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Volkswagen will set caps on executive pay, the German carmaker said as it announced a return to profit for 2016 following the "dieselgate" scandal.

Under the new rules, pay will reflect financial performance more closely.

The chief executive's package will be limited to 10m euros (£8.5m), with a 5.5m euro cap for other board members.

Former chief executive Martin Winterkorn, who quit over the diesel scandal, took home 17.5m euros in 2011 because of large bonus payments.

VW reported a net profit of 5.1bn euros for last year, bouncing back from a 1.6bn euro loss for 2015 in the wake of the emissions-cheating scandal.

"While the past fiscal year posed major challenges for us, despite the crisis the group's operating business gave its best-ever performance," said chief executive Matthias Mueller after a meeting of VW's supervisory board at its Wolfsburg headquarters on Friday.

The scandal did not stop the group, which also owns the Porsche, Audi and Skoda brands, delivering a record 10.3 million vehicles last year, driven by strong demand in Europe and the Asia-Pacific region.

That allowed VW to overtake Toyota and claim the crown of the the world's top-selling car maker.

Revenue was a record 217.3bn - 2% higher than 2015. The company expects that figure to rise 4% this year following a "moderate" increase in vehicle sales.

Image copyright Getty Images Image caption VW chief executive Matthias Mueller on Friday

"Volkswagen is very solidly positioned in both operational and financial terms. This makes us optimistic about the future," Mr Mueller said.

However, the company took higher-than-expected one-off charges totalling 7.5bn euros, of which 6.4bn euros were related to the emissions-test rigging. Analysts had forecast provisions of 4.2bn euros.

VW has now set aside a total of 22.6bn euros for fines, fixing or buying back affected vehicles and compensating owners.

Some 600,000 vehicles in the US were affected and last month the firm agreed to plead guilty to criminal charges.

But no compensation has been offered to the millions of UK or European drivers affected - much to the anger of politicians and regulators there.