Mar 2, 2023

VAT : Corporate Governance Message : Corporate Governance Report VAT Group AG is committed to the highest principles of good corporate governance, aimed at ensuring trans- parency, achieving a balanced relationship between management and control, and safeguarding shareholder interests. VAT Group AG regularly reviews its corporate governance framework and discloses information on corporate governance in accordance with the SIX Swiss Exchange Directive on Information relating to Corporate Governance, the Swiss Code of Best Practice for Corporate Governance, and the corporate governance provision of the Swiss Code of Obligations. In addition, VAT Group has implemented a Code of Conduct, setting out VAT Group's key principles. To avoid duplication, some sections contain cross-references, in particular to the Articles of Association of VAT Group AG, published at https://ir.vatvalve.com/fileadmin/user_upload/corporate_governance/en/ articles-of-association---vat-group-ag.pdf, Committee Charters published at https://ir.vatvalve.com/en/corpo- rate-governance and the Organizational Regulations of VAT Group AG published at https://ir.vatvalve.com/file- admin/user_upload/corporate_governance/en/VAT_Organizational_Regulations_2022.pdf. For those disclosures under the SIX Swiss Exchange Directive on Information relating to Corporate Governance that are included in the notes to the consolidated financial statements, please consult the Consolidated Financial Statements 2022 of VAT Group AG within this document. The financial year of VAT Group AG ends on December 31 of each calendar year. 1. Group structure and shareholders 1.1 Group structure VAT Group AG, a stock corporation, was founded on February 25, 2016 (registration number CHE- 202.223.983, LEI: 529900MVFK7NVALR7Y83) and its registered seat is at Seelistrasse 1, 9469 Haag, Switzerland. VAT Group consists of VAT Group AG (the ultimate holding company) and its subsidiaries in Switzerland and abroad: four production companies that can also hold a distribution function in Switzerland, Romania, and Ma- laysia; ten distribution companies in Europe, North America and Asia; and three holding and financing compa- nies. An overview of this structure, with company names, place of incorporation, share capital and VAT Group AG's participation is provided in the Consolidated Financial Statements 2022 of VAT Group AG on page 118. VAT Group's operational structure is organized into two business segments aimed at delivering maximum value to customers: Valves and Global Service. This structure is described in more detail in the segment information in the notes to the financial statements on pages 85-87. 1.2 Significant shareholders As of December 31, 2022, 20,516 shareholders were registered in VAT Group AG's share register, holding 18,423,165 shares (as defined below under 2.1). Disclosure notifications of significant shareholdings in VAT Group AG that were filed in 2022 with VAT Group AG and the SIX Swiss Exchange are available from the online publication platform of the SIX Swiss Exchange: http://www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html. VAT GROUP AG CORPORATE GOVERNANCE As of December 31, 2022 (or as per the date indicated), VAT Group AG was notified of the following share­ holders, representing 3% or more of the share capital of VAT Group AG: Name of shareholder Capital Group Companies, Inc.3 1 Position of Rudolf Maag as per VAT share register dated December 31, 2022 2 Position for BlackRock, Inc. as per filing dated April 28, 2021 3 Position for Capital Group Companies, Inc. as per filing dated February 13, 2023 In % of total share capital 10.00% 5.95% VAT was informed by Allianz SE on February 9, 2022, that it had reduced its position in VAT shares to below the threshold of 3%. Further details are available from the online publication platform of the SIX Swiss Ex- change: http://www.six-exchange-regulation.com/en/home/ publications/significant-shareholders.html. VAT Group AG is not aware of any other person or institution holding, at the date of this report, directly or indirectly, on its own account or in concert with third parties, 3% or more of VAT Group AG's share capital. 1.3 Cross-shareholdings 2. Capital structure 2.1 Company's share capital The share capital of VAT Group AG amounts to CHF 3,000,000 divided into 30,000,000 registered shares with a nominal value of CHF 0.10 each. The shares are fully paid in. The shares have been listed on the SIX Swiss Exchange since the company's Initial Public Offering on April 14, 2016. The VAT Group AG's International Securities Identification Number (ISIN) is CH0311864901, its market capitalization as of December 31, 2022, was CHF 7.58 billion with a free float as defined by SIX Swiss Exchange of approximately 90%. During 2022, the free float remained unchanged compared to a year ago. VAT Group AG issues its registered shares only as uncertificated securities and registers them as book-entry securities. Shareholders have no right to request conversion of the form in which the registered shares are issued into another form. Shareholders may, however, at any time require from VAT Group AG the delivery of an attestation certifying their current shareholdings. Uncertificated securities may only be transferred by way of assignment, provided that they are not registered as book-entry securities. The transfer of book-entry securities and grants of security rights on book-entry securities have to be compliant with the Book Entry Securities Act. The transfer of book-entry securities or grants of security rights on book-entry securities by way of assignment are excluded. 46 2.2 Conditional and authorized capital According to art. 3a of the Articles of Association1, VAT Group AG's share capital of CHF 3,000,000 may be increased by a conditional capital of up to CHF 150,000, i.e. up to 5% of the share capital, by issuing up to 1,500,000 fully paid-in registered shares with a nominal value of CHF 0.10 each, upon the exercise of option rights or in connection with similar rights regarding shares (including restricted stock units) granted to officers and employees at all levels of the company. The preemptive rights and the advance subscription rights of the shareholders are excluded. The acquisition and subsequent transfer of registered shares is limited under art. 5 of the Articles of Association. The conditions for the allocation and exercise of the option rights and similar rights are determined by the Board of Directors. The shares may be issued at a price below the market price. VAT Group AG does not have any authorized share capital. 2.3 Changes in share capital There have been no changes in the share capital during the reporting year. 2.4 Participation certificates, profit-sharing certificates, preference shares and modified voting rights As of December 31, 2022, VAT Group AG has not issued any participation certificates or profit-sharing certifi- cates, nor has it issued any preference shares or shares with increased, limited, privileged or restricted voting rights. 2.5 Own shares As of December 31, 2022, VAT Group AG held 18,082 of its own shares. None of its subsidiaries held any shares in VAT Group AG. 2.6 Transfer restrictions and nominee registrations Persons acquiring registered shares will on application be entered in the share register without limitation as shareholders with voting rights, provided they expressly declare themselves to have acquired the shares in their own name and for their own account and comply with the disclosure requirement stipulated by the Swiss Financial Market Infrastructure Act (FMIA). Entry in the share register as shareholder with voting rights is subject to the approval of VAT Group AG and may be refused if the applicant fails to declare expressly that he/she has acquired and will hold the shares on his/her own behalf and for his/her own account. A resolution of the shareholders' meeting passed by at least two thirds of the represented share votes and the absolute majority of the represented shares par value is required for the easement or abolition of the restriction of the transferability of the registered shares. Persons not expressly declaring themselves to be holding shares for their own account (nominees) will be entered in the share register with voting rights without further inquiry up to a maximum of 3% of the share capital outstanding at that time. Above this limit, registered shares held by nominees will be entered in the share register with voting rights only if the nominee in question makes known the names, addresses and shareholdings of the persons for whose account he is holding 0.5% or more of the share capital outstanding at that time and provided that the disclosure requirement stipulated by the FMIA is complied with. The Board of Directors has the right to conclude agreements with nominees concerning their disclosure requirements. Legal entities or partnerships or other associations or joint ownership arrangements which are Iinked through capital ownership or voting rights, through common management or in like manner, as well as individuals, legal entities or partnerships (especially syndicates) which act in concert with the intent to circumvent the entry restriction are considered as one shareholder or nominee. VAT Group AG may in special cases approve exceptions to these restrictions. No such cases were approved in 2022. 2.7 Convertible bonds and options VAT Group AG has neither convertible bonds nor options regarding its shares outstanding. 1 The Articles of Association of VAT Group AG are published at https://ir.vatvalve.com/en/corporate-governance/ articles-regulations-charters. VAT GROUP AG 3.1 Members of the Board of Directors The Articles of Association2 provide that the Board of Directors shall consist of a minimum of three members, including the Chairman of the Board of Directors who is appointed by the meeting of shareholders. The Board of Directors currently consists of seven non-executive members (including the Chairman). None of the members of the Board of Directors has or had any significant business connection with VAT Group AG or any of its Group companies during the three years prior to December 31, 2022. Board of Directors1 2022 1 Heinz Kundert served as Vice Chairman until the AGM held on May 17, 2022, but did not stand for re-election 3.2 Background, other activities and functions As of December 31, 2022, the members of the Board of Directors were: Dr. Martin Komischke, Chairman, was born in 1957 and is a German citizen. Martin Komischke became the Chairman of the Board of Directors of VAT Group AG in May 2017 and was re-elected as Chairman of the Board of Directors at the Annual General Meeting (AGM) in May 2018 and since then annually. From 2004 to 2016, Martin Komischke served as CEO of HOERBIGER Holding AG, following his function as Head of the Strategic Business Unit Drive Technology and member of the Executive Board from 1996 to 2003. Before that, he held various functions at Kolbenschmidt AG and Mannesmann-Sachs AG. In 2022, Martin Komischke served as Chairman of the Board of HOERBIGER Holding AG (since 2016). He was also a member of the Board of Directors of Stäubli Holding AG (since 2016), Aixtron SE (2013 until May 2019) and the Vice President of the Board of Trustees of HOERBIGER Foundation (since 2016). Martin Komischke holds a degree and a doctorate in electrotechnics and mechanical engineering from the University of Aachen. 2 The Articles of Association of VAT Group AG are published at https://ir.vatvalve.com/en/corporate-governance/ articles-regulations-charters. 48 CORPORATE GOVERNANCE Urs Leinhäuser, Vice Chairman, was born in 1959 and is a Swiss citizen. Urs Leinhäuser became a member of the Board of Directors of VAT Group AG in March 2016 and was since then re-elected annually. He became Vice Chairman in May 2022. From 1995 to 1999, Urs Leinhäuser was Head of Corporate Controlling at Georg Fischer AG and later CFO of Georg Fischer's Piping Systems Division. Between 1999 and 2003, he was CFO of Mövenpick Holding AG. From 2003 until 2011, he was CFO and Head Corporate Center at Rieter Holding AG. After the spin-off of Autoneum Holding AG from Rieter Holding AG in 2011, Urs Leinhäuser was CFO and Deputy CEO of Autoneum Holding AG until 2014. Since 2014, Urs Leinhäuser is self-employed and since 2016 he is managing partner at ADULCO GmbH. Currently, Urs Leinhäuser serves on the Board of Directors of Ammann Group Holding AG (since 2013), Burckhardt Compression Holding AG (since 2007) and Liechtensteinische Landesbank AG (since 2014). Since 2017, he is Chairman of the Board of Directors of Avesco AG and since 2019 he is also member of the Board of Directors of PENSADOR Partner AG. Urs Leinhäuser holds a degree in business administration from the University of Applied Sciences Zurich. Dr. Hermann Gerlinger was born in 1953 and is a German citizen. Hermann Gerlinger became a member of the Board of Directors of VAT in May 2017 and was since then re-elected annually. Between 2001 and 2016, Hermann Gerlinger was CEO of Carl Zeiss SMT GmbH and from 2006 to 2016 also member of the Executive Board of Carl Zeiss AG. Before that, he held various functions for Carl Zeiss AG. Hermann Gerlinger served as member of the Advisory Board of the German National Metrology Institute (PTB) (2015 until May 2020) and is a member of the Supervisory Board of Siltronic AG since 2011 and guest member of the Technology Committee of the ASML Board of Directors since 2018. Hermann Gerlinger holds a degree and a doctorate in physics and astronomy from the University of Würzburg. Karl Schlegel was born in 1953 and is a Swiss citizen. He became a member of the Board of Directors of VAT Group AG in March 2016 and was since then re-elected annually. Karl Schlegel served as CEO of Hamilton Medical AG between 1997 and 2003. Between 2004 and 2013, he was the CEO of VAT Group. From 2014 to 2016, he was a member of the Board of Directors of VAT Holding AG. Karl Schlegel was a member of the Foundation Board of Stiftung Arwole (a charity for individuals with disabilities from 2014 to 2018) Karl Schlegel holds a Bachelor of Science degree from the medical engineering department of the University of Applied Sciences and Technology Buchs (NTB) and an Executive MBA from the University of St.⁜Gallen. Dr. Libo Zhang was born in 1970 and is a German citizen. She became a member of the Board of Directors of VAT Group AG in May 2018 and was since then re-elected annually. Libo Zhang is an independent senior consultant of finance, controlling and corporate structuring. She has been the CFO of FFG Europa & Americas, MAG IAS GmbH, a German machine manufacturer, and Borgward Group AG, a German auto manufacturer. From 2010 to 2015, she held various senior financial management positions in Germany and Asia at SGL Group, a leading global manufacturer of carbon-based products, including regional CFO and senior manager of corporate development, mergers and acquisitions. Prior to that, for more than ten years, she held senior positions in finance and commercial operations in the German engineering and aerospace sector. Currently, Libo Zhang serves on the Scientific Advisory Board of CIC Controlling GmbH in Dortmund, Germany, and on the SPT Roth AG Advisory Board in Lyss, Switzerland. Libo Zhang holds a degree and a doctorate in economics and an MBA from Georg-August University Göttingen, Germany. Attachments