LONDON (Reuters) - Activist hedge fund TCI's campaign against German carmaker Volkswagen was launched as its own initiative and not on behalf of a broader investor group, a partner at the firm told Reuters.In a letter to Volkswagen's executive and supervisory boards on Friday, TCI, founded by Chris Hohn, said it wanted to see a complete overhaul of the carmaker's executive pay structure as part of a plan to boost productivity.The $10 billion London-based hedge fund says it has a 2 percent exposure to VW's non-voting preference shares and none to the group's ordinary shares. Although acting alone, it would be prepared to speak to fellow investors, TCI partner Ben Walker said."We will speak to any investor whose motives and interests are aligned with ours," said Walker.TCI spoke out ahead of a May 10 meeting of members of VW's supervisory board to discuss issues including whether to allow its third-largest shareholder, the Qatari Investment Authority, a seat on its executive steering committee. Reeling from a diesel emissions cheating scandal and fresh from posting a record loss of 1.6 billion euros ($1.8 billion) for 2015, investors have been riled by news that Volkswagen's top bosses would get millions of euros in bonus payments. "We're shining a light on the situation," said Walker. "By shining a light, you expose it to the ridicule that it deserves," adding TCI believed the share price could double if the firm improved productivity."In five years -- in a good market for auto sales – efficiency and productivity plummet[ed] because of all the escalating personnel expenses," he said."The old management team acted at the behest of German unions, protected jobs and increased salaries of German workers and, long-term, that is not good for the company; it's not good for workers long-term."VW's works council, whose members occupy about half the seats on the carmaker's supervisory board, declined comment.VW has also declined to comment on TCI's criticism. VW shares are down by around 20 percent since the diesel scandal broke last September. Matthias Mueller, former head of Porsche, replaced Martin Winterkorn as Volkswagen chief executive a week into the crisis.Walker said TCI would now wait and see how Volkswagen's management team responds, particularly in their long-term strategy plan, expected in the next couple of months.One solution, long sought after by some investors, would be for Volkswagen and Porsche to abandon their current holding company structure and merge, loosening the grip of the Porsche-Piech family. "I think it would be massively positive for both Volkswagen and Porsche," said Walker.Activist investors often build an 'economic position' in a target company through derivatives, which give them a larger exposure to the firm than their holding of actual shares would suggest. TCI declined to specify how it had built its position.VW's shares ended Friday up 2.8 percent and extended those gains on Monday, up 2.1 percent to 124.35 euros by 1520 GMT. (Additional reporting by Andreas Cremer in Berlin; Editing by Keith Weir)
