Introductory note 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 2023.

The fiscal year 2023, the market environment proved to be challenging due to a slowdown in the construction industry, economic uncertainties, higher interest rates, and increased construction costs. The early implementation of differentiated cost management helped counteract reduced demand in the radiator and ventilation segment. Among other matters, this compensation report highlights how the business results in 2023 impact the compensation awarded to the members of the Group Executive Committee.

As part of its duties, the Nomination and Compensation Committee regularly reviews succession planning for the Board of Directors and Group Executive Committee. With the appointment of Dorien Terpstra as Chief Commercial Officer EMEA from 1 January 2024 by the Board of Directors, an internationally experienced manager from Zehnder Group has been appointed to the Group Executive Committee. The choice was made after careful evaluation and including external candidates. With this appointment, the percentage of women on the Group Executive Committee is now 20% from 1 January 2024.

In order to continue to increase the gender diversity, the Nomination and Compensation Committee has examined the addition of ESG-based performance indicators to the Long-Term Incentive (LTI) Plan and submitted ambitious and clearly measurable targets, such as increasing gender diversity and CO₂e emission reduction, to the Board of Directors for approval from the 2024 LTI plan onwards. The Board of Directors has agreed to include these two ESG targets in the 2024 LTI Plan with a total weighting of 30%. In addition, a review was carried out of the composition criteria for the peer group of companies with a view to preparing a benchmark for the compensation of the Board of Directors, and the necessary adjustments were made.

In other respects, the Nomination and Compensation Committee performed its regular activities, including the annual performance review of the CEO and the other members of the Group Executive Committee, the annual review of the compensation policy 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, and preparation of the compensation report and the compensation proposals for the Annual General Meeting.

Binding votes on the maximum total compensation for the Board of Directors and the Group Executive Committee as well as an advisory vote on the compensation report were held at the Annual General Meeting 2023, allowing shareholders to express their views on the compensation system directly. Approvals were again granted at a very high approval rate of 96% for the total compensation of the Board of Directors for 2023 and 99% for the Group Executive Committee for 2023, as well as 97% for the compensation report for 2022, serving as proof of our constructive ongoing dialogue with shareholders.

In the future, we will continue to review the compensation programmes on a regular basis, maintaining an open dialogue with you to ensure that the compensation programmes are in line both with the sustainable development of the business and with 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 shown us.

Kind regards,

Riet Cadonau

Chairman of the Nomination and Compensation Committee