For many years, Lufthansa has given its employees an opportunity to share in the company's success. In 1970, for the first time, staff was able to choose between a cash bonus or Lufthansa shares. Since 1996 the share payout has involved two options: staff can choose between traditional employee shares or, as part of the "LH-Chance" programme, they can buy extra shares by taking out an interest-free loan from the company.
In 2017, the "LH-Chance" programme was offered for the nineteenth time as part of the profit-sharing of the 2016 results. In all, 28 per cent of Lufthansa's workforce in Germany opted for profit-sharing in the form of Lufthansa stock, while 72 per cent chose a cash payment.
Incentive pay programmes, based on both value creation for the company and achievement of personal goals, has long been a tradition at Lufthansa. In addition to performance-related bonuses, Lufthansa also offers its Executive Board, managers and non-contracted staff a share programme known as LH-Performance.
This programme combines a personal investment by the participants in Lufthansa shares with additional outperformance and performance payments. Lufthansa gives a discount on shares purchased as part of this programme, which must then be held until the end of the programme’s vesting period. The outperformance payments are calculated based on the growth of Lufthansa’s share price over a weighted benchmark of European competitors’ share prices. Additionally, payments occur when the absolute performance of the Lufthansa share reaches a specified threshold.
On one hand, this makes the participants shareholders, with all related risks and rewards, and on the other, provides them with remuneration for a company-specific performance.