drastically reduced. Also during 2002, Tyco International Ltd. admitted its failure to
disclose information about secret bonus payments (compensation) for top executives,
which were compensation-related disclosures required by the U.S. SEC in U.S. com-
panies’ proxy statements.^35
Stock exchange corporate governance disclosure requirements vary dramatically
around the world, but are becoming more stringent in many jurisdictions. At one ex-
treme, the U.S SEC, NYSE, and NASDAQ impose stringent corporate governance
requirements on domestic listed companies.^36 At the other extreme is the Tokyo
13.9 CORPORATE GOVERNANCE DISCLOSURES 13 • 33Earnings Prospects
The Volkswagen Group will build further on its success of recent years in 2002. We
will greatly expand and renew our continuously improving range of high-quality vehicles,
with the aim of entering new segments and further enhancing our position in established seg-
ments. Consequently, we again expect to see our share of the world automobile market rise
in 2002. We will counter the competitive pressures, as previously, with our strategy of prod-
uct value retention, and will continue to reject the option of a discount-driven pricing policy.
We also aim to make further progress on the cost side. Measures in this area will ex-
tend across the entire process chain, based on a unified IT infrastructure. The focus of the
measures will be on development and material costs and the cost of procurement, produc-
tion and distribution logistics, delivering a boost to productivity, product quality and cus-
tomer satisfaction.
Earnings development overall will, however, depend on automobile demand in the
various market regions. The German and U.S. markets will be key. The downward sales
trend in those two countries which took hold in the second half of 2001 still persists. It is
not yet possible to forecast whether and when the trend will be reversed. Consequently, no
reliable forecast with regard to earnings development can yet be made at present.
Outlook for Volkswagen Passenger Cars
The Volkswagen Passenger Cars brand expects to safeguard its high level of unit sales
and achieve further improvements in profits in 2002 despite continuing weak markets,
based on continuous optimization of revenues and costs. With a wide product range, the
brand will extend its lead over the competition.
Outlook for Volkswagen Commercial Vehicles
2002 profits will be burdened by expenditure on the new model generations. On the
other hand, all growth opportunities in international markets in commercial and leisure ve-
hicles will be taken up. The targeted investments in the modernization of the brand’s sites
will form a sound basis for an attractive, refreshed and expanded product range—for the
greater benefit of customers worldwide.
Exhibit 13.16. Excerpts from Volkswagenwerk AG’s Annual Report Discussing Finan-
cial Prospects.
(^35) See Maremont and Cohen (2002) and Financial Times(September 18, 2002).
(^36) Within the last two years, the NYSE and NASDAQ have implemented the recommendations con-
tained in the Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness
of Corporate Audit Committees(Blue Ribbon Committee, 1999). In early 2002, Harvey Pitt, the Chair-
man of the U.S. SEC, requested the U.S. stock exchanges to consider further changes to improve the
quality of corporate governance of U.S. companies.