Daimler : Position of the management on the countermotions for the Annual Meeting 2021

Position of the management on the countermotions for the Annual Meeting of the Shareholders to be held on March 31, 2021

The Board of Management and the Supervisory Board maintain their motions as presented in the Agenda and state their positions on the countermotions as follows:

Election to the Supervisory Board

The candidates proposed for election by the Supervisory Board, Elizabeth Centoni, Ben van Beurden and Dr. Martin Brudermüller, are successful leaders in various industries. With their extensive experience in the fields of digitization and software, electrochemistry, energy and transformation, as well as their knowledge of international markets, particularly in Asia, they can cover essential fields that are crucial for the future of our Company. We are convinced that the diverse expertise of the persons nominated as Supervisory Board members optimally complements the Supervisory Board of Daimler AG as a whole.

Ben van Beurden has been Chief Executive Officer of Royal Dutch Shell since 2013. Previously, he was responsible for areas such as operations management, business development and marketing in a large number of countries. Ben van Beurden has initiated Shell's global transformation to become a net-zero company supplying its customers with CO2-free energy. We also need this transformation experience in our Supervisory Board to constructively support the management in the upcoming transformation of Daimler.

The same applies to Dr. Martin Brudermüller, who has been Chairman of the Board of Executive Directors of BASF SE since 2018. Before that, as a member of the Board of Executive Directors, he was Chief Technology Officer of the chemical company for five years and in charge of the Asia business for ten years. Martin Brudermüller is not only a successful executive in many sectors of the chemical industry, but also has global experience, especially in Asia. The chemical industry is also in the middle of a transformation to a CO2-free future. Martin Brudermüller has played a major role in initiating this transformation.

The future Chairman of the Supervisory Board will be elected from among its members at the constituent meeting of the Supervisory Board following the Annual Meeting. Dr. Bernd Pischetsrieder has unique experience as an executive in the automotive industry and brings with him a broad knowledge of electric drive technologies and vehicle digitization. As an engineer, he has already worked closely with the Board of Management in the past and has supported it in all technological challenges. He also has extensive experience at companies subject to co-determination and can help lead the Company into the future during this important phase of transformation. With the election of Bernd Pischetsrieder, the chairmanship of the Supervisory Board would be in the best hands.

Independence of the members of the Supervisory Board representing the shareholders

The German Corporate Governance Code (the Code) as amended on December 16, 2019, which has been in force since March 20, 2020, contains several recommendations relating to the independence of the members of the Supervisory Board representing the shareholders. The decision on the assessment of independence is expressly assigned to those members of the Supervisory Board representing the shareholders. Indicators defined by the Code which may suggest a lack of independence on the part of a member, for example membership of the Supervisory Board for more than twelve years, are to be taken into account. The Code expressly states that even if one or more of the indicators to be taken into account are fulfilled, a Supervisory Board member may still be considered independent. Taking into account all relevant aspects, the members of the Supervisory Board of Daimler AG representing the shareholders have come to the conclusion that all shareholder representatives in office as of December 31, 2020 are independent within the meaning of the Code. This was substantiated in the Declaration on Corporate Governance - in particular also with regard to Dr. Bischoff and Dr. Börsig. The Code's recommendations on independence were complied with. Both gentlemen maintained the necessary critical distance to the Company and to the Board of Management of Daimler AG at all times, as well as the necessary clear, alert and critical view when monitoring the Board of Management. This is also manifested in their conduct of office, on the one hand as Chairman of the Supervisory Board, and on the other as Chairman of the Audit Committee and the Legal Affairs Committee. Moreover, with regard to both the emissions-related proceedings and the antitrust-related proceedings, independent legal experts have just recently confirmed that the Supervisory Board fully complied with its (supervisory) duties under stock corporation law in the past financial year.

Resolutions and measures of the Supervisory Board with regard to ongoing antitrust and emissions-related proceedings

In line with its responsibilities, the Supervisory Board dealt in detail with the issues raised regarding the possible liability of Board of Management members in connection with antitrust matters, and obtained expert advice on this from independent legal experts. The Legal Affairs Committee also dealt with the issue in detail and made appropriate recommendations to the Supervisory Board. In addition, the Supervisory Board again obtained an expert opinion from an independent legal expert in stock corporation law, a summary of which was made available to the shareholders in advance of the Annual Meeting and which confirms that the Supervisory Board fully complied with its obligations under stock corporation law with the measures initiated and the resolutions adopted. Similarly, the Supervisory Board and the Legal Affairs Committee dealt in detail with the emissions-related proceedings and also obtained an expert opinion on this from an independent legal counsel, a summary of which was also made available to the shareholders in advance of the Annual Meeting. This expert opinion also confirms that the Supervisory Board fully complied with its obligations under stock corporation law with the measures taken and the resolutions adopted.

Remuneration of the Supervisory Board members and corresponding amendment to the Articles of Association

The remuneration of the Supervisory Board was already approved by the 2017 Annual Meeting. In terms of content, the proposed adjustment affects only the Legal AffairsCommittee, which was newly established in 2019. This committee coordinates the exercise of the rights and duties of the Supervisory Board with regard to the ongoing emissions-related and antitrust-related proceedings against Daimler AG and companies of the Group. It prepares resolutions of the Supervisory Board in these matters and issues corresponding resolution recommendations. As part of the agreement in principle reached in the 2020 financial year with various US authorities to end regulatory proceedings concerning alleged violations of US and California environmental laws in connection with exhaust emissions, the Legal Affairs Committee was assigned further tasks and decision-making authority with regard to fulfilling the obligations assumed in the agreement in principle. Due to the associated significant increase in the scope of work to be done, the additional function-related remuneration for the chairperson and members of the Legal Affairs Committee is to be increased effective January 1, 2021. This is also in line with the recommendation of the Code to take appropriate account of increased time requirements for chairpersons and members of Supervisory Board committees when determining remuneration. The members of the Committee perform the tasks assigned to them very diligently and vigorously, as also demonstrated by the number of meetings held by the Committee in the past year.

Dividend

Like many other companies in Germany, Daimler is making use of the legally regulated possibility of short-time working to safeguard jobs.

Funding of the short-time allowance is from the social-security contributions paid in half by the companies and half by the employees. The short-time allowance is an insurance payout.

The dividend proposed by the Board of Management and the Supervisory Board takes into account the careful and prudent consideration of the interests of all stakeholders to whom the Company is committed, as well as the current business situation, liquidity and the business outlook. The employees have also received special payments for the 2020 financial year in the form of a corona bonus of €1,000 each and a profit-sharing bonus of €500 each.

For several years now, Daimler has generally aimed to pay an annual dividend of 40 percent of the distributable net profit. At the same time, the dividend should be covered by the free cash flow of the industrial business.

We are of course aware of the current discussions. But we are also aware of how important the dividend is for our shareholders as owners of our Company. Our shareholder base is international and diversified. It includes institutional investors as well as private investors, pension funds and employee shareholders.

Institutional pension funds in Germany and abroad provide for the old-age security of many people, i.e., retired persons and pensioners depend on liquidity inflows from dividends and distributions. The proposal made by the Board of Management and the Supervisory Board to the Annual Meeting of a dividend of €1.35 per share for the 2020 financial year would amount to a total distribution of €1.4 billion.

We will continue to maintain the advance expenditure that serves to safeguard the future viability of our Company. In particular, this includes our clear commitment to CO2-neutral mobility and the implementation of electric drive systems as a top priority.

Possibility of a majority takeover

More than one billion Daimler shares are in circulation worldwide. Our largest shareholders include the Kuwait sovereign wealth fund (since 1974) and the Chinese investor Li Shufu. The latter holds the largest shareholding in Daimler through the company Tenaciou3 Prospect Investment Limited (since 2018). In July 2019, the Chinese BAIC Group acquired 5% of the voting rights in Daimler.

It is a fact that Renault decided to sell its stake of about 1.55% in Daimler in March 2021 for financial reasons. This has no impact on the existing strategic cooperation. Nevertheless, we were informed of the sale by Renault in accordance with the applicable legal requirements. Nissan continues to hold a 1.54% stake in Daimler as part of the original cross-shareholding.

We continuously monitor the development of our shareholder base and are in constant and close contact with both external advisors and our investors.

Exhaust emissions diesel vehicles

Daimler has already taken important steps toward legal certainty in connection with various diesel proceedings; these include, in particular, the US settlements in 2020 and also the conclusion of the administrative offense proceedings by the Stuttgart district attorney's office in 2019.

The Company continues to cooperate fully with all authorities.

In the interests of our Company, we do not comment on ongoing proceedings. This is because our experience has shown that our restrained communication supports constructive dialog with the authorities.

Since 2018, Germany's Federal Motor Transport Authority (KBA) has repeatedly issued subsequent supplementary provisions to the EC type approvals of certain Mercedes-Benz diesel vehicles and has ordered recalls. In each case, it has taken the view that certain calibrations of more closely specified functionalities are to be assessed as impermissible defeat devices.

Daimler takes the opposite legal view on this issue. For this reason, and in order to obtain clarity for the future in the interpretation of relevant legal standards in a complex technical environment, the Company has filed an appeal and is having the issued notices of objection reviewed by the administrative court. Irrespective of the legal clarification of the matter, the Company is implementing all administrative orders issued by the KBA, is continuing to cooperate fully with the authorities and is establishing transparency.

In general, Daimler is developing software updates for the diesel fleet of the Euro 6b and Euro 5 emission standards in Europe that will improve nitrogen-oxide emissions on average for the vehicles in normal driving operation. The Company is thus making an important contribution to the further improvement of air quality. The software updates also stem from agreements reached by various manufacturers with the German government in the context of the National Diesel Forum in August 2017. In addition, as mentioned above, Daimler has been carrying out mandatory recalls since 2018, as instructed by the Federal Motor Transport Authority, during which software updates are also installed.

As is already known, in September 2019, the Stuttgart district attorney's office issued a penalty notice for negligent breach of supervisory duty with vehicle