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KRONES AG

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Krones : Remuneration system for the members of the Supervisory Board

05/19/2021 | 07:34am EDT

krones Aktiengesellschaft, Neutraubling

Annual general meeting (Virtual AGM) of KRONES AG on Monday, 17 May 2021, 2:00 pm,

at the business premises of KRONES AG, Böhmerwaldstrasse 5, 93073 Neutraubling, Germany.

Remuneration system for the members of the Supervisory Board Description, resolution and vote

AGM 2021 | 2

A. Description of the remuneration system for the members

of the Supervisory Board (agenda item 9)

The Supervisory Board of Krones AG (hereinafter "Supervisory Board")

advises­

and oversees the Executive Board in its management of Krones AG

(hereinafter "Krones" or the "Company"). Considering the responsibility

that this function entails, the members of the Supervisory Board should

receive remuneration commensurate with their duties, the time demands

associated with serving on the Supervisory Board, and the situation of the

Company. The amount of fixed annual remuneration takes into account

the specific role and responsibility of the members of the Supervisory

Board. Supervisory Board remuneration that is in line with the market en­

vironment should also ensure the Company's ability to attract and retain

qualified candidates for the Supervisory Board, so that the Supervisory

Board can carry out its advisory and oversight activities in the best way

possible. Overall, the Supervisory Board remuneration thus makes a sig­

nificant contribution to promoting the business strategy and long-term

development­

of the Company.

The system of remuneration for members of the Supervisory Board is based on statutory requirements and takes into account the provisions of the German Corporate Governance Code. Supervisory Board remuneration of comparable listed companies has also been taken into account.

In keeping with recommendation G.18 of the German Corporate Govern­ ance Code, the members of the Supervisory Board should receive only a fixed remuneration so as to strengthen the Supervisory Board's independ­ ence to remain objective and neutral in fulfilling their advisory and moni­

toring role and to ensure their ability to make independent personnel and remuneration decisions. The extent of the workload and liability risk of the members of the Supervisory Board generally does not develop in parallel with the Company's commercial success or earnings. Rather, it is often the difficult times, in which the variable remuneration might decrease, that ­require especially intensive advising and oversight on the part of the mem­ bers of the Supervisory Board. There are neither performance-based remu­ neration nor financial or non-financial performance criteria.

The remuneration of the members of the Supervisory Board is governed by Article 15 of the Company's articles of association. The amount of Super­ visory Board remuneration proposed under agenda item 9 differs from the existing policy only in the proposed amendment to Article 15 (4). Under it, the Chair of the Audit and Risk Management Committee would in future receive additional remuneration of €14,000.00 instead of the current €7,000.00. This is to account for the recommendation under G.17 of the German Corporate Governance Code, which states that remuneration of members of the Supervisory Board shall take appropriate account of the larger time commitment of the Chair of committees. Moreover, Article 15

  1. and the new Article 15 (5) of the Company's articles of association should further clarify the modalities of payment of reimbursement and remuner­ ation.

The adjusted remuneration of the members of the Supervisory Board pro­ posed to the Annual General Meeting of the Company for approval under agenda item 9 would apply retroactively to 1 January 2021.

AGM 2021 | 3

Components, amount, and structure of Supervisory Board

remuneration

In keeping with the prevailing practice among German companies and

recommendation­

G.18 of the German Corporate Governance Code, the

remuneration­

of the members of the Supervisory Board consists purely

of fixed remuneration. In addition, the members of the Supervisory Board

receive­

additional remuneration for membership in special committees

of the Supervisory Board as well as reimbursement of expenses and addi­

tional benefits. Fixed remuneration thus always makes up a relative share

of 100% of total remuneration.

1.

Fixed remuneration

Each member of the Supervisory Board shall receive a fixed remuneration

of €35,000.00 per annum, payable after the end of each financial year. In

keeping with recommendation G.17 of the German Corporate Governance

Code, which states that the large time commitment of the Chair and the

Deputy Chair should be taken into account, the Chair of the Supervisory

Board shall receive two and one-half times and the Deputy Chair of the

Supervisory­

Board shall receive one and one-half times the fixed remuner­

ation cited above.

2.

Reimbursement of expenses

Expenses shall be reimbursed either by payment of a lump sum amount of

€1,500.00 for each attended meeting or, if the expenses exceed €1,500.00,

by payment on the basis of receipts showing the actual costs. Expenses

shall also be reimbursed for meetings attended or resolutions made by the Supervisory Board by telephone or video conference. If multiple meetings take place on a single day, reimbursement of expenses will be paid only once.

  1. Additional benefits
    The Company shall reimburse each member of the Supervisory Board for the value added tax (VAT) due on the remuneration received. It shall also provide the members of the Supervisory Board with insurance cover in the form of a civil liability insurance policy (D&O insurance) to cover the statu­ tory liability arising from their activity as members of the Supervisory Board.
  2. Remuneration membership in special committees
    Members of the Supervisory Board who belong to special committees within the Supervisory Board shall receive additional annual remunera­ tion of €7,000.00 and the flat-rate reimbursement for expenses for every meeting attended or committee resolution reached via phone or video con­ ference (see item 2 above). Effective 1 January 2021 the Chair of the Audit and Risk Management Committee should receive additional remuneration of €14,000.00 instead of the current €7,000.00. Membership in more than one special committee is not compensated separately with additional remuneration.

AGM 2021 | 4

Procedure for determining, implementing, and revising

the remuneration system for the Supervisory Board

The Annual General Meeting resolves on approval of the remuneration

system­

for members of the Supervisory Board at the proposal of the

Executive­

Board and the Supervisory Board at least once every four years.

If the Annual General Meeting does not approve the remuneration system,

a revised­

remuneration system shall be presented to the next Annual

General­

Meeting, at the latest.

The Executive Board and the Supervisory Board always review the remu­ neration system for members of the Supervisory Board before proposing it to the Annual General Meeting. Here, too, the Executive Board and Super­ visory Board may seek the advice of an external independent remunera­ tion expert.

Any conflicts of interest in the review of the remuneration system are counteracted by the statutory assignment of competence since sole deci­ sion-making power on Supervisory Board remuneration is assigned to the Annual General Meeting pursuant to Section 113 AktG. In addition, the gen­ eral rules of the Supervisory Board with respect

to conflicts of interest apply, under which the Supervisory Board must

­report to the annual general meeting on any conflicts of interest that arise and their handling.

Remuneration-related legal transactions, term of office, dismissal

No remuneration-related legal transactions within the meaning of Sec­ tions 87a (1) sentence 2 number 8 and 113 (3) sentence 3 AktG have been made with members of the Supervisory Board.

Unless the Annual General Meeting resolves on a shorter term when

electing­ individual shareholder representatives, the members of the Super­ visory Board are elected for a period that ends at the close of the annual general meeting that resolves on the ratification of the acts of the Board for the fourth financial year following the start of their term in office. The ­financial year that is underway at the start of the term in office is not to be included in this calculation. Members of the Supervisory Board may be dis­ missed subject to the relevant provisions of the law. They may also resign from office prematurely without cause by giving one month's notice in writing to the Chair of the Supervisory Board or to the Executive Board. The right to resign from office for cause shall remain unaffected.

No further remuneration is paid in the event of resignation and there is no provision regarding remuneration after the term of office. Members of the Supervisory Board who belonged to the board or any of its committees for only a portion of the financial year receive pro-rated remuneration. The members of the Supervisory Board shall receive one twelfth of the remu­ neration for each month or part thereof of their activity. The same applies if a member of the Supervisory Board withdraws from a function involv­ ing increased remuneration.

AGM 2021 | 5

B. Resolution on the remuneration system and the remuneration

for members of the Supervisory Board and a corresponding

amendment to the articles of association

Pursuant to Section 113 (3) AktG as amended by ARUG II, the annual general

meeting of listed companies must adopt a resolution on the remuneration

of members of the Supervisory Board at least once every four years. The

first resolution is to be made before the end of the first annual general

meeting held after 31 December 2020, even if the remuneration does not

change.

The remuneration policy currently in place for the Supervisory Board, as contained in Article 15 of the Company's articles of association, is based on a resolution of the Annual General Meeting of the Company of 25 June 2014. The remuneration of the members of the Supervisory Board should remain largely unchanged compared with the previous policy and the amount would be adjusted in only one point effective 1 January 2021. Arti­ cle 15 (4) of the Company's articles of association provides that members of the Supervisory Board who belong to special committees within the Super­ visory Board receive additional remuneration of €7,000.00 annually. This rule should be expanded so that the Chair of the Audit and Risk Manage­ ment Committee receives an additional remuneration of €14,000.00 an­ nually instead. This is to account for the recommendation under G.17 of the German Corporate Governance Code, which states that remuneration of members of the Supervisory Board shall take appropriate account of the larger time commitment of the Chair of committees. Moreover, Article 15

  1. and the new Article 15 (5) of the Company's articles of association should further clarify the modalities of payment of reimbursement and remuner­ ation.

Therefore, the Executive Board and the Supervisory Board propose the following resolution:

The remuneration system for the Supervisory Board of Krones AG as

­described under Section III. B below as an annex to agenda item 9 and the resulting remuneration applicable effective 1 January 2021 shall be adopted and Article 15 of the Company's articles of association shall be amended as follows:

"Article 15 Remuneration

1.

Each member of the Supervisory Board shall receive, in addition to the re­ imbursement of expenses, a fixed remuneration of €35,000.00 per annum, payable after the end of each financial year. The Chair of the Supervisory Board shall receive two and one-half times and the Deputy Chair of the ­Supervisory Board shall receive one and one-half times the fixed remuner­ ation cited above.

2.

Expenses shall be reimbursed either by payment of a lump sum amount of €1,500.00 for each attended meeting or, if the expenses exceed €1,500.00, by payment on the basis of receipts showing the actual costs. Expenses shall also be reimbursed for meetings attended or resolutions made by the Supervisory Board or its special committees by telephone or video confer­ ence. If multiple meetings take place on a single day, reimbursement of ­expenses will be paid only once.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Krones AG published this content on 19 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 May 2021 11:33:06 UTC.


© Publicnow 2021
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