In light of the German Act implementing the Second Shareholder Rights Directive (Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie - ARUG II) and the German Corporate Governance Code (Deutscher Coporate Governance Kodex - DCGK), the Supervisory Board resolved changes to the remuneration system for the Executive Board Members of Rheinmetall AG effective as of January 1, 2022 and submitted the remuneration system to the Annual General Meeting on May 11, 2021 for approval under agenda item 7. The Annual General Meeting approved the remuneration system for the Executive Board Members with a majority of 92.61%.
Overview of the compensation system
The compensation system at Rheinmetall consists of fixed (base compensation, fringe benefits and pension plan) as well as short-term and long-term variable compensation components (short-term incentive STI and long-term incen-tive LTI). The compensation system also governs other compensation-related legal transactions (e.g. contract terms and commitments at the end of the Executive Board activity).
In accordance with the act on the transposition of the Second Shareholder Rights Directive and the new recommendations of the German Corporate Governance Code, the Supervisory Board had reviewed the current remuneration system and approved a series of amendments effective from January 1, 2020.

The current remuneration system already applies for fiscal 2020 to Peter Sebastian Krause (Personnel) and Executive Board member Jörg Grotendorst. For the Chairman of the Executive Board, Armin Papperger, and CFO, Helmut P. Merch, the old remuneration system still applies due to the ongoing contracts.

Against the backdrop of the resolution on the approval of the remuneration system for Executive Board members at the 2020 Annual General Meeting, the Supervisory Board, with the advice of the Personnel Committee, undertook a comprehensive revision of the current remuneration system. The revised remuneration system is even more closely aligned with Rheinmetall's strategy and more comprehensively reflects the sustainable success of the Company by incorporating relevant performance indicators. In doing so, the Supervisory Board also took into account the feedback received from investors as part of Say-on-Pay 2020 and corresponding recommendations from the voting advisors. The Supervisory Board will submit the revised remuneration system, which is to apply to all Executive Board members from January 1, 2022, to the Annual General Meeting on May 11, 2021 for approval.

The remuneration for members of the Executive Board of Rheinmetall AG is geared towards sustainable and long-term corporate development. It thus makes a contribution to promoting the business strategy and to the long-term development of the company. The system offers incentives for the value-creating and long-term development of the company.

The remuneration system aims to ensure that the members of the Executive Board are properly remunerated according to their sphere of activity and responsibility, taking into reasonable account both the personal performance of each and every Executive Board member as well as the economic situation and success of the company. The remuneration system is designed to ensure that it is competitive on a national and international scale and thus offer an incentive for dedicated and successful work.

The remuneration system at Rheinmetall AG envisages basic remuneration not linked to performance with fringe benefits and pension benefits on the one hand and, on the other hand, performance-related variable remuneration comprising two components: the one-year short-term incentive (STI) and the long-term incentive (LTI).

This remuneration covers all activities for the company and for services performed with the company in accordance with sections 15 et seq. of the German Stock Corporation Act. If remuneration is agreed for mandates at affiliated companies, this is offset against the basic remuneration. For mandates at companies that are not affiliated companies or for functions in associations or similar groups to which the company or one of its affiliated companies belongs, the Supervisory Board decides on such setting-off.
Fixed remuneration
Performance-related variable remuneration
Total remuneration of the Executive Board
Pension benefits
Passion for Technology.

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