VW puts limits on executive bonuses Workers assemble a Volkswagen car in Wolfsburg Volkswagen sought to head off a debate about boardroom pay by limiting bonuses for its top executives - even as its full-year net profit soared to €22bn following its takeover of Porsche. At a time when European carmakers such as Fiat, PSA Peugeot Citroën and Opel/Vauxhall are closing plants and slashing jobs, VW's financial strength has left analysts clutching for superlatives. But the company decided to cut the pay packet of ifs chief executive Martin Winterkorn after it triggered a public outcry in Germany last year when it paid him €17.5m for his efforts 2011. As the public debate on executive pay continues, the supervisory board voted on Friday to limit bonuses for management board members, and as a result Mr Winterkorn's total 2012 pay packet will fall to €14.5m. This was not a reaction to poor performance: VW's total vehicle sales jumped 12 per cent to 9.3m last year, thanks to its broad stable of brands, large geographic footprint and powerful financing arm. Full-year operating profit rose 2 per cent to €11.5bn as VW raised investments in a modular platform system to deliver long-term cost savings in production. About €12.3bn in accounting effects linked to VW's takeover of sports car maker Porsche lifted the group's pre-tax profit 35 per cent to €25.5bn and net profits attributable to shareholders jumped 41 per cent to €21.7bn. Porsche joined brands such as Audi, Skoda, Bentley, MAN and Ducati under the VW umbrella. VW retains €10.6bn in net cash. However, VW still faces its share of difficulties in a shrinking European car market and sales of its eponymous brand fell 12 per cent in the region in January compared to the prior year. Mr Winterkorn said in view of Europe's troubles, the company would aim to reach a similar level of operating profit in 2013 and revenues would exceed the €192.7bn achieved in 2012. VW's shares tumbled 6 per cent on Friday because investors were disappointed that it did not issue a more optimistic outlook. But its results provided further evidence that Europe's car industry is dividing into two camps: the successful German premium carmakers and lossmaking mass-market manufacturers. "German carmakers benefit most from low interest rates as financing of cars becomes much cheaper," Daniel Schwarz at Commerzbank told clients in a recent note. VW has faced criticism, which it rejects, that it has contributed to a price war in Europe's car market and its rapid expansion has triggered hostile headlines outside Germany. Mr Winterkorn told Der Spiegel earlier this month that he was concerned about such reactions. We don't want to send anyone to the wall. But we also shouldn't be ashamed that our vehicles have been successful," he said. German media speculated that if VW had not changed its pay rules Mr Winterkorn would have received more than €20m in pay and bonuses for 2012. Mr Winterkorn has acknowledged that such a high payout would not have gone down well with the German public. A German investment banker told the FT: "[VW] is acutely sensitive about these things. They have absolutely no interest in celebrating themselves. The board recommended to increase the dividend by €0.50 to €3.50 or €3.56 for preference shares. VW is set to publish a more comprehensive set of 2012 figures on March 14.