Siemens Energy : Compensation Report for FY2022

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Compensation Report for

fiscal year 2022, along with the audit report of the independent auditor, in accordance with Section 162 of the ­German Stock ­Corporation Act (AktG)

Compensation Report pursuant to Section 162 of the Stock Corporation­ Act

Munich, December 9, 2022

Dear Shareholders,

The entire Supervisory­ Board and in particular the Presiding Committee regards challenging and fair compensation for the Executive Board as a key tool for leadership and governance.

The Supervisory­ Board changed two key elements of the Executive Board's compensation for fiscal year 2022. First, free cash flow was added as a financial performance criterion alongside the adjusted EBITA margin before special items. Second, sustainability (ESG) took on an increased importance for compensation: Each member of the Executive Board is evaluated in their Bonus on customer satisfaction and health and safety. In addition, starting with fiscal year 2022, total shareholder return (TSR) is measured in the Siemens Energy Stock Awards with a weighting of 50% against the performance of the S&P Global Clean Energy Index. This choice addresses the demand for objective transparency and underlines that Siemens Energy benchmarks itself against the world's leading clean energy companies.

In a year replete with challenges, Siemens Energy strengthened its businesses. The Gas and Power (GP) segment again delivered solid results and improved its operational performance. However, the Siemens Energy Group's performance was held back by negative business developments at Siemens Gamesa Renewable Energy. This is also reflected in the Executive Board's compensation and in particular in the Bonus, which is tied primarily to the financial performance of the consolidated Group. While the Company demonstrated its resounding strength in cash generation, which positively impacted the Bonus, the adjusted EBITA margin before special items - which significantly trailed expectations - led to a substantial reduction in compensation.

The Supervisory­ Board assessed that, against the backdrop of enormous geopolitical and macroeconomic challenges, the entire Executive Board performed well in the areas it directly impacts, especially in further developing the structure and strategy of the Company. This is reflected in the assessment of their individual targets.

This particularly applies to the successful launch of a flat and transparent organizational structure on October 1, 2022 (Project Volt). The new organizational structure reduces complexity, increases flexibility, shortens the path for decision making and strengthens individual responsibility. Beyond that, the Supervisory­ Board recognizes the tangible improvement in health and safety and customer orientation. Both elements are particularly important given the largely project-driven nature of the business.

For fiscal year 2023, the Supervisory­ Board again reviewed the design of variable compensation made changes to further strengthen individual responsibility in the Executive Board. With Siemens Energy's new organizational structure in effect from October 1, 2022, each of the three Business Areas are led by a member of the Executive Board, apart from Siemens Gamesa Renewable Energy. To create an even clearer link between compensation and the performance of the Business Areas, the Supervisory­ Board made use of the option in the compensation system to set targets on the Business Area-level. For fiscal year 2023, members of the Executive Board with direct responsibility for a Business Area will have half of their financial targets in the Bonus linked to the performance of the respective Business Area. The goal of an integrated technology company is incentivized with the remaining 50% tied to Group targets.

The design of the long-term share, share-based compensation (Siemens Energy Stock Awards) was slightly adjusted for fiscal year 2023 by changing the measurement of employee engagement to a new KPI with higher validity. You will find a detailed description of these changes in the section "Outlook Executive Board Compensation for fiscal year 2023".

This report should allow you, the shareholders, to have a transparent view of compensation for the Executive and Supervisory­ Boards. Like all of my colleagues on the Super­ visory Board, I look forward to continued dialogue with you on this important topic.

For the Presiding Committee of the Supervisory­ Board

Joe Kaeser

Chairman

This combined report by the Executive and Supervisory­ Boards is based on the requirements of Section 162 of the German Stock Corporations Act (Aktiengesetz) as well as relevant requirements in International Financial Reporting Standards (IFRS) and recommendations and suggestions in the German Corporate Governance Code. The compensation report includes individualized disclosure of compensation awarded or due to the members of the Executive Board and members of the Supervisory­ Board in fiscal year 2022 (October 1, 2021, to September 30, 2022) and fiscal year 2021 (October 1, 2020, to September 30, 2021) as well as other disclosures required by the German Stock Corporations Act. The content of the report was subject to an audit by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft.

The compensation report for fiscal year 2022 will be presented for approval to the Annual Shareholders' Meeting on February 7, 2023.

1.1 Compensation of the members of the Executive Board

This report explains how the compensation system in effect for the members of the Executive Board since October 1, 2020, was applied in fiscal year 2022. The compensation system was approved by the Annual Share- holders' Meeting of Siemens Energy AG on February 10, 2021, with 96.7% of the votes cast ("Say on Pay"). Shareholders will be asked to again approve the compensation system in the event of significant changes or, at the latest, at the Annual Shareholders' Meeting in 2025. A full description of the compensation system for the members of the Executive Board can be found in Siemens Energy AG's Notice of Annual Shareholders' Meeting 2021, which is available for download on the Company's internet site.

Key principles of Executive Board compensation

Each of the Executive Board members in office as of September 30, 2022, receive their compensation in accordance with an employment contract with Siemens Energy AG, which runs in parallel to their appointment as a member of the Executive Board. Dr.-Ing. Christian Bruch and Maria Ferraro receive their compensation exclusively from Siemens Energy AG, as do newly appointed Executive Board members Vinod Philip and Anne-Laure de Chammard, who began their terms on October 1 and November 1, 2022, respectively. Karim Amin and Tim Holt receive a portion of their compensation from Siemens Energy Group companies. For fiscal year 2022, Karim Amin received approximately 56% of his total target compensation from Siemens Energy LLC (United Arab Emirates), and Tim Holt receives around 32% of his total target compensation from Siemens Energy Inc. (United States). Tim Holt's and Karim Amin's compensation from Siemens Energy AG is reduced accordingly so that the employment with Siemens Energy Group companies does not lead to any additional compensation. In accordance with Section 162 para. 1 AktG, the table "Compensation awarded or due" discloses the total compensation from all group companies.

Key elements of Executive Board compensation

The compensation of the Executive Board in fiscal year 2022 complies with all applicable recommendations and suggestions in the version of the German Corporate Governance Code dated April 28, 2022. Executive Board compensation is based on the following principles:

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Compensation Report for the fiscal­ year 2021/2022, along with the audit report­ of the independent auditor

Contribution to the Company's strategy

Sustainable orientation of compensation

Focus on industry-specific requirements­

Alignment of performance and pay

Consideration of Executive Board members'

collective and individual performance

Consistency of compensation systems throughout the organization

Appropriateness of compensation

The compensation system for members of the Executive Board should contribute to implementing the Company's strategy by setting appropriate incentives.

Within the variable compensation, a substantial portion is determined based on performance

­measurement over a multi-year period. The focus on sustainability is further strengthened by anchoring performance criteria reflecting environmental, social and governance (ESG) factors in the long-termequity-based compensation.

Executive Board compensation can be structured to reflect the Company's specific challenges, for example, by way of differentiation in compensation levels based on a specific function, or via the ­flexibility to adjust relative performance measurement in line with growing business segments.

Exceptional performance should be rewarded appropriately in compensation. Performance under the established targets should lead to an appreciable reduction in compensation.

The compensation system offers the Supervisory Board the possibility to, on the one hand,

take ­consideration of Executive Board members' individual responsibilities and, on the other hand, their overall performance as a governing body.

The compensation system for members of the Executive Board is compatible with compensation systems for the management and employees of the Group.

Executive Board members' compensation is appropriate for the market and takes consideration of the Company's size, complexity, and economic situation.

Siemens Energy   -

Overview of Executive Board compensation in fiscal year 2022

Compensation element	Description	Purpose/Link to strategy
Fixed components
Base salary	Twelve monthly installments (exceptions permitted for	Market-aligned base pay for carrying out Executive Board
	place of employment outside of Germany)	responsibilities
Fringe benefits	Benefits such as a company car, subsidies for insurance	Costs covered up to an appropriate level
	policies, tax advisory fees and housing and relocation
	expenses (first time appointment or change of place of
	employment), including any tax gross-ups covered by
	the Company
Retirement benefits	Pension substitute in the form of an unrestricted	Allows members to build up appropriate level of retirement­
	cash payment	savings on their own while minimizing risks for the
			Company
Variable components
	Main features:	Incentives for excellent operational performance in line
	Performance period: one year	with the strategy
	Performance corridor: 0-150%
	Adjusted EBITA margin before	• Recognition for constant improvement to profitability
Short-term variable	Special Items: 1/3	and thereby execution of the long-term strategy
compensation (Bonus)	Free cash flow ("FCF") pre-tax: 1/3	• Assurance the necessary cash is generated at the
	Performance criteria	Siemens­	Energy Group level
	Individual targets: 1/3	• Allows consideration of individual contributions in
			addition to the Board's collective performance;
			focused on strategically important areas

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along with the audit report­ of the independent auditor

Long-term variable compensation (Stock Awards)

Main features:	Orientation of Executive Board compensation toward
Vesting period: four years	sustainability; alignment between the performance of
Performance corridor: 0-200%	Siemens Energy's share price and Executive Board
Payout cap: 250% of the target amount	compensation
Transfer: in shares
Relative Total Shareholder Return	• Alignment of compensation with a comparison versus
("TSR"): 40%	relevant competitors on the capital market
• STOXX Global 1800 Industrial	• Rewards successes on the path to becoming the world's
Goods & Services (50%)	most valued energy technology company, in particular in
• S&P Global Clean Energy Index	the clean energy sphere
(50%)

Compensation Report for the ­fiscal year 2021/2022,

	Earnings per share		• Generating profits over the medium term is a central
	Performance criteria ("EPS", undiluted):­	40%	strategic value driver and reflects sustainable
				improvements­	to operations
	Environmental, Social & Governance • Sustainability is an integral part of the Company's
	("ESG"): 20%		strategy
	• CO₂ emissions (1/3)	• The Supervisory Board has the possibility to use
	• Employee Engagement (1/3)	quantitative­	metrics to incentivize elements of
	• Share of women in leadership	sustainability­	over a multi-year period
		positions (1/3)
Other
Share Ownership	CEO: 300% of base salary		Long-term commitment and further link to the Company's
Guidelines	Other members: 200% of base salary		success
	Adherence after a build-up phase of around 4.5 years;
	purchase requirement if share price falls

Siemens Energy   -

Criteria for assessing the appropriateness of Executive Board compensation

The review of the appropriateness of Executive Board compensation generally is conducted based on a comparison with German companies of similar size and complexity. As of September 30, 2022, Siemens Energy is a member of the DAX index, which comprises 40 of the largest publicly listed German companies. Given its relative positioning on the basis of revenue, number of employees and market capitalization around the median of the DAX, this index represents a suitable comparison group for Siemens Energy and serves as the basis for the market assessment of the appropriateness of compensation conducted in fiscal year 2022.

The compensation system also foresees benchmarking against companies in the MDAX, of which Siemens Energy was a member for a period of time in fiscal year 2022. Due to the re-inclusion of Siemens Energy in the DAX, no comparison with MDAX companies was carried out in fiscal year 2022 as part of the appropriateness review.

In addition, the Supervisory­ Board takes account of Executive Board compensation in proportion to compensation for the workforce of Siemens Energy in Germany (Segment Gas and Power; "GP"), including any changes over time. For this vertical comparison, the Supervisory­ Board determines the ratio of the Executive Board's compensation to the compensation of top executives (Senior Management contract group) and the rest of the workforce (employees covered by the collective bargaining agreement as well as professionals outside of the collective bargaining agreement) of the Segment GP in Germany.

Composition of Executive Board compensation in fiscal year 2022

Executive Board compensation comprises both fixed and variable components. Target compensation represents the level of compensation that is realized if all targets are met and the price of Siemens Energy's shares remains constant. Target compensation thereby sets incentives for strong performance by the Company, the Executive Board as a whole and for each member. Failing to reach targets can lead to a substantial reduction in compensation, as each member of the Executive Board's target compensation is comprised mostly of variable compensation.

For fixed compensation as well as short- and long-term variable compensation, the compensation system for the members of the Executive Board defines ranges for each component as a percentage of total target compensation. The relative share of each compensation element was within the defined ranges for fiscal year 2022. The relative share of each compensation element in terms of compensation awarded or due can deviate from these figures according to the actual level of target attainment and the first possible transfer of Siemens Energy shares as part of the long-term variable compensation in fiscal year 2025. For the period up until the first transfer of a Stock Awards tranche, the relative share of variable compensation as a part of compensation awarded or due will remain lower than its share of total target compensation.

The following table shows the contractually agreed total target compensation for fiscal year 2022.

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Report for the fiscal­ year 2021/2022, along with the audit report­ of the independent auditor

Total target compensation Fiscal year 2022

Members of the Executive
Board in office as of
September 30, 2022	(in k. €)
Dr.-Ing. Christian Bruch	Target amt.
		Share (%)
		Minimum
		Maximum
Maria Ferraro	Target amt.
		Share (%)
		Minimum
		Maximum
Tim Holt2	Target amt.
		Share (%)
		Minimum
		Maximum

Fixed compensation

	Pension	Fringe
Base salary	substitute	benefits1	Sum
1,440	500	41	1,981
27 %	9 %	1 %	37 %
1,440	500	41	1,981
1,440	500	41	1,981
720	250	36	1,006
27 %	9 %	1 %	37 %
720	250	36	1,006
720	250	36	1,006
720	250	52	1,022
27 %	9 %	2 %	38 %
720	250	52	1,022
720	250	52	1,022

Variable compensation

	Stock Awards
	Tranche
Bonus	2022	Sum
1,440	1,920	3,360
27 %	36 %	63 %
0	0	0
2,160	4,800	6,960
720	960	1,680
27 %	36 %	63 %
0	0	0
1,080	2,400	3,480
720	960	1,680
27 %	36 %	62 %
0	0	0
1.080	2.400	3,480

Total

5,341

1. %
   1,981
   8,941
   2,686

1. %
   1,006
   4,486
   2,702

1. %
   1,022
   4,502

Siemens Energy   - Compensation

Total target compensation
Fiscal year 2022					Fixed compensation
Members of the Executive
Board in office as of				Pension	Fringe
September 30, 2022		(in k. €)		Base salary	substitute	benefits1	Sum
Karim Amin	Target amt.	385	88	34	506
(since March 2022)3
Share (%)	27 %	6 %	2 %	36 %
		Minimum	385	88	34	506
		Maximum	385	88	34	506
Executive Board member
who left during fiscal year 2022
Dr.-Ing. Jochen Eickholt	Target amt.	300	104	29	433
(until February 2022)4
Share (%)	26 %	9 %	3 %	38 %
		Minimum	300	104	29	433
		Maximum	300	104	29	433

Variable compensation

	Stock Awards
	Tranche
Bonus	2022	Sum
385	513	898
27 %	37 %	64 %
0	0	0
578	1,283	1,861
300	400	700
26 %	35 %	62 %
0	0	0
450	1,000	1,450

Total

1,404

100 %

506

2,367

1,133

100 %

433

1,883

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of the independent auditor

1. Target amounts for fringe benefits equal the value of benefits received in fiscal year 2022, excluding the monetary value of security installations in Executive Board members' regularly-used homes or rental properties, including any tax gross-ups covered by the Company. These installations were carried out according to Sie- mens Energy's current executive security framework. Values for fringe benefits including the monetary value of these installations, including any tax gross-ups covered by the Company, are disclosed in the table "Compensation awarded or due fiscal year 2022."
2. Base salary, Bonus, pension substitute and selected fringe benefits for Tim Holt are paid out in US Dollars. Target amounts in US Dollars are determined prior to the re- spective fiscal year by converting the disclosed Euro amounts using the average Euro-US Dollar exchange rate in August of the respective year. For fiscal year 2022, the applicable exchange rate was €1 = $1.1772. Base salary and target Bonus each amounted to $847,557 after conversion. Stock Awards are granted on the basis of a Euro amount. Any contributions to retirement plans that Tim Holt receives as part of his employment with Siemens Energy Inc. are offset against the pension substitute.
   The value of contributions owed to these retirement plans amounted to $159,049 (€135,108 at the applicable exchange rate of €1 = $1.1772 for converting target compensation) for fiscal year 2022. Due the difference between the applicable exchange rate and the exchange rates employed for disclosure (base salary = average­ exchange rate for the respective month; Bonus and Pension Substitute = average exchange rate for fiscal year 2022, €1 = $1.0841), the value of this compensation (in Euros) disclosed in the table "Compensation awarded or due" deviates from the amounts cited in the table above, with base salary amounting to €783,688, the Bonus €788,947 and the value of the Pension Substitute and contributions owed to retirement plans equaling €271,469.
3. Pro-ratatarget compensation for fiscal year 2022 (7/12 months). With exception of base salary paid by Siemens Energy LLC (UAE), Karim Amin's compensation is paid out in Euros. Base salary paid by Siemens Energy LLC (UAE) is paid in UAE dirham in accordance with local regulations. A correction is performed at the end of the fiscal year to ensure that the compensation paid out in UAE dirhams corresponds to the target compensation in Euros. The average monthly Euro-Dirham exchange rate is applied for conversions.
4. Pro-ratatarget compensation for fiscal year 2022 (5/12 months).

the ­fiscal year 2021/2022, along with the audit report­

Limits on individual compensation elements

At the beginning of the fiscal year the Supervisory­ Board sets a maximum value in Euro for each compensation element. Base salary and pension substitute are defined as a fixed amount and can therefore not amount to a higher value. Short-term and long-term variable compensation are capped at 150% and 250% of the target value in Euro, respectively.

For fringe benefits, the Supervisory­ Board sets a maximum monetary value - based on a percentage of base salary - at the beginning of the fiscal year for each member of the Executive Board. The Supervisory­ Board set maximum value of 8% of base salary for fiscal year 2022. According to the compensation system, this limit can be increased, in particular in the event of an Executive Board member having their place of employment outside of Germany.

For Tim Holt and Karim Amin, whose places of employment are in the United States and the United Arab Emirates, respectively, the Supervisory­ Board increased the maximum value by €400,000 to account for additional benefits like tax equalization payments and expenses for tax advisory services, including any tax gross-ups covered by the Company. Further, the Supervisory­ Board elected - in line with the compensation system - to increase the maximum value of benefits for Maria Ferraro by €50,000 to account for time-limited benefits granted to her on an individual basis

prior to the Spin-Off of Siemens Energy. These benefits, which were granted in May 2020 for a period of approximately two years, include expenses for tax advisory services and other benefits typical for Executive Board members working internationally, including any tax gross-ups covered by the Company.

Compliance with maximum compensation as defined by Section 87a German Stock Corporations Act

The Supervisory­ Board sets a binding annual maximum compensation amount for each member of the Executive Board, in line with Section 87a para. 1 s. 2 No. 1 of the German Stock Corporations Act. The final value of compensation for a particular fiscal year can only be determined after vesting occurs for the Stock Awards tranche granted for that fiscal year. Consequently, this will be possible for the tranche of Stock Awards granted in fiscal year 2022 in November 2025. However, the following table shows that the maximum possible value of compensation for fiscal year 2022 for each member of the Executive Board - which would result in the event of a payout from the Stock Awards tranche 2022 at 250% of the target value ("payout cap") - amounts to less than the respective applicable maximum compensation. Compliance with maximum compensation according to Section 87a of the German Stock Corporations Act for fiscal year 2022 is thus already assured.

Siemens Energy   -Compensation Report for