The settlement came on the same day that Berlin prosecutors charged Winterkorn with giving false testimony to the German parliament when he said he was unaware of the carmaker rigging diesel engine tests before it became public.
The settlement marks a major milestone in Volkswagen’s efforts to turn a page on its biggest ever corporate scandal, which has cost it more than 32 billion euros in vehicle refits, fines and legal costs so far.
The scandal, which Volkswagen initially blamed on a small number of rogue engineers, also spurred it to launch a huge investment in electric cars.
Volkswagen and top shareholder Porsche SE are still subject to 4.1 billion euros worth of shareholder claims in relation to the scandal, but it could take years before any agreement is reached.
Winterkorn stepped down as Volkswagen CEO in September 2015, a week after the scandal – in which the group admitted using illegal software to rig U.S. diesel engine tests – broke.
Wednesday’s deal, which consists mainly of a 270 million euro payment from directors’ and officers’ liability insurances, also includes a settlement with former Audi boss Rupert Stadler.
It still needs to be approved at the group’s annual general meeting on July 22.
A spokesman for Winterkorn, who served as Volkswagen CEO for nearly nine years, declined to comment on the charges brought against him by Berlin prosecutors.
Volkswagen, the world’s second-largest carmaker, said in late March it would claim damages from Winterkorn and Stadler for breaches of duty of care under stock corporation law.
Volkswagen concluded that Winterkorn had breached his duty of care by failing to fully and swiftly clarify circumstances behind the use of unlawful software functions in some diesel engines sold in North America between 2009 and 2015.
As part of the deal, Winterkorn and Stadler will pay 11.2 million and 4.1 million euros, respectively.
Former Audi board member Stefan Knirsch agreed to settle for 1 million euros, and ex-Porsche AG board member Wolfgang Hatz for 1.5 million, Volkswagen said.
In a further sign that legal implications of the scandal will still be felt for some time, Volkswagen said on Wednesday it was under investigation in France following a December ruling by Europe’s top court.