New Remuneration System for the Executive Board from January 1, 2019

With effect from 2019, the Supervisory Board resolved changes to the remuneration system for the members of the Executive Board. With the new remuneration system, the Supervisory Board is introducing a modern target bonus model for the Executive Board that replaces the previous pure margin participation. In future, the compensation system will focus more strongly on the sustainable development of the company and significantly reduce complexity. The new system takes much better into account the requirements of the various interest groups, in particular the shareholders and their representatives. With the new system transparency and traceability have been increased, and both individual performance and the absolute and relative performance of the share price, Total Shareholder Return (TSR) as well as sustainability targets were given greater consideration.

The new system will be applied to new appointments and contract renewals since January 1, 2019, and to existing contracts on a voluntary basis. The remuneration system, including the pension scheme, has been fundamentally redesigned. For the variable remuneration a standard target bonus scheme applies that is more ambitious than in the past. The new remuneration system supports profitable earnings growth and rewards sustained positive development of the company value. The linking of financial targets and sustainability parameters both in the short-term and in the long-term bonus components emphasizes the great importance of sustainable economic activity.


The remuneration of the Executive Board still consists of a fixed base remuneration (not performance-related), variable (performance-related) remuneration elements, other remuneration elements and a pension scheme.

Remuneration System (Target remuneration*)

* Simplified representation of the target values. Without company pension scheme and other benefits. Assumption: individual performance factor 1.0.

Fixed annual base salary

The base remuneration of EUR 1,634,000 for the Chairman of the Executive Board (previously EUR 1,380,000) and EUR 860,000 for an ordinary member of the Executive Board (previously EUR 862,500) will continue to be paid monthly as a salary. For ordinary members of the Executive Board, the base remuneration will thus remain roughly at the previous level. The distance between the base remuneration of the Chairman of the Executive Board and the base remuneration of an ordinary member of the Executive Board will be increased to a customary market ratio.

Variable remuneration

The variable remuneration was fundamentally redesigned. In future, it will only consist of a one-year and a multi-year component. Sustainability parameters which were previously only applied in the multi-year variable remuneration (in the so-called "deferral"), are now taken into account in both the one-year and the multi-year variable remuneration. In addition to the previous sustainability parameters (employees, customers and environment), the sustainability parameters compliance, reputation and quality will also be considered in the future, with the Supervisory Board setting annual focus points. For 2019, the Supervisory Board has set the sustainability parameters "Customer" and "Employee" as the focus points for the yearly bonus and the parameter "Environment" as the focus point for the long-term bonus. The Net Promotor Score, i.e. the recommendation rate of customers, is used for the "Customer" parameter. For the "Employees" parameter, the so-called Engagmenet Index is considered, which measures employees' commitment to the company as well as their commitment and willingness to recommend the company to others. The IATA targets for fuel/CO2 efficiency are taken into account for the environmental parameter.

Annual bonus

85% of the annual bonus is based on financial targets and 15% on sustainability parameters. The financial targets are the EBIT margin (counting for 42.5% of the annual bonus) and the adjusted EBIT growth compared to the average of the previous four years (counting for 42.5% of the annual bonus). The EBIT margin is a key performance indicator used by the Group to measure the profitability of its business. With adjusted EBIT growth as a target, the focus is on increasing operating earnings. As in the past, the Supervisory Board has the option of applying an individual performance factor (bonus/malus factor) of 0.8 to 1.2 to the annual bonus of each individual member of the Executive Board in order to assess individual performance and crisis management. This is based on the targets and target achievements agreed annually between the Chairman of the Supervisory Board and the individual members of the Executive Board.

The target bonus of the annual bonus amounts to EUR 1,140,000 for the Chairman of the Management Board and EUR 600,000 for an ordinary member of the Executive Board in case of 100 % target achievement; if the targets are exceeded, the annual bonus is limited to a maximum of 200 % of the target bonus (EUR 2,280,000 and EUR 1,200,000, respectively) (cap).

Annual Bonus

* Investment according to SOG if applicable.

Multi-year variable remuneration

In the future, 42.5% of the multi-year variable remuneration of the Executive Board will be based on the relative TSR in comparison to the DAX companies and the adjusted return on capital employed (ROCE). By measuring value creation as the return on capital achieved and value development (including dividend payments) compared with the DAX index, it is closely aligned with the perspective of external investors. In addition, as with the annual bonus, sustainability parameters are also applied in the multi-year variable remuneration with a weighting of 15%. The performance period to which the performance targets relate is four years. The target value bonus of the multi-year variable remuneration amounts to EUR 2,090,000 for the Chairman of the Executive Board and EUR 1,100,000 for an ordinary member of the Executive Board in case of 100 % target achievement. The payment of the multi-year variable remuneration is limited to a maximum of 200% of the target value (EUR 4,180,000 or EUR 2,200,000 gross) (cap).

Multi-Year Variable Remuneration

* Investment according to SOG if applicable.

Target values for variable remuneration

The Supervisory Board annually determines the target, threshold and maximum values of the financial targets and the sustainability parameters for the variable remuneration 

Share Ownership Guidelines

Under the newly introduced Share Ownership Guidelines, the members of the Executive Board are obliged to invest 15% of the gross payment of the annual variable remuneration actually achieved (annual bonus and multi-year variable remuneration) in Lufthansa shares until they hold shares in the amount of 100% of the basic annual remuneration (for an ordinary member of the Executive Board) or 200% (for the Chairman of the Executive Board). Existing shareholdings are taken into account. As soon as this level is reached, it may not be fallen below for the duration of membership of the Executive Board.

Other benefits

Other benefits continue to include, in particular, the non-cash benefit of using company cars and benefits from concessionary travel in accordance with the relevant IATA regulations. Due to the limited booking status, this is a minor ancillary service, which is not limited in amount. The members of the Executive Board should be able to use the company's main product, including the associated exchange with employees and customers on board, as widely as possible in their private lives in accordance with international practice. The previous discount granted in connection with the issue of share programs will no longer apply.

Company pension scheme

In the company pension scheme for members of the Executive Board, the link between pension contributions and variable remuneration was abolished. Instead, a fixed amount of EUR 855,000 for the Chairman of the Executive Board and EUR 450,000 for an ordinary member of the Executive Board will now be paid each year. The pension credit will continue to be paid out in ten instalments. At the request of the Executive Board or its surviving dependents, a payment as one-time capital or a payment in less than ten instalments is possible with the consent of the company; the pension option has been abolished to simplify matters. 

Cap on severance pay

As before, in accordance with the recommendation of the German Corporate Governance Code, in the event of premature termination of the contract, which is not caused by an important reason or a change of control, no more than the value of the claims for the remaining term of the contract may be remunerated, whereby the payments, including fringe benefits, may not exceed two annual remunerations (severance payment ceiling). Unlike before, the relevant annual remuneration is limited to the sum of the annual base remuneration, the target bonus of the one-year variable remuneration and the target amount of the multi-year variable remuneration; payments in kind and other ancillary benefits are not taken into account. It thus amounts to EUR 4,864,000 for the Chairman of the Executive Board and EUR 2,560,000 for ordinary members of the Executive Board.

Change of control

If the contract between an Executive Board member and Deutsche Lufthansa AG is terminated in connection with a change of control of the company, the Executive Board member is entitled to a compensation in the amount of the remuneration outstanding for the remainder of the contract. In accordance with the relevant recommendation of the German Corporate Governance Code, the compensation may not exceed 150%  of the maximum compensation agreed in the contract and described above. 

Post-contractual non-competition clause

After leaving the Executive Board, the members of the Executive Board are now subject to a one-year post-contractual non-competition clause. For the duration of the post-contractual non-competition clause, the company pays the Executive Board member a compensation (waiting payment) amounting to half of the basic remuneration (thus EUR 817,000 for the Chairman of the Executive Board and EUR 430,000 for ordinary Executive Board members). The Company has the option of waiving the post-contractual non-competition clause until the termination of the Executive Board contract, with the effect that it is no longer obliged to pay a compensation payment after six months from receipt of the waiver.


A contractual "clawback provision" has not yet been included in the Executive Board contract due to the continuing uncertainty regarding the legal implementation. However, it was contractually agreed that, should the German Corporate Governance Code in future contain recommendations on so-called "clawbacks", an agreement will be reached on the inclusion of an appropriate provision on the implementation of the Code's recommendations. The provisions on claims for damages under the German Stock Corporation Act remain unaffected by possible clawback provisions.

Remuneration system for members of the executive board1

1) Schematic diagram – percentage of the target values of basic remuneration, variable remuneration and company pension scheme. Assumption: individual performance factor 1.0.
2) Share Ownership Guidelines: Annual investment in Lufthansa shares at a rate of 15% until 100%/200% of the annual base remuneration is hold in shares (for an ordinary member/chairman of the Executive Board).
3) Adjusted EBIT grow thin relation to 4 years’ average.