• 6. Resolution on the approval of the compensation report for the fiscal year 2021

    The Act Implementing the Second European Shareholders' Rights Directive ("ARUG II"), which was promulgated in the Federal Law Gazette (Bundesgesetzblatt) on December 19, 2019, introduced a new

    Section 120a German Stock Corporation Act (Aktiengesetz - "AktG"). This provides in its paragraph 4 that the Annual General Meeting of a listed company shall resolve on the approval of the compensation report prepared and audited in accordance with Section 162 AktG for the preceding fiscal year. This compensation report is to be submitted to the Annual General Meeting for resolution for the first time for the fiscal year 2021 and every year thereafter.

    The compensation report prepared by the Management Board and Supervisory Board was audited by

    KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, in accordance with Section 162 (3) AktG to establish whether the disclosures required by Section 162 (1) and (2) AktG were made. The complete compensation report with audit opinion is attached to this invitation in sectionII.1(Annex to agenda item 6 (Resolutionon the approval of the compensation report for the fiscal year 2021))attached.

    The Management Board and the Supervisory Board propose that the compensation report for the fiscal year 2021 be approved.

    (…)

  • II. Reports and attachments to agenda items 6 and 7

  • 1. Annex to agenda item 6 (Resolution on the approval of the compensation report for the fiscal year 2021) : Compensation report for the fiscal year 2021

    With the Act Implementing the Second Shareholders' Rights Directive ("ARUG II"), the legislator has changed the format of the compensation report. It must now be submitted independently to the Annual

    General Meeting for approval. In addition, the content requirements for the report have been significantly revised. This compensation report of HelloFresh SE (also the "Company") for the fiscal year 2021 follows the provisions of the new Section 162 AktG for the first time and therefore differs significantly from the previous compensation reporting.

    In the fiscal year 2021, the Supervisory Board adopted a new compensation system for the Management

    Board ("Compensation System 2021") in accordance with the legal requirements of ARUG II on April 15, 2021 and submitted this to the Annual General Meeting for approval in accordance with Section 120a (1)

    AktG. In addition, a compensation system for the Supervisory Board was developed and proposed to the

    Annual General Meeting for resolution. The Annual General Meeting on May 26, 2021 rejected the

    Compensation System 2021 by a majority and adopted the proposed compensation for the Supervisory Board with effect from January 1, 2021. The Supervisory Board will therefore submit a revised and amended compensation system for the Management Board to the Annual General Meeting in 2022.

    Since the foundation of the Company, the compensation of the Management Board has consisted of a variable and a fixed compensation component. In the specific design of the compensation structure and

elements, the various growth stages of the Company were taken into account. In the phase after the foundation of the Company, the members of the Management Board (then managing directors) were granted call options which exercise price essentially corresponded to the price of the private financing rounds of the Company carried out at that time. With the further growth of the Company, the Company's two general participation programs, the Virtual Stock Option Program and the Restricted Stock Unit

Program, were introduced and have since formed the basis for the variable compensation component of the

Management Board (for the individual programs (VSOP 2016, VSOP 2018, VSOP 2019 and RSUP 2019),

cf. the comments in sectionsII.1.a)bb)(2)andII.1.a)cc)(3)).

In the fiscal year 2021, the Management Board comprised Dominik Richter, Thomas Griesel, Christian

Gärtner and Edward Boyes. Their Management Board service agreements existing prior to the entry into force of the Compensation System 2021 remain unaffected by the Compensation System 2021 in accordance with the transitional provision of Section 26j (1) EGAktG. The Management Board compensation granted and owed in fiscal year 2021 was therefore not based on the Compensation System

2021. Until new Management Board service agreements are concluded, this also applies to future compensation systems including the amended compensation system to be presented to the Annual General Meeting in 2022 ("Compensation System 2022"). Nevertheless, the existing Management Board service agreements largely correspond to the Compensation System 2021 (for details see sectionII.1.a)cc)(1).

As this is the first time that a compensation report has been submitted to the Annual General Meeting for approval in accordance with Section 120a (4) AktG, there was no previous resolution by the Annual General Meeting that could have been taken into account in the reporting.

a)Compensation of the Management Board in fiscal year 2021

aa)Basic features of Management Board compensation

In determining the compensation of the members of the Management Board, the Supervisory Board is guided primarily by two important objectives: (1) a strong weighting of total compensation towards a long-term performance- and share price-related compensation component, the aim of which is to create the greatest possible alignment of interests between long-term corporate value enhancement and Management Board compensation, and (2) a clear "co-ownership" approach, according to which all Management Board members are required to invest significantly in shares of the Company. The two Management Board members and founders Dominik Richter and Thomas Griesel hold 4.12% and 1.71%, respectively, of the Company's share capital. The two other members of the Management Board, Christian Gärtner and Edward Boyes, have fulfilled the obligation to hold at least the value of one gross annual base salary (corresponding to approximately two net annual base salaries) in shares of the Company until the end of 2021.

In order to effectively implement the aforementioned objectives and ensure that the total compensation of the Management Board members is in line with that of comparable companies, the Supervisory Board sought advice from the compensation expert hkp, which,among other things, benchmarked Management Board compensation, including the individual components, against a group of international peer companies ("Industry Peer

Group"). This took into account reporting-date differences within the peer group in terms of sales, employees and market capitalization.

The peer group consisted of the following companies from the e-commerce, Internet and food or grocery delivery services sectors from Germany and abroad (Industry Peer Group):

Adyen

Deliveroo

Shopify

Car1

Delivery Hero

Spotify

ASOS

Doordash

Stitch Fix

Boohoo

Etsy

Uber

Booking

Just Eat Takeaway

Wayfair

Carvana

Ocado Group

Zalando

Chegg

Roku

Chewy

Scout24

In addition, a cross-sector comparison was carried out with the members of the most important German share indices DAX and MDAX. In view of the international orientation of the company and the USA as the largest market of the HelloFresh Group, the specific industry peer group is primarily used as the relevant comparison group and comparative statements refer to this.

According to the benchmarking prepared by compensation experts of hkp, the base salary of the CEO Dominik Richter is in the bottom 20% and the base salary of the other Management

Board members is in the middle (6th decile) of the Industry Peer Group. The total compensation of the CEO is around the middle of the industry peer group, while the total compensation of the other Management Board members is slightly below the middle of the industry peer group. Overall, the remuneration of all members of the Management Board is below the rank HelloFresh has relative to the Industry Peer Group companies on the basis of its revenue, number of employees, and market capitalization as of the reporting date.

By dividing the remuneration into (i) a comparatively moderate fixed remuneration, (ii) a short-term variable remuneration in the form of restricted stock units ("RSUs"), and (iii) a performance-based long-term variable remuneration in the form of virtual options ("Virtual

Options"), which accounts for the majority of the total remuneration, the remuneration system creates an incentive for results-oriented and sustainable corporate governance. The remuneration of the members of the Management Board is based on the performance of the

Management Board as a whole, the position of the individual members of the Management

Board, and the business success of HelloFresh SE. In addition, the value of the variable compensation of the members of the Management Board is directly dependent on the share price of the company when it is paid out, thereby linking the interests of the members of the

Management Board with those of the shareholders. The integration of non-financial environmental, social, and governance ("ESG") objectives as components of theremuneration structure also incentivizes ESG-sustainable and -future-oriented actions while striving to create value for customers, employees, and shareholders as well as the environment as a whole.

The following graphic summarizes the various components of Management Board compensation, with ESG targets used as additional performance criteria in granting long-term variable compensation since the Supervisory Board adopted the Compensation

System 2021:

bb)Compensation components in detail

The compensation of the Management Board comprises fixed, non-performance-related and variable, performance-related components. The sum of all compensation components constitutes the total compensation of the individual Management Board members.

The fixed, non-performance-related compensation consists of a base salary and fringe benefits. The short-term variable compensation consists of RSUs, the long-term variable compensation consists of Virtual Options.

(1) Fixed remuneration components

a.

Basic salary

Each Management Board member receives an individually agreed base salary, which is generally paid in twelve equal installments at the end of each calendar month.

  • b. Ancillary services

    As a fringe benefit, Management Board members receive half of the monthly reimbursable contributions to German health and long-term care insurance up to the applicable maximum rate for statutory health and long-term care insurance. In the case of Management Board member Edward Boyes, who lives abroad, the fringe benefits are adjusted to the relevant national (in particular regulatory) particularities. In principle, in the case of Management

    Board members living abroad, the Company pays employer contributions - where required - into the Management Board member's foreign health and long-term care insurance in accordance with the applicable statutory regulations, but together up to a maximum of the applicable maximum rate for

    German statutory health and long-term care insurance and any mandatory employer contributions to foreign pension insurance.

    There are no voluntary pension commitments in favor of Management Board members.

    In addition, HelloFresh SE reimburses the Management Board for expenses and other expenses incurred in connection with the proper performance of its duties for the Company.

  • c. Other services

    None of the Management Board members received any other benefits in fiscal year 2021.

(2)

Variable compensation components

The variable compensation of the members of the Management Board of HelloFresh SE consists of a short-term oriented remuneration component, the RSUs, and a long-term oriented remuneration component, the Virtual Options. The total allocation amount for variable remuneration is contractually agreed with each member of the Management

Board and is generally divided 25% into RSUs and 75% into Virtual Options. However, for the last two full fiscal years of an Management Board service agreement, the

Supervisory Board may also decide to allocate up to 40% of the total allocation amount of the variable compensation to RSUs and up to 60% to Virtual Options; the existing

Management Board service agreements provide for an allocation of 40% to RSUs and 60% to Virtual Options for the fiscal years 2024 and 2025.

The payment of the long-term oriented variable remuneration components depends on the achievement of financial targets (revenues and AEBITDA) and non-financial sustainability targets (ESG targets) and thus makes a significant contribution to the long-term and sustainable development of HelloFresh SE and the HelloFresh Group.

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HelloFresh SE published this content on 06 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 April 2022 08:31:01 UTC.