Governance

Composition of the Executive and Supervisory Boards

In accordance with the German Stock Corporation Act (AktG), Wacker Chemie AG has a dual management system with a four-member Executive Board and a 16-member Supervisory Board. In accordance with the German Co-Determination Act (MitbestG), the Supervisory Board is made up of equal numbers of shareholder and employee representatives. Details on the composition of the Executive and Supervisory Boards in 2024, including the Executive Board’s areas of responsibility and the positions held by members of the Supervisory Board, can be found in the annex to the Sustainability Report.

Executive Board’s diversity and expertise

Wacker Chemie AG’s diversity strategy ensures that the Executive Board has the necessary knowledge, skills and experience to manage an international chemical group.

• Educational and professional backgrounds: Scientific expertise and/or experience in the chemical industry as well as knowledge of accounting, financial management, corporate management, planning and strategy.
• An international outlook: Different cultural backgrounds or extensive intercultural and international experience.
• Age: An age-balanced structure. The standard retirement age for members of the Executive Board is 67.
• Gender diversity: Mixed teams achieve better results. Actions have been taken to increase the proportion of women in management positions.

The Executive Board’s current composition is in line with the diversity strategy adopted by the Supervisory Board and complies with the applicable statutory requirement of Section 76 (3a) of the German Stock Corporation Act for publicly listed companies subject to co-determination, namely that an executive board with more than three members must include at least one woman and at least one man. 25 percent of the Executive Board is female.

Supervisory Board’s diversity and expertise

In accordance with Wacker Chemie AG’s diversity strategy, the Supervisory Board shall be composed in such a way that all its members have the knowledge, skills and professional experience required to properly perform their duties.

• International expertise: At least one member of the Supervisory Board ought to have international experience.
• Prevention and handling of conflicts of interest: The Supervisory Board’s rules of procedure contain regulations on avoiding and dealing with conflicts of interest. Conflicts of interest that are material and not merely temporary ought to have been avoided whenever election nominations are submitted to the Annual Shareholders’ Meeting.
• Retirement age for Supervisory Board members: The standard retirement age for Supervisory Board members is 80.
• Diversity: The Supervisory Board strives for a diverse composition that takes into account different professional experience, expertise and educational backgrounds. In accordance with Section 96 (2) of the German Stock Corporation Act (AktG), at least 30 percent of the members of a supervisory board are supposed to be women and at least 30 percent men. In 2024, women accounted for 30 percent of our Supervisory Board.

When filling the positions on our Supervisory Board, we strive to achieve a mix of young and old, industry insiders and those from other sectors, as well different professional backgrounds and diverse international experience. The Supervisory Board as a whole must have the necessary skills, knowledge and experience that are relevant to the WACKER Group’s business activities and that enable it to properly oversee, and provide professional advice to, the Executive Board. This includes the following:

• The Supervisory Board should, overall, have sufficient members with the necessary expertise in corporate management, accounting, financial controlling, risk management, corporate governance, compliance and the main sustainability issues that are relevant to the company.
• The Supervisory Board in its entirety must be familiar with the chemical industry (Section 100 (5) of the German Stock Corporation Act).
• At least one member of the Supervisory Board must have expertise in the field of accounting and at least one other in the field of auditing (Section 100 (5) of the German Stock Corporation Act).

The Supervisory Board takes into account the objectives it has set as well as its skills profile when making its nomination proposals to the Annual Shareholders’ Meeting. The current composition of the Supervisory Board complies with the objectives set and with the skills profile.

The Supervisory Board has four independent members among its shareholder representatives. Supervisory Board members who have been in their post for more than twelve years are not considered independent. The employee representatives are considered independent overall. This means that independent members account for 75 percent of the Supervisory Board.

Tasks and responsibilities

Executive Board

The Executive Board oversees the Group’s strategies, resources, infrastructure and organizational structure. Key tasks include the refinement and monitoring of corporate governance practices, including compliance, corporate ethics and the Responsible Care^® and Global Compact initiatives.

The Executive Board is supported by committees consisting of members from various organizational units and legal entities. These committees ensure the implementation of groupwide strategies, including the strategic sustainability targets. The Executive Board monitors the results of the materiality assessment and its integration into risk management. Our sustainability targets reflect WACKER’s material impacts on people, nature and the environment, and take account of risks and opportunities. Responsibility for implementing the sustainability targets lies with the respective Executive Board member with specific responsibility.

Coordinating sustainability at WACKER

The Group Leadership Team (GLT) discusses strategically important topics, analyzes market trends and competitors as well as key topics, including health and safety issues. Group strategy is reviewed once a year as part of a strategy meeting and the assumptions for financial planning are defined. The GLT comprises the Executive Board, business-division presidents and certain corporate-department heads.

The Executive Board has convened a Sustainability Council, which is chaired by the CEO, to monitor and coordinate the sustainability strategy. Committee members from our business divisions and corporate departments coordinate the assessment of sustainability performance. The Sustainability Council coordinates cross-divisional measures, reviews progress and target achievement, and discusses WACKER’s impact on people, nature and the environment, as well as the resulting risks and opportunities. Experts report on the progress of individual projects and the latest regulatory requirements. In the reporting year, topics such as reducing emissions in production processes, data transparency requirements along the value chain and the calculation of product carbon footprints were discussed.

The following are key to coordinating and monitoring issues related to the environment, health, safety and product safety: the Corporate EHS & PS committee, which meets once a year, and the EHS & PS strategy meetings, headed by the Executive Board member responsible for EHS & PS.

HR policy is discussed monthly in the HR strategy meeting; employee health is dealt with annually in the health promotion steering group headed by the Executive Board member responsible for HR issues. Productivity projects and targets are discussed at our raw materials workshop and the WOS conference. The Group Innovation Meeting deals with innovation strategies and projects.

Sustainability issues are coordinated and monitored at an operational level by special-purpose units such as the Corporate and divisional departments for sustainability, the HR department, and Corporate Procurement. There are special functions for coordinating individual topics such as compliance, EHS & PS, and human rights. Sustainability targets are, where appropriate, part of the personal goals of the employees responsible.

Our compliance organization monitors adherence to legal requirements and internal company regulations. The compliance officer coordinates a network of regional compliance officers.

Responsibility for the environment, health, safety, trade compliance, dangerous goods and product safety lies with the Group coordinators, who report directly to the Executive Board and define groupwide standards. Officers required by law take on defined tasks in the respective regions.

Occupational safety and plant safety are of paramount importance to WACKER. Annual safety targets are set for senior executives and management employees in Germany. These targets are included in the performance appraisal.

The Executive Board has appointed a human rights officer who is instrumental in shaping the company’s human rights policy, risk management system, General Declaration and reporting system. This officer advises affected areas and proposes remedial measures. As regards their duties, the Human Rights Officer is independent and not bound by any instructions. They chair the Human Rights Committee, which consists of representatives from the Legal department, Procurement, Human Resources and Corporate Sustainability.

Supervisory Board

The Supervisory Board appoints, monitors and advises the Executive Board and is involved in key decisions, including sustainability issues. Fundamental decisions on the company’s development require Supervisory Board approval.

The Audit Committee monitors sustainability reporting. The Executive Board informs the Supervisory Board regularly and comprehensively about corporate planning, strategic development, operational business, the risk situation, risk management as well as compliance and sustainability issues. The Executive Committee deals with Executive Board compensation, including sustainability-related performance criteria.

The Audit Committee prepares the Supervisory Board’s decision on the annual and consolidated financial statements, reviews them in advance and discusses the audit strategy and results with the auditor. The chair of the Audit Committee regularly discusses the progress of the audit with the auditors and reports back to the Audit Committee. The Audit Committee also monitors the accounting process, the preparation of the sustainability report and the effectiveness of the internal control, risk management and auditing system, and deals with compliance issues.

The members of the Audit Committee are familiar with the field. At least one member must have expertise in accounting and another must have expertise in auditing.

Information provided to, and sustainability matters addressed by, the Executive and Supervisory Boards

At the annual strategy and planning conference, the Executive Board discusses the company’s long-term strategy and the key related projects over the next five years, together with their financing, including the approval of the annual budget for sustainability projects. The sustainability targets are integrated into the corporate vision and strategic planning and are regularly reviewed and coordinated. The main projects are checked for compatibility with the long-term sustainability targets, and risks and opportunities are assessed. All sustainability information and the target-achievement status are made available to the Executive Board via the Corporate Sustainability department. Information is provided regularly by the head of Corporate Sustainability and by the Sustainability Council, which meets five times a year.

The Supervisory Board is informed, at regular intervals, at least once a year, about sustainability issues at its meetings.

In the reporting year, the sustainability issues and their risks and opportunities that the Executive and Supervisory Boards dealt with included:

• Reporting in accordance with CSRD and materiality assessment
• Status of sustainability-target achievement and associated measures
• Safety culture
• New regulatory requirements
• External sustainability assessments

Integration in incentive schemes

Sustainability targets relating to Executive Board compensation

Compensation for the members of WACKER’s Executive Board comprises both fixed and variable components. The variable components are in turn divided into short-term incentives (STIs) and a long-term incentive (LTI). The sustainability targets are part of the long-term compensation component.

The LTI encourages a sustainable corporate policy, promoting profitable growth and a positive development of the company’s value. It provides for a three-year assessment period and for a subsequent requirement to acquire shares coupled with a three-year holding period. The overall target-achievement factor for the LTI is based on strategically relevant financial and non-financial performance targets. These relate to the Group’s financial and non-financial targets and are determined by the Supervisory Board for the respective compensation year.

In 2024, two sustainability targets were selected as part of the non-financial performance criteria. In terms of strategy, these targets are of particular importance: a reduction in absolute CO₂ emissions (Scopes 1 and 2), and our accident rate (in line with the WACKER Process Safety Incident Rate, WPSIR). Both criteria are weighted at 5 percent each. Relative to total compensation, they each account for around 1.5 percent.

Further information can be found in Wacker Chemie AG’s compensation report.

Due diligence statement

Due diligence refers to the company’s procedures and processes for dealing with, preventing, mitigating or accounting for actual and potential adverse impacts on the environment and people in connection with its operations (due diligence process). The following overview provides a map of the information on this due diligence process contained in the Sustainability Report.

Risk management and internal controls

As a rule, sustainability aspects are embedded in the Group’s overarching risk management and internal control system.

In 2024, risk identification was linked to the results of the double materiality assessment as part of risk management. The risks identified during the double materiality assessment were included in Group risk management.

The accounting-related internal control system that has been put into effect was expanded to include an internal control system for sustainability reporting. This system is in the process of being set up. Key processes relate to data collection, the preparation of the sustainability report, and the double materiality assessment. Corresponding process risks have been identified and key controls defined for the material non-financial data. The internal control system for sustainability reporting is being continuously enhanced. It has already made good progress as regards environmental issues, and there are plans to add social issues.

The separation of functions between Corporate Sustainability (implementation at an operational level) and Corporate Accounting (specification and review of ESRS requirements), together with defined internal controls, ensures consistent implementation of sustainability reporting. A standardized groupwide reporting manual is intended to formulate binding rules for mapping ESRS requirements in the future. In addition, the internal controls for sustainability reporting will be subject to an audit by our internal Auditing department in the future.

The Sustainability Report and the results of the double materiality assessment were submitted to the Executive Board and the Audit Committee for review. The Group Employee Council was informed of the results and had an opportunity to comment on the sustainability report. As part of their reporting to the Executive Board and Audit Committee, the auditors report on their inspection of the process, the results of the double materiality assessment and on the impacts, risks and opportunities identified. The Supervisory Board is integrated into the internal control system through its Audit Committee.

For further information on the Group’s general risk management system and the groupwide internal control system, please refer to the risk management report.

Integrated management system

The integrated management system, including its groupwide regulations, and external certifications are important management tools for ensuring the uniform implementation of our sustainability strategy throughout the Group.

Our Integrated Management System (IMS) regulates operational processes and defines uniform groupwide standards for quality, safety, energy, and environmental and health protection. The Group management system is certified to ISO 9001 (quality), ISO 14001 (environment) and ISO 50001 (energy). An overview of all those production sites covered by this certification, together with other product certificates, can be found on the WACKER website.

We record environmentally relevant and safety-related incidents, plan and document internal and external audits and reviews, and coordinate the implementation of actions as part of our Integrated Management System (IMS).

www.wacker.com/certificates

For more details about resource-efficient production and sustainable products, please refer to the section in the combined management report entitled Further Information on R&D, employees, procurement and logistics.