GEA : Remuneration Report

REMUNERATION REPORT

EXCERPT FROM THE ANNUAL REPORT 2021

GEA.com

TO OUR SHAREHOLDERS	COMBINED GROUP MANAGEMENT REPORT	CONSOLIDATED FINANCIAL STATEMENTS	FURTHER INFORMATION
			REMUNERATION REPORT

REMUNERATION REPORT

This Remuneration Report summarizes the principles governing remuneration of the members of the Executive Board and the Supervisory Board. It provides an overview of changes to the system of Executive Board remuneration in recent years, explains the objectives of the new remuneration system - which has been in force since the beginning of 2021 and will apply to all Executive Board members commencing at the beginning of 2022 - and discusses the points in which the new remuneration system differs from the previous one.

The Remuneration Report also provides individualized and specific information on remuneration awarded and due to current and former members of the GEA Group Aktiengesellschaft Executive Board and Supervisory Board in fiscal year 2021, as well as benefits commitments. Disclosures related to the remuneration of board members comply with the requirements of the German Stock Corporation Act and the applicable German and international accounting standards.

General information on the remuneration of the members of the Executive Board

Acting on the recommendation of the Presiding Committee, the Supervisory Board determines the total remuneration of the individual Executive Board members and resolves the remuneration system applicable to the Executive Board. The Supervisory Board reviews the appropriateness of the remuneration at regular intervals. Criteria for determining the appropriateness of the remuneration include the responsibilities of the individual Executive Board members, their respective personal performance, the business situation, the success and the future prospects of the company, as well as the level of the remuneration compared with peer companies and the remuneration structure in place in other areas of the company.

The Supervisory Board implemented the previous remuneration system effective January 1, 2019. It was valid until the end of 2020 and had been approved by a majority of 93.85 percent at the Annual General Meeting on April 26, 2019. All incumbent Executive Board members were still remunerated under the previous remuneration system on the basis of their current service contracts in the reporting period. Individual members of the Executive Board continued to be remunerated until the end of the 2019 fiscal year under the older 2012 remuneration system, which was in effect for fiscal years 2012 to 2018. A detailed explanation of the previous remuneration system and the 2012 remuneration system can be found on the homepage gea.com under "Investors - Corporate governance - Remuneration".

The Supervisory Board adopted the new remuneration system effective January 1, 2021. The new system is now in effect and was approved by a majority of 89.54 percent at the Annual General Meeting on April 30, 2021 in accordance with section 120a (1), sentence 1 of the Aktiengesetz (AktG - the German Stock Corporation Act). The remuneration system for Executive Board members was revised to comply with the requirements of the new section 87a of the AktG and the recommendations of the German Corporate Governance Code as amended on December 16, 2019 (GCGC). An important consequence of the revision was the adoption of a new long-term incentive plan for Executive Board members. The new remuneration system will apply uniformly for current Executive Board members starting January 1, 2022. Details can be found in this section and are available on the homepage gea.com under "Investors - Corporate governance - Remuneration".

GEA ANNUAL REPORT 2021

249

TO OUR SHAREHOLDERS	COMBINED GROUP MANAGEMENT REPORT	CONSOLIDATED FINANCIAL STATEMENTS	FURTHER INFORMATION
			REMUNERATION REPORT

Principles of the new remuneration system

The new remuneration system is characterized by the following basic principles:

• Strategic relevance: Performance-based remuneration components serve to promote key objectives of the company strategy, in particular continuous, sustainable and profitable growth.
• Pay for Performance: The pay for performance concept is grounded in the idea of linking remuneration to the achievement of ambitious, predefined performance criteria. Malus and clawback provisions are also included.
• Sustainability and the long term: The promotion of sustainable and long-term development is achieved by according significant weighting to sustainability-related and long-term performance criteria. In addition, sustainability aspects are emphasized by comparing them to companies included in the DAX 50 ESG Index.
• Long-termshareholder interests: Sustainable performance is ensured by the four-year term and the strong share-based component of the long-term incentive (LTI) as well as the share ownership guidelines.
• Consideration of employee remuneration and employment conditions: Appropriateness in comparison with senior management and the workforce as a whole is examined when setting remuneration for the Executive Board. In addition, employee satisfaction, as an expression of remuneration and employment conditions, influences the amount of the variable compensation for the Executive Board.
• Appropriate linkage between management and employee remuneration: In the case of variable remu­ neration, care is taken to ensure a uniform management and incentive effect between Executive Board, managers and employees.
• Regulatory conformity: The remuneration system for the Executive Board complies with the provisions of the German Stock Corporation Act and takes into account the recommendations of the GCGC.

Target total remuneration under the new remuneration system

The target total remuneration of the Executive Board members is composed of non-performance-related and performance-related components as follows:

Relative proportion of the components in the total target remuneration

		Remuneration structure  -	Remuneration structure -
			Base salary to variable		components
			components
						~30 - 34 %
			~49 - 57 %
						~19 - 23 %
						~1 - 2 %
						~9 - 13 %			LTI
			~43 - 51 %							Bonus/STI
					~33 - 36 %			Fringe benefits
Variable remuneration										Company pension plan
Base salary										Fixed annual salary

The non-performance-related components comprise a fixed annual salary, fringe benefits and a company pension plan.

GEA ANNUAL REPORT 2021

250

TO OUR SHAREHOLDERS	COMBINED GROUP MANAGEMENT REPORT	CONSOLIDATED FINANCIAL STATEMENTS	FURTHER INFORMATION
			REMUNERATION REPORT

The performance-related components comprise the bonus or short-term incentive (STI) and long-term incentive (LTI). The STI is structured as a target bonus system, which is paid out based on the financial performance criteria EBITDA (earnings before interest, taxes, depreciation and amortization) and ROCE (return on capital employed), each adjusted for restructuring measures, effects from acquisitions and a criteria-based modifier, which takes into account the collective and individual performance of the Executive Board and its members, respectively. It is composed as follows:

Bonus/STI

One-year performance period

Financial

		performance criteria ×				Payout in cash
Target amount	×	(0 % - 200 %)			=
Criteria-based	payout in shares; cap at 200 %
					modifier	(investment of 25 % of the
							of the target amount)
		50 %		EBITDA
		+
		50 %		ROCE

Individual		Collective per-
	formance of the
performance
	Executive Board

The LTI - the second performance-related component - is structured as a Performance Share Plan, which is paid out based on the relative total shareholder return (relative TSR), strategic targets (generally ESG targets) and the company's share price performance. It is composed as follows:

Long-Term Incentive - Performance Share Plan

Target amount	Payout in cash
(investment of 25 % of the
	payout in shares; cap at 200 %
	of the target amount)

÷						=
Ø Share price		Four-year performance period		Ø Share price
(3 months)		(target achievement 0 % - 200 %)		(3 months) incl. dividend equivalent
=						×
Grant of virtual		Relative TSR vs.		Strategic targets		Final number of
×	DAX 50 ESG	+	(generally ESG	=
virtual performance
performance shares		yearly lock-in		targets) yearly lock-in		shares
		(60 %)		(40 %)

Significant changes compared to the previous remuneration system

The new remuneration system, effective for all current members of the Executive Board as of January 1, 2021, differs from the prior remuneration system, particularly with regard to the structure of the LTI, which is designed as a performance share plan. A detailed explanation of the relevant differences can be found in the description of the new remuneration system on the homepage gea.com under "Investors - Corporate governance - Remuneration".

GEA ANNUAL REPORT 2021

251

TO OUR SHAREHOLDERS	COMBINED GROUP MANAGEMENT REPORT	CONSOLIDATED FINANCIAL STATEMENTS	FURTHER INFORMATION
			REMUNERATION REPORT

General information on the remuneration of the members of the Supervisory Board

In principle, the remuneration of the Supervisory Board members consists solely of fixed remuneration. It does not include a performance-related component.

Pursuant to section 15 (1) of the Articles of Association, each member of the Supervisory Board receives fixed annual remuneration of EUR 50 thousand payable after the end of each fiscal year, in addition to the reimbursement of their expenses. The Chairman of the Supervisory Board receives two-and-a-half times and his deputy one-and-a-half times this amount. In accordance with section 15 (2) of the Articles of Association, members of the Presiding Committee and the Audit Committee each receive an additional EUR 35 thousand. In accordance with section 15 (2), the members of the Innovation Committee each receive an additional EUR 25 thousand. The chair of the committee receives twice the respective amount. No separate remuneration is paid to members of the Mediation Committee or the Nomination Committee. Members who join or leave the Supervisory Board and/or its committees during the year only receive a pro rata amount for the duration of their membership. After the end of the fiscal year - pursuant to section 15 (3) of the Articles of Association

• the Supervisory Board members also receive an attendance fee of EUR 1 thousand for each meeting of the Supervisory Board, the Presiding Committee, the Audit Committee or the Innovation Committee they attend. In fiscal year 2021, the Supervisory Board held seven meetings, the Presiding Committee met five times, the Audit Committee convened on four occasions while the Innovation Committee met twice.

Remuneration for the Supervisory Board members was approved by a majority of 99.77 percent of the shareholders at the Annual General Meeting on April 30, 2021.

Overview of the past fiscal year

Personnel

There has been no change in composition of the Executive Board compared with the previous year. The Supervisory Board extended the contract with Stefan Klebert by five years until December 31, 2026, and, in June 2021, extended the appointment of Marcus A. Ketter as Chief Financial Officer of the company by five years until May 19, 2027.

As of the close of the Annual General Meeting on April 30, 2021, there were six personnel changes on the company's Supervisory Board, which comprises twelve members. These changes affected three board members representing shareholders as well as three board members representing employees. The shareholder representatives on the Supervisory Board were reelected for a four-year term at the Annual General Meeting. Prof. Dr. Annette G. Köhler, Dr. Molly P. Zhang and Colin Hall were reelected. In addition, Holly Lei, Klaus Helmrich and Prof. Dr. Jürgen Fleischer were appointed as new members of the Supervisory Board. Dr. Helmut Perlet, Chairman of the Supervisory Board until April 30, 2021, and members Jean E. Spence and Ahmad M.A. Bastaki, who each served on the Supervisory Board for many years, did not stand for reelection and left the Supervisory Board. On the employee side, current Supervisory Board members Brigitte Krönchen, Michael Kämpfert and new members Claudia Claas and Roger Falk were appointed or elected, respectively, to the Supervisory Board as representatives of company employees, first by resolution of the Düsseldorf Local Court and then by the election of the employee representatives held in fall 2021. Prof. Dr. Cara Röhner and former member Rainer Gröbel, who represent IG Metall, were also initially appointed by the court and then elected to the Supervisory Board. Klaus Helmrich, former Group Chairman of Siemens AG, was elected as the new Chairman of the Supervisory Board at the constitutive meeting held after the Annual General Meeting.

Dr. Molly P. Zhang resigned from the Supervisory Board effective at the end of the 2021 fiscal year. At the request of the Executive Board, with the support of the Supervisory Board, the Local Court of Düsseldorf then appointed Jörg Kampmeyer as a member of the Supervisory Board as of January 1, 2022.

GEA ANNUAL REPORT 2021

252