Counter-motions
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Regarding our general meeting on 16 May 2007, Hanover,one shareholder has so far submitted counter-motions to topics 3 and 4 of the agenda which are to be made available by the company. The motions are listed in the same order as the agenda topics.
Counter-motion to agenda topic 3
Counter-motion to agenda topic 4
Counter-motion to agenda topic 6
Regarding topic 3 of the agenda:
Text of the resolution:
Be it resolved, that the activities of the Executive Board in the 2006 financial year are not formally approved.
Statement of Reasons:
The disastrous misassessment of the macroeconomic situation by the Executive Board and the resultant buying into CP Ships at an inappropriately high price, financed by means of a capital increase causing a strong dilution in the company’s capital stock, has given rise to a substantial reduction in the net income of our stock company (AG), otherwise operating in a relatively successful manner. Even divestments in other sectors only resulted in an immaterial cushioning of the disaster.
In real terms, capital was destroyed at large quantities. We are faced with negative consolidated earnings of just over three quarters of a billion euro, i.e. the equivalent of EUR 3.66 of net value destruction per share.
The Executive Board tried to create an understanding for the above-mentioned value destruction at the last Annual General Meeting by means of slogans such as „It’s better to walk on two feet“, without, however, furnishing evidence of a negative correlation between margins in package tours and freight rates. In addition, having deliberately shattered the balance sheet for 2006 in this way, the same Executive Board now has the audacity to suggest under item 2 of the agenda that the earnings generated by the AG, which have been strongly reduced due to the CP Ships venture, be fully retained within the company and that the shareholders be left empty-handed.
Moreover, this suggestion starkly contrasts with the fact that the Executive Board continues to have itself paid pretty substantial compensation amounts in relation to the work performed.
It is unacceptable for us shareholders to continue to approve the activities of an Executive Board that has proven over time that it is unable to handle the shareholders’ money in a way that creates value.
All shareholders, including and in particular the large institutional investors, are called upon to set a clear example against mismanagement, an inappropriate investment policy and the inability of this Board to make forecasts. They should not just abstain but take a clear position as proposed by the present counter-motion.
Berlin, 20 April 2007
Signed by: Ulli Zedler
Mr
Ulli Zedler,
Hamburg
Regarding topic 4 of the agenda:
Text of the resolution:
Be it resolved, that the activities of the Supervisory Board in the 2006 financial year are not formally approved.
Statement of Reasons:
The Supervisory Board has been largely inactive, simply watching the activities of the Group management and in the final analysis approving of the misdirected investment, seemingly without critically questioning this investment. Given the lack of expertise in international freight shipping to be assumed for the otherwise certainly highly qualified experts such as Dr Krumnow, Dr Schneider, Dr Liesen and Dr Vranitzky, this is not surprising. However, the Supervisory Board has failed to consult independent external experts in these important decisions of major relevance to the shareholders’ assets.
No shareholder will demand that an oversight body be smarter than the market in this respect, but every Supervisory Board member is required to obtain the expertise required for such a decision unless they have the relevant expertise themselves. If they fail to do so, they do not perform their duties.
The impression created here is that old personal relationships and ill-fated multiple mandates, still to some extent recalling the old “Germany Inc.“, have an inhibiting effect and thus promote behaviour representing a violation of duties. Given the fact that individual members of the Supervisory Board are members in up to 11 other supervisory bodies, they seem to be unable, not least for simple lack of time, to sufficiently devote themselves to overseeing our company.
Moreover, the impression is created that the Supervisory Board, knowing that tacit agreement on the acquisition of CP Ships and the participation of our large Spanish shareholders in the required capital increase was reached with these shareholders in the run-up to the transaction, only showed insufficient and far too superficial commitment in engaging in a neutral, objective analysis of whether this transaction made sense in view of the interests of the remaining shareholders.
Every independent consultant with a certain amount of experience in the international freight business would easily have been able to outline the substantial risks entailed in acquiring an interest - at a top price - in a sector that overheated in 2006.
The Supervisory Board would thus have been able to guide and in particular moderate the Executive Board that had obviously lost sight of the appropriate economic measure in this transaction. Admittedly, the Executive Board and the Supervisory Board have broad scope for forecasts in any forward-looking decision and therefore in any entrepreneurial investment. However, approving of an investment entailing high risks without raising any criticism and being aware of - or even ignoring - these risks which are not offset by any appropriate opportunities is by no means behaviour deserving of formal approval.
In order to at least keep up the theoretical option for the company to take steps against any misbehaviour by the Supervisory Board in this respect even after the 2007 AGM, the formal approval of its activities must be refused as a precautionary measure.
Berlin, 20 April 2007
Signed b: Ulli Zedler
Mr Walter Habich, Osnabrück
Regarding topic 6 of the agenda:
Regarding topic 6 of the agenda:
Version currently applicable:
“(c) a remuneration reflecting the long-term success of the Company (long-term variable remuneration). Long-term variable remuneration shall comprise a base amount of € 20,000 per year and shall be granted for the current fiscal year – starting from fiscal year 2006. This base amount shall be due at the end of the third fiscal year following the granting and shall either be increased or reduced to the extent that the profit per share in the third fiscal year following the granting changes compared with the fiscal year for which the amount was granted.
Should a member of the Supervisory Board depart prior to expiry of the assessment period, the profit per share in the fiscal year of departure shall be the determining factor when calculating the long-term variable remuneration.”
New version:
“(c) a remuneration reflecting the long-term success of the Company (long-term variable remuneration). Long-term variable remuneration shall comprise a base amount of € 20,000 per year and shall be granted for the current fiscal year – starting from fiscal year 2006. This base amount shall be due at the end of the third fiscal year following the granting and shall either be increased or reduced to the extent that the TUI share develops against the DAX.
To this end, the annual average of the TUI share price in the base year and the annual average of the TUI share price for the third fiscal year following the granting must be determined, with all dividends paid in the interim period having to be added to the share price as of the date of payment. Annual averages must also be determined for the DAX for the same periods. The performance of the TUI share and the DAX shall be determined by means of relating the respective annual average for the third fiscal year following the granting to the annual averages in the base year. The assessment is effected by means of relating the performance of the TUI share to the performance of the DAX. For every percentage point of performance gains of the TUI share against the DAX, the base amount must be increased by EUR 4,000.00. For every percentage point of performance losses of the TUI share against the DAX, the base amount must be reduced by EUR 4,000.00. If the performance loss against the DAX exceeds 5%, the variable remuneration will not be paid for the base year.
Should a member of the Supervisory Board depart prior to expiry of the assessment period, the comparison of the performance in the fiscal year of departure shall be the determining factor in calculating the long-term variable remuneration.”
Statement of reasons:
The amended version meets the shareholders’ interest in a sustainable value creation and does not require a limitation of the type shown in the current version.
Statement of the Executive Board:
"The Executive Board of TUI AG does not support Mr Habich’s motion.
The proposal by the Executive Board and Supervisory Board creates an unambiguous mathematical method to determine the amount of long-term variable remuneration paid to the members of TUI AG’s Supervisory Board. The level of the long-term variable remuneration exclusively depends on the long-term development of TUI AG’s earnings per share. The amount paid out is limited to 250% of the basic amount; this is a useful limitation for the event of an extraordinary unforeseen development. The members of the Supervisory Board are provided with a clear incentive to ensure a sustainable increase in earnings per share. This is in the interest of shareholders.
Mr Habich’s proposal links the long-term variable remuneration to the development of the TUI share in relation to the development of the stock exchange prices of the companies listed in the DAX 30. From the management’s perspective, this does not create an unambiguous incentive for the members of TUI AG’s Supervisory Board since a comparison of the stock price of the TUI share with an average price of the companies listed in the DAX 30 is of no relevance as a corporate control function."
Management note:
“Letter A has been assigned to the above counter-motion on the instruction sheet. Hence, if you wish to have your voting right exercised by a proxy and you support the above counter-motion, you must tick the field in the NO column under item 6 of the agenda and, additionally, tick the field above letter A.”