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.

Executive Board

In 2018, Deutsche Lufthansa AG has been managed by an Executive Board comprising five members. As of January 1, 2019, the Executive Board was expanded to six members by the establishment of the new function Airline Resources & Operations Standards.

Carsten Spohr chairs the Executive Board. As Chief Commercial Officer Network Airlines Harry Hohmeister is responsible for the commercial management of the network airlines. The Finance function is headed by Ulrik Svensson. Dr. Bettina Volkens is responsible for the Corporate Human Resources and Legal Affairs function. Thorsten Dirks is responsible for the Eurowings function. The newly established function Airline Resources & Operations Standards is the responsibility of Dr. Detlef Kayser.

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 ensures long-term succession planning. The Supervisory Board pays particular attention to diversity. To this end, the Supervisory Board adopted a comprehensive diversity concept.

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 five meetings in the financial year 2018. The attendance of members at the meetings of the Supervisory Board and its committees was 95 per cent in fiscal year 2018. An overview of the individual attendance for the 2018 financial year can be found here.

The Supervisory Board annually reviews the efficiency of its activities. This was also the case in 2018 on the basis of a detailed questionnaire. As part of the efficiency review, the Chairman of the Supervisory Board also held individual discussions with each member of the Supervisory Board. In addition, in 2018 the Executive Board provided a 360° feedback on the work of the Supervisory Board for the first time.

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 2018.

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 2018 thereof four times in the presence of the auditor.

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 was not convened in 2018.

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 2018.