Heidelberg Materials : Remuneration Report 2023

Remuneration

report­ for the 2023 financial year

Introduction

The remuneration report sets out the principles and structure of the remuneration of the Managing Board and the Supervisory Board of Heidelberg Materials AG. The remuneration report contains the remuneration granted and owed in the 2023 financial year to the members of the Managing Board and Supervisory Board in office in the 2023 financial year and to former members. The remuneration granted includes the remuneration components whose underlying (single or multi-year) service or performance period was fully completed in the financial year. The remuneration report was jointly prepared by the Managing Board and the Supervisory Board in accordance with the provi-

Review of the 2023 financial year

Business development and target achievement in the 2023 financial year

The excellent business development of Heidelberg ­Materials in the financial year 2023 is also reflected in the target achievement of the variable elements of the remuneration of the Managing Board. The record result in the profit for the financial year attributable to the shareholders of Heidelberg Materials AG adjusted for special effects and the reduction in CO2 emissions contributed to the achievement of the objectives for the annual bonus. In addition, initiatives were implemented that served as a basis of the individual target agreements for the members of the Managing Board within the framework of the company strategy.

Target achievement 2023

For the management component of the long-term

bonus­ 2021-2023/2024, a strong performance of EBIT and ROIC, adjusted for special effects, led to a target achievement of 200 %. However, the total shareholder return (TSR) of the Heidelberg Materials share after the end of the performance period from 2020 to 2023 was below that of the TSRs of the DAX and the MSCI World Construction Materials Index. Consequently, and ­despite the positive development of the Heidelberg Materials share in 2023, there is no payment from the capital market component of the long-term bonus. This result can be explained, among other things, by the fact that the target achievement is measured by the change in TSR based on a four-year reference period prior to the start of the plan (degressive smoothing).

sions of section 162 of the German Stock Corporation Act (Aktiengesetz, AktG). In addition, it takes into account the recommendations and suggestions of the German Corporate Governance Code (GCGC) in its version of 28 April 2022.

The remuneration report was also audited with reasonable assurance by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft beyond the requirements of section 162(3) of the AktG. The report on the audit of the remuneration report can be found at the end of the remuneration report.

Granted and owed remuneration in the 2023 financial year

1) Excluding the Chairman of the Managing Board

2022 remuneration report

In accordance with the requirements of the German Act Implementing the Second Shareholder Rights Directive (Gesetz zur Umsetzung der zweiten Aktionärs- rechterichtlinie, ARUG II), the 2022 remuneration ­report was submitted to the 2023 Annual General Meeting as part of a consultative vote for approval pursuant to section 120a(4) of the AktG and approved with an acceptance rate of 91.06%. In view of the consistently high acceptance rates for our remuneration report at the Annual General Meeting in recent years, we have retained the basic structure and transparency and have only made selective adjustments to further improve the report. The 2022 remuneration report is available via the following link: https://www.heidelbergmaterials.com/en/corporate-governance.

Changes in the composition of the Managing Board

Long-standing member of the Managing Board Ernest Jelito retired with effect from 31 December 2023. Following the termination of his Managing Board man- date, it was agreed with Mr Jelito that he will remain available to Heidelberg Materials as an advisor until 31 December 2024. The fee to be paid to Mr Jelito for this activity will be calculated on the basis of the ­number of hours of consultancy provided. In addition, long-standing member of the Managing Board Kevin Gluskie stepped down from the Managing Board at the end of his term with effect from 31 January 2024.

On 1 January 2024, Roberto Callieri was appointed to the Managing Board and assumed responsibility for the Asia Group area. Chief Financial Officer René Aldach assumed additional responsibility for Australia with

effect­ from January 2024. Axel Conrads was appointed to the Managing Board and made Chief Technical Officer as of 1 February 2024. In addition, as of 1 January 2024, the Western and Southern Europe Group areas and the majority of Northern and Eastern Europe-Central Asia were combined to form the new Europe Group area under the responsibility of Jon Morrish. Since Jan- uary 2024, Hakan Gurdal has taken on responsibility for Kazakhstan and Russia in addition to his existing responsibility for the Africa-Eastern Mediterranean ­Basin Group area. Since then, the Group area has been called Africa and Mediterranean-Western Asia .

Further development of the remuneration system

The Supervisory Board is committed to continuously improving the remuneration system for the members of the Managing Board in the interests of the shareholders of Heidelberg Materials AG.

In the 2023 financial year, the Supervisory Board carried out a comprehensive review of the remuneration system, taking into account investor expectations and Heidelberg Materials' strategic objectives. The remuneration system further developed on the basis of the review (2024+ Remuneration System) will be submitted to the 2024 Annual General Meeting for approval and will then apply retroactively from 1 January 2024. The main features of the revised remuneration system are described in more detail at the end of this remuneration report.

Remuneration of the Managing Board in the 2023 financial year

Principles of the remuneration of the Managing Board

The remuneration system of the Managing Board is aligned with the Group strategy. By selecting appropriate performance criteria for the variable remuneration, incentives are given to implement the Group strategy and to promote the long-term and sustainable development of Heidelberg Materials. Both financial and non-financial performance criteria are used to represent the company's success as a whole. The consideration of ESG targets in the variable remuneration underlines the desire for excellent business performance as well as environmentally and socially responsible conduct.

The remuneration of the company's Managing Board is based on the principle that members of the Managing Board should be remunerated appropriately according to their performance. With the high proportion of variable and thus performance-based remuneration com- ponents, the Supervisory Board pursues a strict pay-­for-performance approach.

The following overview summarises the most important principles of remuneration of the Managing Board. To- gether, they provide incentives to promote the long- term and sustainable development of Heidelberg Materials.

Principles of the remuneration of the Managing Board

Strong pay for performance orientation due to large performance-relatedshare of total remuneration

Alignment of performance-related remuneration and performance criteria with the long-termGroup strategy

Sustainability as an important component of the performance criteria for the variable remuneration

Alignment with shareholder interests through share-basedremuneration and share ownership obligation

Use of relative performance assessment and avoidance of retroactive adjustments to target values or performance criteria during the year

Capping of total remuneration through contractually fixed payouts

Malus and clawback rules for the overall variable remuneration

Procedure for determining and implementing the remuneration system and the amount of Managing Board remuneration

The remuneration system for the members of the Managing Board is determined by the Supervisory Board pursuant to section 87a of the AktG following a recommendation by the Personnel Committee and is then submitted to the Annual General Meeting for approval.

As a result of the German Act Implementing the Second Shareholder Rights Directive (ARUG II) entering into force on 1 January 2020, the remuneration system of the Managing Board was submitted to the Annual General Meeting in 2021 after a resolution by the Supervisory Board and was approved by the Annual General Meeting with an acceptance rate of 92.21%. It has been applicable to all members of the Managing Board since 1 January 2021 and is available via the following link: https://www.heidelbergmaterials.com/en/corporate-governance.

Following a recommendation by the Personnel Com- mittee, the Supervisory Board resolved to submit a revised remuneration system for members of the Managing Board to the Annual General Meeting in 2024 for approval. Following approval by the shareholders of Heidelberg Materials AG, the revised remuneration system shall apply retroactively to all members of the Managing Board with effect from 1 January 2024 and is available via the following link: https://www.heidelbergmaterials.com/en/corporate-governance.

As long as no significant changes are made to the remuneration system, it will be submitted to the Annual General Meeting for approval at least every four years in accordance with the legal requirements. In the event of significant changes to the remuneration system, the adjusted remuneration system will be submitted to the Annual General Meeting for approval in the year of its change.

The remuneration of the Managing Board is determined by the Supervisory Board following a recommendation by the Personnel Committee. The Supervisory Board takes into account the responsibility and tasks of the individual members of the Managing Board, their individual performance, the economic situation, as well as the success and future prospects of Heidelberg Materials.

Review of the appropriate remuneration of the Managing Board

The Supervisory Board regularly reviews the appropriateness of the remuneration of the Managing Board with the support of the Personnel Committee. This includes an external, horizontal comparison with the remuneration of managing boards of comparable companies as well as an internal, vertical comparison of remuneration within Heidelberg Materials. For the horizontal comparison, the selection of companies is based on the size and international activity of Heidelberg Materials, the economic and financial situation, and future prospects.

The companies of the DAX are used for the horizontal comparison. The horizontal comparison serves to verify that the remuneration of the Managing Board is market common.

For the vertical comparison, the remuneration of the Managing Board is compared with the remuneration of top and senior management (upper management) and the remuneration of the total workforce of Heidelberg Materials AG, both overall and in terms of development over time.

The following overview shows the development of the target direct remuneration (fixed annual salary, target value of the annual bonus, and - if the corresponding employee groups are eligible - the target value of the long-term bonus) in the internal comparison in the period from 2019 to 2023. The vertical comparison of the target remuneration is used when reviewing the appropriateness of the remuneration of the Managing Board pursuant to section 87a of the AktG. The comparative statement pursuant to section 162(1)(2) of the AktG can be found in the Comparative presentation of the development in remuneration and earnings section.

In the 2023 financial year, the ratio of the average remuneration of the Managing Board (including the Chairman of the Managing Board) to the average remuneration of top and senior management was 1:10 (previous year: 1:11), and the ratio to the total work- force of Heidelberg Materials AG was 1:39 (previous year: 1:41).

Remuneration report

Remuneration structure

Pay for performance and the focus on the sustainable and long-term development of the company are central principles of the remuneration of its Managing Board. With these principles in mind, 71% of the target direct remuneration for the Chairman of the Managing Board and around 67% for the members of the Managing Board consists of variable remuneration compo- nents. The fixed annual salary thus accounts for 29% of the target direct remuneration for the Chairman of the Managing Board and around 33% for the members of the Managing Board.

To ensure the long-term focus of the remuneration of the Managing Board, the share of the long-term bonus exceeds that of the annual bonus within the variable remuneration components.

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Remuneration components

of the Chairman of the Managing Board in %

Remuneration components

of the members of the Managing Board 1) in %

Determining the target remuneration

Each member of the Managing Board is contractually promised a target remuneration that lies within the specified remuneration structure. The amount of the target remuneration depends on the responsibilities as

well as the relevant experience of and tasks carried out by the individual member of the Managing Board.

The target remuneration of the members of the Managing Board who were active in the 2023 financial year is as follows for the 2023 financial year:

Compliance with the maximum remuneration under the previous remuneration system

The maximum remuneration (without taking into account fringe benefits and annual service costs of pension commitments) equals the fixed annual salary plus the sum of the individual variable remuneration components (annual bonus and long-term bonus), which are each limited to twice the target value, plus the discretionary adjustment of a maximum of 15% or, for old contracts of two members of the Managing Board, a maximum of 25%. The maximum remuneration for Ernest Jelito, Jon Morrish, and Chris Ward corresponds to up to 177% of the target direct remuneration, the maximum remuneration for Kevin Gluskie and Hakan Gurdal 184% of the target direct remuneration.

Remuneration paid for the 2020 financial year

Absolute upper limits (excluding fringe benefits and annual service costs of pension commitments) are defined in the Managing Board agreements concluded since the 2020 financial year. A maximum remuneration of €3,245,000 applies for René Aldach, Dr Nicola Kimm, and Dennis Lentz. For the current Chairman of the Managing Board, the maximum remuneration is limited to €8,400,000 based on individual contractual provisions. This corresponds to 157% of the target direct remuneration for the Chairman of the Managing Board and 177% of the target direct remuneration for René Aldach, Dr Nicola Kimm, and Dennis Lentz.

The maximum remuneration of the Chairman of the Managing Board or the upper limits of the Managing Board agreements concluded since the 2020 financial year limit all payouts resulting from the commitment for a financial year, regardless of when they are received. A compliance report on the maximum remuneration for

the 2023 financial year will therefore be prepared after the tranche of the long-term bonus promised in 2023 has been paid out. Compliance with the maximum remuneration will be reported in the remuneration report for the 2026 financial year after the end of the performance period of the capital market component of the 2023 tranche. If the payout from the long-term bonus results in the maximum remuneration being exceeded, the pay- out amount will be reduced accordingly to ensure compliance with the maximum remuneration.

At the end of the 2023 financial year, all remuneration components allocated in the 2020 financial year have been granted and are owed. The following table shows compliance with the maximum remuneration on an individualised basis for the members of the Managing Board in office in the 2020 financial year with the maximum remuneration levels applicable for the 2020 financial year: