Report of the Supervisory Board

In written and verbal reports, the Executive Board provided regular, timely and comprehensive information to the Supervisory Board, encompassing all relevant information on the planning, the development of business and the position of the Group, including the risk situation, risk management and compliance. Deviations in business performance from the approved plans were presented, explained and discussed. The Executive Board discussed the strategic orientation of the Group and all key transactions of relevance to the Company – in particular the further development of the Group – with the Supervisory Board. The Supervisory Board was involved in all decisions of fundamental relevance to the Company. The Supervisory Board took the resolutions required in accordance with the law and the Articles of Association.

Transactions requiring the approval of the Supervisory Board or which were of fundamental importance were comprehensively discussed with the Executive Board at Supervisory Board committee meetings prior to a decision being taken. The Supervisory Board was fully informed about specific and particularly urgent plans and projects arising between the regular meetings and, where necessary, submitted its approval in writing. The chairman of the Supervisory Board was regularly informed about current business developments and key transactions in the Company between Supervisory Board meetings.

The Audit Committee supports the Supervisory Board in exercising its monitoring function. It discusses in particular accounting and reporting issues, questions related to the internal auditing system, risk management and compliance. The half-year and quarterly financial reports are discussed between the Audit Committee, the Executive Board and the auditors prior to publication.

The Nomination Committee suggests suitable candidates to the Supervisory Board for its proposals to the Annual General Meeting or appointment by the local court.

Number of meetings
In the 2009 short financial year, three regular and three extraordinary Supervisory Board meetings were held, one of which was a telephone conference. Two resolutions were passed by written circulation procedure. The Presiding Committee met four times; the Audit Committee held three meetings; the Nomination Committee met twice.

Prior to regular Supervisory Board meetings, the shareholder representatives on the Supervisory Board met six times, and the employees’ representatives seven times in separate meetings. All Supervisory Board members attended at least half of the Supervisory Board meetings in the completed short financial year. Average attendance was over 85%.

Work of the Presiding Committee
In the period under review, the Presiding Committee held two regular and two extraordinary meetings. At the meeting on 23 March 2009, convened to adopt the annual financial statements, the Presiding Committee mainly dealt with the annual financial statements as per 31 December 2008 and the associated proposals for resolutions to put to the Supervisory Board. The meeting also served to discuss issues relating to the Supervisory Board and the agenda for the subsequent Supervisory Board meeting. The meeting of 10 July 2009 served to prepare the subsequent Supervisory Board meeting and discuss issues relating to the Executive Board, including the recommendation to extend of Peter Long’s appointment as a member of TUI AG’s Executive Board. The extraordinary Presiding Committee meeting on 28 July 2009 focused on approval of a programme to stabilise the equity and liquidity position of Hapag-Lloyd AG. At the meeting on 10 August 2009, the Presiding Committee mainly met to prepare the subsequent meeting of the Supervisory Board.

Work of the Audit Committee
The Audit Committee met three times. At its meeting on 19 March 2009, deliberations focused on the annual financial statements of TUI AG and the consolidated financial statements for 2008. It also prepared its recommendation to the Supervisory Board on the election of auditors for the 2009 short financial year. At that meeting the Presiding Committee also discussed a status report on the synergy effects achieved and further planned synergies at TUI Travel. At its meeting on 8 May 2009 the Audit Committee dealt with the interim financial statements and report as per 31 March 2009, the Group’s risk situation and risk management and the Group’s hedging transactions to hedge against exposure to changes in exchange rates, interest rates and fuel prices.

At the meeting on 9 August 2009 the Audit Committee discussed the interim financial statements and the half-year financial report. It also dealt with the Group‘s financing position, in particular the expiry of credits and credit facilities and the status of refinancing. The Audit Committee also discussed the efficiency of the internal audit system and the effects of the German Accounting Law Modernisation Act (BilMoG) on the activities of the Audit Committee. At that meeting, representatives of an auditing firm presented the status of a project to simplify shareholding structures within the Group.

Auditor representatives attended all three meetings of the Audit Committee and presented reports on their activities, in particular the audits or reviews of annual interim financial statements and financial reports.
 
Work of the Nomination Committee
The Nomination Committee held two meetings in the short financial year 2009. On 23 March 2009, the Nomination Committee discussed proposals for candidates to succeed three Supervisory Board members resigning from the Supervisory Board. At the meeting on 10 July 2009, deliberations focused on a candidate for the Court to appoint in replacement of member who had resigned.
 

At its extraordinary meeting on 27 February 2009, the Supervisory Board elected Petra Gerstenkorn as deputy chairwoman of the Supervisory Board. The Super­visory Board was also given a report on the current short financial year by the Executive Board and discussed the sale of Hapag-Lloyd AG and associated financing issues.

The meetings of 23 and 24 March 2009 focused on reporting and deliberations on the annual financial statements as per 31 December 2008, a comparison between budget and actual figures for 2008, the forecast for 2009 and the HR and social position in 2008. The discussions on the annual financial statements were also attended by representatives of the auditors, who were available to answer questions. The Supervisory Board discussed the strategic development of the Group and prepared the ordinary 2009 Annual General Meeting. Other items on the agenda for that meeting were amendments to the Articles of Association (resulting, inter alia, from authorisation resolutions in the framework of capital measures), the resolution on the issue of employee shares and the extension of the authorisation to acquire own shares.

Based on a resolution passed by written circulation procedure, the Supervisory Board, on 7 April 2009, voiced its opposition to the removal of Supervisory Board members Dr Krumnow and Matutes Juan, elected at the Annual General Meeting of May 2006, which had been demanded by a shareholder, since they had always acted in the best interest of the Company and enjoyed the full confidence of the Supervisory Board. The Supervisory Board suggested rejecting any motion that might potentially be submitted at the Annual General Meeting to dismiss Dr Krumnow and Matutes Juan.

The meeting on 12 May 2009 mainly served to prepare for the forthcoming ordinary Annual General Meeting. In the framework of its regular reporting, the Exe­cutive Board informed the Supervisory Board about the current short financial year.

On 10 July 2009, the Supervisory Board focused on the Group’s strategic develop­ment. Deliberations also dealt with matters relating to the Executive Board and to shareholding. The Presiding Committee and the Nomination Committee presented reports about their work. On 10 August 2009, the Supervisory Board met to discuss above all the concept for restructuring and financing Hapag-Lloyd AG. A further item was the transaction structure for the cooperation scheme with AirBerlin. The Executive Board presented a report on the development of business in the first half of 2009. On 14 August 2009, the Supervisory Board again discussed the concept for restructuring and financing Hapag-Lloyd AG in the framework of an extraordinary telephone conference.

After the cut-off date for the short financial year, the Supervisory Board met on 28 October 2009 in order mainly to discuss the budget for 2009/10 and the forecast accounts for 2010/11 to 2011/12.