Remuneration report for the Executive Board


The Executive Board’s remuneration consists of the following components:

  • Basic remuneration, paid monthly as a salary.
  • Since financial year 2011 the variable remuneration is based on the operating margin for the Lufthansa Group. 75 per cent of this bonus is paid the following year, and therefore on an annual basis. The remaining 25 per cent are carried forward for another two years. At the end of the assessment period, which runs for three years in total, the amount carried forward is to be multiplied by a factor of between 0 and 2. How high the factor is depends to 70 per cent on the CVA achieved over the three-year period and to 30 per cent on sustainability parameters such as environmental protection, customer satisfaction and staff commitment.
  • Executive Board members are also required to participate in the option programmes for managers (with their own parameters which vary from those of the general managers’ programme). The duration of these programmes was extended from three to four years in 2011. These arrangements ensure that the variable remuneration components are essentially based on performance over several years, see “Note 42”.
  • In years with poor operating results due to extraordinary exogenous factors, the Supervisory Board may award Executive Board members an appropriate individual bonus.

The following remuneration was paid to individual Executive Board members in 2011:

 

in €

Basic salary

Variable remuneration

Payments from maturing option programmes

Change in fair value of option programmes

Other *

Total

*

Other remuneration includes, in particular, the non-cash benefit of using company cars, the discount granted in connection with option programme issues (Note 42), benefits from concessionary travel in accordance with the relevant IATA regulations and attendance fees and daily allowances for work on the supervisory boards of subsidiaries.

Christoph Franz

1,207,500

578,815

324,669

148,906

2,259,890

Stephan Gemkow

862,500

407,989

180,000

18,945

96,446

1,565,880

Stefan Lauer

862,500

407,989

174,000

26,852

161,918

1,633,259

Carsten Spohr (Executive Board member since 1.1.2011)

862,500

407,989

32,708

67,523

1,370,720

Effective remuneration for the 2011 financial year

3,795,000

1,802,782

354,000

403,174

474,793

6,829,749

The following remuneration was paid to individual Executive Board members in 2010:

 

in €

Basic salary

Variable remuneration

Payments from maturing option programmes

Change in fair value of option programmes

Other *

Total

*

Other remuneration includes, in particular, the non-cash benefit of using company cars, the discount granted in connection with option programme issues (Note 42), benefits from concessionary travel in accordance with the relevant IATA regulations and attendance fees and daily allowances for work on the supervisory boards of subsidiaries.

Wolfgang Mayrhuber (Executive Board member until 31.12.2010)

805,000

1,610,000

900,000

66,255

110,434

3,491,689

Christoph Franz (Executive Board member since 1.6.2009).

700,000

1,378,700

226,101

86,946

2,391,747

Stephan Gemkow

575,000

1,135,400

600,000

44,170

86,701

2,441,271

Stefan Lauer

575,000

1,135,400

600,000

36,262

110,536

2,457,198

Effective remuneration for the 2010 financial year

2,655,000

5,259,500

2,100,000

372,788

394,617

10,781,905

As of 31 December 2011 (2010) the members of the Executive Board hold the following shares from current option programmes:

 

 

2008 programme

 

2009 programme

 

2010 programme

2011 programme

Number of shares

Number of shares pur­chased from own funds

Number of option packages

Number of shares pur­chased from own funds

Number of option packages

Number of shares pur­chased from own funds

Number of option packages

Number of shares pur­chased from own funds

Number of option packages

Christoph Franz (Executive Board member since 1.6. 2009)

– (–)

– (–)

14,060 (14,060)

37 (37)

9,620 (9,620)

37 (37)

17,280 (–)

45 (–)

Stephan Gemkow

– (11,160)

– (30)

11,400 (11,400)

30 (30)

7,800 (7,800)

30 (30)

11,520 (–)

30 (–)

Stefan Lauer

– (10,788)

– (29)

11,400 (11,400)

30 (30)

7,800 (7,800)

30 (30)

11,520 (–)

30 (–)

Carsten Spohr (Executive Board member since 1.1.2011)

– (–)

– (–)

– (–)

– (–)

– (–)

– (–)

11,520 (–)

30 (–)

 

See “Note 42” for payment caps.

The pro rata change for 2011 in the fair value of option programmes forms part of the individual Executive Board members’ total remuneration and is stated in the remuneration table.

The total fair value of the 2011 option programme for Mr Franz on the date of issue was EUR 1,011,645. For Mr Gemkow, Mr Lauer and Mr Spohr the figure was EUR 674,430 each.

Serving members of the Executive Board will benefit from various contractual entitlements when their employment comes to an end.

Since 2006 each Executive Board member has had a personal pension account into which for the duration of their employment Deutsche Lufthansa AG pays contributions amounting to 25 per cent of the annual salary and the bonus. The investments guidelines for the pension account are based on the investment concept for the Lufthansa Pension Trust, which also applies to staff members of Deutsche Lufthansa AG.

As of 31 December 2011 Mr Franz’s retirement benefit entitlement amounted to EUR 1.1m (previous year: EUR 0.6m). That of Mr Gemkow was EUR 4.4m (previous year: EUR 4.1m), that of Mr Lauer EUR 5.9m (previous year: EUR 5.7m) and that of Mr Spohr EUR 1.1m.

If employment ends before an Executive Board member reaches retirement age, he or she retains the pension entitlement from the pension account, which is continued without further contributions. On reaching retirement age (65 or early retirement between 60 and 65) or in the event of disability the account holder will acquire a pension credit equivalent to the balance of the pension account at that time. Lufthansa guarantees the amounts paid in retirement benefits.

A supplementary risk capital sum will be added to the pension credit in the event of a claim for a disability pension or a pension for surviving dependants. This sum will consist of the average contributions paid into the pension account over the past three years multiplied, when a disability pension entitlement arises, by the number of full years by which the claimant is short of the age of 60.

The pension credit is paid out in ten instalments. On application by the Executive Board member or his widow the pension credit will, subject to approval by the Company, be converted into a pension. On application by the Executive Board member or his surviving dependants a single payment or payment in fewer than ten instalments may also be made.

The widow’s pension is 60 per cent of the deceased Board member’s pension entitlement. If the Board member dies while in the Company’s employment his widow will be paid his full salary until the end of the financial year for a period of at least six months.

The cost of pension entitlements accrued in 2011 for Mr Franz was EUR 0.5m; for Mr Gemkow, Mr Lauer and Mr Spohr EUR 0.3m each. The total cost of EUR 1.4m (previous year: EUR 1.4m), plus EUR 6.8m (previous year: EUR 10.8m) in overall remuneration as shown in the remuneration table, is listed under staff costs, amounting to EUR 8.2m (previous year: EUR 12.2m).

If Mr Lauer’s employment contract is terminated for reasons for which he is not responsible he is entitled to a transitional pension until he becomes 60. Since 1 January 2011 the transitional pension entitlement has reached its maximum benefit level of 40 per cent of basic annual salary.

If Mr Gemkow’s employment contract is terminated for reasons for which he is not responsible when he is over 55 he is entitled to a transitional pension until he becomes 60. As of 31 December 2011 his transitional pension entitlement came to 26 per cent of basic annual salary. The benefit level increases by two percentage points up to a maximum of 40 per cent for each year of service commenced from 1 February 2012 as a full Executive Board member of the Company.

If Mr Franz’s employment contract is terminated for reasons for which he is not responsible when he is over 55 he is entitled to a transitional pension until he becomes 60. His transitional pen-sion entitlement amounts to 10 per cent of his basic annual salary, increasing by two percentage points up to a maximum of 20 per cent for each year of service commenced from 1 June 2014 as a full member of the Executive Board.

Under his contract as a pilot, which is currently not active, Mr Spohr is entitled to a transitional pension in accordance with the wage agreement “Transitional pensions for cockpit staff”. If Mr Spohr leaves the Executive Board before he becomes 60 and resumes his employment as a pilot he is entitled to draw a “Transitional pension for cockpit staff at Lufthansa” once he becomes 60 or on request once he becomes 55, in accordance with the provisions of the wage agreement. This additional benefit is paid if certain conditions of eligibility are met and provides for a monthly pension of up to 60 per cent of the last modified salary until the beneficiary reaches the age of 63.

If a contract is terminated early for reasons other than good cause or a change of control, the Company will not remunerate more than the value of outstanding entitlements for the remainder of the contract, as recommended by the German Corporate Governance Code, whereby these payments including ancillary benefits may not exceed annual remuneration for two years (maximum compensation). Maximum compensation is calculated by reference to total remuneration for the last full Financial year before departure from the Executive Board, as shown in the remuneration report, and including expected total remuneration for the current financial year.

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

Current payments and other benefits for former members of the Executive Board and their surviving dependants came to EUR 3.6m (previous year: EUR 3.2m). This includes payments by subsidiaries as well as benefits in kind and concessionary travel.

Pension obligations toward former Executive Board members and their surviving dependants amount to EUR 51.9m (previous year: EUR 39.5m). They are included in pension provisions, see “Note 37”.

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