Fraport : Remuneration Report 2023

Remuneration Report

pursuant to §162 AktG for the fiscal year 2023 Fraport AG Frankfurt Airport Services Worldwide

Fraport Remuneration Report 2023

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Fraport Remuneration Report 2023

This remuneration report presents the remuneration of the Executive Board and the Supervisory Board of Fraport AG Frankfurt Airport Services Worldwide, Frankfurt am Main (Fraport AG) in accordance with the statutory requirements of Section 162 of the German Stock Corporation Act (AktG). It explains the main features of the remuneration system that is used to determine remuneration and discloses the remuneration granted and owed to each and every current and former member of the Executive Board and Supervisory Board of Fraport AG in the 2023 fiscal year. Remuneration granted and owed is the remuneration for which the underlying activity has been fully performed as of the end of the 2023 fiscal year.

The remuneration report was subject to a formal review by Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, in accordance with the requirements of Section 162 (3) AktG as well as a substantive review that goes beyond the statutory require- ments. The remuneration report and the attached note on the audit of the remuneration report are published on the Fraport AG website at www.fraport.com/de/publikationen.

Vote on the Remuneration Report for the 2022 fiscal year at the Annual General Meeting 2023

The remuneration report for the 2022 fiscal year was approved by the Annual General Meeting on May 23, 2023 with a majority of 94.4% of the votes cast.

Overall, investors gave positive feedback on the structure and transparency of the remuneration report for the 2022 fiscal year. Suggestions for improvement were taken into account in this remuneration report for the 2023 fiscal year. In order to achieve even greater transparency, the reporting on the short-termperformance-based remuneration (bonus) was expanded to include additional details on the individual non-financial targets for Executive Board members in the section "Non-financial performance criteria."

Composition of the Executive Board

In the 2023 fiscal year, there were no changes in the composition of the Executive Board of Fraport AG.

Remuneration of the Executive Board members for the fiscal year 2023

The current remuneration system for the members of the Executive Board has been applicable since the 2020 fiscal year and was approved by the Annual General Meeting held on May 26, 2020 with a majority of 94.2% of the votes cast. Pursuant to Section 120a (1) AktG, the Annual General Meeting decides on the approval of the remuneration system submitted by the Supervisory Board at least every four years and in the event of any significant change.

Main features of the remuneration system

Executive Board remuneration is set by the Supervisory Board upon the recommendation of its executive committee and is regularly reviewed for appropriateness. An external remuneration consultant is brought in for this purpose, whose independence from the Executive Board and the company is ensured.

The Supervisory Board is guided by the following principles when determining the remuneration of the Executive Board:

Promoting the corporate strategy

The remuneration system as a whole makes a significant contribution to promoting and implementing the corporate strategy by defining performance criteria related to the company's success and providing them with annual and multi-year objectives.

Aligning with shareholder and stakeholder interests

The remuneration system makes a central contribution to aligning the interests of the Executive Board with the interests of shareholders and other stakeholders. The vast majority of the performance-based remuneration is linked to the performance of the Fraport Group and the Fraport share. In addition, the Executive Board undertakes to acquire and hold Fraport shares on a permanent basis during its appointment.

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Long-term orientation and sustainability

The remuneration system creates an incentive for the long-term and sustainable development of the Fraport Group. In this regard, the remuneration component based on performance is mainly measured on a multi-year basis. Non-financial targets are also included in measuring the performance-based remuneration in order to support sustainable business development.

Pay for Performance

The performance of the Executive Board is adequately taken into account and remunerated by using adequately set performance criteria within the performance-based remuneration components and the performance remuneration can vary between zero and an upper limit or cap.

Adequacy

The target and maximum total remuneration is determined in an appropriate proportion to the tasks and achievements of the members of the Executive Board and the situation of the company. The normal level of remuneration compared to other comparable companies (horizontal comparison) and the vertical adequacy of the remuneration of the senior executives and the entire workforce in the Fraport Group, including the development over time, (vertical comparison) are taken into account. The comparison group chosen for the horizontal comparison consists of all companies listed in the MDAX, as they are well comparable to Fraport in terms of size and registered office of the company.

Consistency of the remuneration system

The Supervisory Board ensures that the remuneration system of the Executive Board and the incentives of senior executives are based on the same incentives and that it pursues uniform objectives and jointly promotes the long-term Group strategy.

Comparison with the competition

Incentives are provided for outperforming the capital market in the long term by providing a relative performance measurement (relative TSR) compared to MDAX companies in the long-term performance remuneration.

Compliance and market standards

Current market practices are taken into account in designing the remuneration system, and compliance with legal and regulatory requirements is ensured.

The following chart summarizes the components of the current remuneration system of the Executive Board:

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Non-performance-related components

Basic remuneration (fixed salary)

During the term of their Executive Board contract (initially three years, and then for renewals generally five years), members of the Executive Board, as a rule, receive a fixed annual salary across the entire period as laid out in their respective contract. This is based on the area of responsibility of the respective Executive Board member and is paid out in 12 monthly installments.

Ancillary benefits

In addition, the remuneration for Executive Board members includes compensation in kind and other compensation (ancillary benefits). In particular, compensation in kind is the pecuniary benefit subject to income tax from the private use of a company car with the optional provision of a driver. It is also possible to make use of the Fraport AG VIP service free of charge for private matters and accompanied by family members, as well as the opportunity to make use of a manager check-up (health screening) every two years. The respective compensation in kind is taxed as non-cash benefits. This compensation in kind is generally available to all Executive Board members in the same way; the amount of compensation depends on the personal situation.

Executive Board members also receive half of the total contributions toward their pension insurance in the case of voluntary insurance, and in the case of statutory insurance, half of the total statutory contributions. For contributions to voluntary statutory or private medical and health care insurance, each member of the Executive Board receives a tax-free employer contribution in line with legal provisions.

Provisions for pensions and similar obligations

The Executive Board members are entitled to pension benefits and provision for surviving dependents. If an Executive Board member retires from office during the term of, or upon expiry of, his or her service agreement or if permanent occupational disability occurs during the term of the contract, the member is entitled to a retirement pension. Upon the death of an Executive Board member, benefits are paid to his or her surviving dependents.

Members of the Executive Board appointed in or after 2012 receive a pension commitment based on a defined contribution system. This calls for the payment of a one-time pension capital or lifelong retirement pension after the insured event. The insured event occurs at the end of the month in which the employee reaches the age of 62 or 65, or in the event of permanent occupational disability. At the same time, the Executive Board member must have left Fraport AG at the end of the employment contract. Pension capital accrues through Fraport AG annually paying 40% of the fixed gross annual remuneration into a pension account. The pension capital accumulated at the end of the previous year pays interest annually at the interest rate used for the valuation of the pension obligations in the German balance sheet of Fraport AG at the end of the previous year pursuant to Section 253 (2) of the HGB, which is at least 3% and at most 6%. This is increased by 1% on January 1 of each year for lifelong retirement payments. No further adjustment is made. If the pension capital reached is less than €600 thousand when retirement benefits fall due as a result of permanent occupational disability, Fraport AG will increase it to this amount. The same applies to the payment of the pension capital to the widow or widower in the event of the death of the Executive Board member without a previous pension claim. If an Executive Board member dies while collecting retirement pensions, the widow or widower is entitled to 60% of the last retirement pensions paid. Half-orphans receive 10% and full orphans receive 25% of the last retirement pensions paid.

Deviating from this standard, the retirement pension of an Executive Board member who was appointed before 2012 is defined by the percentage of a contractually agreed basis of assessment, with the percentage rising annually by 2 percentage points up to a limit of 75%, dependent on the duration of time an Executive Board member is appointed. In the event of occupational disability, the pension rate amounts to at least 55% of the contractually agreed basis of assessment. If an Executive Board member dies while collecting retirement pensions, the widow or widower is entitled to 60% of the last retirement pensions paid. Half- orphans receive 12% and full orphans receive 20% of the last retirement pensions paid. Effective January 1 of each year, the retirement pensions are adjusted at discretion, taking into account the interests of the former Executive Board member and the company's economic situation. The adjustment obligation is considered to be satisfied if the adjustment does not fall below the increase in the consumer price index for the cost of living for private households in Germany.

The following table provides an overview of the pension obligations of the current members of the Executive Board in the reporting year in accordance with IFRS:

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Pension obligations in accordance with IFRS 1)

in €'000		Obligation 31.12.2022	Change in 2023	Obligation 31.12.2023
Dr. Stefan Schulte		6,457.9	-3,088.0	3,369.9
Anke Giesen		1,691.0	+507.8	2,198.8
Julia Kranenberg		30.9	+202.4	233.3
Dr. Pierre Dominique Prümm		609.9	+256.4	866.3
Prof. Dr. Matthias Zieschang		3,383.6	+552.7	3,936.3
Total		12,173.3	-1,568.7	10,604.6

1. The pension expense is shown in the tables "remuneration awarded and due".

The provisions for pensions and similar obligations were determined in accordance with IAS 19 (International Accounting Stand- ards) using the projected unit credit method and an interest rate of 3.16% (previous year: 3.69%). A pension increase of 2.25% p.a. (previous year: 2.25% p. a.) was assumed. The 2018G guideline tables by Prof. Dr. Klaus Heubeck were used for the mortality rate. As in the previous year, the calculations did not include salary increases and fluctuations for the active members of the Executive Board.

Performance-related components

Short-term performance remuneration (bonus)

The bonus rewards the contribution to the operational implementation of the corporate strategy in a specific fiscal year. The bonus is based on a target bonus system in accordance with market standards. It is based on a target amount laid out in the Executive Board contract, which corresponds to a target achievement of 100%. Overall, a target achievement of 0% to 150% is possible, depending on both financial and non-financial performance criteria. The total amount paid as the bonus is therefore limited to 150% of the target amount. If a member joins or leaves the company during the year, the bonus will be reduced pro rata temporis. This does not affect the performance criteria and objectives underlying the bonus, nor regulations setting due dates.

Based on a target achievement of 100% and without any reductions due to penalty or clawback provisions, the bonus for the 2023 fiscal year is €611 thousand for Dr. Stefan Schulte, €508 thousand for Prof. Dr. Matthias Zieschang, €443 thousand for Anke Giesen, and €200 thousand each for Dr. Pierre Dominique Prümm and Julia Kranenberg.

Short-term performance remuneration (bonus)

Target amount

in €

	Target achievement (0-150%)
Financial performance indicator	Non-financial
		performance
		indicators (Modifier)
		Collective	=
EBITDA	ROFRA	performance of the
Executive board
		ESG-goals
Quantifier: 60%	Quantifier: 40%	Range: 0.9 - 1.1

Payout

amount in €

(Cap at 150% of the target amount)

In addition to financial performance criteria, non-financial performance criteria are also defined, which are taken into account by means of a so-called "modifier" in determining the amount of the payout.

The bonus for a completed fiscal year is payable within one month of the approval of the consolidated financial statements for the relevant fiscal year by the Supervisory Board.

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Financial performance indicators

The financial performance criteria for the bonus depend on the EBITDA and ROFRA as important indicators and controlling parameters of the Fraport Group for the respective fiscal year.

• EBITDA indicates the Group result and has a weighting of 60% in the bonus calculation. As operating result before interest, taxes, depreciation, and amortization, EBITDA reflects the profitability of the Fraport Group and is a significant indicator of the performance of the Executive Board.
• The ROFRA ("Return on Fraport Assets") represents the interest on the assets employed and thus the capital efficiency and receives a weighting of 40% in the bonus calculation.
• A target value and an upper and lower threshold are set for both performance criteria. If this target value is reached, the target achievement rate is 100%. The upper and lower threshold determined by the Supervisory Board is defined as a 33.33% deviation from the target. When the respective lower threshold is reached, the target achievement is 50%. If this threshold is not met, the target achievement is 0%. It is therefore possible that the bonus may not be paid at all. Reaching or exceeding the upper threshold will result in a maximum target achievement rate of 150%. The degree of target achieve- ment progresses in a straight line between the target value and the threshold values. In order to determine the bonuses, the respective degree of achievement is multiplied by the target amount according to its weighting. If the Supervisory Board does not make any new determinations for the next fiscal year before the end of a fiscal year, the target values for the EBITDA and ROFRA performance components are the corresponding values from the Group business plan approved by the Supervisory Board and the respective ratios set in the previous year continue to apply for the determination of the associated minimum and maximum values.

The targets mentioned below for EBITDA and ROFRA performance criteria were set in accordance with the 2023 business plan adopted by the Supervisory Board. For the 2023 fiscal year, based on an EBITDA result of €1,204.0 million and a ROFRA of 6.6%, a weighted target achievement of 134.97% was reached.

Target achievement

Performance component

Lower threshold (50%	Upper threshold (150%
target achievement)	target achievement)

Target Value (100% target achievement)

Actual Value

Degree of Target achievement

Weighted Target achievement

EBITDA (in € million)
Weighting 60 %	688.2	1,376.4	1,032.3	1,204.0	124.95%
ROFRA (in %) Weighting 40 %	3.2	6.4	4.8	6.6	150.00%

74.97%

60.00%

Non-financial performance indicators

In order to integrate non-financial and other qualitative performance criteria into the Executive Board remuneration system, as well as to assess the collective performance of the Executive Board as the overall executive body, the bonus includes a so-called "modifier" with a range of 0.9 to 1.1. The modifier assesses the collective performance of the Executive Board and the achievement of non-financial performance criteria. The modifier is fixed on the basis of a predetermined set of criteria. These criteria also include sustainability-oriented ESG targets. Possible criteria for the modifier include:

• Strategic corporate objectives such as the achievement of key strategic corporate objectives (including mergers & acquisi- tions), or sustainable strategic, technical, or structural company development;
• Environmental Social Governance (ESG) targets such as occupational safety and health, compliance, energy and environ- ment, customer satisfaction, employee concerns, or corporate culture.

The specific performance criteria for the respective fiscal year are determined by the Supervisory Board before the beginning of the corresponding fiscal year. These include two to four performance criteria per fiscal year, at least one of which must be an ESG target. At the end of the fiscal year, the Supervisory Board determines the modifier in the range of 0.9 to 1.1 at its proper discretion, depending on the achievement of the target of the respective defined modifier performance criteria.

A strategic corporate objective and two ESG objectives, each with a weighting of one third, were adopted for the 2023 fiscal year:

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1. Increase in process efficiency

In 2020 and 2021, the primary goal of the internal Relaunch 50 program was to reduce personnel expenses by modifying the organizational structure. With the resumption of air traffic and the return from short-time work, a modification of the processing organization became necessary. Coordinated implementation takes place in the process optimization program with the aim of simplifying and accelerating processes that are particularly time-consuming and repetitive. For the 2023 fiscal year, two key processes or sub-objectives were defined in this respect:

• Streamlining of the procurement process

The coordination and approval process as well as the number of process participants from the purchase requisition to the order from the supplier must be streamlined. In doing so, the process steps that can be influenced by Fraport (i.e. exclusive, statutory bid windows) and a comparable process demand structure are taken into account by Fraport. The actual process runtime in 2022 was measured by an external process mining provider with an average value of 14.7 days.

• Streamlining of the personnel request process

The approval procedure and the reduction in the number of parties involved must be streamlined by digitizing the process starting with a request for personnel through to the creation in the employee database (SAP HR) after the contract has been signed by both parties. Process steps that can be influenced by Fraport and a comparable process demand structure (e.g. internal/external recruitment ratio) must also be taken into account. The actual process runtime in 2022 was measured by an external process mining provider with an average value of 145.5 days.

Both sub-objectives were weighted at 50% each and their achievement was agreed as follows:

• 110% target achievement, if at least -35% process lead time to the actual process 2022
• 100% target achievement, if at least -30% process lead time to the actual process 2022
• 90% target achievement, if at least -25% process lead time to the actual process 2022

was saved and the proof was provided by an external process mining provider in the Q4 2023 Supervisory Board meeting.

Target achievement 110%:

The savings in the respective process lead time were verified by an external process mining provider as follows and noted at the Supervisory Board meeting in November 2023:

• In the procurement process, the process lead time was reduced by 50% from an average of 14.7 days to an average of 7.4 days.
• In the personnel request process, the process lead time was reduced by 47% from an average of 145.5 days to an average of 77.4 days.

2. Driving the Group decarbonization master plan forward

In December 2021, the Executive Board adopted the following climate protection target: "Reduction of CO2 emissions group-wide by 58% compared to the base year to 120,000 tons by 2030." Two interim targets were set for the 2023 fiscal year:

• Approval by the Executive Board of the specific master plan for the complete decarbonization (scope 1 and 2) of the Fraport Group for all controlled and environmentally relevant subsidiaries worldwide.
• Inclusion of all measures of the master plan in the report on the measures taken for targeted implementation and pro- gress monitoring of the above-mentioned decarbonization master plan in the Fraport Group.

Both sub-objectives were weighted at 50% each and target achievement was agreed as follows:

• 110% target achievement by the Supervisory Board meeting in Q3 2023
• 100% target achievement by the Supervisory Board meeting in Q4 2023
• 90% target achievement by the end of February 2024

Target achievement 110%:

The Group's decarbonization master plan was noted at the Supervisory Board meeting in Q3 2023. It was successfully rolled out in the Fraport Group in the course of 2023. Under the plan, the foreign equity holdings defined measures for a carbon reduction

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path similar to the process at the Frankfurt site. Despite different initial situations, the intention is to achieve the reduction targets for 2030, 2040, and 2045. On the whole, the plan is to save 606 thousand tons of CO2 by 2045 due to the measures taken by the foreign subsidiaries.

3. Development of the infrastructure concept for alternative drives at the Frankfurt site

As part of the Frankfurt decarbonization master plan adopted in 2022, specific measures are aimed at converting drive systems and achieving emission-free energy procurement (scope 1 and 2).

In order to create the supply infrastructure for alternative drive systems, a concept for implementing the measure "Creating the conditions for the switch to alternative drive systems and fuels in ground transportation" is to be developed and adopted by the Executive Board in 2023. This concept describes specific measures for implementation as well as their timeframe and financing.

The target achievement was agreed as follows:

• 110% target achievement if the implementation concept is completed by the Q3 2023 Supervisory Board meeting
• 100% target achievement if the implementation concept is completed by the Q4 2023 Supervisory Board meeting
• 90% target achievement if the implementation concept is completed by the end of February 2024.

Target achievement 110%:

The implementation concept approved by the Executive Board was noted at the Supervisory Board meeting in Q3 2023. In sum- mary, the strategic orientation and the implementation concept are available for the entire Frankfurt site, taking into account the current legal and technical framework conditions. This also includes the schedule for the Vorfeld 2030 project, which is regularly validated to take account of new developments. The project budget was confirmed in the current development plan. Initial measures to validate the concept have already been successfully implemented.

The fulfillment of the aforementioned non-financial and qualitative performance criteria for the 2023 fiscal year were decided by the Supervisory Board taking into account an overall target achievement of 110% for all Executive Board members with a modifier of 1.1.

The target amounts, target achievements, and bonus amounts payable for the 2023 fiscal year are as follows:

Bonus 2023 at a glance

in €'000	Target amount (100 %	Target achievement	Target achievement	Calculated pay amount	Cap at 150 % of the
	target achievement)	(max. 150 %)	(max. modifier 1.1)	according to target	target amount
		Financial performance	Non-financial perfor-	achievement
		indicators	mance indicators
Dr. Stefan Schulte	611.0	134.97%	1.1	907.1
916.5
Anke Giesen	443.0	134.97%	1.1	657.7	664.5
Julia Kranenberg	200.0	134.97%	1.1	296.9	300.0
Dr. Pierre Dominique Prümm	200.0	134.97%	1.1	296.9	300.0
Prof. Dr. Matthias Zieschang	508.0	134.97%	1.1	754.2	762.0

Long-term performance remuneration (Performance Share Plan)

The introduction of the new remuneration system as at January 1, 2020 restructured the previous Long-Term Incentive Program (LTIP) into a Performance Share Plan (PSP) that maintains the performance period of four years.

At the start of the plan, each member of the Executive Board is promised a target amount in € specified in their employment contract as an allocation value. For the 2023 fiscal year, this allocation value is €849 thousand for Dr. Stefan Schulte, €379 thousand each for Dr. Pierre Dominique Prümm and Julia Kranenberg, and €647 thousand each for Anke Giesen and Prof.Dr. Matthias Zieschang. This amount is divided by the initial fair value (i.e., the financially determined fair value according to the accounting standard IFRS 2, Share-based Payment) per performance share at the beginning of the performance period, resulting in the provisional number of virtual performance shares allocated to each case.

The achievement of the PSP is determined by two performance criteria, Earnings Per Share (EPS) and the Total Shareholder Return (TSR) compared to the MDAX Index.

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• The Earnings Per Share (EPS) criterion is used as an internal financial key indicator and is taken into account with a weighting of 70%. The EPS performance criterion provides incentives to operate profitably and profit-oriented. This forms the basis for the sustainable and long-term growth of the Fraport Group and ensures the financing capacity of necessary capital expendi- ture and thus the achievement of important strategic goals. In determining the achievement of the EPS target, a target value derived from strategic planning is compared with the actual EPS value achieved. This compares the average of the annual actual EPS values determined during the performance period with the average target EPS. If the average actual EPS value is equal to the average target EPS (target value), the target achievement rate is 100%. If the average actual EPS value is 25% below the target value, the target achievement rate is 50%. If the average actual EPS value is more than 25% below the target value, the target achievement rate is 0%. If the average actual EPS value is 25% or more above the target value, the target achievement rate is 150%. Between these values, the degree of achievement follows a straight-line development.
• As a further performance criterion, the relative Total Shareholder Return (TSR) is used, an external key figure geared to the capital market, which is weighted at 30%. The relative TSR takes into account the development of the Fraport AG share price plus fictitious reinvested gross dividends compared to a predefined comparison group. The relative TSR links the interests of the Executive Board and shareholders and integrates a relative measurement of success into the remuneration system for the Executive Board. This creates an incentive to outperform the relevant comparison group in the long term. Achieving the target for the relative TSR is based on a comparison with the MDAX. The Supervisory Board considers the MDAX to be an appropriate benchmark group, as Fraport AG is listed in this index and the MDAX consists of companies of a comparable size. To calculate the TSR of Fraport AG shares and the MDAX in the performance period, the arithmetic average of the closing prices over the last 30 trading days before the beginning of a year of the performance period and over the last 30 trading days before the end of a year of the performance period is determined for each year of the performance period and then averaged relative to the four years of a performance period. In determining the arithmetic average of closing prices at the end of the performance period, a fictitious amount of reinvested gross dividends is also taken into account. The target achievement is 100% if the TSR performance of the Fraport AG share corresponds to the TSR performance of the MDAX. If the TSR performance of the Fraport AG share is 25 percentage points below the TSR performance of the MDAX, the target achievement is 50%. If the TSR performance of the Fraport AG share is more than 25 percentage points below the TSR performance of the MDAX, the target achievement is 0%. If the TSR performance of the Fraport AG share is 25 percentage points or more above the TSR performance of the MDAX, the target achievement is 150%. Target achievement between the defined target achievement points progresses in a straight line.

The aforementioned performance criteria allow a target to be achieved in the range of 0% to 150%. At the end of the four-year performance period, the achievement of the performance criteria is determined and the final number of performance shares is identified. The distributed amount is calculated by multiplying the final number of performance shares determined by the average price at that time of the Fraport AG share in the last three months prior to the end of the performance period plus dividends paid per share during the performance period.

The value of the performance shares to be distributed therefore depends on the achievement of the performance criteria and the share price relevant for the distribution. The maximum payout amount is limited to 150% for each tranche at the allocation value applicable at the start of the plan.

The PSP is paid no later than one month after the approval of the consolidated financial statements for the fourth year of the performance period.

In the event that a member of the Executive Board joins or leaves the company during a given year, the pro rata temporis allocation value is reduced to the amount corresponding to the number of full calendar months in which the employment or eligibility for participation exists in the allocation year (= the first year of the performance period). In addition, the underlying performance criteria as well as the maturity arrangements before the termination of employment remain unaffected. In certain departure situations (bad-leaver cases), performance shares whose performance period has not expired lapse without compensation. In the event of an early termination of the employment contract due to death or permanent occupational disability, performance shares whose performance period has not yet expired will be paid out prematurely. The disbursement amount corresponds to the respective allocation value of the affected plan tranche.