Volkswagen shareholders have accused its executives of overseeing a shambles and demanded changes to the management structure in the first annual meeting since the carmaker became embroiled in a diesel emissions scandal.

Investors used the meeting in Hanover to criticise the German company’s board for its handling of the scandal and call for a dramatic overhaul of its corporate governance.

Ulrich Hocker, head of the German shareholder association DSW, said there had been a collective failure by the management board. “We are looking at a shambles,” he added.

The carmaker admitted last September that 11m diesel cars had been fitted with software that allowed them to cheat emissions tests. VW has set aside €16.2bn (£11bn) to deal with a scandal that led to the carmaker’s first annual loss in 20 years. It also faces a string of regulatory and legal cases around the world.

However, the full impact of the scandal remains unclear. VW is in the process of recalling and repairing affected vehicles, while an internal investigation into how the defeat software came to be installed, led by law firm Jones Day, is yet to be published.

German prosecutors announced this week they had opened an investigation into VW’s former chief executive Martin Winterkorn over alleged market manipulation for not announcing earlier that the company had manipulated emissions test. Winterkorn left as a result of the scandal.



Shares in VW, which owns Audi and Porsche, remain roughly a quarter below where they were when the emissions test cheating emerged last September.

Matthias Müller, who replaced Winterkorn, apologised to shareholders for the scandal.

He said: “On behalf of the Volkswagen Group and everyone who works here, I apologise to you shareholders for your trust in Volkswagen being betrayed.

“This misconduct goes against everything that Volkswagen stands for.”

Hans-Dieter Pötsch, chairman of VW, said the scandal casted “a shadow on this great company”.

Some shareholders made an unsuccessful attempt to have Pötsch, who was VW finance director at time when the defeat devices were being installed, replaced as chairman of the meeting.

“You are a conflict of interest personified,” Markus Dufner, managing director of the Association of Ethical Shareholders in Germany, told the AGM.

Hermes, one of the world’s biggest institutional investors, also criticised VW’s corporate governance and Winterkorn’s €7m pay deal last year. The equity ownership services firm pledged to vote against key resolutions at the meeting, including the “the discharge of the management and the supervisory board”, and called for an independent audit of the board’s structure.

Hans-Christoph Hirt of Hermes said: “VW’s continuous disregard of fundamental corporate governance principles may have contributed to the emissions scandal. It has undoubtedly tarnished the reputation of the German two-tier board system and employee representation among foreign institutional investors, resulting in collateral damage to the German economy.”

Despite the criticism, all resolutions at the meeting were expected to be voted through thanks to the backing of the company’s biggest shareholders – the Porsche family, the Lower Saxony local government and the Qatar sovereign wealth fund.

Müller told shareholders that the the scandal could prove to be beneficial for VW.

“The crisis has also opened doors,” he said. “It forced us to strengthen and speed up overdue changes, and to set new priorities. To turn this crisis into an opportunity has been my goal from the beginning.”

The VW boss announced the company would invest billions into developing a collection of more than 30 fully electric vehicles by 2025, and would ensure that emissions tests on its vehicle are independently evaluated.

Müller added: “What’s done cannot be undone. But what does lie in our power is ensuring we act in a responsible manner. This is our commitment to you. What unites all of us with a role to play here at Volkswagen – whether it be the supervisory board, board of management, executives, employee representatives or workers – is the desire to do everything we can to win back trust.”