Deutsche Lufthansa AG is managed via the management and supervisory structures according to legal requirements for public limited liability corporations in Germany. The Executive Board is responsible for managing the company and defining its strategic direction. The Supervisory Board appoints, advises and monitors the Executive Board. The joint objective of the Executive Board and Supervisory Board is to increase the value of the Company on a sustainable basis. To this end, they work together closely and in a spirit of trust in the interests of the Company.
The Supervisory Board has adopted rules of procedure that set out binding rules for the work of the Executive Board and Supervisory Board and for the cooperation between the two bodies.
Members of the Executive Board and allocation of responsibilities
The Executive Board of Deutsche Lufthansa AG has six members. The division of responsibilities for the Executive Board was adjusted with effect from 1 July 2022.
Carsten Spohr is the Chairman of the Executive Board of Deutsche Lufthansa AG.
Christina Foerster is responsible for the “Brand & Sustainability” portfolio. On 2 March 2022, the contract with Christina Foerster was extended ahead of schedule for a five-year period ending 31 December 2027.
Harry Hohmeister looks after the “Global Markets & Network” portfolio.
Detlef Kayser heads up the “Fleet & Technology” portfolio.
Michael Niggemann is in charge of the “Human Resources & Infrastructure” portfolio and is the Chief Human Resources Officer. On 2 March 2022, the contract with Michael Niggemann was extended ahead of schedule for a five-year period ending 31 December 2027.
Remco Steenbergen manages the “Finance” portfolio.
The Executive Board functions of Christina Foerster, Harry Hohmeister and Detlef Kayser have functional responsibility for certain cross-airline processes to realise synergies and coordinate the activities of Group airlines.
Together with the Executive Board and with the support of the Steering Committee, the Supervisory Board ensures long-term succession planning. To this end, the Supervisory Board and the Steering Committee maintain an ongoing dialog with the Executive Board on suitable internal candidates. At Supervisory Board and committee meetings and at regular information and training events, the members of the Supervisory Board have the opportunity to get to know selected executives both professionally and personally. In addition, the Steering Committee and Supervisory Board also evaluate external candidates where necessary. As part of the selection process, the Supervisory Board takes particular account of the criteria of the diversity concept adopted by the Supervisory Board for the composition of the Executive Board, in addition to the statutory minimum of one woman and one man. The decisive factor for filling a specific Executive Board position is always the interests of the company, taking into account all the circumstances of the individual case.
With the composition of the Executive Board as of December 31, 2022, the Supervisory Board believes that the six-member Executive Board meets the targets as set out in the diversity concept. Alongside many years of experience within the Group, the members of the Executive Board contribute extensive knowledge and experience from various roles, including international roles outside the LH Group. The current age range on the Executive Board is 48 to 58 years. The average age of the Executive Board members is 54. The CVs of the Executive Board members are available on the website investor-relations.lufthansagroup.com.
Work of the Executive Board
The members of the Executive Board are jointly responsible for the overall management of the Company and inform each other of all significant activities and transactions. The entire Executive Board decides on all matters of a fundamental or significant financial importance that are bindingly defined by law, the Articles of Association, or the Rules of Procedure. The Rules of Procedure contain a list of individual 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, are held at least once a month, but generally twice a month. The Executive Board passes resolutions by a simple majority of the votes cast. The Executive Board also meets regularly outside its meetings to discuss developments in the markets and the wider business environment in advance, and prepare important matters affecting the Company, and upcoming decisions by the Executive Board.
The Executive Board has set up a standing committee to manage its tasks efficiently. This committee also includes persons who are not members of the Executive Board. It prepares major decisions of the Executive Board, examines them in the light of the specialist expertise represented on the committee, and decides on matters assigned to it or makes recommendations to the Executive Board. The committee generally meets twice a month in advance of Executive Board meetings.
The Executive Board reports regularly to the Supervisory Board, which is made up of an equal number of shareholder and employee representatives. At the Supervisory Board meetings, the Executive Board informs the Supervisory Board at least four times a year about the business development of the Lufthansa Group. The Chairman of the Executive Board informs the Chairman of the Supervisory Board and the Supervisory Board about important events also between the meetings. The Executive Board submits regular reports on the main business developments and the Company's quarterly reports to the Supervisory Board.
Composition of the Supervisory Board
TThe Supervisory Board of Deutsche Lufthansa AG consists of 20 members and, in accordance with the German Codetermination Act, is composed of an equal number of shareholder and employee representatives. Pursuant to Section 96 (2) sentence 1 of the German Stock Corporation Act (AktG), the Supervisory Board must be composed of at least 30 percent women and at least 30 percent men. The overall fulfillment of this minimum proportion was objected to by both the employee representatives and the shareholder representatives for the Supervisory Board elections vis-à-vis the Supervisory Board Chairman, so that the minimum proportion must be fulfilled separately by the shareholder representatives and the employee representatives on the Supervisory Board. As a result, at least three seats on the Company's Supervisory Board must be held by women and at least three seats by men on both the shareholder and employee sides. In the 2022 financial year, the Supervisory Board comprised four women and six men each on the shareholder side and on the employee side, so that the minimum proportion requirement was consistently met on both sides.
The two Supervisory Board members Michael Kerkloh and Angela Titzrath were proposed in 2020 by the Chairman of the Supervisory Board after consultation with the Nomination Committee of the Supervisory Board and nominated by the ESF in accordance with the framework agreement concluded between Deutsche Lufthansa AG and the Economic Stabilization Fund (WSF) dated June 29, 2020. Both Supervisory Board members were elected to the Supervisory Board by the Annual General Meeting on May 4, 2021. They will retain their seats on the Supervisory Board of Deutsche Lufthansa AG after the sale of the last shares held by the ESF on September 13, 2022. At the meetings of the Supervisory Board on March 2, May 9 and July 6, 2022, and the meetings of the Audit Committee on February 24, April 28 and July 28, 2022, Annette Olschinka-Rettig, Head of the Equity Investments Department and ESF at the Federal Republic of Germany - Finance Agency GmbH, or her deputy Michael Haas respectively, exercised the guest rights agreed with the ESF on the Supervisory Board of Deutsche Lufthansa AG. With the sale of the remaining Lufthansa shares by the Federal Government, ESF's right to attend the meetings of the Supervisory Board and its committees as a guest expired.
The Supervisory Board has adopted a comprehensive requirements profile for its composition, which includes both the competence profile required by the German Corporate Governance Code (GCGC) and the diversity concept required by Section 289f of the German Commercial Code (HGB). According to the Supervisory Board's assessment, the Supervisory Board fulfils the objectives as stated in the requirements profile as of December 31, 2022. In particular, the Supervisory Board as a whole is knowledgeable about the aviation sector. As a whole, its members contribute a broad range of specialist knowledge to the Supervisory Board’s work and possess international experience and specialist knowledge of one or more of the Company’s key markets outside Germany. The ages of the current Supervisory Board members range from 44 to 70. The average age is 56.
Furthermore, it is the assessment of the Supervisory Board that none of the shareholder representatives currently show any indication of relevant circumstances or relationships that could give rise to a significant and lasting conflict of interest. In particular, no member of the Supervisory Board is a close family member of an Executive Board member. Likewise, no member of the Supervisory Board himself or a close family member has had – with the exception described below – or continues to have a business relationship with Deutsche Lufthansa AG or any of its dependent companies. Karl-Ludwig Kley is the only former member of the Executive Board that belongs to the Supervisory Board. He has been elected to the Supervisory Board after a seven-year cooling-off period. No members of the Supervisory Board exercise board or advisory functions at a significant competitor or hold a personal relationship with a significant competitor. No Supervisory Board member belongs to the Supervisory Board for more than twelve years. In the opinion of the shareholder representatives on the Supervisory Board, all shareholder representatives therefore currently qualify as independent within the meaning of the German Corporate Governance Code.
In addition to her mandate as Chairwoman of the Executive Board of Hamburger Hafen und Logistik AG, Ms. Titzrath currently holds a total of three Supervisory Board mandates in non-group listed companies or similar bodies. Mrs. Titzrath has declared to Deutsche Lufthansa AG that she has sufficient time to perform her Supervisory Board duties and that she can perform these duties with due regularity and care.
The status of the implementation of the requirements profile is shown in the following qualification matrix.
New Supervisory Board members receive an overview of key topics such as corporate strategy, financial management, fleet strategy and network management as part of a detailed onboarding program. On this basis, they can familiarize themselves with the structures of the Lufthansa Group. Discussions with the members of the Executive Board also take place within this framework. In addition, the new Supervisory Board members are provided with a comprehensive information package that includes the Articles of Association and the rules of procedure for the Supervisory Board, its Audit Committee and the Executive Board, the requirements profile for the composition of the Supervisory Board and the diversity concept for the Executive Board, as well as information on capital market regulations for Supervisory Board members and on D&O insurance. In fulfilling their duties, Lufthansa also supports the members of the Supervisory Board with training and continuing education measures, which they are generally responsible for themselves. To this end, Lufthansa regularly offers topic-specific information and training events on the day before Supervisory Board meetings as well as other training courses on Supervisory Board-specific topics. In the financial year 2022, a total of four information and continuing education events were offered on topics including IT and digitization and other Lufthansa-specific topics. Information on conflicts of interest that arose in the financial year is provided in the Report of the Supervisory Board. No conflicts of interest were reported in the 2022 financial year.
Work of the Supervisory Board
The Supervisory Board appoints the Executive Board, advises it on the management of the Company and monitors its activities. It also decides on the system and amount of compensation for the Executive Board. The Rules of Procedure for the Executive Board contain a catalog of transactions for which the Executive Board requires the prior approval of the Supervisory Board. Above a certain value threshold, these include, for example, borrowing, investments in aircraft and other fixed assets, the long-term leasing of aircraft, the establishment of companies, and the acquisition or sale of shares in companies. In addition, the Supervisory Board approves the company's strategy, key performance indicators (KPIs) for the following year, and the Group's medium-term financial planning on an annual basis.
The principles of the Supervisory Board's cooperation are set out in the Rules of Procedure for the Supervisory Board. According to these, the Supervisory Board meets at least twice every calendar half-year. In the 2022 financial year, the Supervisory Board held a total of five meetings. The presence of Supervisory Board members at meetings of the Supervisory Board and its committees totaled 99% in the 2022 financial year. An overview of individual meeting attendance for the 2022 financial year can be found here.
The Supervisory Board regularly reviews how effectively the Supervisory Board and its committees perform their duties (self-assessment). This is done annually on the basis of a detailed questionnaire. In addition, the Chairman of the Supervisory Board holds individual discussions with each member of the Supervisory Board every two years. In addition, 360° feedback from the Executive Board on the work of the Supervisory Board is also provided on a regular basis. For the 2022 financial year, the Supervisory Board conducted its self-assessment on the basis of a detailed questionnaire and a 360° feedback from the members of the Executive Board. Key outcomes include, in particular, the further development of the onboarding process for new Supervisory Board members and the establishment of an additional Supervisory Board committee, effective January 1, 2023, to advise the Supervisory Board and its committees as well as the Executive Board on issues relating to sustainable corporate governance and the company's business activities in the areas of environmental, social and governance (ESG). Overall it showed that the work of the Supervisory Board was perceived to be at a consistently high level.
Further information on the work of the Supervisory Board and its committees in the 2022 financial year can be found in the Report of the Supervisory Board.
Committees of the Supervisory Board
The Rules of Procedure of the Supervisory Board provide for the formation of Supervisory Board 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 regulated the internal order of committee activities in its own rules of procedure, which must be submitted to the Supervisory Board for approval in the event of modifications. Since the establishment of the ESG Committee as of January 1, 2023 there are currently five Supervisory Board committees at Deutsche Lufthansa AG:
The Supervisory Board has formed a Steering and Remuneration Committee with equal representation from among its members, consisting of the Chairman of the Supervisory Board and his deputy, each in a corresponding function, and two further members of the Supervisory Board to be elected by the Supervisory Board. The Steering and Remuneration Committee prepares the Supervisory Board meetings and makes recommendations to the Supervisory Board regarding the appointment of Executive Board members, the appointment of a Chairman of the Executive Board, the determination of the total compensation of the individual Executive Board members including salary and fringe benefits of any kind and any reductions pursuant to Art. 87 AktG. The Steering and Remuneration Committee is responsible for all other personnel matters relating to Executive Board members not reserved for the full Supervisory Board. It is also responsible for contracts with Supervisory Board members (including granting of loans) and for granting approval for transactions with related parties in accordance with § 111a ff. of the German Stock Corporation Act (AktG). In the event of a tie, the Chairman of the Supervisory Board has the casting vote. The Steering and Remuneration Committee generally meets prior to Supervisory Board meetings and as required. The Steering and Remuneration Committee met a total of six times in fiscal 2022. Regular follow-up reports on the discussions and resolutions were submitted to the full Supervisory Board.
In addition, a six-member Audit Committee is elected, also with equal representation of shareholders and employees. This committee is mainly responsible for auditing the financial reporting (i.e. the consolidated financial statements and the Group management report, including the non-financial reporting on corporate social responsibility, the interim financial information, and the separate financial statements in accordance with the German Commercial Code) and monitoring the effectiveness of the risk management, internal control system, and compliance management system in the financial reporting process. This Committee also discusses the quarterly reports with the Executive Board prior to their publication. Other key issues are the required independence of the auditor, the issuing of the audit engagement to the auditor, the determination of the focal points of the audit and the fee agreement, as well as the regular review of the quality of the audit. The committee also makes a recommendation to the Supervisory Board on the proposal of the auditor to the Annual General Meeting and on the adoption or approval of the annual and consolidated financial statements. The Chairman of the Audit Committee is Harald Krüger. He is independent within the meaning of the German Corporate Governance Code. As a former Chairman of the Executive Board and long-standing member of audit committees, he has special knowledge and experience in the application of accounting principles, internal control and risk management systems, and is familiar with the auditing of financial statements. Carsten Knobel is another member of the Audit Committee who qualifies as an independent 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 company, Carsten Knobel also has special knowledge and experience in the application of accounting principles and control procedures and is familiar with the auditing of financial statements. The Audit Committee meets at least four times a fiscal year. In the 2022 financial year, the Audit Committee met a total of five times, each time 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 requirements profile for Supervisory Board members adopted by the Supervisory Board. The committee generally meets in connection with upcoming changes to the Company's Supervisory Board. The Nomination Committee met once in the 2022 financial year.
The Arbitration Committee required by Section 27 (3) of the Codetermination Act (MitbestG) and formed in accordance with Section 9 (3) of the Company's Articles of Association only meets if the necessary two-thirds majority of votes is not achieved in the case of an appointment or revocation of an appointment to the Executive Board. Pursuant to Sec. 31 (3) Sentence 1 MitbestG, the committee must then submit a corresponding proposal to the Supervisory Board within one month. The Arbitration Committee did not have to be convened in the 2022 financial year.
The Environmental, Social and Governance (ESG) Committee, which has been in place since January 1, 2023, consists of four members with equal representation. The ESG Committee shall advise the Supervisory Board, its committees and the Executive Board on issues relating to sustainable corporate governance and the company's business activities in ESG areas. This includes in particular the approach to integrating sustainability into the business strategy, setting sustainability targets, non-mandatory ESG reporting, and opportunities and risks in the ESG areas. The ESG Committee met for the first time in February 2023.