Volkswagen secures $21.7M in executive clawbacks for Dieselgate roles

Former Chairman of the Board (CEO) Martin Winterkorn agreed to return €11.2 million (U.S. $13.6 million), while former Audi CEO Rupert Stadler will pay back €4.1 million (U.S. $5 million). Volkswagen had announced in March it would seek damages from the two after an internal investigation determined each man breached duty of care under stock corporation law as part of Dieselgate.

Volkswagen additionally received clawback agreements from former Audi Board Member Stefan Knirsch (€1 million, or U.S. $1.2 million) and former Porsche Board Member Wolfgang Hatz (€1.5 million, or U.S. $1.8 million) after each subsidiary reviewed the findings of the investigation, which included an extensive review of liability claims by law firm Gleiss Lutz.

Former Audi Board Member Ulrich Hackenberg was “not prepared to reach an agreement” and could face legal action for his part.

The Volkswagen supervisory board’s probe, started in October 2015 and self-described as “the most comprehensive and complex investigation carried out in a company in German economic history,” involved a screening of approximately 1.6 million relevant files and 1,550 interviews.

A public statement from Winterkorn in September 2015 expressed shock toward the German auto giant’s decade-long scheme to install defeat device software into 16 Volkswagen, Audi, and Porsche diesel models between model years 2009-2016. The undisclosed software was designed to cheat U.S. emissions standards. In testing mode, the tampered vehicles’ software produced compliant results; outside a testing environment, the software caused the emission control system to underperform, resulting in increased pollution up to 40 times above permitted levels, U.S. officials said.

The scandal came to a head in summer 2015, when the U.S. Environmental Protection Agency (EPA) threatened not to approve certificates of conformity for Volkswagen’s 2016 vehicles unless the company confessed to wrongdoing. “Only then did VW admit it had designed and installed a defeat device in these vehicles,” the EPA’s notice of violation stated.

Winterkorn’s statement of resignation came one week later. “I am doing this in the interests of the company even though I am not aware of any wrong doing [sic] on my part,” he included.

Volkswagen’s supervisory board determined Winterkorn had knowledge of the cheating scheme from July 27, 2015, onward and that the former CEO failed to clarify the facts behind the defeat device software and ensure U.S. authorities’ questions were answered “truthfully, completely, and honestly.” Volkswagen had been engaged in back-and-forth discussions with the California Air Resources Board, in coordination with the EPA, for 16 months prior to coming clean. During that time, the automaker continually dodged the regulators’ technical questions to obstruct them from the truth.

Although Winterkorn has maintained his ignorance, the former CEO was indicted by a federal grand jury in the Eastern District of Michigan for conspiracy and wire fraud connected to the emissions cheating scandal in May 2018. Winterkorn remains a fugitive of justice in the United States today.

As for Stadler, Volkswagen’s supervisory board concluded the former Audi CEO breached his duties of care from Sept. 21, 2016, onward by failing to investigate internally whether Audi engines used in EU vehicles of Volkswagen, Audi, and Porsche contained illegal software. Overall, the number of vehicles sold worldwide with illicit software installed reached roughly 11 million.