning of section 87a(1) sentence 2 no. 1 of the AktG in accordance with the remuneration system adopted by the Supervisory Board and approved by the Annual General Meeting. As in the past, in addition to maximum remuneration, a limit on cash remuneration, which includes the base salary paid out for the relevant fiscal year, the annual bonus granted for the relevant fiscal year and paid out in the subsequent year, the performance share plan paid out in the relevant fiscal year and for which the performance period ended immediately before the respective fiscal year, and any special payment granted for the relevant fiscal year, has been agreed with the members of the Board of Management.

Board of Management service contracts that are new or have been renewed since the Supervisory Board adopted the new remuneration system for the members of the Board of Management on December 14, 2020 also contain the penalty and clawback rules provided for in this remuneration system. As such, the service contract of the Board of Management member Mr. Duesmann, who was already appointed at the time of the Supervisory Board resolution of December 14, 2020, does not contain penalty or clawback rules, nor did Ms. Werner’s service contract, which ended on January 31, 2022. For Mr. Blume, the penalty and clawback rules apply starting from his new appointment, i.e. from September 1, 2022. Volkswagen AG did not make use of the existing penalty and clawback rules in fiscal year 2022.

2.2 Explanation

2.2.1 Performance criteria for the variable remuneration

a) Performance criteria for the annual bonus

aa) Financial subtargets
The following overviews show the threshold values, target values and maximum values set by the Supervisory Board for fiscal year 2022 for the financial subtargets operating result, including Chinese joint ventures (proportionate), and operating return on sales (RoS), along with the actual figures and target achievement levels in percent in fiscal year 2022.

bb) ESG factor
The following overview shows the minimum values, target values and maximum values set by the Supervisory Board for fiscal year 2022 for the environmental (decarbonization index) and social (sentiment rating and diversity index) subtargets along with the actual figures and target achievement levels in fiscal year 2022. The decarbonization index measures the emissions of CO₂ and CO₂ equivalents by the passenger car- and light commercial vehicle-producing brands over the entire life cycle and documents the progress in improving our carbon footprint. The sentiment rating is an important parameter of the opinion survey – an employee poll with which the Group regularly gathers information regarding employee satisfaction. The diversity index is used worldwide to determine the development of the proportion of women in management and the internationalization of top management. The indicator provides incentives for an exemplary leadership and corporate culture. The governance factor is a means for the Supervisory Board to express its satisfaction with the expected and actual behavior of the Board of Management with regard to the criteria of integrity and compliance. As a rule, the governance factor should be 1.0 and may only be reduced to 0.9 or raised to 1.1 in exceptional circumstances based on a professional judgment of the Supervisory Board. For fiscal year 2022, the Supervisory Board has set the governance factor at the standard value of 1.0 for all Board of Management members; it takes into account and assesses the collective performance of the Board of Management as a whole and the performance of each Management Board member individually.

b) Performance criteria for the long-term incentive (LTI)

The four-year performance share plan has applied since January 1, 2021 to all Board of Management members with service contracts newly concluded or renewed after the Supervisory Board resolution of December 14, 2020. For the Board of Management members already appointed at the time of the Supervisory Board resolution of December 14, 2020, a three-year performance period continues to apply until their contracts are renewed. This is the case for Ms. Werner and Mr. Duesmann. For fiscal year 2022, the four-year performance share plan applies pro rata to Mr. Blume starting from September 1, 2022.

aa) Information on the performance shares

bb) EPS performance
The following overview shows the minimum value, target value and maximum value set by the Supervisory Board at the beginning of the performance period for the performance share plan 2019 – 2021, which was paid out in fiscal year 2022, along with the actual figure and target achievement level in percent.

The following overviews show the minimum values, target values and maximum values set by the Supervisory Board at the beginning of the performance periods 2020 – 2022, 2021 – 2023 or 2021 – 2024 and 2022 – 2024 or 2022 – 2025 along with the actual figures and target achievement levels attained in percent so far for the individual years of the assessment period up to and including 2022. The performance share plans for the performance periods 2020 – 2022, 2021 – 2023 or 2021 – 2024 and 2022 – 2024 or 2022 – 2025 were not due in fiscal year 2022 and have not yet been paid out; they therefore do not constitute remuneration granted or owed in fiscal year 2022.

cc) Reference prices/dividend equivalent for the performance periods
The relevant initial reference price, closing reference price and dividend equivalent for the performance period 2019 – 2021 can be found in the following overview.

The following overview shows the initial reference price, closing reference price and dividend equivalent for the performance share plans not yet due and not yet paid out for the performance periods 2020 – 2022, 2021 – 2023 or 2021 – 2024 and 2022 – 2024 or 2022 – 2025.

dd) Advances
In the introductory phase of the performance share plan, the members of the Board of Management received advances of 80% of their target amount. Mr. Blume received a corresponding advance from the performance period 2019 to 2021. The advance was paid after the first year of the relevant performance period. Final settlement in 2022 was based on actual achievement of targets at the end of the three-year performance period.

2.2.2 Conformity with the remuneration system

The remuneration granted and owed to the Board of Management members in fiscal year 2022 meets the requirements of the remuneration system for the members of the Board of Management. There was no deviation from the applicable remuneration system in fiscal year 2022. There was no need to reduce the payments related to the annual bonus and performance share plan based on the maximum values of the individual remuneration components being exceeded, as they did not exceed 180% of the target amount for the annual bonus or 200% of the target amount for the performance share plan. The total remuneration granted and owed to the Board of Management members in fiscal year 2022 did not exceed the maximum remuneration envisaged by the remuneration system. Due to the base salary paid out for fiscal year 2022, the annual bonus granted for fiscal year 2022 and paid out at the beginning of fiscal year 2023, and the performance share plan paid out in fiscal year 2022 for the 2019 to 2021 performance period, Board of Management members Mr. Diess, Ms. Werner and Mr. Kilian would have each received total cash remuneration above the agreed cash remuneration cap of €10.0 million (Mr. Diess), €5.5 million (Mr. Kilian) and pro rata €458,333.33 (Ms. Werner) in fiscal year 2022. Against this background, the payment amount from the annual bonus was reduced by the excess amount of €3,253,125.44 in the case of Mr. Diess and €965,521.72 in the case of Mr. Kilian. The (pro rata) maximum remuneration of €583,333.33 agreed for fiscal year 2022 was also exceeded for Ms. Werner. Against this background, Ms. Werner’s annual bonus was reduced by a total of €97,619.14. The tables detailing remuneration granted and owed therefore show the reduced amounts of the annual bonus for Mr. Diess, Ms. Werner and Mr. Kilian.

The Supervisory Board of Volkswagen AG extended the appointment of Mr. Blume in fiscal year 2022 and appointed Mr. Blume as Chair of the Board of Management with effect from the beginning of September 1, 2022. A new service contract with effect from September 1, 2022 was concluded in this context, the terms of which correspond to the remuneration system applicable to members of the Volkswagen AG Board of Management from January 1, 2021. A four-year performance share plan has thus applied to Mr. Blume since September 1, 2022. For fiscal year 2022, the LTI was therefore based pro rata on a three-year performance share plan up to and including August 31, 2022 and a four-year performance share plan from September 1, 2022. The penalty and clawback rules were only applicable as from September 1, 2022. Mr. Blume is also Chair of the Executive Board of Dr. Ing. h.c. F. Porsche AG. In preparation for the IPO completed on September 29, 2022, Dr. Ing. h.c. F. Porsche AG agreed on an IPO bonus for Mr. Blume. This IPO bonus is structured as a share plan with a one-, two- and three-year term, in each case starting from the time of the IPO. Mr. Blume was allocated a total of 19,290 phantom preferred shares in Dr. Ing. h.c. F. Porsche AG in fiscal year 2022, divided into three tranches of 6,430 phantom preferred shares each. Any remuneration granted and owed from this IPO bonus will be reported in the remuneration report for the fiscal year in which the respective tranche is paid out to Mr. Blume. Volkswagen AG approved this remuneration from Dr. Ing. h.c. F. Porsche AG as a third-party remuneration arrangement.

2.2.3 Benefits and pension commitments in connection with termination

a) Benefits and pension commitments to Board of Management members for early termination

The remuneration system for the members of the Board of Management and the service contracts of the Board of Management members provide for severance payments in the event that an appointment as member of the Board of Management is revoked. In such cases – except where there is good cause entitling the Company to terminate the service contract prematurely or where the appointment is revoked due to a gross breach of duty – the Board of Management member receives a gross severance payment in the amount of the total remuneration of the past financial year up to the end of the regular term of the appointment, for a maximum of two years, calculated as of the date of the termination of the appointment as member of the Board of Management. Any special payment will not be taken into account for the calculation. Should a Board of Management member leave during the course of the first fiscal year of the appointment, the calculation will by way of exception be based on the expected total remuneration for the current fiscal year. The severance payment will be paid in a maximum of 24 monthly installments from the time of the termination of the appointment as a member of the Company’s Board of Management. Contractual remuneration paid by the Company for the period from the termination of the appointment until the end of the service contract will be offset against the severance payment. Should Board of Management members take up other work after the termination of their appointment, the amount of the severance payment will be reduced by the amount of the income earned from that work. Should a post-contractual non-compete covenant be agreed, the severance payment will be offset against the compensation received for observing the post-contractual non-compete covenant.

The members of the Board of Management are also entitled to a pension and to a surviving dependents’ pension as well as the use of company cars for the period in which they receive their pension in the event of early termination of their service on the Board of Management.

In line with the recommendation under G.14 of the 2022 Code, the service contracts do not provide for change of control clauses.

b) Pension commitments to Board of Management members for regular termination of service

In the event of regular termination of their service on the Board of Management, the members of the Board of Management are entitled to a pension, including a surviving dependents’ pension, as well as the use of company cars for the period in which they receive their pension. The agreed benefits are paid or made available when the Board of Management member reaches the age of 65, or in Mr. Blume’s, Mr. Diess’s, Mr. Kilian’s and Ms. Werner’s case, when they reach the age of 63.

The Board of Management members received a defined contribution plan, which is based in principle on a works agreement that also applies to the employees of Volkswagen AG covered by collective agreements and includes retirement, invalidity and surviving dependents’ benefits. A pension contribution in the amount of 40% of the base salary, and for Ms. Werner and Mr. Diess in the amount of 50% of the base salary, is paid to Volkswagen Pension Trust e.V. at the end of the calendar year for each year they are appointed to the Board of Management. The annual pension contributions result in modules of what is, in principle, a lifelong pension in line with the arrangements that also apply to employees covered by collective agreements.

The individual pension modules vest immediately upon payment to Volkswagen Pension Trust e.V. Instead of a lifelong pension, benefits can optionally be paid out as a lump sum or in installments when the beneficiary reaches retirement age.

There were no changes to these commitments in fiscal year 2022.

The overview on the previous page shows the pensions for the individual members of the Board of Management in fiscal year 2022, indicating the present value and the pension expense for the Company during the last fiscal year.

c) Benefits and pension commitments to Board of Management members who left in fiscal year 2022

Ms. Werner, Mr. Diess, Ms. Wortmann and Mr. Aksel left the Board of Management in fiscal year 2022.

Mr. Diess was originally appointed as a member of the Volkswagen AG Board of Management until the close of October 24, 2025 and had been appointed Chair of the Board of Management. Mr. Diess’s appointment to the Board of Management of Volkswagen AG was terminated early by mutual agreement with effect from the close of August 31, 2022. Due to this termination, Volkswagen AG concluded a termination agreement with Mr. Diess. The subject of this termination agreement included the continuation of his service contract until its regular termination date, i.e. until the close of October 24, 2025. Volkswagen AG agreed to continue paying Mr. Diess his remuneration until the termination date of his service contract. Variable remuneration components will be paid at the contractually agreed time; there will be no early calculation and payout. The annual bonus will be based in each case on a Governance factor of 1.0. Mr. Diess is entitled to fringe benefits and will be available to Volkswagen AG in an advisory capacity until the end of his service contract. He is not receiving a severance payment from Volkswagen AG in the form of a one-off payment.

Ms. Wortmann was originally appointed as a member of the Board of Management until the close of January 31, 2025. As part of changes to Group management, Ms. Wortmann’s appointment to the Board of Management of Volkswagen AG and her service contract were terminated by mutual agreement with effect from the close of August 31, 2022. Since that time, Ms. Wortmann has been a member of extended Group Management. In this context, Volkswagen AG and Ms. Wortmann have concluded a termination agreement, under which Ms. Wortmann’s remuneration for fiscal year 2022 is paid pro rata. Variable remuneration components will be paid at the contractually agreed time; there will be no early calculation and payout. Since September 1, 2022, a temporary employment contract for membership of extended Group Management has been in place between Ms. Wortmann and Volkswagen AG with an end date of January 31, 2025; the remuneration-related provisions of the Board of Management service contract will continue to apply for the duration of this employment contract. The appointment of Ms. Wortmann as a member of the Board of Management of AUDI AG – currently until the close of June 30, 2027 – remains unaffected by her move to extended Group Management.

Mr. Aksel was originally appointed as a member of the Board of Management until the close of December 31, 2023. As part of changes to Group management, Mr. Aksel’s appointment to the Board of Management of Volkswagen AG and his service contract were terminated by mutual agreement with effect from the close of August 31, 2022. In this context, Volkswagen AG and Mr. Aksel have concluded a termination agreement, under which Mr. Aksel’s remuneration for fiscal year 2022 is paid pro rata. Variable remuneration components will be paid at the contractually agreed time; there will be no early calculation and payout. From September 1, 2022, an employment contract for membership of extended Group Management was in place between Mr. Aksel and Volkswagen AG with an end date of December 31, 2022; the remuneration-related provisions of the Board of Management service contract continued to apply for that period. Mr. Aksel took over responsibility for Procurement on the MAN Truck & Bus Executive Board effective January 1, 2023.

2.2.4 No clawback claims in fiscal year 2022

Volkswagen AG did not seek to claw back any variable remuneration components from individual Board of Management members in fiscal year 2022. The prerequisites for a clawback claim did not apply.

IV. Remuneration of former Board of Management members

In accordance with section 162(1) sentence 1 of the AktG, the remuneration granted and owed to former members of the Board of Management must also be reported.

1. Remuneration granted and owed in fiscal year 2022 (individualized)

Under section 162(5) sentence 2 of the AktG, the obligation to report individually on the remuneration granted and owed to former Board of Management members also extends to remuneration granted and owed in the ten years after their most recent term of office on the Board of Management or Supervisory Board at Volkswagen AG.

The following tables show the remuneration granted and owed in fiscal year 2022 to the individual former members of the Board of Management who left after fiscal year 2012. As with the current Board of Management members, the annual bonus paid at the beginning of 2023 to former Board of Management members for the 2022 fiscal year is counted as remuneration granted in fiscal year 2022.

2. Total remuneration granted to former Board of Management members

Section 162(5) sentence 2 of the AktG does not require the Company to report individually on the remuneration granted and owed in 2022 to former members of the Board of Management whose most recent term of office on the Board of Management or Supervisory Board at Volkswagen AG came to an end before the beginning of 2013 and who were then granted and owed remuneration for more than ten years after leaving Volkswagen AG. A total of €9.2 million was granted and owed to such former Board of Management members and their surviving dependents in fiscal year 2022. Obligations for pensions for this group of persons measured in accordance with IAS 19 amounted to €91.6 million.