Volkswagen : Remuneration Report 2019

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Remuneration Report

This chapter describes the main elements of the remuneration system for the Board of

Management. In addition, the Remuneration Report details the individualized remuneration of the Board of Management and the Supervisory Board of Volkswagen AG, broken down into components, as well as individualized pension provision disclosures for the members of the Board of Management.

PRI N CI PLE S OF B OARD OF M ANAG EMEN T RE MU N E RATIO N

Matters involving the remuneration system and the total remuneration of each individual member of the Volkswagen AG Board of Management are decided on by the Supervisory Board on the basis of the Executive Committee's recom- mendations. The remuneration system implements the requirements of the Aktiengesetz (AktG - German Stock Corporation Act) and the recommendations of the German Corporate Governance Code (the Code) in the version dated February 7, 2017. In particular, the remuneration structure is focused on ensuring sustainable business development in accordance with the Gesetz zur Angemessenheit der Vorstandsvergütung (VorstAG - German Act on the Appropriateness of Executive Board Remuneration) and section 87(1) of the AktG.

At the beginning of 2017, the Supervisory Board of Volks- wagen AG resolved to adjust the remuneration system of the Board of Management with effect from January 1, 2017. The system for remuneration of the Board of Management was approved by the Annual General Meeting on May 10, 2017 with 80.96% of the votes cast. The adjustment, in which the Supervisory Board was assisted by renowned, independent external remuneration and legal consultants, resulted in an alignment with the Group strategy.

The level of the Board of Management remuneration should be appropriate and attractive in the context of the Com- pany'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 Company, as well as how customary the remuneration is when measured against the peer group and the remuneration structure that applies to other areas of Volkswagen. In this context, comparative studies on remuneration are conducted on a regular basis.

COMPO N E NT S O F BOAR D OF M A NAGEM EN T RE MU N ERATI ON

In this section, we provide an overview of the Board of Man- agement's remuneration system before going into the components of the remuneration for the reporting period.

Overview of the remuneration system

The remuneration system of the Board of Management comprises non-performance-related and performance-related components. The performance-related remuneration consists of an annual bonus with a one-year assessment period and a long-term incentive (LTI) in the form of a performance share plan with a forward-lookingthree-year term. The performance share plan is linked to business development in the next three years and is thus based on a multiyear, forward- looking assessment that reflects both positive and negative developments. The non-performance-related component creates an incentive for individual members of the Board of Management to perform their duties in the best interests of the Company and to fulfill their obligation to act with proper business prudence without needing to focus on merely short- term performance targets. The performance-related compo- nents, dependent among other criteria on the financial performance of the Company, serve to ensure the long-term impact of behavioral incentives.

If 100% of the targets agreed with each of the members of the Board of Management are achieved, the annual target remuneration for each member will amount to a total of €4,500,000 (corresponding to a fixed remuneration of €1,350,000, a target amount from the annual bonus of €1,350,000 and a target amount from the performance share plan of €1,800,000). The annual target remuneration for the

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Chairman of the Board of Management amounts to a total of €9,000,000 (fixed remuneration of €2,125,000, a target amount from the annual bonus of €3,045,000, and a target amount from the performance share plan of €3,830,000).

Annual minimum remuneration of €3.5 million (sum of fixed remuneration, annual bonus, LTI and any special pay- ments) was contractually agreed with Mr. Sommer.

Non-performance-related remuneration

The non-performance-related remuneration comprises fixed remuneration and fringe benefits. Since 2018, separate remuneration is no longer provided for appointments assumed at Group companies, but is covered by the fixed remuneration. The fringe benefits result from noncash benefits and include in particular the use of operating assets such as company cars and the payment of insurance premiums. Taxes due on these noncash benefits are mainly borne by Volkswagen AG.

The fixed level of remuneration is reviewed regularly and adjusted if necessary.

Performance-related remuneration

The performance-related/variable remuneration consists of an annual performance-related bonus with a one-year assessment period and a long-term incentive (LTI) in the form of a performance share plan with a forward-lookingthree-year term (long-term incentive components) and phantom preferred shares. The components of performance-related/

variable remuneration reflect both positive and negative developments.

The Supervisory Board may cap the performance-related/ variable remuneration components in the event of extraordinary developments.

Annual bonus

The annual bonus is based upon the result for the respective fiscal year. Operating profit achieved by the Volkswagen Group plus the proportionate operating profit of the Chinese joint ventures form half of the basis for the annual bonus, with operating return on sales achieved by the Volkswagen Group making up the second half. Each of the two components of the annual bonus are only payable if certain thresholds are reached or exceeded.

The calculated payment amount may be individually reduced by up to 20% (multiplier of 0.8) or increased by up to 20% (multiplier of 1.2) by the Supervisory Board, taking into account the degree of achievement of individual targets agreed between the Supervisory Board and the respective member of the Board of Management, as well as the success of the full Board of Management in transforming the Volkswagen Group by transferring employees to new areas of activity.

The payment amount for the annual bonus is capped at 180% of the target amount for the annual bonus. The cap arises from 150% of the maximum financial target achievement and a performance factor of a maximum of 1.2.

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CALCULATION OF THE PAYMENT AMOUNT FOR THE ANNUAL BONUS

						×									=
			TARGET				TARGET ACHIEVEMENT					ANNUAL BONUS
								Company bonus			×		Performance factor
								Operational KPIs					Multiplier						Payment amount
							(0 - 150% target achievement)				(0.8 - 1.2)
50 PERCENT COMPONENT 1								50 PERCENT COMPONENT 2
Target achievement in percent								Target achievement in percent
150											150
100											100
50											50
0
5	10	15	20	25	30	35	0	1	2	3		4	5	6	7	8	9	10
					Operating result including Chinese joint								Operating return on sales in percent
					ventures (proportionate) in € billion

COMPO N E NT 1: OPERAT I NG RE SU LT I NCLU D I NG
CH I N E SE J OI NT V ENTU RE S (PROP ORT IO NATE )					COMPO N E NT 2: OPERAT I NG RETU RN O N SAL ES
€ billion	2018	2019		%			2018	2019
Maximum threshold			25.0		25.0	Maximum threshold			8.0		8.0
100% level of target			17.0		17.0	100% level of target	6.0	6.0
Minimum threshold			9.0		9.0	Minimum threshold	4.0	4.0
Actual			18.5		21.4	Actual	5.9	6.7
Target achievement (in %)			110		127	Target achievement (in %)	98	118

Group Management Report

Performance share plan - long-term incentive (LTI)

The LTI is granted to the Board of Management annually in the form of a performance share plan. Each performance period of the performance share plan has a term of three years. At the time the LTI is granted, the annual target amount under the LTI is converted on the basis of the initial reference price of Volkswagen's preferred shares into performance shares of Volkswagen AG, which are allocated to the respective member of the Board of Management purely for calculation purposes. The conversion is performed based on the unweighted average of the closing prices of Volkswagen's preferred shares for the last 30 trading days preceding January 1 of a given fiscal year. At the end of each year, the number of performance shares is determined definitively for one-third of the three-year performance period based on the degree of target achievement for the annual earnings per Volkswagen preferred share (EPS - earnings per share per preferred share in €). A prerequisite for this is that a threshold is reached.

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PERFORM ANCE P ERIOD 2017 - 2019

€	2017		2018		2019
Maximum threshold			30.0	30.0	30.0
100% level of target			20.0	20.0	20.0
Minimum threshold			10.0	10.0	10.0
Actual	22.69	23.63	26.66
Target achievement (in %)			113	118	133
PERFORM ANCE P ERIOD 2018 - 2020
€				2018				2019
Maximum threshold				30.0					30.0
100% level of target				20.0					20.0
Minimum threshold				10.0					10.0
Actual				23.63					26.66
Target achievement (in %)				118					133
PERFORM ANCE P ERIOD 2019 - 2021
€									2019
Maximum threshold									30.0
100% level of target									20.0
Minimum threshold									10.0
Actual									26.66
Target achievement (in %)									133

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After the end of the three-year term of the performance share	If the employment contract of a member of the Board of
plan, a cash settlement takes place. The payment amount	Management concludes prior to the end of the performance
corresponds to the final number of determined performance	period due to extraordinary termination based on good
shares, multiplied by the closing reference price at the end of	cause, or if the member of the Board of Management starts
the three-year period plus a dividend equivalent for the	working for a competitor (also referred to as "bad-leaver
relevant term. The closing reference price is the unweighted	cases"), the unpaid performance shares will expire. For mem-
average of the closing prices for Volkswagen's preferred	bers of the Board of Management who held their seat as of
shares for the 30 trading days preceding the last day of the	December 31, 2016, this rule only applies in the event of a
three-year performance period. The dividend equivalent	reappointment or new appointment.
corresponds to the dividends distributed during the holding	In connection with the appointment of the Chairman of
period on a genuine Volkswagen preferred share.			the Board of Management, the employment contract of
										Mr. Diess was terminated by mutual agreement in 2018 and a
										new employment contract was entered into, whereby the
										expiry rule described above applies from the 2018 -2020
		PERFORMANCE PERIOD			performance period onwards.
		2017-2019	2018-2020	2019-2021	Ms. Werner was appointed as a member of the Board of
										Management in 2017. Mr. Blume, Mr. Kilian and Mr. Sommer
Initial reference price		127.84			169.42			147.08	were newly appointed to the Board of Management in 2018,
										followed by Mr. Schot in 2019.
Closing reference price		177.44		- 1	- 1
Dividend equivalent										In the introductory phase of the performance share plan
2017		2.06		-	-	(2017-2018), the members of the Board of Management who
										were Board members as of December 31, 2016 will generally
2018		3.96		3.96			-
										receive advances of 80% of their target amount. Mr. Blume
2019		4.86		4.86			4.86
										will receive corresponding advances for the performance
1 Determined at the end of the performance period.
					periods 2018-2020 (proportionate) and 2019-2021. The two
										advances will each be paid after the first year of the per-
The payment amount under the performance share plan is	formance period. Final settlement is based on actual achieve-
limited to 200% of the target amount. The payment amount	ment of targets at the end of the relevant three-year perfor-
is reduced by 20% if the average ratio of capex to sales reve-	mance period.
nue or the R&D ratio in the Automotive Division of the last
three years is smaller than 5%.

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CALCULATION OF THE PAYMENT AMOUNT FROM THE PERFORMANCE SHARE PLAN

TARGET				PERFORMANCE MEASUREMENT						PRICE PERFORMANCE			LTI
÷																			AND DIVIDENDS
	Provisional		Final number determined for 1/3		Final			Closing reference price
Initial								Payment
performance shares		of provisional performance shares		performance shares ×		plus dividend	=
reference price					amount
(number)	multiplied by annual target achievement EPS		(number)			over term
							per preferred share
				⅓	⅓	⅓
				×		×			×
				Target achievement EPS per preferred share
			Fiscal year 1	Fiscal year 2	Fiscal year 3
I N F ORM AT IO N O N TH E PE RF ORM ANCE SHA RE S
							PERFORMANCE PERIOD		PERFORMANCE PERIOD			PERFORMANCE PERIOD
							2017 - 2019					2018 - 2020			2019 - 2021
							Number of							Number of					Number of
							performance							performance					performance
€						shares allocated			Fair value	shares allocated	Fair value		shares allocated				Fair value
				at the grant date		at the grant date	at the grant date	at the grant date		at the grant date				at the grant date
Herbert Diess						14,080			2,048,640			19,212		2,840,468	26,040			3,350,046
Oliver Blume (since April 13, 2018)				-			-		7,614		1,349,810	12,238			1,574,419
Jochem Heizmann (until January 10, 2019)				14,080			2,031,040			10,624		1,799,918	335			43,098
Gunnar Kilian (since April 13, 2018)				-			-		7,614		1,349,810	12,238			1,574,419
Andreas Renschler						14,080			1,891,648			10,624		1,799,918	12,238			1,574,419
Abraham Schot (since January 1, 2019)				-			-			-			-	12,238			1,574,419
Stefan Sommer (since September 1, 2018)				-			-		3,541		488,446	12,238			1,574,419
Hiltrud Dorothea Werner				12,907			1,856,672			10,624		1,799,918	12,238			1,574,419
Frank Witter						14,080			2,025,408			10,624		1,799,918	12,238			1,574,419
Total						69,227			9,853,408			80,477			13,228,206		112,041			14,414,075
														Comprehensive									Comprehensive
														income 2019									income 2018
														arising from									arising from
€						Provision as of		Intrinsic value as of		performance	Provision as of		Intrinsic value as of				performance
					Dec. 31, 2019			Dec. 31, 2019		shares	Dec. 31, 2018		Dec. 31, 20181				shares
Herbert Diess						3,504,374			3,687,200		3,490,713		2,617,527	1,616,319			1,547,771
Oliver Blume (since April 13, 2018)				984,260			-		1,614,937		401,323		-			401,323
Jochem Heizmann (until January 10, 2019)				2,934,421			1,767,329		951,793			3,422,628	2,362,898			759,638
Gunnar Kilian (since April 13, 2018)				2,016,260			-		1,614,937		401,323		-			401,323
Andreas Renschler						5,572,774			3,879,394		1,713,961		5,298,813	2,362,898			1,991,565
Abraham Schot (since January 1, 2019)				3,925,694			-		3,925,694				-		-				-
Stefan Sommer (since September 1, 2018)				1,415,440			-		1,317,674		97,766		-			97,766
Hiltrud Dorothea Werner				5,019,403			2,782,969		2,852,956		2,166,448		-			1,542,922
Frank Witter						6,981,087			3,879,394		2,054,256		6,366,831	2,362,898			2,678,125
Total						32,353,713			15,996,286		19,536,920			20,772,660	8,705,012			9,420,432

1 Adjusted

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The number of performance shares equals the provisional performance shares allocated at the grant date of the performance share plan. The fair value as at the grant date was determined using a recognized valuation technique.

To determine their amount, the performance shares expected for future performance periods were taken into account in addition to the provisional performance shares determined or allocated for the performance periods 2017- 2019, 2018-2020 and 2019-2021. The amount therefore depends on the individual contract term and the relevant vesting arrangements for the performance shares. The intrinsic value was calculated in accordance with IFRS 2 and corresponds to the amount that the members of the Board of Management would have received if they had stepped down on December 31, 2019. Only the nonforfeitable (vested) performance shares at the reporting date are included in the calculation. The intrinsic value was calculated based on the unweighted average share price for the last 30 trading days (Xetra closing prices of Volkswagen's preferred shares) preceding December 31, 2019, taking the dividends paid per preferred share during the performance period into account. The net value of all amounts recognized in income for the performance shares in fiscal year 2019 is recorded in "Com- prehensive income 2019 arising from performance shares" according to the IFRSs.

Phantom preferred shares

The phantom preferred shares for the remuneration withheld for 2015 formed part of the Board of Management remuneration until they were paid out in 2019.

Total remuneration cap

In addition to the cap on the individual variable components of the remuneration for the members of the Board of Man- agement, the annual benefits received according to the Code, consisting of fixed remuneration and the variable remuneration components (i.e. annual bonus and performance share plan) for one fiscal year may not exceed an amount of €10,000,000 for the Chairman of the Board of Management and €5,500,000 for each member of the Board of Manage- ment. If the total remuneration cap is exceeded, the variable components will be reduced proportionately.

Regular review and adjustment

The Supervisory Board regularly reviews and, if necessary, adjusts the level of the total remuneration cap and the individual targets.

Other agreements

Members of the Board of Management with contracts entered into on or after January 1, 2010 are entitled to payment of their normal remuneration for six to twelve months in the event of illness. Contracts entered into before that date grant remuneration for six months. In the event of disability, they are entitled to the retirement pension.

Surviving dependents receive a widow's pension of 66 ⅔% and orphans' benefits of 20% of the former member of the Board of Management's pension. Contracts with members of the Board of Management whose first term of office began after April 1, 2015, provide for an entitlement - in line with the principles of the works agreement that also applies to employees of Volkswagen AG covered by collective agreements - to a widow's pension of 60%, an orphan's benefit of 10% for half-orphans and an orphan's benefit of 20% for full orphans, based in each case on the former member of the Board of Management's pension.

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B EN EF IT S BASE D ON PHAN TOM P REFE RRE D S HAR ES FROM T H E REMU N ERAT ION WIT H H ELD FOR F ISCA L YEA R 2 0 15

At its meeting on April 22, 2016, Volkswagen AG's Supervisory Board accepted the offer made by the members of the Board of Management to withhold 30% of the variable remuneration for fiscal year 2015 for the Board of Management members active on the date of the resolution and to make its disposal subject to future share price performance.

This was effected by first converting the amount withheld based on the average share price for the 30 trading days preceding April 22, 2016 (initial reference price) into phantom preferred shares of Volkswagen AG with a three-year holding period and, at the same time, defining a target reference price corresponding to 125% of the initial reference price. During the holding period, the holders of phantom preferred shares were entitled to dividend equivalents in the amount of the dividends paid on real preferred shares.

The shares were generally reconverted and paid out when the three-year holding period had expired or - in the event that members retired from office early - at the time they did so.

To determine the payment amount, the average share price for the 30 trading days preceding the last day of the

holding period, i.e. April 22, 2019, or the date on which members left the company, was calculated (closing reference price). The difference between the target reference price and the initial reference price was deducted from the closing reference price, and the dividends distributed on one real Volks- wagen preferred share during the holding period (dividend equivalent) were added to the closing reference price. The figure thus calculated was multiplied by the number of phantom preferred shares so as to calculate the amount to be paid to each Board of Management member. This ensured that

• excluding the dividend equivalents accrued - the amount withheld was only paid out in full if the initial reference price of the preferred share increased by at least 25%.
  In January of fiscal year 2019, Mr. Heizmann retired from the Board of Management as per contract.
  The number of phantom preferred shares granted on April 22, 2016 to members of the Board of Management who were in office at the time did not change in fiscal year 2019 (as of settlement in April 2019). In the year under review, the change in fair value of the phantom shares led to the recog- nition of an expense of €0.1 million (previous year: total income of €0.6 million).

I N F ORM AT IO N O N TH E P HA N TOM P RE FE RRE D S HA RE S H EL D I N 2 0 1 9

												Comprehensive	Comprehensive
												income 2019	income 2018
												arising from	arising from
		Number of		Provision	Provision	Intrinsic value	Intrinsic value	phantom	phantom
€	phantom shares		Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	preferred shares	preferred shares
Herbert Diess		4,317		-		512,740	-	540,704		27,705	- 83,688
Jochem Heizmann
(until January 10, 2019)		8,633		-	1,025,361	-	1,081,283	43,232	- 167,356
Andreas Renschler		7,914		-	939,964	-	991,229		50,791	- 153,418
Frank Witter		1,990		-	236,357	-	249,248		12,771	- 38,577
Total		22,854		-	2,714,422	-	2,862,464		134,499		- 443,040

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REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M ANAG EMEN T I N ACCO RDAN C E WI TH T H E G ER M AN COMME RCI AL COD E

				2019					2018
		Non-performance-		Performance-	Long-term
		related		related	incentive	Total	Total
€		component		component	component	remuneration	remuneration
Herbert Diess		2,212,694		4,288,002			3,350,046	9,850,742	7,877,832
Oliver Blume (since April 13, 2018)		1,418,936		1,901,085			1,574,419	4,894,440	3,515,815
Jochem Heizmann (until January 10, 2019)		71,391		52,085			43,098	166,574		5,013,141
Gunnar Kilian (since April 13, 2018)		1,462,701		1,901,085			1,574,419	4,938,205	3,529,523
Andreas Renschler		1,609,755		1,901,085			1,574,419	5,085,259	5,004,370
Abraham Schot (since January 1, 2019)		1,810,079		1,901,085			1,574,419	5,285,583	-
Stefan Sommer (since September 1, 2018)		1,869,019		1,901,085			1,574,419	5,344,523	1,603,515
Hiltrud Dorothea Werner		1,465,159		1,901,085			1,574,419	4,940,663	4,930,160
Frank Witter		1,412,781		1,901,085			1,574,419	4,888,285	4,821,428
Members of the Board of Management who left in the
previous year		-		-			-	-	14,040,526
Total		13,332,515		17,647,682			14,414,075		45,394,271		50,336,310

REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF

M ANAGEME NT I N ACCORDA NCE WIT H T H E GE RM AN COR PORAT E GOVE RNAN CE CO DE

The amounts shown as benefits received in the Board of Management remuneration tables in accordance with the Code correspond, in principle, to the amounts paid out for the fiscal year in question.

In the introductory phase of the performance share plan (2017 to 2018), members of the Board of Management who were Board members as of December 31, 2016 generally received advances on the target amount, which in accordance

with the Code are reported in the tables as benefits received for the fiscal year in which the performance shares under the plan were allocated. Mr. Blume will receive corresponding advances for the performance period 2018-2020 (propor- tionate) and 2019-2021.

The amounts shown as "Benefits granted" in the Board of Management remuneration tables in accordance with the Code are based on 100% of the targets for the annual bonus and on the fair value at the grant date for the performance share plan.

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REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M ANAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE WIT H T H E GE RM AN COR PORAT E GOVE RNAN CE CO DE

							HERBERT DIESS
				Chairman of the Board of Management of Volkswagen AG,
				Chairman of the Brand Board of Management of Volkswagen Passenger Cars,
							Volume brand group,
							China
		Benefits received						Benefits granted
€
	2019	2018		2018			2019		2019 (minimum)	2019 (maximum)
Fixed remuneration		2,125,000		1,905,414		1,905,414		2,125,000	2,125,000	2,125,000
Fringe benefits		87,694	76,768		76,768		87,694	87,694	87,694
Total		2,212,694	1,982,182		1,982,182			2,212,694		2,212,694		2,212,694
One-yearperformance-related remuneration		4,288,002	3,055,182		2,564,750		3,045,000	-	5,481,000
Multiyear performance-related remuneration		540,445	2,603,867		2,840,468		3,350,046	-	7,660,000
LTI (performance share plan 2017-2019)		-	-		-	-	-	-
LTI (performance share plan 2018-2020)		-	2,603,867		2,840,468		-	-	-
LTI (performance share plan 2019-2021)		-	-		-	3,350,046	-	7,660,000
Phanton shares		540,445	-		-	-	-	-
Total1		7,041,141	7,641,230		7,387,400			8,607,740		2,212,694		15,353,694
Pension expense		1,354,053	850,620		850,620			1,354,053	1,354,053	1,354,053
Total remuneration		8,395,194	8,491,850		8,238,020			9,961,793		3,566,747		16,707,747

1 The fixed remuneration agreed with Mr. Diess for fiscal year 2018 is €1,905,414 (prorated for the term of office as a full member of the Board of Management up until April 12, 2018 and for the term of office as Chairman of the Board of Management starting April 13, 2018).

							OLIVER BLUME
				Chairman of the Board of Management of Dr. Ing. h.c. F. Porsche AG,
							Sport & Luxury brand group
							Joined: April 13, 2018
		Benefits received					Benefits granted
€
	2019	2018		2018		2019		2019 (minimum)	2019 (maximum)
Fixed remuneration		1,350,000		967,500		967,500		1,350,000	1,350,000	1,350,000
Fringe benefits		68,936	45,999		45,999	68,936	68,936	68,936
Total		1,418,936	1,013,499		1,013,499		1,418,936		1,418,936		1,418,936
One-yearperformance-related remuneration		1,901,085	1,152,506		967,500		1,500,0001		-	2,580,000
Multiyear performance-related remuneration		1,440,000	1,032,000		1,349,810	1,574,419	-	3,600,000
LTI (performance share plan 2018-2020)		-	1,032,000		1,349,810	-	-	-
LTI (performance share plan 2019-2021)		1,440,000	-		-	1,574,419	-	3,600,000
Total		4,760,021	3,198,005		3,330,809		4,493,355		1,418,936		7,598,936
Pension expense		808,544	588,354		588,354		808,544		808,544		808,544
Total remuneration		5,568,565	3,786,359		3,919,163		5,301,899		2,227,480		8,407,480

1 In 2019, Mr. Blume was granted a maximum performance-related bonus payment by Porsche AG in the amount of €150,000 which is not taken into consideration in the remuneration from Volkswagen AG.

80

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REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M ANAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE WIT H T H E GE RM A N COR PORAT E GOVE RNA N CE CO DE

JOCHEM HEIZMANN

China

Left: January 10, 2019

Benefits received

Benefits granted

€	2019	2018	2018
Fixed remuneration	36,986	1,350,000	1,350,000
Fringe benefits	34,405	255,076	255,076
Total	71,391	1,605,076	1,605,076

One-yearperformance-related remuneration		52,085	1,608,147		1,350,000
Multiyear performance-related remuneration		1,068,593	1,440,000		1,799,918
LTI (performance share plan 2017-2019)		-	-	-
LTI (performance share plan 2018-2020)		-	1,440,000	1,799,918
LTI (performance share plan 2019-2021)		-	-	-
Phantom shares		1,068,593	-	-
Total		1,192,069		4,653,223		4,754,994
Pension expense		-	-		-
Total remuneration		1,192,069		4,653,223		4,754,994

2019			2019 (minimum)	2019 (maximum)
36,986			36,986		36,986
34,405		34,405		34,405
71,391			71,391		71,391
36,986		-	66,575
43,098		-	98,630
-		-		-
-	-	-
43,098		-	98,630
-		-		-
151,475			71,391		236,597
-	-	-
151,475			71,391		236,597

							GUNNAR KILIAN
							Human Resources
							Joined: April 13, 2018
		Benefits received				Benefits granted
€		2019		2018			2018		2019			2019 (minimum)	2019 (maximum)
Fixed remuneration		1,350,000	967,500			967,500		1,350,000			1,350,000		1,350,000
Fringe benefits		112,701		59,707		59,707		112,701			112,701		112,701
Total		1,462,701		1,027,207			1,027,207		1,462,701			1,462,701		1,462,701
One-yearperformance-related remuneration		1,901,085	1,152,506			967,500		1,350,000	-	2,430,000
Multiyear performance-related remuneration		-	-			1,349,810		1,574,419	-	3,600,000
LTI (performance share plan 2018-2020)		-	-		1,349,810		-	-	-
LTI (performance share plan 2019-2021)		-	-		-		1,574,419		-	3,600,000
Total		3,363,786		2,179,713			3,344,517		4,387,120			1,462,701		7,492,701
Pension expense		886,559		703,228			703,228		886,559			886,559		886,559
Total remuneration	4,250,345		2,882,941			4,047,745		5,273,679		2,349,260		8,379,260

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81

REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M ANAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE WIT H T H E GE RM AN COR PORAT E GOVE RNAN CE CO DE

							ANDREAS RENSCHLER
				Chairman of the Board of Management of TRATON SE,
							Truck & Bus brand group
		Benefits received					Benefits granted
€	2019		2018		2018		2019		2019 (minimum)	2019 (maximum)
Fixed remuneration		1,350,000		1,350,000		1,350,000	1,350,000	1,350,000	1,350,000
Fringe benefits		259,755		246,305		246,305		259,755		259,755		259,755
Total		1,609,755		1,596,305		1,596,305		1,609,755		1,609,755		1,609,755
One-yearperformance-related remuneration		1,901,085	1,608,147		1,350,000	1,350,000	-	2,430,000
Multiyear performance-related remuneration		990,754		1,440,000		1,799,918	1,574,419	-	3,600,000
LTI (performance share plan 2017-2019)		-	-		-	-	-	-
LTI (performance share plan 2018-2020)		-	1,440,000		1,799,918	-	-	-
LTI (performance share plan 2019-2021)		-	-		-	1,574,419	-	3,600,000
Phanton shares		990,754		-			-	-	-	-
Total		4,501,594		4,644,452		4,746,223		4,534,174		1,609,755		7,639,755
Pension expense		5,025,570	5,249,526		5,249,526	5,025,570	5,025,570	5,025,570
Total remuneration		9,527,164		9,893,978		9,995,749		9,559,744		6,635,325		12,665,325

€

Fixed remuneration

Fringe benefits

Total

One-yearperformance-related remuneration

Multiyear performance-related remuneration

LTI (performance share plan 2019-2021)

Total

Pension expense

Total remuneration

ABRAHAM SCHOT

Chairman of the Board of Management of AUDI AG,

Premium brand group

Joined: January 1, 2019

	Benefits received						Benefits granted
	2019			2018			2018		2019		2019 (minimum)	2019 (maximum)
	1,350,000			-			-	1,350,000	1,350,000	1,350,000
	460,079			-			-	460,079		460,079		460,079
	1,810,079			-			-	1,810,079		1,810,079		1,810,079
	1,901,085			-			-	1,350,000	-	2,430,000
	-			-			-	1,574,419	-	3,600,000
	-			-			-	1,574,419	-	3,600,000
	3,711,164			-		-	4,734,498		1,810,079		7,840,079
	2,222,572			-			-	2,222,572	2,222,572	2,222,572
	5,933,736			-			-	6,957,070		4,032,651		10,062,651

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Group Management Report

REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M ANAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE WIT H T H E GE RM A N COR PORAT E GOVE RNA N CE CO DE

							STEFAN SOMMER
							Components & Procurement
							Joined: September 1, 2018
		Benefits received				Benefits granted
€		2019		2018			2018		2019			2019 (minimum)	2019 (maximum)
Fixed remuneration	1,350,000	450,000			450,000		1,350,000			1,350,000		1,350,000
Fringe benefits		519,019		129,020			129,020		519,019			519,019		519,019
Total		1,869,019		579,020			579,020		1,869,019			1,869,019		1,869,019
One-yearperformance-related remuneration	1,901,085	536,049			450,000		1,350,000	-	2,430,000
Multiyear performance-related remuneration		-	-			488,446		1,574,419	-	3,600,000
LTI (performance share plan 2018-2020)		-	-		488,446		-	-	-
LTI (performance share plan 2019-2021)		-	-		-		1,574,419		-	3,600,000
Total1		4,019,019		1,295,687			1,517,466		4,793,438			4,019,019		7,899,019
Pension expense		761,437		270,997			270,997		761,437			761,437		761,437
Total remuneration	4,780,456		1,566,684			1,788,463		5,554,875		4,780,456		8,660,456

1 Benefits received and the minimum amount for 2019 and benefits received for 2018 (prorated) include a top-up amount on the minimum remuneration of €3.5 million.

HILTRUD DOROTHEA WERNER

Integrity & Legal Affairs

Benefits received

Benefits granted

€	2019	2018	2018
Fixed remuneration	1,350,000	1,350,000	1,350,000
Fringe benefits	115,159	172,095	172,095
Total	1,465,159	1,522,095	1,522,095
One-yearperformance-related remuneration	1,901,085	1,608,147	1,350,000
Multiyear performance-related remuneration	-	-	1,799,918
LTI (performance share plan 2017-2019)	-	-	-
LTI (performance share plan 2018-2020)	-	-	1,799,918
LTI (performance share plan 2019-2021)	-	-	-
Total	3,366,244	3,130,242	4,672,013
Pension expense	956,364	953,404	953,404
Total remuneration	4,322,608	4,083,646	5,625,417

2019			2019 (minimum)	2019 (maximum)
1,350,000			1,350,000		1,350,000
115,159			115,159		115,159
1,465,159			1,465,159		1,465,159
1,350,000		-	2,430,000
1,574,419		-	3,600,000
-		-		-
-	-	-
1,574,419		-	3,600,000
4,389,578			1,465,159		7,495,159
956,364			956,364		956,364
5,345,942			2,421,523		8,451,523

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83

REMU N ERAT ION OF TH E MEMB E R S OF T H E B OAR D OF M ANAG EMEN T (B EN E FI TS REC EIVED A N D B E N E FIT S GRA NTE D) I N ACCORDA NCE WIT H T H E GE RM AN COR PORAT E GOVE RNAN CE CO DE

							FRANK WITTER
							Finance & IT
		Benefits received						Benefits granted
€	2019		2018		2018			2019		2019 (minimum)	2019 (maximum)
Fixed remuneration		1,350,000		1,350,000		1,350,000		1,350,000	1,350,000	1,350,000
Fringe benefits		62,781	63,363		63,363		62,781	62,781	62,781
Total		1,412,781		1,413,363		1,413,363			1,412,781		1,412,781		1,412,781
One-yearperformance-related remuneration		1,901,085	1,608,147		1,350,000		1,350,000	-	2,430,000
Multiyear performance-related remuneration		249,128		1,440,000		1,799,918		1,574,419	-	3,600,000
LTI (performance share plan 2017-2019)		-	-		-	-	-	-
LTI (performance share plan 2018-2020)		-	1,440,000		1,799,918		-	-	-
LTI (performance share plan 2019-2021)		-	-		-	1,574,419	-	3,600,000
Phanton shares		249,128		-			-	-	-	-
Total		3,562,994		4,461,510		4,563,281			4,337,200		1,412,781		7,442,781
Pension expense		886,120		849,556		849,556			886,120		886,120		886,120
Total remuneration		4,449,114		5,311,066		5,412,837			5,223,320		2,298,901		8,328,901

84 Remuneration Report

PO ST - EMP LOYME NT B EN EFI T S

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 63. As a departure from this principle, Mr. Renschler is able to start drawing his pension when he reaches the age of 62.

The retirement provision for members of the Board of Management with a pension commitment based on final remuneration is calculated as a percentage of the fixed remuneration, starting from 50%. For Mr. Heizmann and Mr. Renschler the individual percentages rise by two percentage points for every year of service. In specific cases, credit is given for previous employment periods and retirement pensions earned. In a departure from this rule, a retirement pension entitlement of 62% of the fixed level of remuneration was set for Mr. Renschler on his appointment. The Supervisory Board has capped the percentage at 70%. These benefits are not broken down any further into performance- related components and long-term incentive components. Mr. Renschler reached a retirement pension entitlement of 70% of his fixed level of remuneration at the end of 2019. The increase in the fixed remuneration as a consequence of the remuneration system in place from fiscal year 2017 is therefore not taken into account for Mr. Heizmann and Mr. Renschler because their final salary pension commitment is based on a previous pension scheme. Current pensions are index-linked in accordance with the index-linking of the highest collectively agreed salary insofar as the application of section 16 of the Gesetz zur Verbesserung der betrieblichen Altersversorgung (BetrAVG - German Company Pension Act) does not lead to a larger increase.

For the members of the Board of Management of Volks- wagen AG appointed before February 24, 2017 with a defined contribution pension scheme, a contribution rate of 50% of the fixed remuneration applies. For the members of the Board of Management of Volkswagen AG appointed after February 24, 2017 with a defined contribution pension scheme, a contribution rate of 40% of the fixed remuneration applies. The resulting amount will be credited to the pension account.

Ms. Werner, Mr. Blume, Mr. Diess, Mr. Kilian, Mr. Schot, Mr. Sommer and Mr. Witter received a defined contribution

Group Management Report

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 50% of the fixed level of remuneration for Ms. Werner, Mr. Diess and Mr. Witter and in the amount of 40% of the fixed level of remuneration for Mr. Blume, Mr. Kilian, Mr. Schott and Mr. Sommer 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 princi- ple, 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

• currently 63 at the earliest. Volkswagen AG has assumed responsibility for pension entitlements due to Mr. Witter from the time before his service with the Company, although these cannot be claimed before he reaches the age of 60.
  On December 31, 2019, the pension obligations for mem- bers of the Board of Management in accordance with IAS 19 amounted to €60.5 (55.8) million. €13.7 (11.9) million was added to the provision in the reporting period in accordance with IAS 19. Other benefits such as surviving dependents' pensions and the use of company cars are also factored into the measurement of pension provisions. The pension obli- gations measured in accordance with German GAAP amounted to €44.8 (45.9) million. Measured in accordance with German GAAP, €14.5 (9.5) million was added to the pro- vision in the reporting period.
  Retired members of the Board of Management and their surviving dependents received €32.7 (44.0) million, or €32.7 (44.0) million measured in accordance with German GAAP, in the past year. Obligations for pensions for this group of persons measured in accordance with IAS 19 amounted to €373.7 (324.0) million, or €300.5 (276.2) million measured in accordance with German GAAP.
  The following general rule applies to contracts for the first term of office of members of the Board of Management entered into after August 5, 2009: the retirement pension to be granted after a member of the Board of Management leaves the Company is payable when the member reaches the age of 63.

Group Management Report

EARLY T ERM I NAT ION B E N EF IT S

If the appointment to the Board of Management is terminated for cause through no fault of the Board of Management member, the claims under Board of Management contracts entered into since November 20, 2009 are limited to a maximum of two years' remuneration, in accordance with the recommendation in section 4.2.3(4) of the Code (severance payment cap).

No severance payment is made if the appointment to the Board of Management is terminated for good reason for which the Board of Management member is responsible.

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85

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.

Please refer to notes 43 and 46 to the consolidated financial statements and the notes to the annual financial statements of Volkswagen AG for more detailed individual disclosures relating to members of the Board of Management who left the Company in fiscal year 2019.

PEN SIO N S OF T H E MEMB ER S O F T H E BOA RD O F M ANAGEM EN T I N 2019 (P RIO R - YEA R FIGU R ES I N B RACKE TS)

				Present values as of
€	Pension expense	December 311
Herbert Diess		1,354,053		5,592,969
		(850,620)		(3,410,933)
Oliver Blume (since April 13, 2018)	808,544		1,743,034
		(588,354)		(588,354)
Jochem Heizmann (until January 10, 2019)	-	-
		-	(18,098,438)
Gunnar Kilian (since April 13, 2018)		886,559		2,102,717
		(703,228)		(703,228)
Andreas Renschler	5,025,570	29,609,167
		(5,249,526)		(20,109,236)
Abraham Schot (since January 1, 2019)	2,222,572	2,222,572
		-	-
Stefan Sommer (since September 1, 2018)		761,437		1,228,940
		(270,997)		(270,997)
Hiltrud Dorothea Werner	956,364		3,482,194
		(953,404)		(1,872,035)
Frank Witter	886,120		14,474,204
		(849,556)		(10,765,942)
		-	-
Members of the Board of Management who left in the previous year	(1,053,684)		-
Total	12,901,219		60,455,797
		(10,519,369)		(55,819,163)

1 The amount is reported in the total amount for defined benefit plans recognized in the balance sheet (see note 29 to the consolidated financial statements).

86 Remuneration Report

SU PERV IS ORY B OARD RE MU N ERAT ION

Following its regular review of Supervisory Board remu- neration, the Supervisory Board proposed a reorganization of the system of Supervisory Board remuneration to the 2017 Annual General Meeting, which was approved on May 10, 2017 with 99.98% of the votes cast. The remuneration of the members of the Supervisory Board of Volkswagen AG is comprised entirely of non-performance-related remuneration components. Remuneration for supervisory board work at subsidiaries continues in part to comprise a mix of non- performance-related and performance- related components.

The following applies to members of the Supervisory Board of Volkswagen AG with effect from January 1, 2017:

• Members of the Supervisory Board receive fixed remu- neration of €100,000 per fiscal year.
• The Chairman of the Supervisory Board receives fixed remuneration of €300,000, while the Deputy Chairman receives remuneration of €200,000.
• For their work in the Supervisory Board committees, the members of the Supervisory Board also receive additional fixed remuneration of €50,000 per committee per fiscal year provided the committee met at least once per year for the performance of its duties. Memberships of the Nomination and Mediation Committees established in accordance with section 27(3) of the Mitbestimmungs- gesetz (MitbestG - German Codetermination Act) are not taken into account.

Group Management Report

• Committee chairpersons receive double this amount, while deputy chairpersons receive one-and-a-half times the com- mittee remuneration listed previously.
• Membership of no more than two committees is taken into account, whereby the two functions with the highest remu- neration are counted if this maximum number is exceeded.
• Supervisory Board members who belonged to the Super- visory Board or one of its committees for only part of the fiscal year receive proportionate remuneration.
• Supervisory Board members receive an attendance fee of €1,000 for attending a meeting of the Supervisory Board or one of its committees; if several meetings are held on one day, the attendance fee is paid only once.
• The remuneration and attendance fees are each payable

after the end of the fiscal year.

In fiscal year 2019, the members of the Supervisory Board received €5,327,155 (4,538,986). Of this figure, €2,290,833 related to the work of the Supervisory Board and €944,444 related to the work in the committees.

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87

REMU N ERAT ION OF TH E MEMB E R S OF T H E SU PERVIS ORY B OAR D

		FIXED
		REMUNERA -	WORK IN THE
		TION		COMMITTEES		OTHER 1		TOTAL		TOTAL
€							2019		2018
Hans Dieter Pötsch		300,000	100,000		525,500		925,500		584,500
Jörg Hofmann2		200,000	75,000	14,000	289,000		294,000
Hussain Ali Al Abdulla		100,000	-	5,000	105,000		108,000
Hessa Sultan Al Jaber		100,000	-	7,000	107,000		111,000
Bernd Althusmann3		100,000	50,000	7,000	157,000		155,194
Birgit Dietze2 (until May 31, 2019)		41,667	20,833	5,000	67,500	167,000
Hans-Peter Fischer2		100,000	-	7,000	107,000		114,000
Marianne Heiß (since February 14, 2018)		100,000	50,000	100,500		250,500		198,300
Uwe Hück2 (until February 8, 2019)		10,278	-	4,596	14,874	184,500
Johan Järvklo2		100,000	-	7,000	107,000		114,000
Ulrike Jakob2		100,000	-	6,000	106,000		112,000
Louise Kiesling		100,000	-	7,000	107,000		111,000
Peter Mosch2		100,000	100,000		190,500		390,500		346,589
Bertina Murkovic2		100,000	50,000	7,000	157,000		164,000
Bernd Osterloh2		100,000	125,000		162,000		387,000		264,233
Hans Michel Piëch		100,000	-	189,000		289,000		272,000
Ferdinand Oliver Porsche		100,000	150,000		185,000		435,000		412,500
Wolfgang Porsche		100,000	150,000		183,500		433,500		422,500
Conny Schönhardt2 (since June 21, 2019)		52,778	23,611	5,000	81,389	-
Athanasios Stimoniaris2		100,000	-	382,040		482,040		230,225
Stephan Weil3		100,000	50,000	13,000	163,000		164,000
Werner Weresch2 (since February 21, 2019)		86,111	-	79,241	165,352		-
Members of the Supervisory Board who left in the previous year		9,444	-	-	-	9,444
Total		2,290,833	944,444		2,091,877		5,327,155		4,538,985

1. Attendance fees, membership of other Group bodies (non-performance-related: €790,810; performance-related: €779,967).
2. These employee representatives have stated that they will transfer their Supervisory Board remuneration to the Hans Böckler Foundation in accordance with the guidelines issued by the German Confederation of Trade Unions (DGB).
3. Under section 5(3) of the Niedersächsisches Ministergesetz (German Act Governing Ministers of the State of Lower Saxony), these members of the Supervisory Board are obliged to transfer their Supervisory Board remuneration to the State of Lower Saxony as soon as and in so far as it exceeds €6,200 per annum. Remuneration is defined for this purpose as Supervisory Board remuneration and attendance fees exceeding the amount of €200.