Review of remuneration year 2024
An economically demanding year for the Lufthansa Group
The Lufthansa Group can look back on another very challenging financial year. The tail-end effects of the coronavirus crisis are still making themselves felt throughout the airline industry. These include delays in aircraft deliveries and the need for newly hired staff to build up experience. Whereas the MRO business segment reported record results thanks to growing global demand for maintenance and repair services, core airline business – and particularly Lufthansa Airlines – contended with delays in aircraft deliveries, strikes, higher fees and charges and increasing price pressure due to global capacity growth. The annual forecast had to be revised twice in light of this situation, first at the start of the second quarter due to the impacts of the strikes, and again at the start of the third quarter on account of the market-related decline in yields in all our traffic regions, especially in Asia.
Despite this, the Executive Board consistently advanced the Lufthansa Group’s focus on its core airline business with significant M&A activities in the 2024 financial year. Particularly noteworthy in this respect were the approval by the European Commission of the investment in ITA Airways and the completion of the sale of payment provider Lufthansa AirPlus Servicekarten GmbH. The development of Lufthansa City Airlines, the consistent expansion of Discover Airlines and the successful turnaround of Brussels Airline and Eurowings are serving to make the Lufthansa Group more international, competitive and resilient. Furthermore, while operating stability was improved significantly, great challenges and bottlenecks remain throughout the industry.
Changes to the Executive Board
At its extraordinary meeting in February 2024, the Supervisory Board voted to carry out a wide-ranging reorganisation of the Executive Board. This consisted of reducing the Executive Board from six members to five and reorganising responsibilities.
As part of the reorganisation, Christina Foerster, Harry Hohmeister and Detlef Kayser stepped down from the Executive Board on 30 June 2024. At the same time, the Supervisory Board appointed Grazia Vittadini as the Executive Board member for the MRO & IT function and Dieter Vranckx as Executive Board member for Global Markets and Commercial Hub Management, both with effect from 1 July 2024.
Remco Steenbergen resigned his Executive Board position as Chief Financial Officer with effect from the close of 7 May 2024, the date of the Annual General Meeting. At its extraordinary meeting, the Supervisory Board acknowledged the resignation of Remco Steenbergen from the Executive Board with effect from the close of 7 May 2024 and approved the conclusion of a rescission agreement with effect from 30 June 2024. After the departure of Remco Steenbergen, Michael Niggemann headed the Finance function on an interim basis alongside his other responsibilities. The Executive Board therefore consisted of just four members from 1 July 2024 onwards.
Till Streichert was appointed as the new Chief Financial Officer with effect from 15 September 2024. In view of his long experience and outstanding reputation as a chief financial officer, the Supervisory Board regarded Till Streichert as a particularly important member of the Executive Board when appointing him. The Executive Board has therefore had five members since 15 September 2024.
Vote on the remuneration report for the 2023 financial year at the Annual General Meeting 2024
The remuneration system for the Executive Board members was presented to the Annual General Meeting for approval on 9 May 2023 and approved by shareholders with a large majority of 89.47%. Despite generally positive feedback on its structure and transparency, the remuneration report for the 2023 financial year only received the support of 73.21% of the shareholders in attendance at the Annual General Meeting on 7 May 2024.
The Supervisory Board discussed the concerns and suggestions of investors in depth in financial year 2024. The following table shows how these considerations were taken into account in the preparation of this remuneration report, in the Supervisory Board’s remuneration decisions in the 2024 financial year and for the ongoing development of the remuneration system.
| T207 | Handling of investor feedback in 2024 |
|---|---|
| Investor feedback | Lufthansa’s response |
| Insufficient information about the peer group in the context of the Supervisory Board’s appropriateness review | More detailed disclosures in this remuneration report on the peer group used to determine whether Executive Board remuneration meets market standards in the Supervisory Board’s appropriateness review. |
| Criticism of the amount of contributions to the company pension | In the remuneration system adopted by the Supervisory Board with effect from the 2025 financial year, the level of contributions to the company pension was reduced for new and repeat appointments to around 30% of basic remuneration |
| More ambitious target achievement curve for relative Total Shareholder Return (TSR) in the LTI | The asymmetric structure of the performance curve ensures a balanced profile of risks and opportunities. The sector index also means that a demanding peer group is used. A target achievement curve in which the target corresponds to median performance is still standard within the German peer group. The Supervisory Board will continue to review the structure of the performance curve regularly in the context of market practice and peer group performance. |
| Duration of the LTI of five rather than four years |
The assessment of performance criteria over four years for the LTI meets market standards, and is consistent with Section 87 AktG and the recommendations of the German Corporate Governance Code. It is also in line with market practice in Germany. |
| Settlement of variable remuneration components in shares rather than cash | The Executive Board remuneration system also provides an option for settlement in company shares. The existing share ownership guidelines ensure that the Executive Board invests in Company shares, so its interests are aligned with those of shareholders. |
Changes to the remuneration system for the Executive Board from the 2025 financial year onwards
At its meeting on 5 December 2024, the Supervisory Board adopted changes to the remuneration system approved by the Annual General Meeting on 9 May 2023, which take effect from 1 January 2025.
The revised remuneration system will be presented to the Annual General Meeting for approval on 6 May 2025. A summary of the key changes can be found in Chart ↗ G39 Adjustments to the remuneration system 2025 in this report and online in the notice convening the Annual General Meeting 2025.