Introductory notes from the Chairman of the Nomination and Compensation Committee

Dear Shareholders,

On behalf of the Board of Directors and the Nomination and Compensation Committee of Zehnder Group, I am pleased to present the Compensation Report 2022.

The fiscal year 2022 was significantly affected by the consequences of the war in Ukraine, continued supply chain disruptions and rising material, transport, energy and operating costs. This challenging market environment called for a high degree of flexibility and responsiveness. Thanks to acquisitions and operational performance improvements, we succeeded in expanding our market presence and securing our profitability. This Compensation Report highlights, inter alia, how the business results in 2022 impact the performance-related compensation awarded to the members of the Group Executive Committee.

As part of its expanded responsibilities since the Annual General Meeting 2022, the Nomination and Compensation Committee assesses the succession planning for the Board of Directors based on defined criteria to ensure that the composition of the Board of Directors remains balanced. With the election of Sandra Emme at the Annual General Meeting on 7 April 2022, the Board of Directors gained a new, independent member with extensive expertise in digitalisation. Following her election, the gender ratio of the Board of Directors was increased from 16.7% (term of office 2021/2022) to 28.6% (term of office 2022/2023). The Board of Directors seeks to further increase the proportion of women when the next vacancy occurs.

During the year, the Nomination and Compensation Committee carried out an analysis of the company pension scheme arrangements for members of the Group Executive Committee and submitted the corresponding market-oriented adjustments for approval to the Board of Directors. Another aspect reviewed for the Group Executive Committee was the standard market cap for variable short-term compensation (short-term incentive, STI), as well as the definition of the key performance indicators for variable long-term compensation (long-term incentive, LTI). The addition of an ESG-based performance indicator is intended to be introduced as soon as the data basis has been created and clearly measurable targets have been defined.

In other respects, the Nomination and Compensation Committee conducted its regular activities, including its annual performance review of the CEO and the other members of the Group Executive Committee, the succession planning for the Group Executive Committee, the annual review of the compensation policies, taking into consideration feedback from shareholders on the compensation programmes and their disclosure in the Compensation Report, setting of the compensation amounts for members of the Board of Directors and the Group Executive Committee, elaboration of the Compensation Report and the remuneration proposals for the Annual General Meeting.

Binding votes on the maximum total compensation for the Board of Directors and the Group Executive Committee and an advisory vote on the Compensation Report were held at the Annual General Meeting 2022, allowing shareholders to express their views on the compensation system in an unambiguous manner. Approvals were granted at a very high consent rate of 98% for the total compensation of the Board of Directors and the Group Executive Committee for 2022 and 94% for the Compensation Report for 2021, serving as proof of our constructive ongoing dialogue with investors.

In future, we will continue to review the compensation programmes on a regular basis, maintaining an open exchange with you to ensure that the compensation programmes are in line with the sustainable development of the business and your interests. We would like to take this opportunity to thank you for your feedback on the topic of compensation and for the trust and support you have placed in us.

Kind regards,

Riet Cadonau

Chairman of the Nomination and Compensation Committee