ANDRITZ : remuneration report 2022

ANDRITZ AG remuneration report 2022

This remuneration report provides a comprehensive overview of the remunerations paid or owed to current and former members of the ANDRITZ AG Executive Board and Supervisory Board in the 2022 business year.

1 INTRODUCTION: BUSINESS DEVELOPMENT IN 2022

In 2022, the international technology Group ANDRITZ achieved the best business result in the company's 170-year history.

The order intake reached a record value of 9,263 MEUR and was thus significantly above the previous year (+18% versus 2021: 7,880 MEUR). All four business areas were able to increase order intake year-on-year.

Revenue amounted to 7,543 MEUR and also reached a historical high (+17% versus 2021: 6,463 MEUR). The Pulp & Paper business area in particular was able to significantly increase revenue year- on-year.

The operating result (EBITA) of the Group also reached a new record value of 649 MEUR. It was significantly higher than the comparative figure for the previous year (2021: 547 MEUR). Profitability (EBITA margin) was 8.6% and thus higher than in 2021 (EBITA margin. 8.5%).

Net income (including non-controlling interests) amounted to 403 MEUR and was thus significantly above the comparative figure for the previous year (2021: 322 MEUR).

2 MAIN FEATURES OF THE REMUNERATION POLICY

The remuneration policy defines the principles applied in determining the remunerations of the Executive Board, the Supervisory Board and the executives of ANDRITZ AG. The primary objective of the remuneration policy is to promote long-term and sustainable company development, above all in the interests of the shareholders, and to organize the remuneration of the Executive Board and the Supervisory Board in a manner that is simple, clear and transparent. This is intended to achieve the best possible alignment of the company's strategy and goals with the interests of the company's owners.

These principles were approved by the Annual General Meeting on March 24, 2021.

Page: 2 (of 18)

2.1 REMUNERATION OF THE EXECUTIVE BOARD

The Supervisory Board is responsible for drawing up the remuneration policy for the Executive Board as well as for checking this policy regularly and implementing it.

The ANDRITZ AG remuneration policy for members of the Executive Board focuses on the endeavor to create an incentive for the ANDRITZ GROUP to achieve long-term growth and, in particular, a continuous improvement in its financial position and profitability. In addition to the financial criteria, the "Accident Frequency Rate" (AFR) is also used to determine the variable remuneration component. The AFR is measured by the number of accidents resulting in one or more days of absence per one million working hours.

Executive Board members should receive a competitive remuneration in line with the market to create a strong incentive and thus attract highly qualified and best suited members to the company's Executive Board and tie them to the company in the longer term. In order to guarantee that the remuneration is competitive and in line with the market, a continuous, horizontal comparison of remunerations is conducted with Austrian and international industrial companies.

The Executive Board's remuneration comprises a fixed payment (basic salary) and a variable performance bonus. The Executive Board of ANDRITZ AG and selected top managers, including individual high potentials for future top management posts in the ANDRITZ GROUP have the opportunity to take part in a stock option program based on sustained development of the company's share price and earnings as well as on non-financial criteria.

Other miscellaneous incentives for members of the Executive Board are pension fund arrangements, company cars, continued payments for up to six months in the event of illness, insurance, relocation costs, expenses for medical examinations and D&O insurance. Some of these incentives are explained in more detail below.

It should be noted that there are endeavors to effect a reduction in the fixed remuneration component by mutual agreement with the Executive Board in the event of negative economic developments.

The total remuneration paid to the Executive Board in the 2022 business year amounted to 16,986,740 EUR (2021: 12,522,128 EUR).

2.1.1 FIXED REMUNERATION COMPONENT

The fixed remuneration component (basic salary) is intended to create an incentive for the members of the Executive Board to pursue the company's objectives to the best of their ability and to act in the interests of the shareholders, the employees and also in the public interest. Determination of the component parts of the fixed remuneration takes account of the duties and also the professional experience of the individual Executive Board members, which results in each member of the Executive Board having a different basic salary based on the scope of their strategic and operative tasks.

Page: 3 (of 18)

The basic salary comprises an annual salary agreed upon by contract, which is paid in 14 monthly salaries in advance - as is customary in Austria. The basic salary not only covers all overtime hours worked, but also functions performed in the bodies of Group companies.

In the 2022 business year, the fixed remuneration of all members of the Executive Board totaled 2,471,657 EUR (2021: 2,550,000).

	in EUR			2022		2021
Joachim Schönbeck	685,333	470,000
(President & CEO as of April 8, 2022)
Domenico Iacovelli*	329,133	0
Humbert Köfler	410,000	410,000
Norbert Nettesheim	400,000	400,000
Wolfgang Semper	418,643	410,000
Wolfgang Leitner**	228,548	860,000
	TOTAL			2,471,657		2,550,000

• New Executive Board Member as of April 8, 2022
• Resigned from the Executive Board on April 7, 2022

2.1.2 VARIABLE REMUNERATION COMPONENT

The strategic goal of the ANDRITZ GROUP is long-term profitable growth. Therefore, the remuneration policy of ANDRITZ AG is divided into short-term and long-term remuneration components with respect to the variable remuneration.

2.1.2.1 Short-term variable remuneration components

The short-term variable remuneration is tied to the net income. As safety at work is a matter of great importance to the ANDRITZ GROUP and reducing the number of accidents at work is an essential goal of the ESG strategy, the accident frequency is to be used to determine the variable remuneration component in addition to the financial criterion. The criterion applied here is the so-called"Accident Frequency Rate" (AFR), which is measured by the number of accidents resulting in one or more days of absence per one million working hours.

Page: 4 (of 18)

The short-term variable remuneration policy is organized as follows:

Factors

Minimum

Variable remuneration component

Actual value

target

in 2022

Net income

105 MEUR

0.475% (0.95% for the President and

403 MEUR

(including non-

CEO) of the net income if the target

controlling interests)

is met or exceeded

AFR

-30% compared

If reached: 100,000 EUR per

AFR: 2.8

to the previous

Executive Board member

year (2021: 3.1)

If exceeded: linear increase up to a

maximum of 150,000 EUR per

Executive Board member

Change of AFR between 0% and

-30%: amount calculated

proportionally

No variable remuneration is paid if

the change is 0% or there is a fatal

accident

Each Executive Board member receives a profit-related bonus for the net income of the Group in the amount of 0.475% of the basis of assessment and a management bonus for the non-financial goal relating to accident frequency rate (AFR, see below) in the amount of 100,000.- EUR - in words: one hundred thousand euros.

The basis of assessment is the net income shown in the company's Consolidated Financial Statements. Expenditure for profit-related bonuses to be paid to Executive Board members is not added to the result when calculating such bonuses.

The calculation factor for the profit-related bonus (i.e. the percentage) is reduced each year by 5%, i.e. it drops to 0.451% in 2023, to 0.428% in 2024, and to 0.407% in 2025.

In order for a bonus to be paid, the net income shown in the Consolidated Financial Statements for 2022 must reach a minimum of 105 MEUR - in words: one hundred and five million euros. This minimum figure for net income will be increased annually by 5%, i.e. after being set at 110.25 MEUR - in words: one hundred and ten point two five million euros - in 2023, it will increase to 115.76 MEUR in 2024 and to 121.55 MEUR in 2025.

In the event of any extraordinary situations affecting the economy in general or specific to the company, the Supervisory Board can pass a resolution suspending the annual adjustment to the percentage and minimum value for a period of one year.

Page: 5 (of 18)

An Executive Board member shall not be entitled to any bonus for years in which the basis of assessment does not exceed the minimum figure stated above. In the event of increases in capital or sale of substantial parts of the ANDRITZ GROUP, a consensus must be reached on an appropriate adjustment of the profit-related bonus percentage.

If the basis of assessment falls below an amount of 0 EUR - in words: zero euros - a "negative bonus" in the amount of the percentage of profit-related bonus for the year in question is to be applied to the amount by which the basis of assessment falls short of 0 EUR - in words: zero euros - for the year concerned. The negative bonus thus calculated will be limited to the amount of the fixed remuneration pursuant to Article 4, para. (1), item a) of the contract of employment and carried forward over the following three years at most. The negative bonus reduces the profit-related bonuses for these subsequent years as well as the bonus carried forward and the management bonus for AFR.

The non-financial goal relating to accident frequency rate (AFR) is the number of accidents resulting in one or more days of absence per one million working hours.

The company's goal is to lower the accident frequency rate in the ANDRITZ GROUP by 30% every year (referred to below as "target value") compared to the previous year. If the target value is reached, the management bonus amounts to 100,000.- EUR - in words: one hundred thousand euros. This management bonus will not be paid if the AFR remains unchanged compared to the previous year or if there is a fatal accident. If the AFR improves within a range between 0% and the target value, the management bonus will be calculated in linear proportion thereto. If the target is over-achieved, the management bonus will increase in a straight line up to a maximum amount of 150,000.- EUR.

The management bonus for AFR shall be payable regardless of whether the target value for the profit- related bonus, dependent on the net income shown in the company's Consolidated Financial Statements, is reached or not, however this bonus will be offset against any negative bonus.

The total bonus paid in any one business year shall not exceed three times the fixed remuneration pursuant to Article 4, para. (1), item a) of the contract of employment. If the calculation of bonus results in a higher sum, the amount exceeding three times the fixed salary must be carried forward to the following business year in each case (also referred to below as "bonus carry-forward"). Amounts carried forward in this way are linked to the consumer price index (VPI 2005) published by Statistik Austria) until they are paid out, respectively. In this case, the index figure published for the day on which the above-mentioned maximum amount for payment is due shall be applied.

If no other individual agreements are reached, the total bonus shall be paid in 14 (fourteen) installments (in advance, one each month and two in June and December) in the year of the Annual General Meeting deciding on the distribution of profits for the respective business year. Any bonus carry-forward still available when the employment contract is terminated shall be paid four weeks after the effective date of termination.