Performance-related components

The performance-related components of Executive Board remuneration include the annual performance-related remuneration (short-term incentive, ‘STI’) with a one-year performance period, which is measured on the basis of two key financial Group figures and an ESG factor (ESG = Environmental, Social, Governance).

The multi-year component, known as the long-term incentive (‘LTI’), is based on virtual shares and the development of earnings per share (‘EPS’) and runs over a performance period of four years.

Short term incentive ('STI')

The STI is a performance-related target bonus designed to motivate the members of the Executive Board to achieve demanding and challenging financial, operational and strategic targets during a financial year. These targets contribute to the corporate strategy and are designed to increase the value of the company. The STI is calculated on the basis of two Group financial indicators and an ESG factor. The key financial indicators are reported EBIT and total cash flow before dividends (‘total cash flow’), both of which are calculated on the basis of constant exchange rates.

  • Reported EBIT is the TUI Group's reported earnings before interest and taxes on a constant currency basis.
  • The Group indicator total cash flow is total cash flow before dividends determined for the purpose of calculating Executive Board remuneration. This is calculated from the operating cash flow determined on the basis of reported EBIT less net investments and less/plus the change from financing adjusted for Group (re-)financing measures

 

The ESG factor is based on three equally weighted sub-targets from the areas of environmental, social and governance.

  • Sub-targets from the environmental area - examples: Reduction of CO2 emissions, waste management, utilisation of resources, share of renewable energies in electricity consumption, development of a comprehensive sustainability strategy
  • Sub-targets from the social area - examples: Employee concerns (diversity, employee satisfaction, talent acquisition and development), social concerns (social projects, data protection), customer / supplier concerns (customer satisfaction, loyalty rate)
  • Sub-targets from the area of governance - examples: Promotion of compliance, anti-corruption, safety innovations, result ESG ratings

When calculating the target achievement for the Group key figures, reported EBIT is weighted at 75% and total cash flow at 25%. For each financial year, the Supervisory Board sets minimum, target and maximum values for the aforementioned Group key figures, which correspond to target achievement of 50%, 100% and 180% respectively. By comparing the actual result (actual value) with the target value, the target achievement for each Group key figure is determined.

Payments from the STI are only granted if targets are achieved within the target achievement corridor. The degree of target achievement resulting from the weighted average calculation is multiplied by the ESG factor and the individual target amount agreed in the service agreement in order to calculate the amount paid out for the STI. 

Long Term Incentive ('LTI')

The LTI is a multi-year variable remuneration for Executive Board members calculated on the basis of virtual shares. The relevant performance target is the TUI Group's average annual reported earnings per share (‘EPS’) over a four-year performance period.

 

  • Reported EPS is the reported earnings per share from continuing operations recognised in the TUI Group's approved and audited consolidated financial statements

Each Executive Board member has an individual target amount, which is set out in the service agreement. The number of virtual shares allocated at the beginning of each financial year is based on this target amount and the average XETRA share price of TUI AG over the 20 trading days prior to the first day of the allocation financial year.

The Supervisory Board sets minimum, target and maximum values for the Reported EPS, which correspond to target achievement of 25%, 100% and 175% respectively.

 

Payouts from the LTI are only granted if targets are achieved within the target achievement corridor. The final number of virtual shares and the payout amount are determined at the end of the performance period based on target achievement and the average XETRA share price of TUI AG over the 20 trading days prior to the end of the performance period.