Executive Board remuneration
The current remuneration system for the members of TUI AG's Executive Board has been in place since financial year 2024 (beginning 1 October 2023) and was retroactively approved by the Annual General Meeting on 13 February 2024 with a majority of 88.94%.
It complies with the requirements of the German Stock Corporation Act and follows the recommendations of the German Corporate Governance Code (GCGC). In addition, it takes greater account of sustainability aspects relevant to the company as defined by the GCGC. The Supervisory Board has thus also taken into account the criticism and suggestions of investors and proxy advisors.
The remuneration system for TUI AG's Executive Board members incentivises the promotion of the company's business strategy and long-term, sustainable development. The following chart provides an overview of the individual remuneration components and the structure of the remuneration system for the members of the Executive Board.
The structure and organisation of the remuneration system has basically proven itself in recent years, which is why no fundamental adjustments were necessary. An overview of the main changes to the remuneration system valid until 30 September 2023 can be found here.
Remuneration structure
Target total remuneration
The remuneration of the members of the Executive Board consists of fixed and variable components. Fixed components are the monthly salary, fringe benefits and the company pension scheme. Variable components are the Short Term Incentive (STI) and the Long Term Incentive (LTI). The Supervisory Board sets a target total remuneration for each member of the Executive Board that is commensurate with the tasks and performance of the Executive Board member and the situation of the company. The target total remuneration is made up of the sum of all remuneration components. For the STI and the LTI, the target amount is based on 100% target achievement.
Around 36% of the CEO's remuneration consists of fixed components and around 64% of variable components. The STI accounts for around 40% and the LTI for around 60% of the variable remuneration. For the other members of the Executive Board, the proportion of fixed remuneration is around 40-45% and that of variable remuneration around 55-60%. The STI accounts for around 35-38% of variable remuneration and the LTI for around 62-65%. The proportions of fixed and variable remuneration may vary in future financial years, in particular due to developments in service costs as part of the company pension scheme, the cost of contractually agreed fringe benefits and any new appointments.
Non-performance-related components
Fixed remuneration
The members of the Executive Board receive fixed remuneration, which is paid in twelve equal instalments at the end of each month. If the service agreement begins or ends during the financial year in which the remuneration is paid, the fixed remuneration for this financial year is paid pro rata temporis.
Fringe benefits
The Supervisory Board of TUI AG may grant the members of the Executive Board various fringe benefits. The actual amount may vary depending on the amount utilised by the Executive Board members. The fringe benefits include in particular
- the provision of a company car, which may also be used privately, or alternatively a monthly car allowance.
- contributions to health and long-term care insurance and the costs of a medical check are covered. In addition, TUI AG has taken out accident insurance for the members of the Executive Board.
- the conclusion of a D&O insurance policy to protect the members of the Executive Board against financial losses that may arise from breaches of duty in their work.
Company pension scheme
TUI AG offers its Executive Board members a company pension scheme in the form of a fixed annual pension allowance paid in addition to their fixed remuneration. The members of the Executive Board can use this remuneration to organise their pension independently.
In the past, TUI AG has concluded pension commitments for retirement, disability and surviving dependants' benefits. An annual pension contribution of a contractually agreed amount is credited to a pension account. The contributions bear a maximum interest rate of five per cent and form the pension capital in the event of retirement. Such a pension commitment currently exists with Mr Ebel.
Performance-related components
The performance-related components of Executive Board remuneration include the annual performance-related remuneration (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 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
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 calculated on the basis of constant exchange rates and total cash flow before dividends (total cash flow).
- 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
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.
Other regulations
Remuneration caps
The total remuneration of TUI AG's Executive Board members for a financial year is capped. This includes fixed remuneration, variable remuneration components, expenses for the company pension scheme and fringe benefits. The maximum remuneration is EUR 7,500,000 gross for the Chairman of the Executive Board and EUR 3,500,000 gross for ordinary Executive Board members. If the maximum remuneration is exceeded, the amount paid out under the LTI is reduced accordingly. Irrespective of the maximum remuneration, the STI payout amounts are limited to 216% and the LTI payout amounts to 240% of the respective target amount. These upper limits apply pro rata in the event of an employee joining or leaving the company during the current financial year.
Share Ownership Guidelines (SOG)
In addition to the LTI, the share purchase and shareholding obligation is an important component of TUI AG's remuneration system. Executive Board members must acquire and hold a minimum number of TUI AG shares by the end of a build-up phase. The equivalent value of this minimum holding to be acquired must be at least 100% (for ordinary Executive Board members) or 150% (for the Chairman of the Executive Board) of a fixed gross annual salary. From financial year 2025 onwards, Executive Board members must use at least 25% of the net STI payout amount to acquire shares each year until the SOG target is reached. Shares already owned by Executive Board members or their families can also be used to fulfil the SOG target. The relevant purchase price is decisive for offsetting.
Secondary employment
Secondary employment of a member of the Executive Board and an office as a member of the Supervisory Board of another company generally require the prior written consent of the Supervisory Board. In addition, at the request of the Executive Board or the Supervisory Board, Executive Board members are obliged to hold supervisory board mandates and similar offices in companies in which TUI AG holds at least 25% of the voting rights without separate remuneration. Remuneration for intragroup mandates is offset against the remuneration of the Executive Board.
Commitments in connection with the termination of the mandate
The Supervisory Board can agree a post-contractual non-competition clause with members of the Executive Board in return for payment of compensation. In the event of premature termination of an Executive Board mandate, severance payments to Executive Board members may not exceed the value of the remuneration for the remaining term of the service agreement and may not exceed two years' remuneration. The decisive factor here is the target direct remuneration, which is made up of the fixed remuneration and the target amounts for STI and LTI. In the interests of the company, the Supervisory Board may make deviating arrangements in termination agreements. The severance payment should generally be credited against any compensation for waiting periods.
Malus- and clawback provisions
In the event of a serious breach by a member of the Executive Board of the principles set out in TUI AG's Code of Conduct or of the duty of care in managing the company during the assessment period of a variable remuneration component - in the case of the STI during the relevant one-year assessment period, in the case of the LTI during the relevant four-year assessment period - the Supervisory Board may, at its due discretion, reduce or completely cancel the amount paid out under the STI and/or the amount paid out under the LTI (malus) in individual cases or demand full or partial repayment if no more than five years have passed since the payment (clawback). A breach may also be a serious violation of organisational and monitoring duties. In making its decision, the Supervisory Board must take particular account of the severity of the breach and the amount of the financial or reputational damage caused by it.