DEUTZ : Corporate Governance Declaration and Corporate Governance Report 2022

ADDITIONAL INFORMATION | CORPORATE GOVERNANCE DECLARATION AND CORPORATE GOVERNANCE REPORT

CORPORATE GOVERNANCE DECLARATION AND CORPORATE GOVERNANCE REPORT

For DEUTZ, a responsible approach to management that meets the standards of good corporate governance forms the basis for enhancing shareholder value over the long term. This is one of the main reasons why we attach great importance to the implementation of the German Corporate Governance Code (DCGK) and ensure quality and transparency in all key decisions and processes in our Company.

CORPORATE GOVERNANCE DECLARATION PURSUANT TO SECTION 289F AND SECTION 315D HGB

Declaration of conformity with no exceptions

In 2022, the Board of Management and the Supervisory Board once again carefully considered to what extent it was proper and consistent with the Company's objectives for DEUTZ to apply all principles, recommendations, and suggestions of the DCGK. As a result, DEUTZ AG has complied with all the recommendations of the Code, as amended on December 16, 2019, since submitting its declaration of conformity dated December 9, 2020. The most recent declaration of conformity pursuant to section 161 AktG, issued by the Board of Management and the Supervisory Board on December 13, 2022, confirms that DEUTZ AG also complies with the recommendations of the Code, as amended on April 28, 2022, without exceptions and will continue to do so in the future.

The latest version of the declaration of compliance, dated December 13, 2022, can be found in the 'Investor Relations /  Corporate Governance' section of the Company's website at www.deutz.com. The previous declarations of conformity can also be viewed and downloaded there.

Composition of the Board of Management

and Supervisory Board; composition and operating procedures of Supervisory Board committees

At the time this annual report was published, the Company's Board of Management consisted of four people: Dr. Sebastian C. Schulte (Chairman since February 13, 2022, responsible for technical and head-office functions and for sustainability; in the period February 13, 2022 to November 30, 2022, he was responsible for technical and head-office functions, excluding produc- tion, and, on an interim basis, for finance, human resources, and

information services), Dr. Ing. Petra Mayer (since November 1, 2022, responsible for production and purchasing), Dr. Ing. Markus Müller (responsible for research and development and for sales and service; in the period February 12, 2022 to October 31, 2022, he was responsible for research and development and, on an interim basis, for production and purchasing; from September 6, 2022, he was also responsible for sales and service), and Mr. Timo Krutoff (since December 1, 2022, responsible for finance, human resources, and information services).

Following his appointment to the Board of Management with effect from January 1, 2021, the Supervisory Board appointed Dr. Sebastian C. Schulte as Chairman of the Board of Management with effect from February 13, 2022 and initiated a process to continue the restructuring of the Board of Management.

At the Supervisory Board meeting on June 9, 2022, following preparatory work by the Human Resources Committee, the Supervisory Board appointed Dr. Ing. Petra Mayer as a member of the Board of Management for the period from November 1, 2022 to October 31, 2025 and assigned responsibility for purchasing and production to her.

At the Supervisory Board meeting on September 6, 2022, following preparatory work by the Human Resources Committee, the Supervisory Board then appointed Mr. Timo Krutoff as a member of the Board of Management for the period from December 1, 2022 to November 30, 2025. He has taken over responsibility for finance, human resources, and information services and the role of Labor Director from Dr. Sebastian C. Schulte, to whom these responsibilities had been assigned on an interim basis since Feb- ruary 12, 2022.

Finally, at the Supervisory Board meeting on January 18, 2023, following preparatory work by the Human Resources Committee, the Supervisory Board extended Dr. Ing. Sebastian C. Schulte's term of appointment by five years, i.e. for the period from Janu- ary 1, 2024 to December 31, 2028.

Mr. Michael Wellenzohn, who had been the member of the Board of Management responsible for sales, marketing, and service and was actively involved in the restructuring of the Board of Man- agement, left the Company on September 6, 2022 with immediate effect by mutual agreement. The Supervisory Board would like to thank Mr. Wellenzohn once again for his invaluable work and dedication and wishes him every success for the future.

As previously reported, the Supervisory Board decided unanimously at an extraordinary Supervisory Board meeting held on February 12, 2022 to revoke the appointment of Dr. Ing. Frank Hiller as Chairman of the Board of Management of DEUTZ AG for good cause and with immediate effect. Mutual agreement was

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subsequently reached with Dr. Ing. Hiller on the termination of his contract. The process of restructuring the Board of Management, which had begun in February 2022, was successfully concluded in the reporting year with the appointments of Dr. Ing. Petra May- er and Mr. Timo Krutoff.

In accordance with the provisions of the German Codetermina- tion Act (MitbestG), the Supervisory Board of DEUTZ AG comprises twelve members, six members being the representatives of the shareholders and six members being the representatives of the employees.

There were no changes to the composition of the Supervisory Board in 2022. However, the Supervisory Board elected Dr. Dietmar Voggenreiter as its new chairman after Dr. Ing. Bernd Bohr stepped down as chairman of the Supervisory Board at the extraordinary Supervisory Board meeting on February 12, 2022. The Supervisory Board would like to take this opportunity to thank Dr. Ing. Bohr for his work as chairman of the Supervisory Board and welcomes the continuation of a professional and close working relationship with him.

At its extraordinary meeting on September 21, 2022, the Supervisory Board elected Ms. Sabine Beutert as its deputy chairwoman after Ms. Corinna Töpfer-Hartung resigned from the role on that day. The Supervisory Board would also like to expressly thank Ms. Töpfer-Hartung for her work as deputy chairwoman and is looking forward to the continuation of a successful working relationship with her.

The following changes to the composition of the Supervisory Board's committees were made in 2022 and up to the time that this annual report was published:

At the extraordinary Supervisory Board meeting on February 12, 2022, in view of the fact that Dr. Dietmar Voggenreiter was taking over as chairman of the Supervisory Board from Dr. Ing. Bernd Bohr, it was decided that Dr. Voggenreiter would succeed Dr. Ing. Bohr in all his committee roles with immediate effect.

Furthermore, because Ms. Sabine Beutert took over as deputy chairwoman of the Supervisory Board from Ms. Corinna Töpfer-Hartung, Ms. Beutert became a member of the Human Resources Committee on the basis of section 7 no. 1 a) of the rules of procedure for the Supervisory Board and a member of the Arbitration Committee on the basis of section 27 (3) MitbestG, in both cases with effect from September 21, 2022. By contrast, the composition of the Audit Committee was such that no changes were required to its membership; this was furthermore confirmed by the Supervisory Board, for the avoidance of doubt, at the extraordinary meeting.

The Supervisory Board has created four committees to enable it to perform its duties effectively. These committees prepare various topics and resolutions for the full Supervisory Board. Details of all members of the Supervisory Board and its committees, as well as other directorships held by its members, are shown separately on pages 211 to 212 of this annual report.

At the time this annual report was published, the members of the Human Resources Committee were Dr. Dietmar Voggenre- iter (chairman), Ms. Sabine Beutert, and Mr. Alois Ludwig. The Human Resources Committee makes preparations for all Supervisory Board decisions concerning the appointment of members of the Board of Management and their contracts of employment, including the remuneration specified therein, and all issues arising in this connection. It particularly focuses on long-term succession planning, which involves identifying suitable candidates at an early stage. In this task, it is supported by external consul- tants. The Human Resources Committee held seven meetings in 2022, all of which were attended in person by all members of the committee. Among the main matters addressed were succession planning and the new structure for the Board of Manage- ment, the achievement of the Board of Management's targets for 2021, and the setting of Board of Management targets, including medium-term targets, for 2022.

At the time this annual report was published, the members of the Audit Committee were Ms. Patricia Geibel-Conrad (chairwom- an), Ms. Sabine Beutert (deputy chairwoman), Ms. Corinna Töp- fer-Hartung, and Dr. Dietmar Voggenreiter. The committee held four meetings in 2022, all but one of which were attended by all its members (Ms. Töpfer-Hartung sent her apologies on one occa- sion) and by the Board of Management. The auditor also attended all but one of the meetings. The committee members attended the meetings in person. Guests were able to participate virtually, with some of them making use of this option. Where necessary, the committee meetings were held entirely or in part without the Board of Management and/or without the auditor.

The committee's work primarily focused on the preparatory review of the annual and consolidated financial statements, including the combined management report and separate combined non-financial report of DEUTZ AG and the DEUTZ Group. The auditor's report on its review of the condensed consolidated financial statements and the interim management report for the first half of the year was discussed at length together with the Board of Management and in the presence of the auditor. The interim management statements for the first and third quarters were discussed with the Board of Management. The chairwoman of the Audit Committee kept in close contact with the Chief Financial Officer between meetings so that they could share information and ideas and to ensure that she was kept up to date on any important developments. The committee examined

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the monitoring of accounting and the accounting process, the appropriateness and effectiveness of the internal control system and the risk management system, internal auditing, the compliance management system, and the reports on significant legal disputes. For individual agenda items, the heads of relevant head-office functions were available in the committee's meetings to answer questions and give reports. The auditor declared to the Audit Committee that there were no circumstances providing grounds to suspect that its opinion was prejudiced. The Audit Committee obtained the necessary declaration of independence from the auditor, verified that it was qualified for the role, discussed the external rotation of the audit firm in 2024, and made a recommendation to the Supervisory Board on the proposal to be made to the Annual General Meeting regarding the election of the auditor for 2022. The committee appointed the auditor, discussed the auditor's fee, determined the focus of the audit, and monitored the quality of the auditing. The chairwoman of the committee and the auditor also shared information between the meetings. The Audit Committee amended the catalog of approvable non-audit services to be performed by the auditor to reflect the new rules, reviewed the services rendered during the year, and received reports on planned projects; no issues were identified.

The Board of Management reported regularly to the Audit Committee on the course of business in the segments, the relevant key performance indicators, the liquidity and funding situation, and the Group's working capital. The measurement of investments, goodwill, and other intangible assets, the structuring and refinement of non-financial reporting, and other accounting-related matters were addressed throughout the year. The Board of Management also reported to the committee on the refinement of the risk management system and of cybersecurity management, on progress with implementing the Supply Chain Due Diligence Act (LkSG), and on the call for tenders for the audit of the 2024 financial statements. At various meetings, the committee discussed the internal control system, the work and findings of Corporate Audit, compliance, IT issues and, due to the current situation, the sanctions compliance program. The head of Accounting, the ICS coordinator, the head of Corporate Audit, the Compliance Officer, the head of IT, and the head of Quality together with the head of Investor Relations gave reports on these matters and answered the Audit Committee's questions. Reports regarding potential transactions with related parties were provided on at least a quarterly basis; no transactions requiring approval or disclosure were identified in the reporting year. The Audit Committee held preparatory discussions on the qualification matrix for the Supervisory Board. Finally, the Audit Committee resolved on the planning for 2023.

Based on the annual and consolidated financial statements and the combined management report of DEUTZ AG for the year ended December 31, 2022, the Board of Management report, and the corresponding auditor's reports, the Audit Committee carried out a detailed review of the aforementioned financial statements, the proposal for the appropriation of profit, and the remuneration report at its meeting on March 7, 2023, which was attended by the auditor and the Board of Management. During the meeting, the auditor gave a detailed report on the process and key findings of the audits of the financial statements at the parent company and at the German and non-German subsidiaries. No issues were raised in the audit findings. The internal control system relating to the accounting system, the early-warning system for risk, the key audit matters, and the defined focus of the audit were discussed in detail and the auditor provided in-depth answers to all further questions. No material weaknesses in the internal control system were reported. The auditor also established that the Board of Management had set up an appropriate information and monitoring system that is capable, at an early stage, of identifying any risks to the Company's continued existence as a going concern. The requirements for the risk identification system in respect of risk-bearing capacity, risk aggregation, and the documentation of risks were determined by the auditor and then implemented.

The committee's preparatory review also encompassed the separate combined non-financial report of DEUTZ AG and the DEUTZ Group and the auditor's audit of the remuneration report. The Supervisory Board had engaged PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft to also conduct a review with limited assurance of the content of the non-financial report, to audit the remuneration report, and to produce related assurance reports. The auditor reported on this audit and review at the meeting as well. This was followed by an intensive discussion of the main results and findings.

At the subsequent meeting of the full Supervisory Board, the chairwoman of the committee reported in detail on the aforementioned audit and review, and their findings. The recommendations prepared for the Supervisory Board for resolutions concerning the financial statements were approved and adopted by the Supervisory Board without change in each case.

In the year under review, the Audit Committee continued to keep up to date with the changes to the regulatory environment and discussed the measures that would need to be taken by DEUTZ AG to meet the enhanced requirements of the European Single Electronic Format (ESEF) regulation, the new rules on risk management systems, the DCGK reforms in 2022, and changes to sustainability reporting (particularly the requirements of the EU Taxonomy Regulation, the EU sustainability reporting standards, and the Corporate Social Responsibility Directive).

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In 2022, the chairwoman of the Audit Committee also routinely provided detailed updates on the committee's work at each subsequent meeting of the full Supervisory Board. At the time this annual report was published, the members of the Arbitration Committee were Dr. Dietmar Voggenreiter (chairman), Ms. Sabine Beutert, Ms. Sophie Albrecht, and Mr. Ali Yener. The Arbitration Committee set up pursuant to section 27 (3) of the German Codetermination Act (MitbestG) is responsible for the activities described in section 31 (3) MitbestG. It did not need to be convened during the year under review.

At the time this annual report was published, the members of the Nomination Committee were Dr. Dietmar Voggenreiter (chairman), Ms. Sophie Albrecht, and Mr. Alois Ludwig. The Nominations Committee is tasked with proposing to the Supervisory Board suitable candidates as shareholder representatives on the Supervisory Board. It held two meetings in 2022, both of which were attended in person by all members of the committee. The main matters addressed at the meetings were the preparations for the Supervisory Board election to be held in 2023 and the identification and selection of suitable candidates.

The Supervisory Board gave its approval to the recommendations for board resolutions submitted by the committees.

The following changes to the composition of the Supervisory Board's committees were made in 2022 and up to the time that this annual report was published:

At the extraordinary Supervisory Board meeting on February 12, 2022, in view of the fact that Dr. Dietmar Voggenreiter was taking over as chairman of the Supervisory Board from Dr. Ing. Bernd Bohr, it was decided that Dr. Voggenreiter would succeed Dr. Ing. Bohr in all his committee roles with immediate effect.

Furthermore, because Ms. Sabine Beutert took over as deputy chairwoman of the Supervisory Board from Ms. Corinna Töpfer-Hartung, Ms. Beutert became a member of the Human Resources Committee on the basis of section 7 no. 1 a) of the rules of procedure for the Supervisory Board and a member of the Arbitration Committee on the basis of section 27 (3) MitbestG, in both cases with effect from September 21, 2022. By contrast, the composition of the Audit Committee was such that no changes were required to its membership; this was furthermore confirmed by the Supervisory Board, for the avoidance of doubt, at the extraordinary meeting.

The current members of the Supervisory Board are all considered independent within the meaning of article C.6 sentence 2 DCGK, as amended on April 28, 2022. The names of the independent members are Dr. Dietmar Voggenreiter, Ms. Sabine Beutert,

Dr. Ing. Bernd Bohr, Ms. Sophie Albrecht, Mr. Yavuz Büyükdag, Dr. Fabian Dietrich, Mr. Hans-Peter Finken, Ms. Patricia Gei- bel-Conrad, Mr. Alois Ludwig, Dr. Ing. Rudolf Maier, Ms. Corinna Töpfer-Hartung, and Mr. Ali Yener. See also p. 211 onward fur further infor-

mation on the composition of the Supervisory Board and its committees, and on the further

mandates held by its members.

In the reporting year, the Supervisory Board did not conduct a self-assessment (article D.12 DCGK, as amended on April 28, 2022).

Targets and timeframes in accordance with sections 76 (4), 111 (5) AktG

On August 21, 2022, the Board of Management of DEUTZ AG set certain targets and timeframes in accordance with section 76

1. AktG. The proportion of women employed by DEUTZ AG at the top level of senior management below the Board of Manage- ment was to be increased to 13 percent by June 30, 2022. The proportion of women at the second level of senior management below the Board of Management was to be increased to 7 percent over the same period. On December 19, 2022, the DEUTZ Board of Management updated the targets and timeframes in accord- ance with section 76 (4) AktG as follows: The proportion of wom- en employed by DEUTZ AG at the top level of senior management below the Board of Management is to be increased to 20 percent by June 30, 2027. The proportion of women at the second level of senior management below the Board of Management is to be increased to 12 percent over the same period. The top level of sen- ior management below the Board of Management encompass- es all managers in Germany who report directly to a member of the Board of Management. The second level of senior manage- ment below the Board of Management comprises all managers in Germany who report directly to a manager in the top level of senior management.

To ensure that women are taken into consideration for vacant managerial positions, DEUTZ AG has adopted a staff development program. When positions in the top and second levels of senior management below the Board of Management become available, the Board of Management and the HR department strive to ensure that at least one woman is always shortlisted for the post (article A.2. DCGK, version dated April 28, 2022). This means that external recruitment must focus on female managers.

As at the end of the reporting year, the proportion of women was 27 percent in the top level of senior management below the Board of Management and 12 percent in the second level of senior management below the Board of Management. DEUTZ AG thus attained the aforementioned targets.

At its meeting on June 9, 2022, the Supervisory Board of DEUTZ AG set the following target in accordance with section 111 (5) AktG: On December 31, 2023, the Board of Management of DEUTZ AG should have at least one female member.

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Disclosures regarding compliance with the statutory quotas for women and men on the Supervisory Board

In accordance with the Law for the equal participation of women and men in managerial positions in the private and public sectors (law on the quota for women), the Supervisory Board of DEUTZ AG had to have at least four female members and four male members following the election of the Supervisory Board at the Annual General Meeting on April 26, 2018, if not before.

The Supervisory Board of DEUTZ AG has been in compliance with these statutory quotas since the Supervisory Board election held in 2018.

2. Objectives of the diversity plan

The objective of the diversity plan for the Board of Management is to consciously harness diversity as a means of driving the Company forward. After all, taking account of different perspectives, skills, backgrounds, and experience will be key to maintaining our competitiveness and success over the long term. Diversity within the Board of Management will, in particular, help us to better understand new business models and the wide-ranging expectations of our customers from around the world.

3. Manner of implementation

The Supervisory Board takes particular account of the following aspects with regard to the composition of the Board of Management:

Description of the diversity plan for the composition of the Board of Management

The Supervisory Board, with the support of the Human Resources Committee and the involvement of the Board of Management, carries out long-term planning for appointments to the Board of Management. At its meeting on September 27, 2018, the Supervisory Board agreed the following diversity plan for the composition of the Board of Management, incorporating the recommendations of the German Corporate Governance Code, as amended on dated February 7, 2017, and also complying with the German Corporate Governance Code as amended on December 16, 2019, and April 28, 2022:

1. Description of the diversity plan

The Supervisory Board has developed the following diversity plan for the composition of the Board of Management in accordance with section 289f (2) no. 6 HGB: In addition to basic suitability criteria such as good character, integrity, outstanding leadership qualities, professional expertise needed for the member's specific remit, proven track record, knowledge of the Company, and the ability to adapt business models and processes to the needs of a changing world, the Supervisory Board also considers diversity when selecting candidates for a position on the Board of Man- agement. The Supervisory Board regards diversity as meaning, in particular:

�appropriate gender representation

�an adequate mix of ages among the members of the Board of Management

�a range of educational backgrounds and occupations.

�Members of the Board of Management should have several years of managerial experience.

�Members of the Board of Management should bring experience from a wide range of occupations and professional backgrounds.

�The Board of Management collectively should have technical expertise, particularly knowledge and experience of manufacturing and sales of all types of engines and of other technical products, as well as international experience.

�The Board of Management collectively should have many years' experience in the areas of research and development, production, sales, finance, and human resources.

�The Board of Management collectively should have international experience.

�The Supervisory Board has formally agreed a target quota in accordance with the German Act on the Equal Participation of Women and Men in Leadership Positions in the Private and Public Sectors (FührposGleichberG). The resolution stipulates that there should be at least one woman on the Board of Management of DEUTZ AG on June 30, 2022.

�An age limit of 65 (standard retirement age) applies

in principle to the members of the Board of Management.

The Supervisory Board determines which candidate should be offered a specific position on the Board of Management. Its decision is based on the best interests of the Company, taking all the circumstances of the individual case into account.

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