SFC Energy : Letter to the Shareholders

SFC Energy AG, Eugen-Sänger-Ring 7, D-85649 Brunnthal

letter to shareholders

Brunnthal on May 7th, 2021

Dear shareholders,

The executive board as well as the supervisory board of SFC Energy AG highly value a two-way communication with its shareholders, not only at the annual general meeting or at roadshow events but on a continuous basis. SFC Energy AG is a high-growth,high-tech company which endeavours to live up to the highest ESG standards which include international corporate governance standards, whilst at the same time must procure the best management talent for the firm. Recently, we have received applause but also some questions from certain of you regarding our upcoming annual general meeting and in particular on agenda items nos. 6, 10 and 11, and there on the term of office of supervisory board members (Aufsichtsratsmitglieder) and the proposed remuneration system for the executive board members (Vorstandsmitglieder). We are pleased to briefly further explain our position on these topics:

1. Following the international corporate governance discussions with respect to the adequate duration of the supervisory board term of office, this year we, as one of the first listed companies in Germany at all, propose to the annual general meeting
2. • that our supervisory board shall be enlarged from three to four members, strengthening our international and diverse board composition and allowing for establishing an audit committee (Prüfungsausschuss) to enable an even more focused review on topics such as financial key parameters, compliance management system and a risk management system with a 360 degree risk radar;
   • to limit the term of office from a German standard of five years to only four years; and
   • to establish a staggered board structure to allow our shareholders to vote on a possible refreshment of the supervisory board every two years (we decided with the advice of legal experts on that subject not to amend the articles of association in that respect to allow the shareholders to be more flexible in exercising their rights at the annual general meetings in the future).
3. We very much understand the ask for an inclusion of a deductible for supervisory board members in the D&O insurance policy but wish to stress that
4. • such deductible is not any more recommended by the German Code on Corporate Governance (and is not at all German market practice) and
   • such deductible would hinder the attractiveness for international and diverse talent to become supervisory board member of a high-growth and listed company.

SFC Energy AG	Vorstand:	Deutsche Bank München	HypoVereinsbank München	WEEE-Reg.-Nr. DE 85008411
Eugen-Sänger-Ring 7	Dr. Peter Podesser (Vors.),	BLZ 700 700 10,	BLZ 700 202 70,	AG München HRB 144 296
85649 Brunnthal	Daniel Saxena, Hans Pol	Konto 180 484 800	Konto 249 51 55	USt.-IdNr.: DE813032317
Deutschland	Vorsitzender des Aufsichtsrates:	IBAN: DE54 7007 0010 0180 4848 00	IBAN: DE55 7002 0270 0002 4951 55	St.-Nr. 143/101/60645
www.sfc.com	Tim van Delden	SWIFT-BIC: DEUTDEMM	SWIFT-BIC: HYVEDEMM	Finanzamt München
DAC45206420/2	124568-0004

3. We ask you for your approval of our new executive board remuneration system and reported on its elements in an open and transparent way in the meeting's invitation. We deeply believe that there is no one-size-fits-all solution for an executive board remuneration but that such system should be tailormade to the specific company in a certain phase of its economic development. SFC Energy AG is a high-growth, globally active and listed company, and its management was able to increase its market capitalisation over the last years significantly. After receiving some expert advice on these questions and realizing that the company is in a highly competitive situation on talent acquisition and retention, the Company's supervisory board decided, inter alia, to align the long-term variable remuneration with the Company's stock market price (thereby also aligning interests of our shareholders to the interests of the executive board members) and to immunise the executive board members from any possible conflict of interest issue in a (hypothetical) control transactions (by stipulating special termination rights in case of change of control). That change of control termination right shall further secure the board members duty of care to always act in the best interest of the company and all of its significant stakeholders (irrespectively of any personal considerations on career and remuneration).

We pledge to continue our communication with you on corporate governance issues but also broader on our ESG business model. In this respect, we are preparing an ESG reporting which is going to be published in this Q2. We hope that this shareholder letter has further explained some of our thinking on certain agenda items tabled to this year annual general meeting and hope for your support.

The Supervisory Board

The Executive Board

SFC Energy AG	Vorstand:	Deutsche Bank München	HypoVereinsbank München	WEEE-Reg.-Nr. DE 85008411
Eugen-Sänger-Ring 7	Dr. Peter Podesser (Vors.),	BLZ 700 700 10,	BLZ 700 202 70,	AG München HRB 144 296
85649 Brunnthal	Hans Pol	Konto 180 484 800	Konto 249 51 55	USt.-IdNr.: DE813032317
Deutschland	Vorsitzender des Aufsichtsrates:	IBAN: DE54 7007 0010 0180 4848 00	IBAN: DE55 7002 0270 0002 4951 55	St.-Nr. 143/101/60645
www.sfc.com	Tim van Delden	SWIFT-BIC: DEUTDEMM	SWIFT-BIC: HYVEDEMM	Finanzamt München
DAC45206420/2	124568-0004