Please find below the counter-motions submitted to us by shareholders within the specified period regarding the proposals by the Executive Board and the Supervisory Board for the Agenda of the Annual General Meeting taking place on February 17, 2010 as well as nominations by shareholders for the election of supervisory board members or statutory auditors, to be made accessible by the Company pursuant to sections 126, 127 of the German Stock Corporation Act (AktG).
Dear Shareholders,
For our Annual Meeting to be held in Hanover on February 17, 2010, shareholders have submitted counter-motions respectively election proposals to Agenda Items 3,6,7 and 8.
With reference to the counter-motion by the shareholder Monteray Enterprises Ltd. pertaining to Agenda item 8 there is a comment made by our Supervisory Board after the reason given. Moreover we refer to the proposed resolutions on the individual agenda items made by the Supervisory / Executive Board, which were announced in the invitation to the Annual General Meeting.
Counter-motion re. Item 3
Submitter: Wilm Diedrich Müller
Re. Item 3 of the Agenda - Resolution on the ratification of the actions of the Executive Board for the short financial year from 1 January to 30 September 2009 -
"Sirs, I hereby requested to reject the ratification of the actions of the Executive Board for the short financial year 2009.
Reasons: I justfied my counter-motion, that there is today no resolution for a dividend payment in the above-mentioned invitation."
You may support the counter-motion by voting "NO" on the respective agenda item.
Conter-motion / election proposals re. Item 6
Motion D
Submitter: Bernd Reichel
Re. Item 6 of the Agenda – Election of a new Supervisory Board member for the remaining term of office -
“Instead of Prof Klaus Mangold I propose myself for this position.
(Mr Reichel is a retiree, in former days system analyst and management consultant; Mr Reichel is not a member of any other statutory supervisory board or comparable domestic or foreign supervisory body of any business enterprise.)
Reasons: Instead of Prof. Klaus Mangold I propose myself for this position. A similar thing was done by the shareholder/shareholder representative John Fredriksen and Olav Troim. If Prof. Klaus Mangold had the specialist area of tourism then I would have more confidence in him. In the Financial Times Deutschland (FTD) it says: the managers at Daimler are not able to cooperate. Take a look at AEG Telefunken, Chrysler (€35 billion loss), Fokker (bankrupt), Mitsubishi (cooperates with VW) and so on. And now Mr Klaus Mangold unfortunately works for Daimler. In the Manager Magazin it states that Mr Klaus Mangold had also worked for the mail order firm Quelle. I can see a connection between the poor work performed by Mr Klaus Mangold at Quelle and the bankruptcy of the Quelle mail order firm. Ms Schikedanz complained that at Quelle computers, data processing and the internet were not introduced early enough in the sales process. In that respect Otto and Amazon.com were more clever. It is probably Mr Klaus Mangold who was responsible for the acquisitions being a failure. It is also probable that Mr Klaus Mangold was responsible as the CFO at Daimler for the unsuccessful acquisitions at Daimler.
I studied and got a degree in mathematics at the University of Tübingen and passed the state examination there majoring in mathematics. I have worked as a programmer, systems analyst and a management consultant for/at Siemens, IBM, Allianz, BMW, Lufthansa and so on. For TUI AG in Hannover-Roderbruch I looked after the online booking system, advised travel agencies and wrote and modified some computer programs for the online booking system so that customers could go on holiday and travel agencies could book the holidays. I have already made contact in writing and personally with some shareholders such as Hermes and asked them to vote for me. I intend to receive more than 50% of the votes submitted. I met some shareholders at an AGM and briefly spoke with them. I will put all my effort into supporting TUI AG and its holdings in Air Berlin and Hapag Lloyd. What I am interested in is that these companies work profitably and competitively and that the employees work successfully and that a decent dividend is paid. Mr Marc Hanssmann and the Lord Mayor Stefan Weil are interested in the city of Hanover receiving local business tax. Here TUI AG should pay an appropriate amount and I recommended that he attract other companies to Hanover. I also made suggestions for improvement in favour of TUI AG. Mr Michael Frenzel picked up on some of my suggestions. I also wrote to the European Commission asking them to allow a cooperation with competitors owing to the difficult situation in the container shipping business. As a result of this the European Commission has lifted this ban to 2015. I have prepared an expert report based on the information available to me in German, English, American and French newspapers and magazines and distributed it in Hamburg and sent it to Mr Kühne. For that reason I feel the expert report on Hapag Lloyd demanded by Messrs Olav Troim and John Fredriksen is unnecessary. Yet it is a fact that Mr Michael Behrendt has made some severe mistakes that harm Hapag Lloyd and as such also TUI AG. Unfortunately I do not have the email address of Monterey, Frontline Ltd, John Fredriksen or Mr Olav Troim. I am of the opinion that TUI AG has to grow from within, ie organically. I will continue to keep in contact with our major Russian shareholders. The manager invited me to talks in Hanover. I recommended him some hotels in Hanover city centre and advised him if at all possible to fly with Air Berlin. Perhaps he would like to stay in our two-family house. I also suggested that some Russians with a knowledge of German could get training in the travel business in Hanover or could do some training in a TUI travel agency. That’s how to get to know one another. I know of no hotel in Hanover that is owned by TUI AG. As a future member of the Supervisory Board I also have the job of part-time consulting. I have read a reference book for Supervisory Board members."
If you wish to support the counter-motion marked by letter D in the event of a separate vote, please tick the box corresponding to the letter marking the respective counter-motion.
Motion E
Submitter: Dipl.-Ing. Jürgen Kaiser
Reasons: The Group results are consequently unsatisfactory. To compensate for the loss the reserves have to be drawn upon.
The figures have for years been worse than the general economic development and not up to the justified expectations of the shareholders – the Executive Board is to blame for this.
In the Supervisory Board there is no one representing the small shareholders who can carry out the necessary supervising functions in an unencumbered way.
If you wish to support the counter-motion marked by letter E in the event of a separate vote, please tick the box corresponding to the letter marking the respective counter-motion.
Counter-motion re. Item 7
Submitter: Bernd Reichel
Re. Item 7 of the Agenda - Reduction of the Supervisory Board from 20 to 16 members -
"I propose not to reduce the Supervisory Board.
Reasons: I am of the opinion one should recount the number of TUI AG employees, but first of all consider who counts as an employee. What has to be considered are subsidiaries, holdings, part-time employees, temporary staff, skiing instructors, swimming pool attendants, Magic Life hotels, the Riu group and so on, and moreover what day should the figure refer to. I have read various different figures referring to the number of employees."
You may support the counter-motion by voting "NO" on the respective agenda item.
Counter-motions re. Item 8
Submitter: Monteray Enterprises Ltd.
Re. Item 8 of the Agenda - Vote on the remuneration system for TUI AG Executive Board members -
"Monteray Enterprises Ltd. requests that the remuneration system for TUI AG’s Executive Board be rejected.
Reasons: The Supervisory Board has proposed under agenda item 8 to approve the new remuneration system for TUI AG’s Executive Board members. Since the agenda item however is worded in very general terms, the vote on the remuneration system for the Executive Board pursuant to section 120 (4) of the German Stock Corporation Act (AktG) not only covers the “new” remuneration system, but also the remuneration system for the Executive Board members for the past reporting period as outlined in the management report (Lagebericht) for the short financial year 2009.
Neither the new remuneration system, nor the remuneration system for the short financial year 2009 comply with the requirements of section 87 of the German Stock Corporation Act and the recommendations of the German Corporate Governance Code: In the short financial year 2009, this system led to the result that the performance-related remuneration (Tantieme – hereinafter “Management Bonus”) was decoupled from the actual year-end results of the Company and the Group and thus no longer related to the economic position of the Company. This is not resolved by the “new” remuneration system either.
In 2009, the calculation of the Management Bonus was based on the EBITA, as adjusted to account for extraordinary factors (new: “operating EBITA”). The underlying EBITA for the Group amounted to €407.9 million in short financial year 2009, thereby displaying a drop of over 50% compared with the figure for the corresponding period in 2008 (€879.4 million). Although in the consolidated financial statements a net annual profit of €400.7 million was reported for the short financial year, this is entirely attributable to the extraordinary effect of the sale of the majority stake in Hapag-Lloyd. If the earnings on the disposal of the container shipping business of €1,135 million are deducted, the consolidated result would have been clearly negative, namely €-734.3 million. The result from continuing operations is also negative and amounts to €-443.5 million. In its annual financial statements, TUI AG reported a loss of €-98.0 million and will consequently, as in the previous year, not be distributing a dividend.
During the short financial year, TUI was (and still is) in a difficult economic position – not least in view of the situation at Hapag-Lloyd, which in October had to seek state aid and which has received considerable financing contributions from its shareholders, notably TUI. According to its own statements, TUI AG is dependent on the amounts due to it being repaid by Hapag-Lloyd if TUI AG is to be able to meet its own payment obligations. The decline in revenues in the tourism sector demonstrates that this business area has also been affected by the general economic crisis. TUI’s difficult situation is further underlined by its considerable debt, with net financial liabilities of approximately €2.9 billion, and its further downgrading by the rating agencies Standard & Poor’s (B- “credit watch with negative implications”) and Moody’s (Caa1 “negative outlook”)
Notwithstanding the above, in the short financial year 2009 the Chairman of the Executive Board received in total a non-performance-related (fixed) remuneration of €947,100 (or €105,230 per month) and a Management Bonus of €1,103,500 (or €122,610 per month), his total remuneration being €2,390,200 (or €265,570 per month), while, for the 2008 financial year, his fixed remuneration totalled €104,800 per month, with a Management Bonus of €130,970 per month. It can thus be seen that the Management Bonus was reduced only insignificantly while the fixed remuneration even increased. In a comparison of the two equivalent nine-month periods, the total remuneration of the Chairman of the Executive Board fell by only 15.9%, while at the same time the total remuneration paid to chairmen of the executive boards of DAX and MDAX companies publishing their reports as of 30 September 2009 typically fell by 30% or more. The absolute amount of the remuneration exceeds the levels prevailing in comparable companies to a significant degree. A remuneration amount that is appropriate with regard to the results and the position of the Company and the performance of the members of the Executive Board and in comparison to other companies has therefore not been ensured.
This systematic misorientation of the performance-related remuneration is also part of the new remuneration system. The information provided does not show that the new remuneration system, which uses the “operating EBITA” as the calculation base, will not equally lead to a decoupling of the performance-related remuneration from the actual results of the Company and the performance of the management. This decoupling will potentially be even more pronounced if the negative results from the container shipping business are not included in the operating EBITA. It is also not clear from the information provided that the new remuneration system will result in an alignment of the total remuneration with market standards. Furthermore, the new remuneration system does not provide adequate performance incentives, since it regards the achievement of only 50% of a set target as a success worth rewarding.
Moreover, the new remuneration system still allows for the possibility that the remuneration of the Chairman of the Executive Board for his activities as Chairman of the Supervisory Board of Hapag-Lloyd will continue not to be offset from his total remuneration."
Statement by the TUI AG Supervisory Board
The TUI AG Supervisory Board recommends that the counter-motion proposed by the shareholder Monteray Enterprises Ltd. be rejected.
The counter-motion submitted by Monteray Enterprises Ltd. misleadingly deals primarily with the Executive Board remuneration for the short financial year 2009. Agenda item 8 clearly deals solely with a vote for “the approval of the new Executive Board remuneration system in accordance with section 120(4) of the AktG”. In addition, the claim that the performance-based remuneration is not tied to the actual annual results for the Company and/or Group is incorrect. In fact, the variable component of remuneration, which is comprised of the management bonus and the long-term incentive program, dropped from €9.5 million in 2008 to €5.4 million in the short financial year 2009 on a comparable basis. The drop in underlying earnings of the individual divisions (EBITA) has led to a marked reduction in the variable component of the remuneration received by Executive Board members. In addition, the Supervisory Board obtained an expert opinion from a recognised compensation expert which satisfied it that the remuneration for Executive Board members is not unduly high.
With agenda item 8, the Supervisory Board has submitted the new system for approval for the express reason that the old system does not yet fully take into account the new legal requirements. The new Executive Board remuneration system complies in all respects with the stipulations of the German Stock Corporation Act (AktG - section 87 of the AktG) and the German Corporate Governance Code. The target values on which both the annual performance-based remuneration and the long-term incentive system are based are ambitious and constitute corresponding performance incentives. The initial hurdle of at least 50% of the specified target is in line with the prevailing market trend for performance-based remuneration systems. Contrary to the claims made in the counter-motion, there continues to be a direct connection between the basis for calculation (operating, i.e. underlying EBITA adjusted for special influences) and the annual performance-based remuneration. By definition, extraordinary developments, such as the income from the sale of the shareholding in Hapag-Lloyd AG, do not have any effect on the annual performance-based remuneration due to the fact that special influences are excluded.
You may support the counter-motion by voting "NO" on the respective agenda item.
Motion A
Submitter: Helga und Horst-Werner Akrutat
Re. Item 8 of the Agenda - Vote on the remuneration system for TUI AG Executive Board members -
"The sentence 3 should read as follows: The standard age of retirement is the retirement age as laid down in Section 235 SGB (German Social Security Code) VI.
Reasons: This ruling corresponds with the forming of the political will based on demographic reasoning."
If you wish to support the counter-motion marked by letter A in the event of a separate vote, please tick the box corresponding to the letter marking the respective counter-motion.
Motion B
Submitter: Dr.-Ing. Eckhard Eichhorn
Re. Item 8 of the Agenda - Vote on the remuneration system for TUI AG Executive Board members -
"The section TOP 8 annual performance-based remuneration must be supplemented by: The annual performance-based remuneration is not payable in years in which no dividend is paid.
Reason: The "attempt" to procure earnings and the possibility of being paid one’s compensation is made with shareholder capital. The order issued by shareholders and also the proof of success can be seen in the option of paying a dividend; if this option does not exist, then one cannot speak of "success".
If you wish to support the counter-motion marked by letter B in the event of a separate vote, please tick the box corresponding to the letter marking the respective counter-motion.
Motion C
Submitter: Bernd Reichel
Re. Item 8 of the Agenda - Vote on the remuneration system for TUI AG Executive Board members -
"I request, differing from the Supervisory Board's proposal, that a decision be made in favour of a modified compensation system.
Reasons: I have the following suggestion in this respect:
One takes a period of 5 years and calculates the grand total from the operative loss and profit and then takes this sum divided by the number of years as the benchmark figure. As TUI AG does not deal in shares this represents a good basis for working out the variable income because in this way the amounts are averaged out. The bonus would then be held back for a period of 4 years in a bank account at the main branch of the Deutsche Bank in Hanover. The insurance group Talanx does not trust the banks and therefore wants to have a bank account at the German Federal Bank (Bundesbank). I believe the Deutsche Bank in Germany is quite good and proper.
At the Siemens AGM on 27 January 2009 the compensation system for top managers was also discussed. TUI AG should follow this up. The compensation of top managers should urge them on to be more successful. One study came up with the following result: the less top managers are paid the more they try to do nothing wrong and to work well. When managers are paid all too much money then they have too many problems organising their money properly. This worry distracts them from carrying out good and successful work.
If you wish to support the counter-motion marked by letter C in the event of a separate vote, please tick the box corresponding to the letter marking the respective counter-motion.