Declaration of Compliance

LUDWIG BECK am Rathauseck - Textilhaus Feldmeier Aktiengesellschaft

Declaration of Conformity 2024 with the German Corporate Governance Code pursuant to Section 161 of the German Stock Corporation Act (AktG)

The following declaration refers to the recommendations of the German Corporate Governance Code in its version of April 28, 2022, which was published in the Federal Gazette on June 27, 2022 ("Code").

The Executive Board and Supervisory Board of LUDWIG BECK am Rathauseck - Textilhaus Feldmeier Aktiengesellschaft declare pursuant to Section 161 AktG that the recommendations of the "Government Commission on the German Corporate Governance Code" published by the Federal Ministry of Justice and Consumer Protection in the official section of the Federal Gazette have been complied with and will be complied with in the future with the following exceptions:

1.    The description of the main features of the entire internal control system and the risk management system in the company's management report, as well as the presentation of the appropriateness and effectiveness of these systems, are omitted. Recommendation A.5 of the Code is therefore not complied with. Following a cost-benefit analysis, the Executive Board and the Supervisory Board have concluded that it would not be reasonable or proportionate for a company of the size of LUDWIG BECK am Rathauseck - Textilhaus Feldmeier Aktiengesellschaft to comply with recommendation A.5. For this reason, the recommendation will also be deviated from in the future.

2.    The Supervisory Board has not formed a nomination committee (recommendation D.4 of the Code). The Supervisory Board is of the opinion that the preparation of election proposals for Supervisory Board members to the Annual General Meeting should take place in the plenum, which has a manageable number of six members.

3.    The current system for the remuneration of Executive Board members pursuant to Section 87a AktG, adopted by the Supervisory Board on March 24, 2021, does not fully comply with the recommendations of the Code. Recommendation G.3, sentence 1 of the Code, according to which the Supervisory Board should use a suitable peer group of other companies and disclose its composition to assess the customary nature of the total remuneration of the Executive Board members compared to other companies, is not complied with. The remuneration system adopted by the Supervisory Board on March 24, 2021, does not provide for such a peer group comparison because there is currently no sufficient number of listed companies in Germany comparable to LUDWIG BECK in terms of size and sector. Therefore, the determination and disclosure of a representative peer group is currently out of the question, in the Supervisory Board’s opinion. Nevertheless, the Supervisory Board checks, by comparison with non-listed companies in the fashion industry, that the Executive Board remuneration is appropriate and customary.

4.    According to recommendations G.10, sentences 1 and 2 of the Code, the variable remuneration amounts granted to the Executive Board member should predominantly be invested in company shares or granted on a share-based basis. The Executive Board member should only be able to dispose of the long-term variable grant amounts after four years. The remuneration system deviates from these recommendations. The Supervisory Board does not consider the share price to be a relevant indicator for a remuneration system geared to promoting the company’s business strategy and long-term development. Instead, the Supervisory Board considers the financial and non-financial performance criteria set out in the remuneration system for assessing variable remuneration and the payment of all variable remuneration components in cash to be more appropriate. The Executive Board members are paid the long-term variable remuneration (LTI) amounts after three years. The Supervisory Board considers this period to be customary and appropriate.

5.    The employment contract of CEO Christian Greiner, which was valid until December 31, 2023, was essentially still based on the previous remuneration system for Executive Board members, which was replaced by the remuneration system adopted by the Supervisory Board on March 24, 2021. The employment contract valid until the end of 2023 therefore did not fully comply with the recommendations of the Code. For example, in addition to recommendations G.3, sentence 1, and G.10, sentences 1 and 2 (see sections 3 and 4 above), recommendation G.2 of the Code (setting a specific target total remuneration) were not complied with. Similarly, there was no provision for determining performance criteria for the variable remuneration components, which should be primarily based on strategic objectives, for the upcoming financial year (G.7, sentence 1 of the Code). With regard to part of the variable remuneration, the recommendation in G.9 of the 2020 Code was also not fully complied with. The new employment contract for the Chairman of the Executive Board, Christian Greiner, effective from January 1, 2024, also deviates from the aforementioned recommendations of the Code.

Munich, September 10, 2024

The Executive Board
Signed:
Christian Greiner    
Jens Schott

The Supervisory Board
Signed:
Dr Bruno Sälzer
Sandra Pabst
Clarissa Käfer
Sebastian Hejnal
Martin Paustian
Michael Eckhoff