DEUTZ : Adjusted remuneration system

Previous structure

Adaptation and background

Special remuneration

Adaptation:

Special remuneration may

■ The possibility of granting special remuneration that is not linked to pre-

be granted, limited to half

viously agreed targets is no longer applicable.

of the annual basic remu-

Background:

neration and limited by the

maximum remuneration.

■ In addition to a high level of transparency, the basis for broad acceptance

of Board of Management remuneration is the comprehensibility of the

remuneration granted and of its components. In the past, shareholders

have criticized the possibility of special remuneration, as it was perceived

as being insufficiently transparent and, from the shareholders' perspec-

tive, granted the Supervisory Board too much discretion in determining

the Board of Management's remuneration,

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EINLADUNG ZUR HAUPTVERSAMMLUNG DER DEUTZ AG

Special remuneration

including if this has not yet been applied. Given this, the Supervisory

(continued)

Board has further enhanced the already high level of transparency and

comprehensibility of the remuneration system by abolishing the special

remuneration.

Strategic and sustainabil-

Adaptation:

ity targets in the STI from

■ From the 2025 financial year, the two separate STI targets, strategic tar-

2025

To date, strategic targets

gets (25 %) and sustainability targets (15 %), are to be combined into

and sustainability targets

one target, the sustainability and strategy implementation targets, with a

have been anchored sepa-

total weighting of 40 %.

rately in the STI.

Background:

■ The strategic and sustainability targets consist of individual sub-targets.

By merging the separate targets into an overall target, the number of

sub-targets is to be reduced in order to increase their weighting and

thereby further enhance their importance. Moreover, individual sub-tar-

gets cannot be clearly assigned to strategy implementation or sustaina-

bility (such as in the alternative drives area). As a consequence, combin-

ing the targets and reflecting them in an overall target value is better

suited to any overlaps than the separate targets.

Previous structure

Adaptation and background

Sustainability targets in

Adaptation:

the LTI

■ In addition to ROCE, which will continue to be weighted at 50 %, and

To date, sustainability tar-

relative total shareholder return, which is weighted at 20 % in the new

gets have been specifically

system, sustainability targets will also be included in the LTI. Sustaina-

anchored in the STI. No ex-

bility targets are set at the beginning of each performance period and

plicit sustainability-related

weighted at a total of 30 %.

performance criteria have

yet been established in the

Background:

LTI.

■ Sustainability forms an integral part of the strategy of DEUTZ AG and

should consequently also be taken into consideration in the long-term

remuneration component in addition to the short-term remuneration com-

ponent.

Share Ownership Guide-

Adaptation:

lines

■ In future, the members of the Board of Management are to be obligated

A shareholding require-

to hold a significant number of shares in DEUTZ AG in line with the

ment was not previously

Share Ownership Guidelines. The Share Ownership Guidelines set an

anchored in the remunera-

investment target of 150 % of the annual net basic annual remuneration

tion system, as the LTI is

for the Chairman of the Board of Management (CEO), and a target of

already share-based.

100 % for the ordinary members of the Board of Management.

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Background:

■ Share ownership guidelines are becoming increasingly established in

market practice and also form part of the expectations of DEUTZ AG

shareholders in aligning the remuneration system even more directly

with the Company's long-term performance. As a consequence, the

Share Ownership Guidelines represent a key component of the remu-

neration system in establishing an even stronger link between the share

price and Board of Management remuneration, over and above the al-

ready share-based structure of the LTI, and in closely aligning the inter-

ests of the Board of Management with those of the shareholders.

Maximum amount of re-

Adaptation:

muneration

■ The maximum remuneration of the members of the Board of Manage-

Previously, the maximum

ment is to be increased in line with standard market practice. Conse-

remuneration for the Chair-

quently, from 2024, the maximum remuneration for the Chairman of the

man of the Board of Man-

Board of Management (CEO) is to amount to € 3.2 million, and the max-

agement (CEO) amounted

imum remuneration for ordinary members of the Board of Management

to € 2.8 million, and for the

to € 2.2 million.

ordinary members of the

Board of Management to

Background:

€ 1.9 million each.

■ The previous maximum remuneration for members of the Board of Man-

agement was set in 2021. Market developments since 2021 have led to

a diminution in the competitiveness of the amounts originally set. Given

this, the maximum remuneration is to be increased in order to continue

to offer an attractive total remuneration package that attracts and retains

the most suitable candidates for the Board of Management.

The overarching corporate strategy forms a key

basis for the Board of Management

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Remuneration components

Structure

Non-performance-related remuneration

Basic remuneration

■ Fixed remuneration paid in monthly installments

Additional benefits

■ Mainly company car and insurance

Retirement pension

■ Annual contribution to a benevolent fund

Performance-related remuneration

Plan type

■

Target bonus

2024

■

30 % revenue

■

30 % EBIT

■

25 % strategy targets

Performance

■

15 % sustainability targets

Bonus

criteria

From 2025

■

30 % revenue

■

30 % EBIT

■ 40 % sustainability and strategy implementation

targets

Payment cap

■

150 % of target amount

Term

■

one year

Plan type

■

virtual performance share plan

■ 50 % return on capital employed (ROCE)

Performance

■

20 % relative total shareholder return compared to

Virtual Performance

criteria

DAXSubsector All Industrial Machinery

■

30 % sustainability targets

Shares

Payment cap

■

180 % of target amount

Term

■

four years

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Remuneration components

Share of target total remuneration

Basic remuneration

~ 40 % to 45 %

Additional benefits

~ 0 % to 5 %

Retirement pension

~ 0 % to 10 %

Short-term incentive

~ 20 % to 25 %

Long-term incentive

~ 25 % to 30 %

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Aspect

Details

Type of commitment

Defined contribution pension plan

Start of retirement

The standard retirement age is 65; the earliest possible retirement

age is at 62 (provided that the statutory pension is also drawn)

Return

The return depends on the policyholder dividend arrangements of

the insurer. There is no guaranteed interest rate.

Payment options

An amount of capital is promised. With the employee's consent, the

Company can pay a lifelong pension instead of a lump sum.

Invalidity/death

Death before the start of retirement: The policy value is paid out.

Benefits may also be paid in the form of a share of the valuation re-

serves.

Death after the start of retirement (applies only if a life-long annuity

has been arranged): payment of ten times the annual annuity guar-

anteed from the start of retirement. Guaranteed annuities that have

already been paid are deducted from this amount.

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