4Remuneration Report

The Nomination and Compensation Committee has written terms of reference setting out its responsibilities. The Committee generally prepares the groundwork for proposals and decision-making by the full Board. It has executive authority only within the remuneration framework already approved in principle by the Annual General Meeting or Board of Directors and where expressly provided in the Articles of Association or a policy. It meets upon invitation of its Chairman as often as necessary, but at least once a year. The Chairman and the CEO attend the meetings by invitation and in an advisory capacity, and the HR officer of the Group takes the minutes.

The framework for implementing these remuneration principles is set forth in the Articles of Association.

The remuneration of members of the Board of Directors is determined based on the responsibility and time requirements of their function and includes a base fee for Board membership and additional fees for special functions such as committee chairmanship and membership. The additional fees are cumulative in the case of multiple functions.

The elements and levels of remuneration for the Board of Directors is based on benchmarking analysis with a group of comparable international industrial companies listed on the SIX Swiss Exchange with similar geographic scope, revenue, complexity, capitalisation and employee headcount. They include: ALSO, Belimo, Bucher Industries, DKSH, Dormakaba, Emmi, Forbo, Galenica, Georg Fischer, Idorsia, Landis+Gyr, OC Oerlikon, SFS Group, Sigfried, Sulzer, Tecan and VAT Group.

The variable incentive plan rewards the collective performance of the company over a time horizon of one year. The variable incentive is capped at 150% of the annual fixed base salary for the CEO and individually between 50% to 100% for the other members of the Executive Committee.

In alignment with the overall strategy of sustainable profitable growth, the variable incentive will be measured on the basis of three performance indicators with different weightings:

• Net revenue growth compared to previous year, relative to a peer group of companies (weighting 40%);

• EBIT improvement (earnings before interest and tax) compared to previous year, relative to the same peer group of companies (weighting 40%);

• Sustainability measurement parameters (weighting 20%).

The comparison of the two performance indicators net revenue growth and EBIT improvement with the performance of similar companies is performed by an independent consulting firm. The peer group includes industrial firms that have a comparable base of products, technology, customers, suppliers or investors and thus are exposed to similar market cycles as Datwyler. It is identical for all members of the Executive Committee.

The intention of measuring the performance relatively to peer companies is to neutralise the effect of market cycles and external factors that impact the company's performance but are outside of the control of management. The external market cycles being neutralised, the true performance of the company can be better assessed.

The performance indicators net revenue growth and EBIT improvement together determine 80% of the variable incentive. To achieve the target amount of a 100% payout for these two performance indicators, the median performance of the peer group must be reached for both indicators.

The maximum payout of 200% can only be achieved if Datwyler achieves the best ranking among all peer companies on both net revenue growth and EBIT improvement. Should Datwyler perform below all peer companies on both indicators, there is no payout for these two performance indicators. The payout percentage for any point between the lowest ranking (0% payout), the median (100%) and the best ranking (200%) is determined by linear interpolation.

The sustainability performance indicator determines 20% of the variable incentive. The measurement parameters for the sustainability performance indicator are derived from the 12 focus topics of the sustainability strategy. They can be redefined and weighted by the Board of Directors annually.

For all three parameters, there is a minimum threshold that has to be achieved in order to be taken into consideration and a maximum limit above which the contribution to target achievement no longer increases. The three measurement parameters for the sustainability performance indicator cannot be compared with the companies from the peer group. By taking sustainability measurement parameters into account in the variable incentive for all eligible employees, Datwyler is promoting awareness of the sustainability focus areas.

The Board of Directors may decide to adjust both performance indicators to reflect currency effects, extraordinary effects such as one-time costs or sale of real estate and structural changes such as acquisitions or divestments affecting net sales by more than 10% of the previous year figure. In case of a negative net result, the Board of Directors reserves the right to deviate from the above-mentioned calculation approach.

The model for calculating the variable incentive with three collective performance indicators including sustainability measurement parameters and a uniform peer group applies to all employees of the company who are entitled to a variable incentive. In this way, Datwyler promotes agile collaboration across hierarchical levels and departments and accelerates the implementation of customer requests and development projects. In addition, Datwyler uses the concept of Objectives and Key Results (OKR) to focus the activities of all employees on a clearly defined number of key corporate objectives.

The long-term incentive plan measures Datwyler's performance relative to comparable peer companies over a three-year period. This is intended to neutralise the effect of market cycles and external factors that impact the company's performance but are outside of the control of management. The external market cycles being neutralised, the true performance of the company can be better assessed.

Share-based remuneration will be awarded under a long- term incentive plan in future in the form of performance share units (PSUs). A PSU is a conditional right to receive shares of the company subject to the fulfilment of certain conditions during a three-year vesting period. The vesting conditions will include both the achievement of predetermined performance objectives (performance conditions) and continuous employment at the end of the vesting period (service condition).

As a basis for the allocation of PSUs, a target amount for the long-term incentive plan was determined for each member of the Executive Committee. This target amount is based on the relevant compensation benchmarks.

At grant date (1 January), the target incentive amount will be converted to a number of PSUs on the basis of the average closing share price during the twenty trading days before the grant date. The PSUs will be subject to a three-year vesting period, conditional on continued service within the company and on the following performance targets being achieved:

• Relative net sales growth, with one-third weight

• Relative ROCE growth, with one-third weight

• Relative total shareholder return (TSR), with one-third weight

Datwyler's performance on all three indicators is compared annually with a peer group of companies. The peer group is a consolidation of the peer companies that are already considered for the calculation of the annual variable incentive.

The peer group is confirmed by the Board of Directors prior to the annual grant of PSUs and may be adjusted if required.

The peer group in the reporting year consists of the following companies:

With the long-term incentive plan, a significant portion of Executive Committee compensation is linked to the company's long-term performance. This strengthens the alignment to shareholders' interests. Datwyler's relative performance will be expressed as a percentile rank, which determines a payout factor between 0% and 200%:

• Ranking < 25% of the peer group (threshold): 0% payout

• Ranking at the median of the peer group: 100% payout

• Ranking > 75% of the peer group (cap): 200% payout

• Linear interpolation between those points

The combined payout factor is a weighted average of the payout factors for relative sales growth (one-third weight), relative ROCE growth (one-third weight) and relative TSR (one-third weight) over the three-year vesting period. An independent external specialist will calculate the level of relative performance achievement and the combined payout factor.

If Datwyler reports a negative profit after tax (i.e. a loss) from continuous operations during the last year of the three-year vesting period, or if the Board of Directors believes that an adequate dividend cannot be paid out to shareholders, the Board of Directors reserves the right to determine whether and to what extent the PSUs for this period should be forfeited, irrespective of the combined payout factor achieved.

In the case of someone leaving, the PSUs are usually forfeited, except in the case of retirement, death, disability or change of control of the company where they are converted into shares for the number of months up to the time of leaving based on the payout factor achieved (pro-rata vesting).

In the event of death, the pro-rata payout is made at the time of leaving (accelerated vesting). It follows the regular vesting schedule in the other cases.

If Datwyler is required to prepare an accounting/financial restatement, clawback and malus provisions will apply to PSUs or shares awarded under the long-term incentive plan. Datwyler shall have the right to forfeit (malus provision) and/or or to obtain reimbursement (clawback provision) of any PSU or shares that were granted or allocated to the participant in the case that fraud or misconduct by the participant has led to the booking correction.

Employment contracts with members of the Executive Committee stipulate a notice period of 6 to 12 months and of 12 months for the CEO. They contain neither a severance provision in the event of termination of employment, nor any change of control clauses.

The fixed base salary of the five members of the Executive Committee amounted to CHF 1’801’213 in the year under review. As at 31 December 2024, the Executive Committee comprised five members. During the reporting year, there were a few months in which two functions were staffed by two people due to two personnel changes. The Executive Committee’s variable incentive for the 2024 reporting year was calculated according to the model described in detail under Variable incentive.

This involved comparing net revenue growth and EBIT improvement with a peer group of similar companies. Based on the available revenue and earnings figures for the first nine months of the year under review, Datwyler has made best estimates for calculating the variable incentive. The company expects to outperform its peer group by 47.0% in net revenue growth and 63.0% in EBIT improvement for the full year. In the model with a target value of 100% and a maximum payout factor of 200% per performance indicator, these values correspond to a payout factor of 94.0% for net revenue growth and a payout factor of 126.0% for EBIT improvement.

For the sustainability performance indicator, the Board of Directors had defined the following three measurement parameters for the year 2024: Reduction of CO₂ emissions (Scope 1 and 2) in relation to revenue, reduction of accident severity, and employee satisfaction. These measurement parameters cannot be compared with the companies in the peer group. However, they are also estimates based on nine-month figures as at the end of September 2024. In terms of CO₂ emissions, Datwyler is expected to achieve a reduction of 21.3 tons per million revenue compared to the previous year. With a maximum value of -19.5 tons per million revenue, this results in a payout factor of 200% . Acquisition- and currency-adjusted values are used for the calculation.

For the accident severity rate, Datwyler is expected to achieve a value of 0.09. With a defined maximum and minimum value of 0.06 and 0.22 respectively, this results in a payout factor of 162.5%. To evaluate employee commitment, Datwyler will conduct a survey in January and February 2025. The values of this survey are taken into account for the calculation of the variable incentive to be effectively paid out. For the best estimate of the variable incentive in this annual report, the employee commitment from the survey at the beginning of 2023 was used. The employee commitment value at that time was 85 (on a scale from 1 to 100). With a defined maximum value of 90 and a target value of 70 for employee commitment, this results in a payout factor of 175%.

Taking into account the weighting of the three performance indicators (net revenue growth (40%), EBIT improvement (40%) and sustainability (20%)), the aggregate provisional payout factor amounts to 125%. Accordingly, the provisional figure for the Executive Committee’s variable incentive amounts to CHF 1’257’593. Due to the higher payout factor and the temporary double staffing due to personnel changes, this figure is significantly higher than in the previous year.

An external, independent specialist calculated the provisional figures for net revenue growth and EBIT improvement relative to peer groups of similar companies.

Based on the annual reports published by peer companies, the same specialist will ascertain the definitive figures in April 2025 before the date on which the variable incentive is paid out. The actual variable incentive paid out will be published in next year’s Remuneration Report.

Under the long-term incentive plan, 4'017 performance share units (PSUs) worth CHF 796’975 were granted on 1 January 2024 to the members of the Executive Committee. This was based on the average closing price of the Datwyler bearer share of CHF 198.40 over the 20 trading days prior to the grant date. The two changes in the Executive Committee and the slightly higher share price compared to the previous year resulted in a significantly lower number of PSUs allocated in the reporting year.

The heading “Employer social insurance contributions” includes all employer expenditures for pension plans and social security contributions. Perquisites reflect the employer’s contribution to private use of business vehicles, child allowances and, in the reporting year, further one-off allowances due to personnel changes.

The total remuneration of the Board of Directors and the Executive Committee is below the maximum total remuneration figures of CHF 2.35 million and CHF 7.9 million respectively, which the shareholders approved for the 2024 fiscal year at the 2023 and 2024 Annual General Meetings.

The number of shares awarded in spring 2024 for the long-term incentive plan 2021-2023 was calculated according to the model described in detail under Long-term incentive plan.

In the 2021-2023 performance period, Datwyler achieved the following results for the three performance conditions compared to the peer group:

• Relative net revenue growth: 79.3% of peer group companies outperformed

• Relative ROCE growth: 34.7% of peer group companies outperformed

• Relative total shareholder return: 42.3% of peer group companies outperformed

In the year under review, two former members of the Executive Committee who are now retired or left the company received 3'726 shares worth CHF 642’362 from the long-term incentive plan 2021-2023. No further remuneration was paid to former members of the Board of Directors or the Executive Committee in the year under review, nor was any non-arm’s length remuneration paid to persons connected with current or former members of the Board of Directors or Executive Committee.

The Board of Directors will propose the following maximum total sums to the 2025 ordinary Annual General Meeting for remuneration of the Board of Directors for their service during the period up to the 2026 ordinary Annual General Meeting and for remuneration of the Executive Committee for the 2026 fiscal year:

• Board of Directors: CHF 2'350'000, of which CHF 650'000 for cash remuneration plus CHF 1'700'000 for granting of Dätwyler Holding Inc. bearer shares.

• Executive Committee: CHF 7'500'000, of which CHF 5'200'000 for cash remuneration (fixed base salary CHF 2'200'000, variable incentive CHF 2'000'000, employer social insurance and perquisites CHF 1'000'000) plus CHF 2'300'000 for the maximum value at grant of the Performance Share Units awarded under the new long-term incentive plan.

For the sustainability performance indicator, which accounts for 20% of the variable salary component, the Board of Directors has defined the following two measurement parameters for the year 2025:

• Reduction in CO₂ emissions (scopes 1 and 2) relative to revenue (10% of variable incentive component)

• Reduction of elastomer waste in tons relative to value of goods manufactured (10% of the variable incentive component)

For the two parameters, there is a minimum threshold that has to be achieved in order to be taken into consideration and a maximum limit above which the contribution to target achievement no longer increases. The two measurement parameters for the sustainability performance indicator cannot be compared with the companies from the peer group. By taking sustainability measurement parameters into account in the variable incentive for all eligible employees, Datwyler is promoting awareness of the sustainability focus areas.

Furthermore, the Board of Directors has decided to adjust the calculation model for the variable incentive of the Executive Committee. From 2025, there will be a fourth performance indicator that measures the improvement in operating cash flow compared to an internal budget figure and determines 20% of the variable incentive. For the operating cash flow performance indicator, there is a minimum threshold that has to be achieved in order to be taken into consideration and a maximum limit above which the contribution to target achievement no longer increases. Accordingly, the weighting of the two existing performance indicators net revenue growth and EBIT improvement compared to the previous year and relative to a peer group of companies will be reduced from 40% each to 30% each of the variable incentive. In addition, separate peer groups of companies for relative performance measurement will be introduced for the two business areas Healthcare Solutions and Industrial Solutions from 2025. For the members of the Executive Committee, the results of the two business areas are weighted according to their share of revenue. This approach also applies to all other employees who are entitled to a variable incentive but cannot be allocated to one of the two business areas.