Board of Management
Volkswagen AG and the Volkswagen Group are managed by Volkswagen AG’s Board of Management in accordance with the Volkswagen AG Articles of Association and the rules of procedure for Volkswagen AG’s Board of Management issued by the Supervisory Board.
Volkswagen’s strategic management is largely conducted at Group level by various committees. These committees, which are composed of representatives both of the relevant central departments and the corresponding functions in the Company’s business areas, cover the following basic functions, among other things: product, investment, liquidity and foreign currency, and management issues.
Each brand in the Volkswagen Group is managed by a board of management, which ensures its independent development and its business operations. The Group targets and requirements laid down by the Board of Management of Volkswagen AG must be complied with to the extent permitted by law. This allows Group-wide interests to be pursued while at the same time safeguarding and reinforcing each brand’s specific characteristics. Matters that are of importance to the Group as a whole are submitted to the Group Board of Management in order – to the extent permitted by law – to reach agreement between the parties involved. The rights and obligations of the statutory bodies of the relevant brand companies remain unaffected.
The companies of the Volkswagen Group are managed separately by their respective managements. In addition to the interests of their own companies, each individual company management takes into account the interests of the Group and of the individual brands in accordance with the framework laid down by law.
2015 was a very eventful year for the Volkswagen Group. The events surrounding the emissions issue and changes in the composition of the Supervisory Board and the Board of Management meant that 2015 was also an unprecedented year in terms of the work of the Supervisory Board. The Supervisory Board of Volkswagen AG therefore addressed the Company’s position and development regularly and in greater breadth and depth than ever before. The Supervisory Board supported and supervised the Board of Management in its running of the business and advised it on issues relating to the management of the Company in accordance with our duties under the law, the Articles of Association and the rules of procedure. The Supervisory Board also observed the relevant recommendations and suggestions of the German Corporate Governance Code at all times. The Supervisory Board was directly involved in all decisions of fundamental importance to the Group. It also discussed strategic considerations with the Board of Management at regular intervals.
The Board of Management regularly, promptly and comprehensively informed the Supervisory Board in writing or orally on the development of the business and the Company’s planning and position, including the risk situation and risk management. In addition, the Board of Management reported to the Supervisory Board on an ongoing basis on compliance-related topics and other topical issues. In all cases the Supervisory Board received the documents relevant to the decisions in good time for its meetings. It also received a detailed monthly report from the Board of Management on the current business position and the forecast for the current year. Any variances in performance that occurred as against the plans and targets previously drawn up were explained by the Board of Management in detail, either orally or in writing. The Supervisory Board analyzed the reasons for the variances together with the Board of Management so as to enable countermeasures to be derived. In addition, the Board of Management presented regular reports on current developments in connection with the emissions issue at the meetings of the Special Committee on Diesel Engines.
The Chairman and the Deputy Chairman of the Supervisory Board consulted with the Chairman of the Board of Management at regular intervals between meetings to discuss important current issues such as the Volkswagen Group’s strategy and planning, the development of the business, the Group’s risk situation and risk management including compliance issues, as well as developments in the diesel and CO2 issues from September 2015 onwards.
The Supervisory Board held a total of eight meetings in fiscal year 2015. The average attendance ratio was 95.0%; with the exception of Mr. Akbar Al Baker, all of the members of the Supervisory Board attended over half of the meetings of the Supervisory Board and the committees of which they are members. In addition, resolutions on urgent matters were adopted in writing or using electronic communications media.
Supervisory Board Committees
The Supervisory Board has established five committees in order to perform the duties entrusted to it: the Executive Committee, the Nomination Committee, the Mediation Committee in accordance with section 27(3) of the Mitbestimmungsgesetz (MitbestG – German Codetermination Act), the Audit Committee and, since October 2015, the Special Committee on Diesel Engines. The Executive Committee and the Special Committee on Diesel Engines each consist of three shareholder representatives and three employee representatives. The members of the Nomination Committee are the shareholder representatives on the Executive Committee. The remaining two committees are each composed of two shareholder representatives and two employee representatives. The members of these committees as of December 31, 2015 are given on page 84 of the 2015 Annual Report.
The Executive Committee met twelve times during the fiscal year 2015. As well as discussing the composition of the Board of Management, these meetings primarily served to prepare in detail the resolutions by the Supervisory Board and to deal with contractual issues concerning the Board of Management other than remuneration. In addition, the Executive Committee addressed the events relating to the emissions issue in detail as from September 2015.
The Nomination Committee is responsible for proposing suitable candidates for the Supervisory Board to recommend for election to the Annual General Meeting. The Committee met three times in the fiscal year 2015.
The Mediation Committee did not have to be convened in 2015.
The Audit Committee held six meetings in fiscal year 2015. It focused primarily on the consolidated financial statements, risk management (including the internal control system), and the work performed by the Company’s compliance organization. In addition, the Audit Committee addressed the Group’s quarterly reports and the half-yearly financial report as well as current financial reporting issues and their examination by the auditors.
The Special Committee on Diesel Engines is responsible for coordinating all activities relating to the emissions issue. In particular, the Special Committee is tasked with reviewing the progress being made with the internal investigations. It also receives regular reports from the Board of Management about the latest developments. Finally, it is entrusted with examining any consequences of the findings. The Special Committee on Diesel Engines met on six occasions in fiscal year 2015 following its establishment October 7, 2015.
Furthermore, as a rule the shareholder and employee representatives met for separate preliminary discussions before each of the Supervisory Board meetings.
Conflicts of Interest
At its meeting on November 19, 2015, the Executive Committee of the Supervisory Board addressed major shareholder business relationships. In this context, the Executive Committee granted approvals to transactions with the State of Lower Saxony. Executive Committee member Mr. Stephan Weil is Minister-President of the State of Lower Saxony and took part in the votes. The Executive Committee members were guided exclusively by the interests of the Company when voting. No material conflicts of interest were discernible in this respect. All approvals were granted unanimously. No other discernible conflicts of interest were reported or arose in the fiscal year 2015.