The supervisory board of Volkswagen (VOWG_p.DE) has agreed to connect managers’ incentives to the firm’s absolute net cash flow beginning in 2024. According to Volkswagen’s chief financial officer, this decision came on Thursday as the automaker tried to link strategic objectives to financial targets more closely.
According to a post on LinkedIn by the Chief Financial Officer, Arno Antlitz, the net cash flow objective has replaced one of the earlier metrics that connected bonuses to the operational profit of Volkswagen and its Chinese joint ventures.
The automobile manufacturer also intended to evaluate the performance of the management boards of each of its brands regarding the net cash flow targets and then proceed to evaluate the performance of the whole management team.
“All leaders should have skin in the game,” he said also.
Volkswagen, a worldwide automotive firm, conducts frequent evaluations and adjustments to its executive salary and bonus structures. These adjustments are based on the company’s performance, financial goals, and strategic objectives. These performance-based incentives can include various financial metrics, including sales objectives, profit margins, cash flow goals, and other key performance indicators (KPIs).
At the capital markets day that the automobile manufacturer had in June, the company announced that it intended to change management compensation structures. At that time, the company stated that each brand would be assigned a specific objective for operational results, returns, net cash flow, cash conversion rate, and investment ratio.
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