The compensation systems of the Executive Board and Supervisory Board are in line with the statutory regulations and the recommendations of the German Corporate Governance Code. In accordance with the provisions of stock corporation law, the Executive Board compensation system and Supervisory Board compensation are submitted to the Annual General Meeting for resolution in the event of significant changes or at least every 4 years.
The remuneration of the Supervisory Board is laid down in the Articles of Association of Deutsche Lufthansa AG. Pursuant to Section 113 (3) of the German Stock Corporation Act (AktG), it has been submitted to the Annual General Meeting on 4 May 2021 for resolution and approved with a majority of 97.6%.
The currently existing compensation system for the members of the Executive Board was submitted to the Annual General Meeting on May 5, 2020 for approval in accordance with Section 120a (1) AktG and approved by a majority of 88.2%.
However, the framework agreement of June 29, 2020 concluded between Deutsche Lufthansa AG and the Economic Stabilization Fund (ESF) provides for significant restrictions on Executive Board remuneration. For example, subject to claims against the Company already substantiated before June 21, 2020, no bonuses, other variable or comparable remuneration components may be paid to Executive Board members for the duration of the stabilization measures.
At the same time, no Executive Board member was allowed to receive basic compensation (including any compensation from Group mandates) in excess of the basic compensation of the respective Executive Board member as of December 31, 2019 until at least 75% of the total of Silent Participations I and II (including coupons and any additional compensation) and the shareholding have been fulfilled, repaid or redeemed, sold or terminated in full by contribution or otherwise. For new Executive Board members, the lowest basic compensation of an Executive Board member in a corresponding position as of December 31, 2019 applied as the upper limit.
With the completion of the stabilization measures in the reporting year, the restriction on basic remuneration no longer applies. However, as long as the ESF has not fully sold its shares in Deutsche Lufthansa AG, the restrictions on the payment of bonuses under the ESF framework agreement will continue to apply.
In order to implement the remuneration restrictions agreed with the ESF, Deutsche Lufthansa AG has concluded corresponding supplementary agreements to the existing Executive Board employment contracts with all members of the Executive Board.
The Executive Board and Supervisory Board are liable to pay damages to the Company in the event of a culpable breach of their duties. A financial loss liability insurance policy (D&O) has been taken out for both boards. A deductible in line with the requirements of the German Stock Corporation Act is provided for the members of the Executive Board.
The Supervisory Board also has the option of withholding or reclaiming the one-year and multi-year variable remuneration of Executive Board members in cases of intentional or grossly negligent breach of statutory duties or violation of internal company guidelines (compliance penalty and clawback) or in cases where variable remuneration components linked to the achievement of certain targets were wrongly paid out on the basis of incorrect data (performance clawback).