Manz : Compensation Report for the Fiscal Year 2021

Manz AG

Compensation Report for the Fiscal Year 2021

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2021 Compensation Report

Compensation Report 2021

of Manz AG

Preamble

The Compensation Report explains the main features of the compensation system for the members of the Managing Board and Supervisory Board, as well as the amount of individual compensation received or granted to the members of Manz AG's executive bodies in the 2021 reporting year. The report complies with the statutory requirements of Section 162 German Stock Corporation Act (AktG) and the recommendations of the German Corporate Governance Code as amended on December 16, 2019. In preparing the Compensation Re-port, the Managing Board and Supervisory Board of Manz AG have attached importance to clear, comprehensible, and transparent reporting. The Compensation Report was audited by the auditors in accordance with Section 162 (3) Sentences 1 and 2 German Stock Corpora-tion Act (AktG).

A. Review of the 2021 fiscal year from a compensation perspective

1. Performance in fiscal year 2021
   In fiscal year 2021, Manz AG achieved many important milestones and further sharp- ened its growth strategy with a focus on the automotive & e-mobility, battery produc- tion, electronics, energy, and medical technology industries. In particular, it significantly strengthened its positioning as a high-tech machine builder in the e-mobility market. While the Company achieved important strategic and operational successes, its 2021 operating performance was at the same time significantly impacted by revenue shortfalls related to the CIGS solar project and impairment of goodwill in the Solar segment.
   In fiscal year 2021, Manz AG generated consolidated revenues of EUR 227.1 million (previous year: EUR 236.8 million) and earnings before interest, taxes, depreciation and amortization (EBITDA) of EUR 18.3 million (previous year: EUR 19.4 million). The EBITDA margin was 7.7 % (previous year: 8.0 %). Earnings before interest and taxes (EBIT) of EUR -16.1 million (previous year: EUR 7.2 million) were impacted by impairment losses of EUR 21.6 million on goodwill and a brand name in connection with the CIGS solar project in China. The EBIT margin, therefore, fell to a negative figure of -6.8 % (previous year: 3.0 %). Furthermore, basic earnings per share (for consolidated earnings after taxes) amounted to EUR -2.89 (previous year: EUR 0.44).
   The Manz AG share started the 2021 fiscal year at a price of EUR 34.90. In the follow- ing months, the share price trend was characterized by an overall upward movement and reached its annual high of EUR 70.00 on June 25, 2021. On December 30, 2021,

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2021 Compensation Report

Manz shares closed at EUR 50.00, which corresponds to a market capitalization of EUR 379.3 million and a price increase of around 43 % since the beginning of the year.

1. Composition of the Managing Board and Supervisory Board
   There were no changes in the composition of the Managing Board and Supervisory Board of Manz AG in the 2021 reporting year. The Managing Board remained unchanged and consisted of Martin Drasch (Chairman), Manfred Hochleitner (Chief Financial Officer) and Jürgen Knie (Chief Operations Officer).
   The existing members of the Supervisory Board Prof. Dr. Heiko Aurenz (Chairman), Dieter Manz (Vice Chairman), Prof. Dr.-Ing. Michael Powalla and Dr. Zhiming Xu were re-elected to the Supervisory Board for a full term of office by the Annual General Meet- ing on July 7, 2021.

B. Compensation of the members of the

Managing Board

1. The compensation system at a glance
   The system for compensating members of the Managing Board of Manz AG was resolved by the Supervisory Board on May 6, 2021, on the recommendation of its Economic Com- mittee, and approved by the Annual General Meeting on July 7, 2021, with a majority of 98.93 %. It conforms to the regulations of the Stock Corporation Act, and observes the recommendations of the German Corporate Governance Codex (DCGK) in the version enacted by the governmental commission on the German Corporate Governance Codex on December 16th, 2019, which went into force on March 20th, 2020.
   The Managing Board compensation system approved by the Annual General Meeting is available on the Company's website under https://www.manz.com/en/investor-relations/corporate-governance/compensation/
   Manz AG's goal is to achieve a sustained increase in competitiveness with earnings- oriented growth. The Managing Board compensation system is closely linked to this strategy, and plays an important part in helping us achieve the corporate objectives described here. Based on this, the aim of the compensation system is to compensate the members of the Managing Board commensurately according to their area of activity and responsibility, taking into account not only the personal performance of each respec- tive Managing Board member, but also the Company's overall situation and business success.
   Integrating the main management indicators of Manz AG into the Managing Board com- pensation incentivizes increasing earning power and profitability, as well as the long- term financing power and appreciation in value of Manz AG. Furthermore, it should also incentivize performance that contributes to the strategic, technical and structural development of Manz AG. Therefore, non-financial factors, in particular from the envi- ronment, social & governance areas - "ESG" - also play an important role in Managing

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Board compensation. The objective is to unite the interests of the Managing Board and shareholders with other stakeholders as well.

The compensation paid to members of the Manz AG Managing Board consists of fixed and variable components. Non performance-related components as fixed compensation components include the annual salary, benefits, and company pension plan. Performance -related components as variable components include short-term incentives (STI) and long-term incentives (LTI).

The following table shows an overview of the compensation components as well as the parameters and bases on which they are calculated:

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2021 Compensation Report

Fixed compensation (non performance-related components)

Fixed salary	Monthly wages
	Expected employer contribution to social insurance
	Payment in cash
Fringe benefits	Private use of company car
	Insurance (D&O insurance, accident insurance)
Company pension plan	Contributions to the provident fund

Variable compensation (performance-related components)

Short-term incentives (STI): Annual cash bonus

Type		Annual target bonus with financial performance criteria
Performance criteria		EBIT margin
Performance period		one year
Limit		160 % of annual fixed salary
Payment		Annually in cash after approval of the consolidated financial
		statement
Short-term incentives (STI): Non-financial STI
Type		Annual target bonus with non-financial performance criteria
Performance criteria		Objectives related to strategic, technical and structural develop-
		ment, including ESG criteria according to annual individual targets
Performance period		One year
Limit		30 % of annual fixed salary
Payment		Annually in cash after determination of the amount to be paid out
Long-term incentives (LTI): Manz Performance Share Plan
Type		Performance Share Plan (share purchasing rights)
Performance criteria		EBITDA margin (50 %)
		Development in corporate value (50 %)
Performance period		Four fiscal years
Vesting period		Four years
Limit		300 % of the value of the performance shares upon allocation
Payment		After the end of the vesting period and approval of the consoli-
		dated financial statement for the fourth fiscal year, generally in
		shares of Manz AG
Maximum compensation		Fixed maximum amount for each member of the Managing Board