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Knorr Bremse : Compensation Report 2025
Knorr Bremse : Compensation Report
About this update from Knorr-bremse Ag
Compensation Report Introduction This compensation report explains the principles of the compensation systems for the Executive Board and Supervisory Board of Knorr-Bremse AG and the compensation granted and owed within the meaning of section 162 (1) sentence 1 AktG to the current and former members of the Executive Board and Supervisory Board, in each case relating to the 2025 fiscal year (January 1 to December 31, 2025). The presentation of the compensation report takes into account the vote by last year's Annual General Meeting approving the 2024 compensation report pursuant to section 120a (4) AktG, in addition to other feedback from investors and authorized proxies. This compensation report consistently discloses the compensation granted and owed in accordance with section 162 (1) sentence 2 no. 1 AktG for the fiscal year in which the underlying work (one or more years) was completed in full. For the variable compensation components, the compensation subtargets and the calculation of the actual target achievement are presented and described in detail. The compensation report was jointly prepared by the Executive Board and the Supervisory Board. It was reviewed with regard to form and content by KPMG AG Wirtschaftsprüfungsgesellschaft above and beyond the requirements of section 162 (3) AktG. The auditor's report is included in the 2025 compensation report. This compensation report is planned to be presented for approval at the Annual General Meeting on April 30, 2026. Overview of the fiscal year Business The Executive Board of Knorr-Bremse AG is very satisfied with the business development in 2025, a year shaped by a geopolitical and economic environment that continued to be challenging. In the last fiscal year, Knorr-Bremse attained revenues of € 7,817 million, equivalent to a slight fall of around 0.8% year over year (previous year: € 7,883 million). Reported EBIT came in at € 903 million, down by a modest 0.8% on the prior-year figure ( € 911 million). The Group's operating EBIT was € 1,016 million, a moderate 5.1% above the prior-year level (€ 966 million). Free cash flow amounted to € 790 million and was therefore a robust amount above the previous year (€ 730 million). The Rail Vehicle Systems division exceeded the prior-year level with a solid increase in revenues of 6.7% to € 4,316 million. Revenues of the Commercial Vehicle Systems division, at € 3,503 million, were down a moderate € 338 million compared with the prior-year figure (€ 3,842 million). The Executive Board The composition of the Executive Board of Knorr-Bremse AG did not change in the 2025 fiscal year. The Supervisory Board Stephan Sturm was elected to the Supervisory Board on April 30, 2025 to succeed Dr. Theodor Weimer as shareholder representative. Manuela Deseive succeeded Sylvia Walter as an elected substitute member on the employee side on January 1, 2025, after the latter resigned from the Supervisory Board with effect from December 31, 2024 having reached retirement age. Executive Board compensation Description of the compensation system The system of compensation for Executive Board members in the version applicable since January 1, 2024 should be clear and understandable. It adheres to the specifications of the German Stock Corporation Act (AktG) as amended by the German Act on the Implementation of the Second Shareholders' Rights Directive of December 12, 2019 (Federal Gazette Part I 2019, no. 50 of December 19, 2019) and incorporates the recommendations of the German Corporate Governance Code ( GCGC ). The remuneration system of the Executive Board members is composed of fixed and variable components. The fixed components of the Executive Board members' remuneration are their fixed annual salary, fringe benefits, and pension contribution. The variable components are the short-term variable remuneration (short-term incentive, STI ) and long-term variable remuneration (long-term incentive, LTI ). The remuneration system also provides for Share Ownership Guidelines (" SOG ") for the Executive Board members. An overview of the compensation system is provided in the table below: Fig. 1 F IG . 1 OV E R V I E W OF T H E C OM P E N S A TI ON S Y S TE M I N 2 0 2 5 Compensation components Assessment base/parameters Non-performance-related components Fixed annual salary - Fixed, contractually agreed remuneration paid in twelve monthly installments - Mainly private usage of the company car, possibly with the services of a driver, in- Fringe benefits Pension contribution Performance-related components surance policies (accident, D&O), reimbursement of the employer share in health and long-term care insurance Annual payment for retirement benefit purposes Aside from this, no company pension scheme is provided. Plan type - Target bonus Short-term variable remuneration (STI) Limitation of payment amount Performance criteria 200% of the target amount - EBIT* (35%) Revenues* (20%) Free cash flow* (15%) - ESG* (20%) ("ESG STI") Quality (10%) Modifier (0.8-1.2) to reflect the individual and collective performance of the Executive Board, in addition to stakeholder targets Payout - In the month following approval of the consolidated financial statements for the fiscal year Plan type - Performance share plan Long-term variable remuneration (LTI) Limitation of payment amount Performance criteria 200% of the target amount Return on Capital Employed - ROCE* (30%) - ESG* (20%) ("ESG LTI") Relative Total Shareholder Return - TSR (50%) Benchmarked against selected companies in the industrial goods peer group and selected rail and truck peers Other Share ownership obligation Payments upon taking position: Malus and clawback Payout - Month following approval of the consolidated financial statements for the final fiscal year in the 4-year performance period Obligation to buy shares in Knorr-Bremse AG in an amount equivalent to one gross fixed annual salary within four years and to hold them for the duration of the appointment to the Executive Board If applicable, compensation payments upon taking office If applicable, relocation benefits Possibility to reduce ("malus") or claw back variable remuneration in cases of compliance breaches or in the event of a retrospective correction of objectively erroneous consolidated financial statements with relevance for variable compensation * Measurement of achievement of subtargets EBIT, revenues, free cash flow, ESG STI, ESG LTI and ROCE is based on the actual values in the approved and audited consolidated financial statements (where available). Here, the Supervisory Board is entitled to use its discretion to subtract unbudgeted extraordinary influences based on a list of criteria defined in advance by the Audit Committee. The aim of these adjustments is to measure the actual management performance of the Executive Board without distortion, such as by currency effects or effects of M&A activities. Target compensation and compensation structure On the basis of the compensation system the Supervisory Board defines a specific target total compensation for each Executive Board member, which should be in appropriate relation to the tasks and performance of the Executive Board member and the company's situation and should not exceed standard compensation without justification. The Supervisory Board regularly reviews the Executive Board compensation to ensure it is appropriate and in line with the market. The regular review of compensation takes place as a comparison with companies in the DAX, MDAX and selected companies from the industrial goods peer group as well as selected rail and truck peers (horizontal comparison). A vertical comparison is also carried out, which considers the Executive Board compensation in relation to the employees at other levels of the Knorr-Bremse Group in Germany. Based on the results of the regular review of Executive Board compensation, which was most recently conducted in January 2025 with external oversight, the Supervisory Board considers that the compensation is in line with the market and appropriate. The Supervisory Board also regularly reviews the compensation structure of the Executive Board members in order to incentivize the company's long-term performance. The target total remuneration comprises the sum of all remuneration components relevant for total remuneration. In the case of the STI and LTI, the target amount is in each case based on 100% target achievement. Long-term variable compensation accounts for a larger proportion of the total target compensation than the short-term variable compensation. The relative proportions of fixed and variable compensation are shown below on the basis of the total target compensation. Fig. 2 F IG . 2 S T RU C T U RE O F C O M P EN S A T I O N EL EM EN T S CEO*: 25% - 35% OEBM*: 40% - 50% CEO*: 25% - 35% OEBM*: 20% - 30% CEO*: 35% - 45% OEBM*: 30% - 40% Non-performance-re-lated components/fixed compensation Performance-related components/ variable compensation Fixed annual salary including fringe benefits and pension contribution Short-term incentive (STI) Long-term incentive (LTI) Annual payment Payment after four years * CEO = Chief Executive Officer / OEBM = Ordinary Executive Board member The target compensation of the Executive Board members active in 2025 is presented in the following table: Ta-ble 4.01 4. 01 T A RG ET C O M P EN S A T I O N O F EX EC U T I V E B O A RD M EM B E RS Marc Llistosella Frank Markus Weber Dr. Claudia Mayfeld Chief Executive Officer (CEO) Chief Financial Officer (CFO) Chief Human Resources & Integrity Officer (CHRO) (since January 1, 2023) (since July 1, 2020) (since May 1, 2021) in € thousand 2025 In % 2024 2025 In % 2024 2025 In % 2024 Base remuneration 1,000 24 1,000 900 31 900 900 34 900 Fringe benefits 28 1 28 27 1 27 33 1 33 Pension contribution 300 7 300 300 10 300 300 11 267 One-year variable compensation (STI) STI 2025 1,300 31 - 750 26 - 600 23 - STI 2024 - - 1,300 - - 750 - - 600 Multi-year variable compensation (LTI) LTI 2025-2028 1,500 36 - 900 31 - 800 30 - LTI 2024-2027 - - 1,500 - - 900 - - 800 Total target compensation 4,128 100 4,128 2,877 100 2,877 2,633 100 2,600 Bernd Spies Dr. Nicolas Lange Commercial Vehicle Systems division Rail Vehicle Systems division (since March 12, 2022) (since October 1, 2023) in € thousand 2025 In % 2024 2025 In % 2024 Base remuneration 900 34 900 900 34 833 Fringe benefits 28 1 28 35 1 35 Pension contribution 300 11 300 300 11 300 One-year variable compensation (STI) STI 2025 600 23 - 600 23 - STI 2024 - - 600 - - 600 Multi-year variable compensation (LTI) LTI 2025-2028 800 30 - 800 30 - LTI 2024-2027 - - 800 - - 800 Total target compensation 2,628 100 2,628 2,635 100 2,568 Fixed compensation components The compensation system for the Executive Board comprises the following fixed compensation components. Annual salary Executive Board members receive a fixed, non-perfor-mance-related annual salary, which is paid in 12 equal installments as a monthly salary. Fringe benefits In addition, Executive Board members receive fringe benefits. For each member of the Executive Board, the company bears, in particular, the costs of accident insurance for death or disability, the employer's contribution to private health and long-term care insurance, and a company car that can also be used privately, possibly with the services of a driver. Furthermore, Executive Board members are covered by a D&O liability insurance policy. Pension contribution For the purposes of an old-age pension, the Executive Board members receive an annual pension contribution, payable at the end of the fiscal year in question. Knorr-Bremse AG does not have any pension commitments to current members of the Executive Board. Other The Supervisory Board may, on a case-by-case basis, grant a payment on the occasion of a new Executive Board member taking up his or her position in the first or second year of the new member's appointment. This payment can be used to compensate for, for example, losses of variable remuneration that an Executive Board member faces from a former employer as a result of moving to Knorr-Bremse AG. No such payments were pledged or made in 2025 fiscal year.