BE Semiconductor Industries N : Agenda item 3 - Advisory vote on the Remuneration Report 2021

Remuneration Report

1

Remuneration Report

This Remuneration Report has been drafted in accordance with article 2:135b of the Dutch Civil Code and best practice provisions of the Dutch Corporate Governance Code and provides an overview of Besi's:

• Value creation and alignment with remuneration
• Remuneration Policy and shareholder engagement
• Principal components of Remuneration Policy 2020-2023
• Application of the Remuneration Policy in 2021
• Remuneration of the Board of Management
• Remuneration of the Supervisory Board

Besi's Remuneration Policy has been designed to successfully attract and retain executives who are capable of leading and overseeing the Company at all levels. Besi is committed to fair and responsible remuneration as we believe that all employees are integral to our success. We therefore consider the remuneration of the Board of Management and the Supervisory Board in the context of the remuneration of all Besi employees, including associated pay ratios. Over time, we have made adjustments to our Remuneration Policy to reflect our commitment to develop fair, responsible and transparent compensation plans. Furthermore, the Supervisory Board pro-actively engages with shareholders on matters concerning our Remuneration Policy and invites shareholder feedback.

The Remuneration and Nomination Committee (the "Committee") oversees all remuneration decisions. The Supervisory Board, upon proposal by the Committee, determines the criteria with which to measure the performance of the Board of Management considering their roles and responsibilities. For determining the remuneration of the Board of Management, the Committee is also informed of the remuneration scheme of the direct reports to the Board of Management including the applicable Short-Term and Long-Term Incentive Plans related thereto. Remuneration paid to such direct reports is fully aligned with the performance conditions as applicable under the Remuneration Policy.

The dynamic environment in which Besi participates requires the implementation of the Remuneration Policy based on our common values and vision. Our common values help Besi provide a uniform response to internal and external challenges so that we achieve business goals in a fair and equitable manner. For this purpose, we have a Code of Conduct which addresses our responsibilities to the Company and to each other and what our stakeholders may expect from us. It is available on our website (www.besi.com) for further review.

In determining the remuneration of the Board of Management, the Committee assesses realized performance relative to Besi's strategy and Code of Conduct. The Committee also takes into account the impact of the overall remuneration of the Board of Management relative to pay differentials within the Company and obtains the views of the Board of

Management with respect to the level and structure of remuneration. In addition, the Committee analyzes the possible outcomes of its variable remuneration elements and how they may affect the total remuneration of the Board of Management. In this respect, the Committee evaluates the development of the Company's underlying share price as well as other factors that create variable remuneration exposure such as the Company's financial performance, business, strategy and ESG execution. Variable remuneration is primarily linked to predetermined, assessable and quantifiable financial targets which are predominantly of a sustainable nature. It is also linked to Besi's strategy including associated business, financial and sustainability objectives, values, purpose and vision, all of which are aligned with long-term shareholder value creation.

Besi's value creation and alignment with remuneration

Set forth below is a table presenting Besi's key financial performance indicators for long- term value creation in 2021 versus 2020.

BESI VALUE CREATION 2021/2020

(€ millions, except	2021	2020		Highlights
otherwise stated)
Revenue	749.3	433.6	+72.8%	•	Record revenue and net income
Gross Margin	59.6%	59.6%	+0.0pts		in 2021.
•	Peer leading financial metrics.
Net Income	282.4	132.3	+113.5%	•	Return on average equity grows
	to 57.0% (+17.5pts).
Net Margin	37.7%	30.5%	+7.2pts	•	Hybrid bonding orders
	accelerating. Significant new
ROAE	57.0%	39.5%	+17.5pts		revenue potential.
•	Share price up 51.3%.
Share Price (€)	75.02	49.58	+51.3%	• Significant growth in shareholder
	distributions.
Capital Allocation	179.5	91.3	+96.6%

2

Other important factors contributing to value creation in 2021 included the following:

Strategic

• The overachievement of key goals set in Besi's last strategic plan 2020-2024, especially as related to the realization of important financial and organizational metrics.
• The initiation and successful completion of a revised strategic plan 2021-2025 with a leading, independent consulting firm incorporating new challenging targets to help Besi exceed € 1 billion revenue by 2025. Toward this end, a new <10 nanometer equipment organization was established, and management group appointed, to help achieve and exceed this target.
• Continued progress of the Besi/Applied Materials joint development agreement with hybrid bonding orders significantly exceeding goals set at the beginning of the year.
• The establishment and execution of new COVID-19 initiatives, timelines and protocols in order to better protect the health, safety and welfare of Besi's stakeholders including the maintenance and continuity of Besi's supply chain, production and customer deliveries, installation and service activities amidst a 72.8% revenue increase in 2021.

2021 ESG HIGHLIGHTS

Financial

• Achievement or over achievement of quarterly financial revenue and profit guidance to investors and analyst expectations set at the beginning of the year.
• Cost reduction programs and targets set were achieved which helped result in an only 18.9% increase in operating expenses in the face of 72.8% revenue growth achieved in 2021. As such, Besi's operating expenses as a percentage of revenue decreased to a record low of 17.2% in 2021.
• Besi's working capital management and cash flow generation which resulted in an increase in net cash of € 171.7 million, or 86.4% versus year end 2020 to reach € 370.4 million.

Environmental, social and governance

• Expanded reporting against ESG benchmarks.
• Significant reduction of Besi's environmental footprint.
• Increased usage of renewable energy in European locations.
• Improvements to sustainability of Besi's product platforms.
• Additional health and safety protocols implemented in response to the ongoing pandemic.
• Increased employee engagement and motivation.
• Improvements in management diversity and inclusion.
• Continued progress to increase CFSI and SAQ participation in supply chain.

Process Pillar	Topic	Progress
		• Relative reductions in fuel, energy, hazardous waste and water consumption.
Environmental Impact	Energy Use and Renewable Energy
		•	Renewable energy sources increased to 92% at European operations.
		•	Installed LED lighting and charging points at all European facilities.
	Carbon Emissions	•	Reduced Scope 1 & 2 and 3 emissions intensity by 27% and 4%, respectively.
		•	Remote service, installation and support expanded to further reduce travel and transportation.
		•	Relocated NL Plating group to a smaller, more energy efficient location.
	Sustainable Design	•	Launched sustainable design initiatives for die bonding platforms.
People Wellbeing	Health and Safety	• Additional COVID-19 health and safety measures implemented.
	Diversity and Inclusion	•	Increased female management and local management representation and training hours.
	Employee Engagement	•	High level of employee engagement and motivation identified in COVID-19 survey.
Responsible Business	Supply Chain	• Increased % of Purchasing Volume signed CFSI and SAQ.
		•	94% of PV compliant with ROHS directive.
		•	Implementing new risk map matrix for suppliers.

3

Besi's exceptional performance in 2021 was also reflected in an increase of its market capitalization by € 2.2 billion, or 62% versus 2020, operating income growth of 111.9% to reach € 317.6 million and an increase in its operating margin from 34.6% to 42.4%. As such, Besi's performance ranked in the upper quartile of all semiconductor equipment companies as set forth in the table below:

BESI PAY-TSR ALIGNMENT (2016-2021)

Indexed to 2016. Base = 100 700

Besi TSR

BESI PERFORMANCE/VALUATION IN UPPER QUARTILE OF ALL SEMICONDUCTOR EQUIPMENT COMPANIES

600

598

EV/Revenue (2022E)

ASML

R2 = 65%

12.0x

EV/Revenue (2022E) vs. Operating Margin (2022E)

10.0x

ASMI

8.0x

Teradyne, Inc.

KLA-Tencor

BESI

6.0x

Tokyo Electron

Lam Research

Aixtron

Disco

4.0x

Applied Materials

2.0x

Suss MicroTec

Cohu

TOWA

Kulicke and Soffa

ASMPT Tokyo Seimitsu

0.0x

Ultra Clean

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

BESI

Back-End

Front-End

Operating Margin% (2022E)

Source: CapIQ as of December 31, 2021. All values calendarized as per December year end

500

400

									CEO Total Comp*
300
										273
										271
200
							Median Rem Ref
									Group TSR
100
0
2016	2017	2018	2019	2020	2021
			Besi Total Return		CEO Total Comp
			Median Rem Reference Group Total Return (Datastream)

* CEO Total Comp includes base pay, short and long-term incentive pay, and additional PSA.

The Board of Management remuneration is well aligned with Besi's exceptional performance versus peers and superior shareholder returns over the past ten years. In addition, compensation growth since 2016 is significantly below Besi's TSR development and in alignment with the median TSR growth of Besi's Remuneration Reference Group.

The following charts confirm that, as compared to the TSR comparator group, Besi's performance has consistently tracked at or above the 90th percentile for the one-year and three-year periods examined. This substantiates the Company's very strong performance achieved which has improved significantly over the past seven years in both industry upcycles and downcycles. It was also an important consideration in setting and determining the member of the Board of Management's performance under the Remuneration Policy.

4

PERFORMANCE COMPARED TO THE TSR REFERENCE GROUP

Net Income/Revenue
40%
								Besi
35%
30%
25%
							90th percentile
20%
15%
							Peer median
10%
5%
0%
2013	2014	2015	2016	2017	2018	2019	2020	2021

Cash Flow from Operations/Revenue
40%
									Besi
35%
30%
25%
								90th percentile
20%									Peer median
15%
10%
5%
0%
2013	2014	2015	2016	2017	2018	2019	2020	2021

Gross Margin

65%

60%													Besi
55%
											90th percentile
50%
45%
											Peer median
40%
35%
30%
25%
2013	2014	2015	2016	2017	2018	2019	2020	2021

Net Income/Revenue (3yr)

Cash Flow from Operations/Revenue (3yr)

Gross Margin (3yr)

35%

	Besi
30%
25%	90th percentile
20%
15%	Peer median
10%
5%
0%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Besi

90th percentile

Peer median

60%	Besi
55%
50%	90th percentile
45%
	Peer median
40%

35%

30%

25%

2011-13

2012-14

2013-15

2014-16

2015-17

2016-18

2017-192018-202019-21

Return on Equity

50%

Besi

45%
40%
35%
30%
25%	90th percentile
20%
15%
10%	Peer median
5%
0%

2013

2014

2015

2016

2017

2018

2019

2020

2021

2011-132012-142013-152014-162015-172016-182017-192018-202019-21

Return on Equity (3yr)
45%
40%	Besi
35%
30%	90th percentile
25%
20%
15%
10%	Peer median

5%

0%

2011-132012-142013-152014-162015-172016-182017-192018-202019-21

2011-132012-142013-152014-162015-172016-182017-192018-202019-21

Source: Datastream