* Former CEO to head supervisory board despite concerns
* Mayrhuber had withdrawn candidacy a day before AGM
* Some blame meddling by Anglo-American shareholders
By Peter Maushagen and Marilyn Gerlach
COLOGNE, May 7 Wolfgang Mayrhuber was named
chairman of Lufthansa's supervisory board on Tuesday after a
stormy meeting where major shareholders voiced their displeasure
with the return of the German airline's longtime chief
The 66-year-old Austrian, who ran Lufthansa for seven years
before stepping down at the end of 2010, had withdrawn his
candidacy for the board a day before the annual general meeting
(AGM) in Cologne, only to change tack hours later and re-enter
Despite the flip-flop and a record as CEO that some have
criticised, Mayrhuber received the support of 63.2 percent of
shareholders voting at the AGM, a less than resounding
endorsement but enough to place him on the supervisory board.
When Mayrhuber was CEO, Lufthansa pursued an aggressive
acquisition drive, buying up rivals including Austrian Airlines
But the results have been mixed at best and Germany's
biggest airline has suspended its dividend and slashed costs as
part of a painful strategic overhaul overseen by his successor,
"During his time, debts piled up and these are now burdening
Lufthansa," said Dietmar Pfaff, a 63-year-old retiree and
shareholder from Cologne who attended the AGM.
Ingo Speich, representing Union Investment, told the meeting
that he was "speechless" at Mayrhuber's about-face and said it
had already cast a shadow over his new role at the firm.
Both Union and proxy advisory firm ISS refused to back
Mayrhuber because he left Lufthansa so recently. Under German
guidelines, a CEO can become supervisory board chairman after a
two year "cooling off" period, but some governance experts
believe a five-year gap is more appropriate.
They also objected because Mayrhuber already holds board
seats at chipmaker Infineon, where he is chairman,
and at carmaker BMW and reinsurer Munich Re
Others like Ulrich Hocker, president of Germany's DSW
association for private investors, blamed Mayrhuber's U-turn on
misguided meddling by Anglo-American shareholders rather than
governance problems at Lufthansa.
In announcing Mayrhuber's withdrawal on Monday morning, the
airline cited "criticism from shareholders". Several hours
later, it issued a new statement saying Mayrhuber was back in
"Lufthansa did the right thing. ISS feels a cooling off
period of five years is needed but being out of the airline
industry for five years means you are not just cooled off, you
are deep frozen," he told Reuters.
"Insisting on an independent director is good, but
independence can also mean cluelessness. Mayrhuber is the ideal
sparring partner for the Lufthansa CEO."
Under Germany's two-tier corporate governance system, the
supervisory board controls a separate management board. Its
members have non-executive functions.
As chairman, Mayrhuber will be vetting the strategy of his
successor Franz, who has launched a major revamp to cope with
rising fuel costs and cut-throat competition from discount
carriers and Middle East rivals.
Franz, who urged shareholders at the meeting to back
Mayrhuber for the board, has sold some of the companies acquired
during his predecessor's aggressive expansion campaign.
The restructuring plan, dubbed SCORE, includes 3,500 job
cuts and merging loss-making European short-haul flights with
discount carrier Germanwings.
On Tuesday, Franz told shareholders that the management
board would take a 5 percent pay cut for the 18-month period
ending December 2014 as its contribution to SCORE.