The carmaker should look beyond contractual obligations as it finalizes remuneration packages for senior managers this week.

"It is also about morals," Osterloh is quoted as telling the paper, according to an advance copy of its Tuesday edition.

Volkswagen has been considering cuts to bonuses for senior managers, people familiar told Reuters last week, in an attempt to resolve an internal dispute over executive pay following the diesel emissions scandal.

But current proposals for partial cuts do not go far enough, Handelsblatt said.

Lower Saxony, VW's second-largest shareholder, has already called for executive bonuses to be scrapped or cut as Europe's largest automaker counts the multi-billion-euro costs of "Dieselgate".

Volkswagen, which faces numerous legal and regulatory fines after admitting it cheated on diesel emissions tests, was not immediately reachable for comment.

(Reporting by Edward Taylor, editing by Louise Heavens)