Semperit : Remuneration report (annex 1 to proposed resolutions)

REMUNERATION REPORT 2023

2	Semperit Group I Remuneration report 2023

Remuneration report of the Semperit AG Holding 2023

Financial year 2023

The Semperit Group performed solidly in a challenging market environment characterized by high inflation and a weak economy in the 2023 financial year. Revenue of EUR 721.1 million was generated, which was 7.5% below the previous year's figure. Positive price effects could not offset lower sales volumes, as customers reduced their inventories and ordered more cautiously due to the economic situation - especially in the Semperit Industrial Applications division. This decline was only partially offset by the significantly higher earnings of the Semperit Engineered Applications division. In anticipation of this development, cost-cutting programs were introduced at an early stage, which already had a positive effect of EUR 5.8 million. EBITDA from continued operations amounted to EUR 71.8 million (previous year: EUR 100.5 million), including one-off expenses of around EUR 9.9 million from the transaction costs for the acquisition of the Rico Group, from profits realized in advance in the purchase price allocation, from one-off severance payments for changes to the Executive Board and for reductions in headcount, as well as in connection with the sale of the medical business (separation of IT systems). Earnings after tax from continued operations were positive at EUR 24.9 million, while the loss from the discontinued and now sold Examination Operations division had a significant negative impact, as expected. Earnings after tax therefore amounted to EUR -17.1 million. ROCE for the 2023 financial year was 5.7% (previous year: 2.5%).

Remuneration policy and remuneration report

The remuneration report is intended to provide a comprehensive overview of the remuneration owed and granted to current and former members of the Executive Board and the Supervisory Board during the last financial year, including all benefits in any form. The legal basis for this is formed by the statutory requirements of the Austrian Stock Corporation Act (Sections 78c et seq. AktG (Aktiengesetz)).

The remuneration policy of Semperit AG Holding defines the principles which are used for determining the remuneration of the Executive Board and the Supervisory Board of Semperit AG Holding. The remuneration system implements the statutory requirements of the Austrian Stock Corporation Act (Sections 78 et seq. AktG) and the recommendations of the Austrian Code of Corporate Governance (ÖCGK). The primary aim of the remuneration policy is to promote long-term and sustainable business development.

The remuneration policy was adopted for the first time by the Annual General Meeting on July 22, 2020. The remuneration system for the members of the Executive Board of Semperit AG Holding applicable for the 2023 financial year was approved as an updated version at the Annual General Meeting on April 27, 2022.

The remuneration report for 2022 was submitted to the Annual General Meeting for a vote on April 25, 2023, and approved with a majority of 99.87%.

Remuneration of the Executive Board

Principles of remuneration of the Executive Board

The Nominating and Remuneration Committee of the Supervisory Board is responsible for preparing, regularly revising and controlling the implementation of the Remuneration Policy for the Executive Board. The final determination of the Remuneration Policy is the responsibility of the entire Supervisory Board. If need be, the Committee and/or the Supervisory Board will be supported by an external remuneration advisor. To avoid conflicts of interest, it is ensured that the advisor who may be used does not advise the Executive Board on remuneration issues at the same time.

The tasks and activities of the Executive Board members, the situation of the company and the customary levels of remuneration are taken into consideration when fixing the remuneration of the Executive Board. Work experience and responsibility of the Executive Board members, as well as the scope and complexity of their

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work are taken into account. A horizontal remuneration comparison to other Austrian and German industrial enterprises ensures that the remuneration of the Executive Board is competitive and in conformity with the market and will attract, motivate and bind the most qualified Executive Board members to the company. In addition, the remuneration and employment condition of the company's employees are taken into account to put the remuneration of the Executive Board in context with the company's remuneration structure.

Executive Board members are employed on local Austrian conditions. Thus, remuneration components are fixed in euros (EUR) (gross). The Executive Board members' employment contracts are concluded with Semperit AG Holding and subject to Austrian law.

Components and structure of remuneration

The remuneration of Executive Board members is comprised of performance-independent and performance- dependent components which are as follows:

Overview of remuneration components

Remuneration components

Performance-independent remuneration

Base remuneration

Remuneration in kind and other benefits

Pension contributions

Performance-dependent remuneration

Shot-term variable performance bonus (Short-Term Incentive, STI)

Long-term variable performance bonus (Long-Term Incentive, LTI)

Special grants and bonuses

Description of key parameters

Fixed salary at a competitive level taking into account the responsibility and activities of each Executive Board member

Company car, insurance premiums

Defined pensions are paid via an external pension fund

Performance assessment based on financial and non-financial criteria over an assessment period of one year

• Financial criteria: EBITDA and ROCE
• Non-financialtargets: overall performance and individual performance (modifier of +/-20%)

Upper limit (cap): 150% of the target value bonus

Performance assessment based on financial and non-financial criteria over an assessment period of several years

• Financial criteria: ROCE, earnings after tax and relative TSR
• Non-financialcriteria: sustainability goals

Upper limit (cap): 200% of the target value bonus

May be granted in the case of extraordinary achievements which have a future-oriented benefit for the company, and sign-on bonuses and retention bonuses

The components of the target remuneration (exclusive of remuneration in kind and other benefits, pension contributions and special grants and bonuses, if any) account for the following percentages:

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Percentage of remuneration components	Chairman of the Executive	Regular member
in target remuneration in %	Board	of the Executive Board
Base salary	40-55%	40-55%
STI	20-35%	20-35%
LTI	20-40%	20-35%

The relative percentages of existing contracts with Executive Board members are within the above stated ranges. At the same time, the ranges serve as a benchmark for the conclusion of future contracts with Executive Board members. Details of the absolute amounts of the remuneration components can be found in the corresponding corporate governance reports up to 2019 and in the company's remuneration reports from 2020 onwards.

The long-term variable performance bonus promotes a medium- to long-term increase in value as well as a successful implementation of the corporate strategy, including the sustainability strategy, of Semperit. In addition, the LTI also takes into consideration the relative total shareholder return (TSR), i.e., the shareholder return from share price development and dividend in relation to the selected companies of the ATX Prime and MDAX indices. This serves the purpose of aligning the targets of Executive Board members with interests of shareholders and other stakeholders.

By taking into account the relative TSR, the members of the Executive Board are granted a share-based compensation. Apart from that, a stronger focus is placed on internal performance indicators relating to the Group's business results and on sustainability indicators for the variable compensation components. The reason for this is that the stock market price of the Group's shares is sometimes strongly influenced by exogenous factors such as interest rate developments or bull and bear phases of the capital market and is therefore only of limited use as a benchmark for assessing the performance of the Executive Board.

With regard to C-Rule 27 of the Austrian Code of Corporate Governance, the remuneration policy provides that the company may claim back variable remuneration components if it turns out that they were paid on the basis of obviously false data (clawback).

Base salary

The base salary consists of a fixed annual salary which is paid in 14 equal instalments. These payments cover all overtime, travel times and all work done beyond the normal working hours applying to employees of the com- pany. They also cover the assumption of Board functions within the Group.

The base salary is a fixed competitive payment which incentivizes Executive Board members to act for the welfare of the company in compliance with shareholder and employee interests, as well as in the public inter- est.

Short-Term Incentive (STI)

The STI is based on the company's results in the past financial year and depends on the financial key performance indicators of consolidated EBITDA and consolidated ROCE as well as on nonfinancial criteria.

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Overview of STI performance criteria

		Financial	Non-financial
	EBITDA	Return on Capital	Modifier
Performance criterion	(absolute)	Employed (ROCE)
Weighting	70%	30%	0.8 - 1.2

The Nominating and Remuneration Committee of the Supervisory Board generally defines target values as well as upper and lower limits for financial performance criteria for the assessment period (current financial year), which apply to all Executive Board members equally, in general by 31 January of the financial year. The target value may be defined by following the approved budget for the relevant year, among other methods. The actual target achievement rates will then be calculated on the basis of the audited IFRS consolidated financial statements after the end of the respective financial year.

Financial performance criteria - STI
Performance	Target achievement rate
Upper limit	150%
Target value	100%
Lower limit	50%
Lower limit not reached	0%

If the relevant financial performance criterion is exactly equal to the lower limit, the target achievement rate will be 50% ("floor"). If the upper limit is reached or exceeded, the target achievement rate will be 150% ("cap"). The target achievement rates in between are distributed linearly (linear interpolation) in each case. If the lower limit is not reached, the target achievement rate will be 0%. Thus, the bonus share for the relevant performance criterion and the short-term variable performance bonus (STI) as a whole may be skipped com- pletely.

STI entitlement calculation overview

Target value bonus

(in EUR)

	Weighted target	Weighted target
x	achievement	+ achievement
	EBITDA (in %)	ROCE (in %)

x

Modifier (0,8 - 1,2)

=

STI bonus

(in EUR)

In the case of extraordinary performance not reflected in the financial criteria, the Nominating and Remuneration Committee may apply a so-called modifier to increase the bonus that results from the achievement of the financial performance criteria by a maximum of 20% or to reduce the same by a maximum of 20% in the case that performance is below expectations. Normally, a modifier of 1.0 will be applied. The basis for assessing non- financial performance is, on the one hand, the collective performance of the entire Executive Board and, on the other hand, the individual performance of each Executive Board member. This may, for example, be the achievement of important strategic corporate goals and the realization of key projects.

The amount of the STI target value bonus is defined individually for each Executive Board member in his or her employment contract. The STI bonus is limited to 150% of the target value bonus and cannot be exceeded, not even by applying the modifier. The STI bonus entitlement is correspondingly accrued. Forming the provision is based on the best possible estimation of the target achievement for the end of the financial year. The amount of the payment will be calculated by 30 June of the financial year following the end of the assessment period

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and will then be paid in seven equal instalments in the months July to December (including a special payment in December).

Taking into account two financial and one non-financial target key performance indicators ensures a comprehensive and balanced assessment of the Executive Board members' performance. The financial target key performance indicators take into account both the development of profitability and of efficiency. By using EBITDA with a weighting of 70%, the focus is on the development of earning power. In addition, ROCE with a weighting of 30% takes into account the efficiency of capital employment.

Under special circumstances (particularly in a period of corporate restructuring) the Supervisory Board's Nominating and Remuneration Committee may substitute alternative performance criteria, such as free cash flow or EBITDA or EBIT margin, for the two financial performance criteria by 31 January of the current financial year. The weightings of the two criteria may also be adjusted in the course of that change. This is intended to enable management to focus on generating free cash flows in critical phases in compliance with the development of profitability.

Long-Term Incentive (LTI)

The LTI is a performance-based remuneration component with an assessment period of several years which is supposed to bring about a long-term incentive effect. The LTI is granted on a rolling basis, i.e., in annual tranch- es with assessment periods of three years each. Financial performance criteria are considered, namely, average consolidated earnings after tax (i.e., earnings after tax in the IFRS consolidated financial statements), the average consolidated ROCE as well as the company's capital market performance in relation to selected comparable enterprises (relative TSR) and, and as of financial year 2022, also the non-financial sustainability criteria (ESG KPIs).

LTI performance criteria overview
		Financial		Non-financial
Performance	Consolidated	Return on Capital	Relative total	Sustainability
criterion	after tax for	shareholder
Employed (ROCE)	criteria/ESG KPIs
	the year	return (TSR)
Weighting	30%	30%	20%	20%

The Nominating and Remuneration Committee of the Supervisory Board generally defines the target values and lower and upper limits for the financial LTI performance criteria for the next 3-year assessment period (mean value), which apply to all Executive Board members, by 31 January of the financial year. The same applies to the relevant ESG KPIs.

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LTI entitlement calculation overview

Incentivizing Executive Board members in a uniform manner simplifies the integration of newly appointed Executive Board members, which serves to ensure the sustainable success of the business. When defining LTI targets, internal sources such as corporate planning and, where appropriate, also external sources such as expectations of analysts or historical performance of comparable enterprises are used. This is intended to create a target that is ambitious compared with competitors, which supports the long-term competitiveness of the Semperit Group. The target achievement rate will then be calculated on the basis of the audited IFRS consolidated financial statements and the sustainability reporting and/or, if applicable, on the basis of a corresponding external ESG rating of the financial years of the assessment period. In contrast to the STI, the upper limit of the LTI target achievement rate is reached at 200% ("cap").

Financial performance criteria - LTI
Performance	Target achievement rate
Upper limit	200%
Target value	100%
Lower limit	50%
Lower limit not reached	0%

Accordingly, the bonus share for the relevant performance criterion and the long-term variable performance bonus as a whole may be skipped completely.

To assess the target achievement rate of the relative TSR, the TSR performance of Semperit AG Holding is compared with the performance of all ATX Prime and MDAX companies (in each case exclusive of banks, insurance companies and real estate companies). If the TSR of Semperit AG Holding equals the 50th percentile (median) of the peer group, the target achievement rate is 100%. The 25th percentile is defined as the lower limit (floor) with a target achievement rate of 50%, and the 90th percentile is defined as the upper limit with a target achievement rate of 200% (cap). If the TSR of Semperit AG Holding is below the 25th percentile, the target achievement rate is 0%. The TSR target achievement rates are distributed linearly (linear interpolation) between the 25th percentile and the 50th percentile and between the 50th percentile and the 90th percentile.

Target achievement rate - relative TSR

rate	200%
achievement
100%
Target	50%

25th percentile

50th percentile

90th percentile

Performance

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In addition to the relative TSR, the use of the average ROCE and the average earnings after tax for the year (i.e., earnings after tax in the IFRS consolidated financial statements) takes into account both the profitability and the earnings development in the long-term variable performance bonus. Whereas the focus is on an efficient long-term employment of capital for ROCE, earnings after tax for the year - as the basis for distribution of dividends - serves to strongly align remuneration with shareholder interests, with the dividend potential being ultimately limited by net earnings in the individual financial statements of Semperit AG Holding. By using ROCE in both remuneration components, the focus is on the efficient employment of capital.

Due to the increasing importance of sustainability for all companies, and especially for Semperit, two to four sustainability goals are also defined for each LTI tranche based on the following catalogue of criteria:

In this way, the sustainability goals can be adapted to the Semperit Group's corporate environment, and different priorities can be set for each annual tranche.

The target values and the upper and lower limits for the three financial performance criteria always refer to the mean of the three-year assessment period. An LTI target value bonus applies to each tranche, the amount of which is defined for each Executive Board member individually in his or her employment contract. The tranches are generally accrued over the three-year assessment period by recognizing corresponding provisions, unless the entitlement vests earlier. Provisions are recognized based on the best possible estimate of the LTI target achievement level of the respective tranche.

The tranche model used for the LTI is intended to promote the long-term strategic performance of the com- pany. When it comes to defining the LTI this model ensures that the performance of the company after the end of the term of office of an Executive Board member is taken into account as well. In this way Executive Board members are incentivized to sustainably invest in the company even at the end of their term of office. In addi- tion, it also helps to offset the effects of cyclical fluctuations in results on the LTI.

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Contract period

Performance period

Contract period of

three years

Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
	Year 1 tranche
		Year 2 tranche
			Year 3 tranche

Target definition

Assessment period

Target Assessment

Payment

The payment amount of the LTI tranche will be calculated by 30 June of the financial year following the end of the assessment period for an LTI tranche and will then be paid in seven equal instalments in the months July to December (including a special payment in December). If the Executive Board member resigns from his or her office before the end of the term for which he or she was appointed or if he or she is dismissed for important reasons (cause) as defined in Section 75 AktG, all claims to LTI payments for all LTI tranches, for which the assessment period has not yet expired, shall be forfeited.

Special grants and bonuses

The Nominating and Remuneration Committee reserves the right to grant special bonuses for special work or achievements in addition to the mentioned variable performance bonuses, provided that the Semperit Group has derived a future-oriented benefit from such special work or achievements. Special bonuses are intended to motivate Executive Board members to manage the company sustainably and on a long-term basis.

Granting sign-on bonuses and retention bonuses to Executive Board members is permitted. This may be necessary to attract particularly well qualified Executive Board members and to bind them to the company.

In special cases change-of-control clauses may be agreed as well.

Pension fund

Semperit AG Holding pays contributions for Executive Board members employed by it into an external pension fund. The amount of those payments is defined individually for each Executive Board member in his or her employment contract and is between 5% and 15% of the annual base salary. Normally, no early retirement schemes apply.

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Remuneration in kind and other benefits

The company may take out a directors and officers (D&O) insurance policy, accident insurance and any other insurance policy necessary for the activities as an Executive Board member, such as legal expenses insurance or foreign travel health insurance. The company may provide Executive Board members with a company car. In addition, Executive Board members may be reimbursed for reasonable business expenses incurred in connection with their work as an Executive Board member and travel expenses. Executive Board members enjoy health, pension and accident insurance cover with an Austrian social security institution. Social security contribution costs are split between Executive Board members and the company according to the statutory key, and the company contributes to a corporate pension insurance fund (Betriebliche Vorsorgekasse BVK) as prescribed by law. In the event of the death of an Executive Board member the company may grant the widow or widower or the children of the deceased a death benefit.

Information on share-based remuneration

The remuneration of the Executive Board is designed to promote the business strategy and long-term performance of the company by taking into account the responsibilities and scope of activities of the individual Executive Board members as well as the economic situation of the company. For the variable remuneration components of the Executive Board members, greater focus is placed on internal performance indicators related to the company's business results. The reason is that the stock market price of the company's shares is sometimes strongly affected by exogenous factors such as the development of interest rates or bull and bear phases of the capital market and is thus only of limited use as a benchmark for assessing the Executive Board's performance. For this reason, the Executive Board is not granted any share-based remuneration as defined under Section 78c

1. no. 4 AktG. By taking into account the relative TSR under the LTI, the members of the Executive Board are granted share-based compensation to a certain extent.

Deviation from remuneration policy in extraordinary circumstances

In extraordinary circumstances the Nomination and Remuneration Committee or the Supervisory Board may temporarily deviate from this remuneration policy in accordance with Section 78a (8) AktG to safeguard the company's long-term performance and/or profitability.

If the office of an Executive Board member is assumed by a Supervisory Board member on an interim basis, the variable remuneration components and the proportion between the base salary and variable remuneration components may be defined in a different manner to incentivize the Executive Board member who has been delegated by the Supervisory Board in a manner that is appropriate for the situation.

In addition, in extraordinary circumstances that are particularly challenging for the economy as a whole or for the company specifically, other short-term and long-term performance bonuses may be defined on a temporary basis to attract and/or retain particularly suitable Executive Board members and to motivate them accordingly by means of remuneration incentives. There were no deviations from the provisions of the remuneration policy of Semperit AG Holding in 2023.

Term of office of Executive Board members

The term of office of an Executive Board member is normally limited to approximately three years; in exceptional cases a term of office of up to five years may be agreed. Reappointments are permitted. To guarantee continuity on the Executive Board, the Supervisory Board ensures that the contracts of Executive Board members will not predominantly end on the same date.