Corporate Governance Report (Part of the Management Report) Responsible, transparent and value-enhancing corporate governance

Corporate Governance Report (Part of the Management Report) Responsible, transparent and value-enhancing corporate governance

The future of the Volkswagen Group depends on our ability to continually increase the Company’s value. Strengthening the trust of our customers and investors is fundamental to this. Transparent and responsible corporate governance therefore takes the highest priority in our daily work. The Board of Management and the Supervisory Board of Volkswagen AG comply with the recommendations of the current German Corporate Governance Code as issued on May 15, 2012 with a few justified exceptions.

SUCCESSFUL CORPORATE GOVERNANCE BASED ON THE

been complied with, with the exception of article 4.2.3(4)

RECOMMEN DATIONS AN D SUGGESTIONS OF THE GERMAN

(severance payment cap). They further state that, as of the

declaration of February 27, 2012, all recommendations The German Corporate Governance Code contains recom- were fully complied with, with the exception of article mendations and suggestions for good corporate governance. 4.2.3(4) (severance payment cap), 5.1.2 (age limit for It was prepared by the responsible government com- members of the Board of Management) and 5.5.3 sentence 1 mission on the basis of the material statutory provisions (report to the Annual General Meeting about conflicts of and nationally and internationally recognized standards of interest that have arisen and how they are being handled). corporate governance. The government commission reviews

CORPORATE GOVERNANCE CODE

The reasons for these exceptions can be found in the the German Corporate Governance Code on an annual declarations of conformity, which are published on our basis and amends or updates it as necessary. The recommen- website, www.volkswagenag.com/ir, under the heading dations and suggestions of the Code underpin the work of “Corporate Governance”, menu item “Declarations”. the Board of Management and Supervisory Board of Volks-

The annual declaration of conformity with the German wagen AG, as responsible and transparent corporate gover- Corporate Governance Code as required by section 161 of nance helps us to strengthen the trust of our customers the Aktiengesetz (AktG – German Stock Corporation Act) and investors in our work. It also allows us to meet the was issued by the Board of Management and the Super- steadily increasing demand for information from national visory Board of Volkswagen AG on November 23, 2012. In and international stakeholders. These are fundamental this document, they declare that, since the last declaration conditions for continuously increasing our Company’s value.

of conformity was submitted on February 27, 2012, the recommendations in the version dated May 26, 2010

DECLARATIONS OF CON FORMITY (AS OF THE DATE OF THE

published on July 2, 2010 were complied with, with the

RELEVANT DECLARATION)

exception of article 4.2.3(4) (severance payment cap), On February 27, 2012 the Board of Management and the

5.1.2 (age limit for members of the Board of Management) Supervisory Board of Volkswagen AG issued a declaration and 5.5.3 sentence 1 (report to the Annual General Meeting of conformity with the German Corporate Governance Code. about conflicts of interest that have arisen and how they This became necessary due to changes in its application are being handled), up to the publication of the new since the previous declaration of conformity was submitted version dated May 15, 2012 published on June 15, 2012. on November 18, 2011. In this document, the Board of

From June 15, 2012 until the current declaration of Management and Supervisory Board declare that, since conformity was submitted on November 23, 2012, the the last declaration of conformity was submitted on Novem- recommendations of May 15, 2012 published on June 15, ber 18, 2011, the recommendations of the Government 2012 were complied with, with the following exceptions: Commission on the German Corporate Governance Code articles 4.2.3(4) (severance payment cap), 5.1.2 (age limit in the version dated May 26, 2010 published by the for members of the Board of Management), 5.3.2 sentence 3 German Federal Ministry of Justice on July 2, 2010 have (independence of the Chairman of the Audit Committee),

5.4.1(2) (specification of concrete objectives regarding the The two Boards furthermore declared that the recommen- composition of the Supervisory Board), 5.4.1(4 to 6) (dis- dations of the version dated May 15, 2012 published on closure regarding election recommendations), 5.4.6(2) June 15, 2012 were and will continue to be complied with, (performance-related remuneration of members of the with the exception of articles 5.1.2(2) sentence 3, and Supervisory Board) and 5.5.3 sentence 1 (report to the 5.4.1(2) sentence 1 (age limit for Board of Management and Annual General Meeting about conflicts of interest that Supervisory Board members), 5.3.2 sentence 3 (indepen- have arisen and how they are being handled).

dence of the Audit Committee Chairman), 5.3.3 (nomination In this document, the Board of Management and committee), 5.4.1 (4 to 6) (disclosure regarding election Supervisory Board also declare that, as of the declaration recommendations), 5.4.2 (no more than two former Board of November 23, 2012, the recommendations of May 15, of Management members to sit on the Supervisory Board), 2012 published on June 15, 2012 have been and will

5.4.3 sentence 1 (election to the Supervisory Board on an continue to be complied with, with the exception of articles individual basis), 5.4.6(2) sentence 2 (performance-related 4.2.3(4) (severance payment cap), 5.1.2 (age limit for remuneration of members of the Supervisory Board), 5.5.3 members of the Board of Management), 5.3.2 sentence 3 sentence 1 (report to the Annual General Meeting about (independence of the Chairman of the Audit Committee), conflicts of interest that have arisen and how they are 5.4.1(4 to 6) (disclosure regarding election recommen- being handled). dations), 5.4.6(2) (performance-related remuneration of

The reasons for these exceptions are explained in members of the Supervisory Board) and 5.5.3 sentence 1 the declaration of conformity, which is published at (report to the Annual General Meeting about conflicts of www.audi.com/cgk-declaration. interest that have arisen and how they are being handled).

AUDI AG complies with the suggestions of the German

The reasons for these exceptions can be found in the Corporate Governance Code without exception. declarations of conformity, which are published on our

In their declaration of conformity with the German website, www.volkswagenag.com/ir, under the heading Corporate Governance Code in December 2012, the “Corporate Governance”, menu item “Declarations”.

Executive Board and Supervisory Board of MAN SE declared The suggestions of the current version of the German that the recommendations of the German Corporate Gover- Corporate Governance Code have been complied with in nance Code in the version dated May 26, 2010 published full since June 15, 2012. With regard to the previous version on July 2, 2010 were complied with up to June 15, 2012 in of the Code, a deviation from the recommendation in accordance with MAN SE ’s declaration of conformity of article 5.4.6(2) sentence 2 was declared as a precautionary December 2011. measure until June 15, 2012. It was unclear whether the

The recommendations of the German Corporate Gover- remuneration of members of the Supervisory Board, nance Code in the version dated May 15, 2012 published which is regulated by the shareholders in article 17(1) of on June 15, 2012 were complied with, with the exception the Volkswagen AG Articles of Association by means of a of articles 5.3.2 sentence 3 (independence of the Chairman link to dividend distribution among other things, repre- of the Audit Committee) and 5.4.6(2) (performance-related sented a variable compensation component in line with remuneration of members of the Supervisory Board), from the provisions of article 5.4.6(2) of the German Corporate June 15, 2012 until the date of submission of the current Governance Code.

declaration of conformity. Following the necessary consulta- Our listed subsidiaries AUDI AG , MAN SE and Renk AG tions and the corresponding decision by the Supervisory have also issued declarations of conformity with the Board, article 5.4.1(2) (specification of concrete objectives German Corporate Governance Code.

regarding the composition of the Supervisory Board) has

The annual declaration of conformity with the German been complied with since December 12, 2012. Corporate Governance Code was issued by the Board of

Management and the Supervisory Board of AUDI AG on

D EC L A R AT I ON OF CO N F O R M I T Y OF VOL KSWAG E N AG November 29, 2012. In this document, the two Boards

www.volkswagenag.com/ir

declare that the recommendations of the Government

D EC L A R AT I ON OF CO N F O R M I T Y OF AU D I AG

Commission on the German Corporate Governance Code

www.audi.com/cgk-declaration

in the version dated May 26, 2010 published on July 2,

D EC L A R AT I ON OF CO N F O R M I T Y OF M A N S E

2010 were complied with up to the publication of the new

www.man.eu/en

version dated May 15, 2012 on June 15, 2012. However,

D EC L A R ATI ON OF CO N F O R M IT Y OF R EN K AG there were qualifications: the Supervisory Board has not

www.renk.biz/corporated-governance.html

formed a Nomination Committee (article 5.3.3 of the Code)

CO R P O R ATE G OV ER N A N C E AT SC A N I A A B

and members are not elected to the Supervisory Board on www.scania.com/scania-group/corporate-governance an individual basis (article 5.4.3 sentence 1 of the Code).

COR PORATE GOVERNANC E 133

Corporate Governance Report Remuneration Report Structure and Business Activities Executive Bodies

The Executive Board and Supervisory Board of MAN SE also > At least three Supervisory Board members should be declare that, from the date of issue of the current decla-

women, and at least two female members should represent ration in December 2012, the recommendations of the

the shareholders.

German Corporate Governance Code in the version of May > In addition, proposals for elections should not normally

15, 2012 published on June 15, 2012 have been complied include persons who will have reached the age of 70 by with, with the exception of articles 5.3.2 sentence 3

the time the election takes place.

(independence of the Chairman of the Audit Committee), The first four objectives have already been met. As a rule, 5.4.6(2) (performance-related remuneration of members individuals will also not be proposed for election to the of the Supervisory Board) and 5.5.3 sentence 1 (report to Supervisory Board if they are 70 years old at the time of the the Annual General Meeting about conflicts of interest that election. have arisen and how they are being handled).

The reasons for these exceptions are explained in COOPERATION BETWEEN THE BOARD OF M ANAGEMENT AN D the declaration of conformity, which is available at THE SU PERVISORY BOARD

www.man.eu/en under the heading “Company”. The Board of Management and Supervisory Board of Volks- At Scania AB, the management and supervisory functions wagen AG decide on the strategic orientation of the Volks- are split between the Annual General Meeting, the Board wagen Group in close consultation. The two Boards discuss of Directors and the President and CEO . They are governed the progress of the strategy implementation at regular inter- by the articles of association, Swedish company law, the vals. The Board of Management provides the Supervisory stock exchange admission criteria and other laws and Board with regular, complete and prompt written and verbal regulations to be complied with, such as the Swedish Corpo- reports on all relevant issues concerning business develop- rate Governance Code. Additional details on Scania AB’s ment, planning and the Company’s situation, including the corporate governance and the relevant declaration of risk situation, risk management and compliance. conformity with the Swedish Corporate Governance Code

More information on the cooperation between the are available at www.scania.com/scania-group/corporate- Board of Management and the Supervisory Board of governance.

Volkswagen AG and on the work and structure of the committees of the Supervisory Board can be found in the

COMPOSITION OF THE SUPERVISORY BOARD

Report of the Supervisory Board on pages 14 to 21 of this In view of the purpose of the Company, its size and the annual report. Information on the membership of the extent of its international activities, the Supervisory Board Board of Management and Supervisory Board, as well as of Volkswagen AG strives to take the following criteria into its committees, may be found on pages 147 to 150. account in its composition: