Deutsche Lufthansa AG · XETR:LHA
Deutsche Lufthansa — Non-Deal Roadshow (February 2024)
33 slides from Deutsche Lufthansa's roadshow presentation, February 2024
Slide 1: Lufthansa Group Corporate Governance
Lufthansa Group Corporate Governance Karl-Ludwig Kley, Chairman of the Supervisory Board February 2024 lufthansagroup.com
Slide 2: Agenda
Agenda 1 Supervisory Board and Committee Work Pages 3-13 2 Executive Board Composition and Succession Planning Pages 14-15 3 Corporate Responsibility Pages 16-20 4 Management Remuneration Pages 21-24 5 Annual General Meeting 2024 Page 25 Corporate Governance Presentation February 2024 Page 2
Slide 3: Supervisory Board – Experience, diversity and independency
1 Supervisory Board and Committee Work Lufthansa Group’s Supervisory Board – Experience, diversity and independency 20 Board Members Lufthansa Supervisory Board tenure 10 Shareholder Representatives 10 Employee Representatives Age Gender Nationality Professional experience1,2 10% 20% 45% 35% 45% 80%
Slide 4: Supervisory Board nomination process
1 Supervisory Board and Committee Work Supervisory Board nomination process1 Step 1 – Definition of required profile Step 2 Step 2 Step Step 3 3 StepStep 4 4 Skills Diversity Experience Other Nomination Committee Supervisory Board • Industry • International • Work • Independence assesses presents of
Slide 5: Shareholder representatives have broad and diverse qualifications
1 Supervisory Board and Committee Work The shareholder representatives have a broad and diverse set of qualifications Karl-Ludwig Kley Chairman of the Supervisory Board Born 1951, German Member since 2013 Extensive leadership and supervisory board experience Financial expert Erich Clementi Michael K
Slide 6: Staggered and short appointment periods ensure regular change
1 Supervisory Board and Committee Work Staggered and short appointment periods ensure regular change on the Supervisory Board AGM 2024 AGM 2026 AGM 2025 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Karl-Ludwig Kley1 Erich Clementi Thomas Enders Karl Gernandt Michael Kerkloh Carsten Knobel
Slide 7: Group of employee representatives headed by experienced chair
1 Supervisory Board and Committee Work Group of employee representatives headed by experienced chair Christine Behle Deputy Chairman of the Supervisory Board Born 1968, German Member since 2013 Deputy Chairwoman of the Federal Management Board of the union Ver.di Tim Busse Jamila Jadran Marvin Resch
Slide 8: Members' skill profiles ensure effective governance (I)
1 Supervisory Board and Committee Work Members’ skill profiles ensure effective governance & committee work (I) Karl- Christine Tim Erich Thomas Karl Sara Christian Jamila Arne Ludwig Behle Busse Clementi Enders Gernandt Grubisic Hirsch Jadran Christian Kley Karstens Membership length Member since 0
Slide 9: Members' skill profiles ensure effective governance (II)
1 Supervisory Board and Committee Work Members’ skill profiles ensure effective governance & committee work (II) Michael Carsten Holger Harald Marvin Birgit Britta Astrid Angela Klaus Kerkloh Knobel Benjamin Krüger Reschinsky Rohleder Seeger Stange Titzrath Winkler Koch Membership length Member sinc
Slide 10: Committees support the work of the Supervisory Board
1 Supervisory Board and Committee Work Committees support the work of the Supervisory Board Steering and Remuneration Committee Nomination Committee Prepares the Supervisory Board’s meetings and decisions, Recommends to the Supervisory Board candidates for election among other things with regard to
Slide 11: Supervisory and Executive Board met on a regular basis in 2023
1 Supervisory Board and Committee Work Supervisory and Executive Board met on a regular basis also in 2023 Attendance of Supervisory Board and committee meetings 2023 Supervisory Board 6 Meetings in 2023 Steering and Remuneration Committee + 5 Meetings in 2023 Audit Committee + 5 Meetings in 2023 ES
Slide 12: Regular self-evaluation is the basis for continuous improvements
1 Supervisory Board and Committee Work Regular self-evaluation is the basis for continuous improvements • The Supervisory Board conducts annual self-evaluations • All Supervisory Members provide feedback based on a detailed questionnaire • Includes a 360° feedback from the Executive Board every two
Slide 13: Supervisory Board is actively involved in the strategy process
1 Supervisory Board and Committee Work The Supervisory Board is actively involved in the strategy process Two strategy-focused meetings: In September, the Supervisory Board discusses the strategy with the Executive Board, in December it approves the strategy and reviews the budget and the mid-term p
Slide 14: Executive Board currently has six members
2 Executive Board Composition & Succession The Lufthansa Group Executive Board currently has six members Supervisory Board Carsten Spohr Chairman of the Executive Board (57, Board member since 2011, CEO since 2014, contract until 12/28) Dr. Michael Niggemann Human Resources & Infrastructure, Labor D
Slide 15: Selection of Executive Board members guided by comprehensive criteria
2 Executive Board Composition & Succession The selection of Executive Board members is guided by a comprehensive set of criteria Personal skill-set Additional criteria Aviation Professional Industry Diversity qualifications Knowledge Leadership International skills & experience management experience
Slide 16: Sustainability is an integral part of Group strategy and management
3 Corporate Responsibility Sustainability is an integral part of the Group’s strategy and management ▪ ESG Committee of the Supervisory Board established in January 2023 ▪ Christina Foerster holds direct responsibility for Corporate Responsibility on Executive Board level since 2020 ▪ Sustainability
Slide 17: Emission reduction targets validated by SBTi
3 Corporate Responsibility Group’s emission reduction targets successfully validated by Science Based Targets initiative (SBTi) Index LHG CO2 Emissions (not to scale) 110 Major levers for CO2 Reduction: Growth Fleet (SBTi relevance) Reduction 50% less net carbon 100 SBTi Sector Guidance ▪ Fleet roll
Slide 18: SAFs will play the key role in reducing emissions
3 Corporate Responsibility SAFs will play the key role in reducing the Group’s emissions Sustainable Aviation Fuels (SAF) Predicted SAF production ramp-up1 in mt The availability of SAFs is projected ~x5 cost of Biogenic SAF fossil fuel to increase significantly, costs are ▪ Oils, Sugars, Starch exp
Slide 19: Lufthansa Group scores well in sustainability rankings
3 Corporate Responsibility Lufthansa Group scores well in relevant sustainability rankings ▪ Rating is unchanged at 'AA’ in 2023. Leader among 20 companies in the airline industry ▪ Strong carbon emission mitigation programs, robust corporate governance and behavior structures ▪ Labor management: un
Slide 20: Increased focus on cyber security
3 Corporate Responsibility Further increased focus on cyber security to protect the business and our customers Cyber Resilient Organization Major Achievements 2023 ▪ Expansion of Cyber Security Community to 180 LHG Technical security Cyber defense Usability, culture and Future focus companies with n
Slide 21: Executive Board remuneration system
4 Management Remuneration Executive Board remuneration system ▶ Compensation system received 89.5% approval at AGM 2023 ▶ Annual General Meeting 2024 will be asked to approve the compensation report Overview of compensation elements Base Salary • Financial targets 80% + • Performance Share Plan • Ad
Slide 22: Short-Term Incentive considers financial and non-financial targets
4 Management Remuneration Short-Term Incentive (STI) considers financial and non-financial targets as well as individual performance Annual Bonus x Annual Target Achievement = Payout: Cash or Financial Targets1 + Target Non-Financial Targets1 (20%) shares Bonus (80%) Cap at 200% Overall and individu
Slide 23: Long-Term Incentive aligns management and shareholders
4 Management Remuneration Long-Term Incentive (LTI) aligns interests of management and shareholders Performance Share Plan 4-year Performance Period LTI target Initial Payout: value number of Adjusted Relative TSR Non-financial targets1 Average cash or shares ROCE1 Performance1 divided by phantom x
Slide 24: Supervisory Board remuneration is fixed and based on committee work
4 Management Remuneration Supervisory Board remuneration is fixed and based on committee work ▶ Compensation system received 98.3% approval rate at AGM 2023 Compensation 2023 Compensation 2022 Committee Committee ▪ Base compensation: in € thousands Fixed activities Total Fixed activities Total Karl-
Slide 25: Format of AGM on May 7, 2024
5 AGM 2024 Format of AGM on May 7, 2024, ensures a high-quality dialogue with our shareholders Shareholders’ motions to April 22 be made accessible shall Submission of be deemed to have been shareholders’ motions Publication of March 26 made at the AGM in and nominations at least shareholder comment
Slide 26: Appendix
Appendix lufthansagroup.com
Slide 27: Executive Board Remuneration System – Short-Term Incentive
Appendix Executive Board Remuneration System – Short-Term Incentive (STI) Short-Term Incentive (STI) Base Salary • Adjusted EBIT vs. target value (40%) + Performance targets • Adjusted Free Cash Flow vs. target value (40%) • Overall and individual business and sustainability targets (20%) Short-Term
Slide 28: Executive Board Remuneration System – Long-Term Incentive
Appendix Executive Board Remuneration System – Long-Term Incentive (LTI) Long-Term Incentive (LTI) Base Salary Performance Share Plan + Plan type • Allocation of virtual Lufthansa shares with a four-year term Short-Term Incentive (STI) • Average adjusted ROCE during the performance period vs. target
Slide 29: Executive Board Remuneration System – Pension
Appendix Executive Board Remuneration System – Pension Base Salary Pension scheme + Short-Term Incentive (STI) Plan type • Defined contribution plan = Contribution • Fixed annual amount Target Cash Compensation Investment concept • Investment of contributions via the Lufthansa Pension Trust + Retire
Slide 30: Executive Board Remuneration System – End-of-service benefits
Appendix Executive Board Remuneration System – End-of-service benefits In accordance with the recommendation of the German Corporate Governance Code (Code), no more than Termination by mutual the value of the entitlements for the remainder of the contract and maximum two years’ compensation consent
Slide 31: Executive Board Remuneration System – Other contractual terms
Appendix Executive Board Remuneration System – Other contractual terms • Company car incl. driver Fringe benefits • Industry standard flight allowances for private air travel • Insurance premiums • Obligation to invest in Lufthansa shares over a period of 4 years − CEO: 200% of base salary Share Own
Slide 32: Capital Authorizations
Appendix Capital Authorizations Exclusion of Nominal Date of Expiry of Purpose Contribution Subscription amount authorization authorization rights Authorized In cash or EUR 1,000m General purposes May 10, 2022 May 9, 2025 Capital A in kind ~32.6% of share capital Contribution in cash: max. 10% of sh
Slide 33: Auditor and auditors' fees
Appendix Auditor and auditors’ fees Auditor for FY 2023 Ernst & Young (since 2020) Joerg Boesser (responsible for the Lead auditors engagement, since 2022) Dustin Jansen (since 2023) The auditing services mainly consist of fees for auditing the consolidated financial statements, the review of the ha
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