The Executive Board and Supervisory Board have a close and trusting working relationship in the interests of the Company. Their common aim is to increase company value sustainably.
The Supervisory Board of Deutsche Lufthansa AG has adopted internal regulations governing the work of the Executive Board and the Supervisory Board and the cooperation between them. The four 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 Executive Board reports regularly 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 four times a year on business developments at the Group and its affiliated companies, and once a year on operational planning and 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.
The Executive Board takes decisions by simple majority of votes cast. There are a number of transactions for which the Executive Board requires the prior approval of the Supervisory Board. These include in particular – always above a certain value threshold – capital expenditure (for aircraft and other non-current assets), long-term leasing of aircraft, establishing companies, acquisitions or disposals of shares in companies, entering new businesses within the scope of the Articles of Association or discontinuing any such existing businesses, signing or cancelling control agreements and strategically important cooperation agreements, and borrowing.
The Supervisory Board elects a Steering Committee made up of four members with equal shareholder and employee representation, which makes recommendations to the Supervisory Board on the contents, form and signing of service contracts with the Executive Board members. The Steering Committee is also responsible for other staff matters regarding Executive Board members and senior managers.
A six-member Audit Committee with equal shareholder and employee representation is also elected, which is essentially responsible for monitoring the accounting processes, reviewing the effectiveness of the internal control system, the risk management system and the internal audit system, and handling matters relating to compliance. It also discusses the quarterly interim reports with the Executive Board before they are published.
The Nomination Committee consists of three members elected from among the shareholder representatives. It proposes suitable candidates to the Supervisory Board, which can in turn put them forward for the election of new Supervisory Board members at the Annual General Meeting.
The obligatory Arbitration Committee required under Section 27 Paragraph 3 of the Codetermination Act 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 proposal to the Supervisory Board.
The Supervisory Board member Mr Matthias Wissmann is a partner and the Supervisory Board member Mr Robert Kimmitt is a partner and Senior International Counsel at the law firm WilmerHale. The Supervisory Board member Mr Martin Koehler was a partner at the company The Boston Consulting Group (BCG) until the end of October 2011 and since then has been a Senior Advisor for the consultancy. Lufthansa has had in the past and will probably in the future have advisory contracts with both WilmerHale and BCG. Neither Mr Wissmann nor Mr Kimmitt nor Mr Koehler advise the Company as part of these contracts. Both WilmerHale and BCG have also confirmed in writing that they have taken organisational steps to ensure that fees from advisory work for our Company are not taken into account either directly or indirectly in determining the remuneration that the aforementioned gentlemen receive from the law firm and the consultancy company respectively. The aforementioned Supervisory Board members therefore have no potential conflict of interests and there is no question of their independence, and the Supervisory Board’s approval of these advisory contracts is not required.
Members of the Executive Board and Supervisory Board are personally liable to the Company for damages resulting from a culpable breach of their fiduciary responsibilities. Lufthansa has taken out a D&O (directors’ and officers’ liability insurance) policy for both Boards, with an excess in line with the requirements of the Stock Corporation Act and the German Corporate Governance Code.
The names of Executive Board and Supervisory Board members and their responsibilities, as well as the members and duties of committees set up by the Supervisory Board, are listed in chapter of this annual report.