Mode of operation of the Executive Board & Supervisory Board

Composition and mode of operation of the Executive Board, Supervisory Board and their committees / Diversity concepts

Deutsche Lufthansa AG has the management and supervisory structures according to legal requirements for public limited liability companies in Germany. The Executive Board is responsible for managing the Company and defining its strategic direction. The Supervisory Board appoints, advises and supervises the Executive Board. The common aim of the Executive Board and the Supervisory Board is to achieve lasting increases in the value of the Company. To this end, they cultivate a close and trusting working relationship in the interests of the Company.

The Supervisory Board has adopted rules of procedure governing the work of the Executive Board and the Supervisory Board as well as the cooperation between them.

Rules of procedure for the Supervisory Board

Executive Board

The Executive Board of Deutsche Lufthansa AG was realigned in terms of content and personnel as of 1 January 2020. The new structure takes into account the strategic development of the Lufthansa Group from an Aviation Group to an Airline Group. In this way, the customer focus is to be strengthened, digitization efforts increased and responsibility for the environment and society anchored at board level.

Carsten Spohr remains chairman of the Executive Board. Thorsten Dirks, whose contract was extended until 30 April 2023 in the fiscal year 2019, is responsible for the newly created division IT, Digital & Innovation since 2020. Until the end of 2019 he managed the Eurowings division. Christina Foerster, previously CEO of Brussels Airlines, has been appointed by the Supervisory Board for three years and is responsible for the newly created division Customer & Corporate Responsibility since 2020.

Harry Hohmeister is responsible in the newly created division Commercial Passenger Airlines for the coordination of the network planning and the revenue management as well as distribution and sales for all passenger airlines since 2020. Until the end of 2019 he was as Chief Commercial Officer Network Airlines responsible for the commercial management of the network airlines. Detlef Kayser is still responsible for the division Airline Resources & Operations Standards.

Michael Niggemann, former CFO of SWISS, has also been appointed by the Supervisory Board for three years and is responsible for the Corporate Human Resources and Legal Affairs function as of 2020. The ressort was previously managed by Bettina Volkens, who left the company by mutual agreement on 31 December 2019. Ulrik Svensson, whose contract has been prematurely extended until 31 December 2022 in the fiscal year 2019, still heads the Finance department.

The members of the Executive Board are jointly responsible for the management of the entire Company and inform each other of all significant activities and transactions. The entire Executive Board decides on all matters of fundamental or material financial significance that are bindingly defined by law, the Articles of Association or the rules of procedure. The rules of procedure of the Executive Board contain a list of decisions requiring the approval of the Executive Board as a whole.

Decisions of the Executive Board are generally taken at meetings which, in accordance with the provisions of the Rules of Procedure, take place at least once, but generally twice a month. The Executive Board takes decisions by simple majority of votes cast. There are a number of transactions for which the Executive Board requires the approval of the Supervisory Board. These include, for example, borrowing, capital expenditure, especially for aircraft and other non-current assets above a certain value threshold, long-term leasing of aircraft, establishing companies and the acquisitions or disposals of shares.

The Executive Board has set up a permanent committee to manage its tasks efficiently. This committee is also composed of persons who are not members of the Executive Board. It prepares significant decisions of the Executive Board, examines them with regard to the represented expertise and decides on the matters assigned to it or makes recommendations for the Executive Board. The committee usually meets twice a month in the run-up to board meetings.

The Executive Board regularly reports to the Supervisory Board, which is made up of equal numbers of shareholder and employee representatives. At the Supervisory Board meetings, the Executive Board informs the Supervisory Board at least four times a year on business developments at the Group and its affiliated companies. Every year, the Supervisory Board approves the strategy of the company, essential KPI’s for the following financial year as well as the mid-term financial planning for the Group. The Executive Board presents the Company’s quarterly reports to the Supervisory Board. Furthermore, the Chairman of the Executive Board informs the Chairman of the Supervisory Board and the Supervisory Board of important matters.

Together with the Executive Board, the Supervisory Board - with the support of the Steering Committee - ensures long-term succession planning. To this end, the Supervisory Board and the Steering Committee are in continuous contact with the Executive Board regarding suitable internal candidates. The members of the Supervisory Board have the opportunity to get to know selected managers both professionally and personally at Supervisory Board and committee meetings as well as at regular information and training events. In addition, the Steering Committee and Supervisory Board also evaluate external candidates as required. As part of the selection process, the criteria of the diversity concept adopted by the Supervisory Board for the composition of the Executive Board are taken into account in particular, in addition to the target figure set by the Supervisory Board for the proportion of women on the Executive Board. The decisive factor in filling a specific position on the Management Board is always the interests of the company, taking into account all circumstances of the individual case.

Members of the Executive Board and allocation of their responsibilities

Supervisory Board

The Supervisory Board of Deutsche Lufthansa AG consists of 20 members and, in accordance with the German Codetermination Act (Mitbestimmungsgesetz), consists of an equal number of shareholder and employee representatives.

The Supervisory Board meets at least twice a calendar half-year. The Supervisory Board held a total of four meetings in the financial year 2019. The attendance of members at the meetings of the Supervisory Board and its committees was 99 per cent in fiscal year 2019. An overview of the individual attendance for the 2019 financial year can be found here. Furthermore, the members of the Supervisory Board met regularly for information and training events offered by the company in advance of meetings.

The Supervisory Board regularly reviews the efficiency of its activities. This is done annually on the basis of a detailed questionnaire. In addition, the Chairman of the Supervisory Board holds individual meetings with each member of the Supervisory Board every two years. In addition, the Executive Board regularly provides 360° feedback on the work of the Supervisory Board. In 2019, the self-evaluation of the Supervisory Board was based on a detailed questionnaire. The main results include in particular the further development of the meeting structure. By extending the duration of the meetings, holding the meetings at various Lufthansa locations and expanding the number of information and training events on specific topics on the day before the Supervisory Board meeting, the discussion culture and the work of the Supervisory Board as a whole were further improved.

The Supervisory Board's rules of procedure contain, in particular, the principles of its internal order and allows for forming committees. The provisions applicable to the Supervisory Board with regard to formal regulations also apply to the committees in accordance with the Rules of Procedure. The Audit Committee has set out the internal rules of procedure for the committee's activities in its own rules of procedure, which are to be submitted to the Supervisory Board for approval. There are currently four Supervisory Board committees at Deutsche Lufthansa AG:

The Supervisory Board elects a Steering Committee made up of four members with equal shareholder and employee representation, which, in particular, makes recommendations to the Supervisory Board on appointing Executive Board members, nominating the Chairman of the Executive Board, setting total remuneration for individual Executive Board members and determining targets and deadlines for the ratio of female Executive Board members. The Steering Committee is responsible for all other human resources matters involving Executive Board members not reserved for the full Supervisory Board. In general, the Steering Committee meets in advance of Supervisory Board meetings and as required. The Steering Committee met four times in 2019.

A six-member Audit Committee with equal shareholder and employee representation is elected, which is in particular responsible for the monitoring of the accounting, the accounting process and the non-financial report on Corporate Social Responsibility, the risk management, the Internal Control System and the compliance management system. It also discusses the quarterly reports with the Executive Board before they are published. Other important aspects are the necessary independence of the auditors, their appointment, defining the focus of audits and the fee arrangements. The Committee also makes a recommendation to the Supervisory Board on the auditors, to be put forward for review and confirmation at the Annual General Meeting, and on adopting the individual and consolidated financial statements. Stephan Sturm, Chairman of the Audit Committee, qualifies as financial expert within the meaning of Section 100 (5) of the German Stock Corporation Act (AktG) due to his many years of experience as Chief Financial Officer of a listed DAX group. The Audit Committee meets at least four times a financial year. The Audit Committee met five times in 2019 thereof four times in the presence of the auditors.

The Nomination Committee consists of three members elected from among the shareholder representatives. It proposes suitable candidates to the Supervisory Board prior to election of new Supervisory Board members, which the Supervisory Board may propose to the Annual General Meeting. The selection process of the Nomination Committee is based on the requirement profile for Supervisory Board members as approved by the Supervisory Board. As a rule, the committee meets in connection with upcoming changes to the Supervisory Board of the company. The Nomination Committee met four times in 2019.

The Arbitration Committee required under Section 27 Paragraph 3 of the Co-determination Act (MitbestG) is only convened when the necessary two thirds majority for appointing or revoking the appointment of a member of the Executive Board has not been reached. The Committee then has one month to make a corresponding proposal to the Supervisory Board. The Arbitration Committee was not convened in 2019.

Members of the Supervisory Board and their responsibilities, committees set up by the Supervisory Board