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Knorr Bremse : Report of the Supervisory Board 2025
Knorr Bremse : Report of the Supervisory Board
About this update from Knorr-bremse Ag
Report of the Supervisory Board 14 K N O R R - B R E MS E A N N UA L R E P O R T 2 0 2 5 R E P O R T O F T H E S U P E R V I S O R Y B O A R D As the Chairman of the Supervisory Board, I wish to report to you on the Supervisory Board's work during the 2025 fiscal year which recently ended. In a fiscal year marked by geopolitical uncertainty and global market protectionism, Knorr-Bremse impressively demonstrated its resilience and excellence. Rigorous implementation of the global BOOST 2026 strategy program played a decisive role here. The measures are aimed at successfully further developing Knorr-Bremse as the global market and technology leader and increasing profitability. A vital part of that is strategic development of the portfolio through the acquisition of the duagon Group in the Rail division and the platform provider Travis in the Truck division; however, it also entails streamlining the portfolio to remove non-performing business areas, most recently the sale of Kiepe, GT, and Sheppard as key components. Strategic acquisitions and divestments are monitored closely by the Supervisory Board. In fiscal 2025, Knorr-Bremse once again increased its operating profitability year over year and generated a record high free cash flow of € 790 million. Knorr-Bremse impresses with its operational strength in an economic environment that is particularly challenging for the truck sector. We are making sure that you, our shareholders, are also included in this success. The preliminary business figures published on February 19, 2026, and the continued strong operational performance, despite the impact of restructuring, put the company in a position to propose a dividend of € 1.90 per share at the Annual General Meeting, a dividend higher than the previous year. The focuses of the Supervisory Board's work in the fiscal year now ended, which are explained in detail below in the section Significant topics of Supervisory Boa rd work (starting on page 8), included the integration of the US signaling technology business acquired from Alstom in 2024 and, with it, Knorr-Bremse's successful entry into the new control, command, and signaling ( CCS ) field of business, achieved with a target that has already exceeded the financial expectations on which the acquisition was based. Other focal points of the Supervisory Board's strategic work were the above-mentioned acquisition of the duagon Group in RVS at the beginning of 2026 and the acquisition of TRAVIS Road Services, which complements our CVS service platform. Finally, advising on strategic measures by the Executive Board for adjusting the portfolio and increasing profitability (brownfield) and growth initiatives (greenfield) as part of BOOST was a key focus. Collaboration of the Supervisory Board and Executive Board In the reporting period, the Supervisory Board continued to fulfill its duties pursuant to the law, the Articles of Association, and the rules of procedure with great care. The Supervisory Board was directly involved in all decisions that were of fundamental significance to the Group and complied with the relevant recommendations of the German Corporate Governance Code ( GCGC ). It advised the Executive Board on the leadership of the company and ongoing acquisition projects, one specific example being the acquisition of the duagon K N O R R - B R E MS E A N N UA L R E P O R T 2 0 2 5 R E P O R T O F T H E S U P E R V I S O R Y B O A R D 15 The candid and trusting collaboration that has evolved between the Executive Board, managers, and the Supervisory Board is a key factor for the Knorr-Bremse success. Dr. Reinhard Ploss Chairman of the Supervisory Board 16 K N O R R - B R E MS E A N N UA L R E P O R T 2 0 2 5 R E P O R T O F T H E S U P E R V I S O R Y B O A R D Group. The Supervisory Board also maintained ongoing dialog with the Executive Board on strategic initiatives such as on growth options in adjacent and new business fields like energy technology (Power & Grid) in particular. At the same time, the Supervisory Board monitored the senior management of the Executive Board on the basis of regular reports with which it remained informed in relation to business development, planning, and risks. I again wish to emphasize the candid, cooperative and trusting collaboration that has evolved between the Executive Board, managers, and the Supervisory Board and which is a key factor for success. The principles of responsible and good corporate governance are the foundation of the Supervisory Board's work. They include a regular examination of the Supervisory Board's understanding of corporate governance, of the legal framework for the Supervisory Board's work, and of relevant developments, both in Germany and globally. The focus of the Supervisory Board's monitoring and advisory activities is on the legality, propriety, expediency, and efficiency of senior management and Group management. The subject matter and performance of the Supervisory Board's work are governed in more detail in the rules of procedure for the Supervisory Board, Audit Committee, and Executive Board, which are available on the website. The Supervisory Board is closely involved in the corporate planning and discussions of strategic projects and topics. Besides the rules of procedure, there is a list of reserved matters governing contractual arrangements and measures that require the approval of the Supervisory Board before the Executive Board can implement them. The comprehensive preliminary review and preliminary consideration partly required as a result is conducted in the committees, specifically in the Strategy Committee, the Audit Committee, or the Executive Committee - depending on the subject matter. The Supervisory Board and its committees take care to always have an appropriate information base and make decisions at their own discretion for the interests of the company. The members of the Supervisory Board are personally responsible for pursuing the training and professional development that they need for their duties. They are given the company's full support for this. In 2025, the members of the Strategy Committee and Audit Committee were (again) given training on their specific responsibilities as part of ESG reporting. During the past fiscal year, the Executive Board regularly, immediately, and comprehensively reported to the Supervisory Board by means of written and oral reports, both at and between meetings. The reports contained all relevant information on the strategic development, planning, business development within the year, position of the company, risk situation, risk management, compliance, competitors of the Commercial Vehicle Systems and Rail Vehicle Systems divisions (peers) with a separate analysis of the business units, situation in the capital market, including expectations of analysts and investors, and current events. The Supervisory Board jointly discussed with the Executive Board the business transactions important for the company and the company's further development. It was included in a timely manner in all decisions of fundamental importance for the Company. The Executive Board also informed the Supervisory Board about urgent matters between the regular meetings. As the Chairman of the Supervisory Board, I also maintained a dialog with the Executive Board between Supervisory Board meetings on the business situation and on significant business transactions of the company as part of regular business reviews. The same applies to the ongoing development of the organization and corporate culture, which are both essential factors for achieving our business targets. The strength of the leadership and culture are key drivers of the company's development, even if their effect can only be seen in the business results after some time has passed. An understanding of this is highly important for the Supervisory Board so that it can judge whether the set targets are realistic at an early stage. I held regular talks with important investors on key topics and issues relating to the Supervisory Board. K N O R R - B R E MS E A N N UA L R E P O R T 2 0 2 5 R E P O R T O F T H E S U P E R V I S O R Y B O A R D 17 In the 2025 fiscal year, we maintained a consistently high attendance rate in our meetings, as we had in previous years. The average attendance at full-board meetings was around 99%. All meetings were held in person, with the exception of the short Supervisory Board meeting before the Annual General Meeting. The option of virtual attendance was available if good reason was given. The Executive Committee, Nomination Committee, Audit Committee, and Strategy Committee likewise met in person. The personal attendance records presented below are evidence of the high degree of commitment that the members of the Supervisory Board have. Supervisory Board and committee members took part in the resolutions by sending voting instructions if they were prevented from attending individual meetings. Documents for meetings were made available at an early stage for the at-tendees' preparation; handouts were only used for late-notice developments and changes. 1.01 MEETING ATTENDANCE OF THE SUPERVISORY BOARD MEMBERS IN FISCAL 2025 Name Supervisory Board (full board) Executive Committee Audit Committee Nomination Committee Strategy Committee Dr. Reinhard Ploss 8 (8) 4 (4) 7 (7) 2 (2) 3 (3) Franz-Josef Birkeneder (Deputy Chairman) 8 (8) 4 (4) 7 (7) 3 (3) Dr. Theodor Weimer (Deputy Chairman) (until April 30, 2025) 3 (3) 1 (1) Stephan Sturm (from April 30, 2025) (Deputy Chairman from July 31, 2025) 5 (5) 2 (2) Kathrin Dahnke 8 (8) 7 (7) 2 (2) Thomas Mittmann 8 (8) Dr. Sigrid Evelyn Nikutta 8 (8) 3 (3) Wolfgang Nirschl 8 (8) 6 (7) Werner Ratzisberger 8 (8) 4 (4) 3 (3) Annemarie Sedlmair 8 (8) Dr. Stefan Sommer 7 (8) 2 (3) Julia Thiele-Schürhoff 8 (8) 2 (2) 3 (3) Manuela Deseive 8 (8) Meeting attendance in % 99.04% 100% 96.43% 100% 94.45% (in parentheses: number of meetings held during the term of the respective Supervisory Board or committee member) Discussions of the Supervisory Board and Its Committees Meetings and resolutions of the full Supervisory Board are normally prepared by the Chairman of the Supervisory Board in consultation with the Chief Executive Officer, and furthermore by the Executive Committee and, depending on the topic concerned, by the Audit and Strategy Committees. The Supervisory Board established a Mediation Committee, whose services were not needed during the reporting period. The Nomination Committee met two times during the reporting period. The committee chairs, Ms. Dahnke (Audit Committee), Dr. Sommer (Strategy Committee), and I myself (Executive Committee, Nomination Committee), provided regular reports to the Supervisory Board on the work done in the committees. The main subjects of the committees' consultations are summarized below. 18 K N O R R - B R E MS E A N N UA L R E P O R T 2 0 2 5 R E P O R T O F T H E S U P E R V I S O R Y B O A R D The shareholder representatives (the owners' panel) regularly held advance meetings prior to the Supervisory Board meetings. Members of the Executive Board also took part in these meetings on an ad hoc basis. Internal discussions were held as needed at the end of Supervisory Board meetings without the presence of the Executive Board members. Significant Topics of Supervisory Board Work A total of eight Supervisory Board meetings were held during the reporting period, including the two-day strategy meeting. They were held at the Knorr-Bremse Group's locations in Munich (6), Mödling (1), and Hohenkammer (1). In one case, the Supervisory Board made decisions through a written circulation procedure on the basis of a pre-formulated decision proposal from the Executive Board. The following presents a chronological overview of the substantive focuses of selected meetings of the full Supervisory Board: The focuses for the two-day strategy meeting on January 30 and 31, 2025, were the strategic alignment of the Group and of both divisions, the strategic financial planning, and core innovation projects in CVS and RVS . The Supervisory Board reviewed the status of implementation of the key strategic and operational BOOST subprojects in brownfield and greenfield. This includes further optimization of the product portfolio, the reduction of structural costs (SG&A), the adjustment of R&D expenditure in line with the strategic financial framework, the expansion of the profitable aftermarket business in the truck and rail sectors, and ongoing examination of M&A opportunities and organic growth possibilities. The Supervisory Board also sees itself as a sparring partner for the Executive Board in this regard. Further focuses for the strategy meeting included the IT and HR strategies as well as the setup of product compliance management ( PCM ). At the accounts meeting on March 20, 2025, the Supervisory Board discussed with the auditor the annual and consolidated financial statements for the 2024 fiscal year and the outcomes of the audit, and - based on the preceding deliberations of the Audit Committee -gave the necessary approval. The Supervisory Board seconded the Executive Board's proposal for appropriating the net profit for the 2024 fiscal year (payment of a dividend of € 1.75 per share). The Supervisory Board approved the Report of the Supervisory Board, the Corporate Governance Statement and Compensation Report, the dependency report, and the Group Sustainability Statement. The Supervisory Board also adopted the motions for the Annual General Meeting and approved it being held virtually, as already in previous years. The Supervisory Board dealt with selected BOOST initiatives, in particular the status of divestment projects as part of the portfolio adjustment. The Supervisory Board likewise conducted its regular review of recently closed M&A transactions in terms of whether they fulfilled the business case under lying the acquisition and the respective strategic foundations. At its meeting on April 29, 2025, the Supervisory Board dealt with preparations for the Annual General Meeting the next day, discussing in particular the advantages and disadvantages of holding a virtual meeting, as well as public broadcasting of (also) the general debate. The Supervisory Board approved both. At its meeting on July 31, 2025, the Supervisory Board dealt with the results for the first half of the year, the status of selected BOOST measures, the ongoing divestment and restructuring activities of the Rail Division, and the integration of the signaling technology business acquired from Alstom. The Supervisory Board elected Stephan Sturm, who succeeded Dr. Theodor Weimer on the Supervisory Board effective April 30, 2025, as its Deputy Chairman.