Dear Shareholders,

For WACKER, 2020 was a year of relentless effort. The coronavirus pandemic confronted the world with challenges that could not be solved with any Modern Age blueprint. In facing this critical situation, we focused chiefly on the company’s financial stability. Three levers were especially important: strong cash flow, substantial cost cuts, and a reduced capital expenditure budget aligned with economic conditions. Another success factor was that we swiftly secured WACKER’s long-term financing.

Our reporting-year results show that WACKER remained very stable through this difficult time. Net cash flow almost quadrupled to some €700 million and net financial debt was extremely low at about €70 million.

All parts of the company performed exceptionally well and were crucial in delivering our very good results. The Supervisory Board thanks every employee for this great achievement in such unusual times.

Another factor of huge importance for the company’s future was an agreement we reached with employee representatives about the Shape the Future program. It enables WACKER to remain on par with its competitors internationally. I sincerely thank all of the company’s employee representatives, who fully support this outcome.

Transferring our Siltronic stake to Taiwan-based GlobalWafers will enable us to realize the strategic goal of focusing our energy on our original core business – chemicals. GlobalWafers was able to secure a majority shareholding in Siltronic AG by early February 2021. Although the takeover has not been finalized yet, as various merger-control and foreign-trade clearances are still outstanding, we have passed a major hurdle. We are confident that the merger will go ahead as planned and that Siltronic and GlobalWafers will be able to chart their future path to success together.

WACKER’s priority now is to make the right investments for the future. A good example of this is WACKER BIOSOLUTIONS. Its acquisition of plasmid DNA manufacturer Genopis, Inc. rounds out our product portfolio in the field of microbial technologies and gives us our own production site in America’s large biologics market.

One issue that still needs to be resolved is WACKER’s high pension obligations. To secure the company’s future, it is vital to mitigate the burden of these obligations. The low-interest-rate environment for capital investments weighs heavily on WACKER’s financial strength. Special pension-fund payments, which the company has made and will need to make, are amounts no longer at our disposal for growth investments. Over time, this will endanger the company’s economic substance, as we cannot use this money for innovation and expanding our operations. That is why we must find ways to ease the burden on the company. We have no other alternative.

At the end of the Annual Shareholders’ Meeting on May 12, 2021, there will be a change at the helm of the company. Dr. Rudolf Staudigl is retiring after 25 years on the Executive Board, 13 of them as president and CEO, and after a total of 38 years at the company.

The Supervisory Board thanks Dr. Rudolf Staudigl for his tireless commitment to WACKER’s interests. He has helped shape the company like few before him. His successor is Dr. Christian Hartel, who has been with WACKER since 2003. We are thus filling the top executive position from among the company’s own ranks. This underscores WACKER’s ability to produce outstanding leaders who are capable of taking on such a role. Our decision ensures continuity in top management and realizes a generational change at the company’s helm.

Continuous Dialogue with the Executive Board

At WACKER, sound corporate governance and control are built on a relationship of trust between the Executive Board and Supervisory Board as they work closely together in the company’s interest. In 2020, the Supervisory Board performed – with great diligence – the duties incumbent upon it under law, the Articles of Association and its own Rules of Procedure. The Supervisory Board was involved at an early stage in every decision of fundamental significance for the company.

In both written and oral reports, the Executive Board regularly provided us with timely and comprehensive information on corporate planning, strategic development, business operations, and the current state of Wacker Chemie AG and the Group, including the risk situation, and compliance and sustainability issues. The Chairman of the Supervisory Board remained in close contact with the Executive Board, especially with the CEO – also outside of the scheduled Supervisory Board meetings – and was kept informed of the business situation, current trends and key business transactions. Any deviations from business plans and targets were explained to the Supervisory Board in detail.

Wherever required by statutory provisions or the Articles of Association, the Supervisory Board voted on the reports and proposals of the Executive Board after detailed examination and discussion.

In the reporting year, we paid particularly close attention to investment projects, the current earnings situation, including the risk position and risk management, as well as the company’s liquidity and financial position.

The Supervisory Board held four ordinary meetings in 2020, two in the first half of the year and two in the second. Between meetings, the Executive Board informed us in detail by means of written reports about all projects and plans of particular importance to the Group. At its full meetings and in its committees, the Supervisory Board discussed in detail business transactions of importance to the company and referred to the reports submitted by the Executive Board. The full meetings were prepared by shareholder and employee representatives in their own separate sessions.

The Supervisory Board’s Main Areas of Deliberation

The development of sales, earnings and employment at the Group and its individual segments were the subject of regular consultations in the full meetings of the Supervisory Board. At each meeting, the Supervisory Board evaluated the Executive Board’s performance – on the basis of the reports submitted by the Executive Board – and discussed strategic development opportunities and other key topics with the Executive Board. There was no need for additional monitoring measures, such as the inspection of corporate documents or the appointment of experts.

The major areas of deliberation dealt with by the Supervisory Board were:

• The effects of the coronavirus pandemic and the corresponding measures that had to be taken
• Further challenges affecting the global market environment, especially high energy costs and the polysilicon-market trend
• The rise in protectionism and trade disputes, in particular anti-dumping proceedings against the solar and other industries in the USA, EU and China; their impact on WACKER; and appropriate courses of action
• The sale of WACKER’s stake in Siltronic to Taiwan’s GlobalWafers
• Various M & A projects
• The Shape the Future project
• The increase in pension provisions amid low discount rates, and the reorganization of the company pension systems
• Financing activities
• Personnel matters relating to the Executive Board (renewal of Dr. Ohler’s contract for a further five years and personnel changes on the Executive Board in 2021)
• The new Executive Board compensation system
• The German Act implementing the Second Shareholder Rights Directive, and the revision of the German Corporate Governance Code

The Supervisory Board discussed the WACKER Group’s plans for 2021 at its meeting of December 9, 2020. On that occasion, the Supervisory Board also dealt with medium-term corporate plans for 2021 – 2025. In addition, it discussed and approved the capital-expenditure budget for 2021.

Work in the Committees

The Supervisory Board is assisted in its work by the committees it has constituted. WACKER’s Supervisory Board has created three committees – an Audit Committee, an Executive Committee, and a Mediation Committee (the latter in accordance with Section 27 (3) of the German Co-Determination Act (MitbestG)). The tasks and the members of these committees are detailed in the Declaration on Corporate Management on page 189.

The Audit Committee met four times in the last fiscal year. Its work included the audit of the annual financial statements of Wacker Chemie AG and the Group for 2020 and of the consolidated interim financial statements for the first half-year. It also discussed the Group’s quarterly financial figures, CSR reporting, and issues relating to risk management, accounting processes, the internal control systems, compliance and auditing. The committee monitored the independence of the auditors and also discussed the additional services they had provided. Moreover, the Audit Committee submitted a recommendation to the Supervisory Board for the latter’s proposal to the Annual Shareholders’ Meeting for appointing an auditor for 2020. It then awarded the auditing contract for 2020 and determined the focus of auditing.

The Executive Committee met twice in 2020. At each meeting the committee members discussed personnel matters relating to the Executive Board (e.g. determining overall compensation and the performance goals for variable compensation, the renewal of Dr. Ohler’s contract for a further five years until December 31, 2025, the new Executive Board compensation system, and personnel changes on the Executive Board in 2021).

The Mediation Committee did not need to be convened in the reporting year.

The Supervisory Board was regularly informed about the committees’ work.

Initial and Advanced Training

The members of the Supervisory Board are called upon to take part in training courses at regular intervals. The company supports the members in their educational endeavors, in particular by granting them generous expense allowances, which can and should be used for further training, among other things. When they take office, new Supervisory Board members receive an information package about their rights and obligations; it also includes information sheets on insider-trading bans and on personal transactions by managers. In addition, Supervisory Board members are regularly informed about court rulings and key changes in laws that have an impact on their work. Last year, for instance, they were given information on the German Act implementing the Second Shareholder Rights Directive, and on the revision of the German Corporate Governance Code.

Personalized Disclosure of Attendance at Meetings

In 2020, all members attended the meetings of the Supervisory Board, while all committee members attended their respective committee meetings. Members’ attendance at meetings of the Supervisory Board and at their respective committee meetings is disclosed in personalized form below:

Corporate Governance

Last year, the Supervisory Board again looked closely at corporate governance standards. At its meeting of December 9, 2020, the Supervisory Board dealt with application of the German Corporate Governance Code and adopted the annual Declaration of Conformity that must be submitted jointly by the Executive and Supervisory Boards in accordance with Section 161 of the German Stock Corporation Act (AktG). The Declaration is available to shareholders on the company’s website and is also included in the Declaration on Corporate Management.

At its meeting in December 2020, the Supervisory Board also discussed the efficiency of its activities and found that it works efficiently – for example, due to the regular preliminary discussions regarding the Supervisory Board meetings, the comprehensive reports provided by the Executive Board and the documents received well in advance of the meetings. Further information on the Supervisory Board’s regular self-assessments can be found in the Declaration on Corporate Management.

Audit of the Annual Financial Statements of Wacker Chemie AG and the WACKER Group

KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, audited the annual financial statements of Wacker Chemie AG for 2020, the consolidated financial statements and the combined management report (as of Dec. 31, 2020), as prepared by the Executive Board.

The Supervisory Board’s Audit Committee had awarded the auditing contract in accordance with the resolution of the Annual Shareholders’ Meeting of August 4, 2020. The auditors conducted their audit in accordance with Section 317 of the German Commercial Code (HGB) and the EU Audit Regulation, and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW). They issued unqualified audit reports.

The auditors also carried out a voluntary review of the combined non-financial report for Wacker Chemie AG and the Group. Their review confirmed that this report, too, meets the legal requirements.

The financial-statement documents (including the auditors’ reports, the combined management report and the Executive Board’s proposal for the distribution of profits) were submitted to all the Supervisory Board members in good time.

At its meeting of February 23, 2021, the Audit Committee examined and discussed in detail the financial statements, the combined management report, the combined non-financial report for Wacker Chemie AG and the Group (as per Sections 289b and 315b of the German Commercial Code – HGB) as well as the auditors’ reports. At its meeting of March 4, 2021, the full Supervisory Board closely examined and discussed the relevant annual accounting documents – including the combined non-financial report for Wacker Chemie AG and the Group – with knowledge and in consideration of both the report of the Audit Committee and the auditors’ reports. The auditors took part in the deliberations at both meetings. They reported on the main results of the audit – in particular the key audit matters described in the auditors’ report – and were available to answer questions and provide supplementary information.

After concluding our own examination, we have no objections to raise to the annual financial statements of Wacker Chemie AG, the consolidated financial statements, the combined management report, the combined non-financial report for Wacker Chemie AG and the Group, or the auditors’ reports.

We therefore approve the annual financial statements of Wacker Chemie AG and the consolidated financial statements as of December 31, 2020 as prepared by the Executive Board. The annual financial statements of Wacker Chemie AG are hereby adopted. We concur with the Executive Board’s proposal for the distribution of retained profit.

Changes in the Composition of the Supervisory and Executive Boards

Konrad Kammergruber, who served as an employee representative on the Supervisory Board for many years, stepped down from the Board after reaching retirement age at the end of September 2020. The Supervisory Board would like to thank Mr. Kammergruber for all his valuable, enriching and collegial work over the years, and wishes him all the best for the future.

Dr. Birgit Schwab, who had already been elected as an alternate member, replaced him as an employee representative on the Supervisory Board.

Employee representative Jörg Kammermann stepped down from the Supervisory Board with effect from December 31, 2020. We wish to thank Mr. Kammermann for his constructive and valued participation in the Supervisory Board.

At the Executive Board’s request, Markus Hautmann was appointed to replace Mr. Kammermann by order of the District Court of Munich with effect from January 1, 2021.

Changes are expected in the composition of the Executive Board as well in 2021. At its meeting of December 9, 2020, the Supervisory Board took key personnel decisions with a view to ensuring long-term continuity in the company’s management. Dr. Rudolf Staudigl, President & CEO of the Executive Board of Wacker Chemie AG, will retire at the end of the next Annual Shareholders’ Meeting, scheduled for May 12, 2021. The Supervisory Board appointed Dr. Christian Hartel, an Executive Board member since 2015, to succeed Dr. Staudigl as of the same date. Also with effect from the end of the Annual Shareholders’ Meeting of 2021, Angela Wörl will be appointed to Wacker Chemie AG’s Executive Board in the position of Personnel Director. Ms. Wörl is currently head of WACKER’s Human Resources corporate department. Her Executive Board contract is set to run for three years.

The Supervisory Board thanks the Executive Board and the company’s employees and employee representatives for their dedicated work in 2020 – a year that, in every way, was challenging for all of us.

Munich, March 4, 2021
The Supervisory Board

Dr. Peter-Alexander Wacker,
Chairman of the Supervisory Board of Wacker Chemie AG