Declaration of Compliance

The Management Board and Supervisory Board of TTL AG declare in accordance with Section 161 of the German Stock Corporation Act (AktG):

TTL AG has complied with the recommendations of the "Government Commission on the German Corporate Governance Code" in the version dated April 28, 2022, as published in the official section of the Federal Gazette, since submitting its last declaration of conformity, with the following exceptions, and will continue to comply with them in the future, with the following exceptions:

Section A.4

According to Section A.4 of the Code, employees should be given the opportunity to report violations of the law within the company in a protected manner.

Due to the current low number of employees, the company is not legally obliged to set up a whistleblowing system and, for the same reason, refrains from setting up such a system.

Section B.1

Section B1 of the Code recommends that the Supervisory Board should ensure diversity in the composition of the Management Board.

The Supervisory Board decides on the composition of the Management Board primarily on the basis of expertise and competence. Other characteristics such as gender or national or religious affiliation were and are of secondary importance in the decision-making process. Since August 1, 2024, the Management Board of the company has consisted of only one person.

Section C.1

Section C.1 of the Code recommends that the supervisory board should set specific targets for its composition and draw up a competency profile for the entire board. In doing so, the supervisory board should pay attention to diversity. According to the Code, the competency profile should also include expertise on sustainability issues that are important for the company. Proposals made by the supervisory board to the annual general meeting should take these objectives into account and at the same time strive to fulfill the competency profile for the entire board. The status of implementation should be disclosed in the form of a qualification matrix in the corporate governance statement. This should also provide information on the number of independent shareholder representatives deemed appropriate by the shareholder representatives on the supervisory board and the names of these members.

There have been and continue to be some deviations from this recommendation:

With the exception of an age limit for Supervisory Board members and the proportion of women on the Supervisory Board, the Supervisory Board has not specified any specific targets for its composition in deviation from Section C.1 of the Code and has not developed a competency profile for the entire board, nor will it specify any such targets or develop a formal competency profile. Potential conflicts of interest, competency requirements, and the appointment of an appropriate number of independent members are also taken into account by the Supervisory Board without formal specifications. For these reasons, the Supervisory Board has refrained from making formal specifications. In the absence of corresponding objectives and a competency profile for the entire committee, and in deviation from Section C.1 of the Code, neither the Supervisory Board's election proposals to the Annual General Meeting nor a publication on the status of implementation, including the specific number of independent members and their names, will be taken into account.

 

Section C.10, sentence 1

Section C.10, sentence 1 of the Code recommends that the Chairman of the Supervisory Board should be independent of the company and the Management Board. According to Section C.7 of the Code, when assessing independence from the company and the Management Board, consideration should be given, among other things, to whether the Supervisory Board member currently or in the year prior to his or her appointment has or had a significant business relationship with the company or a company dependent on it, either directly or as a shareholder or in a responsible position in a company outside the group. The Supervisory Board has decided to use the formal indicators specified in the Code as the basis for its assessment and not to make any deviating classification, as permitted by Section C.8 of the Code. Notwithstanding the fact that, based on the above formal indicators, the Chairman of the Supervisory Board would therefore not be classified as independent of the company and the Management Board, the Supervisory Board has no doubt that he is able to perform his advisory and supervisory duties without restriction. In addition, the Supervisory Board believes that it has an appropriate number of independent members; more than half of the shareholder representatives are independent of the company and the Management Board.

Sections C.13 and C.14

According to Section C.13 of the Code, when submitting its nominations to the Annual General Meeting for the election of Supervisory Board members, the Supervisory Board should disclose the personal and business relationships of each candidate with the company, the company's executive bodies, and any shareholder with a significant interest in the company. According to Section C.14 of the Code, the candidate proposal should be accompanied by a curriculum vitae providing information on relevant knowledge, skills, and professional experience; this should be supplemented by an overview of the main activities in addition to the Supervisory Board mandate and published annually on the company's website for all Supervisory Board members.

These recommendations are not followed. In the company's opinion, the recommendation in Section C.13 of the Code does not specify in sufficient detail which relationships of each candidate must be disclosed in detail and to what extent in election proposals to the Annual General Meeting in order to comply with the recommendation. In the interests of legal certainty for future elections to the Supervisory Board, the Management Board and Supervisory Board have decided to declare a deviation from the recommendation. We are of the opinion – also with regard to section C.14 of the Code – that the statutory disclosure requirements in Sections 124 and 125 of the German Stock Corporation Act (AktG) already take into account the information needs of shareholders and will review and decide in due course whether additional information about the candidates and/or the other members of the Supervisory Board will be made available voluntarily and without being bound by the recommendations of the Code when nominations are submitted to the Annual General Meeting.

Sections D.2 and D.4

Notwithstanding Section D.2, sentence 1 of the Code, no committees of the Supervisory Board other than the Audit Committee shall be formed; this also applies to the formation of a Nomination Committee (Section D.4 of the Code). The Supervisory Board consists of five members. In view of this small number of members, the formation of additional committees would not lead to more efficient work by the Supervisory Board. Since the Supervisory Board consists solely of shareholder representatives and the current practice of preparing election proposals within the entire Supervisory Board has proven to be efficient, the Supervisory Board sees no need to form a nomination committee.

Section D.7

Notwithstanding Section D.7 of the Code, the Supervisory Board's report does not state how many meetings of the Supervisory Board and the Audit Committee each member attended. In the opinion of the Supervisory Board, the information needs of shareholders can be adequately met even without such individualized information.

Section F.2

Notwithstanding Section F.2 of the Code, the consolidated financial statements and the group management report for the 2023 financial year were not made publicly available within 90 days of the end of the financial year, and the mandatory interim financial information (2024 half-year financial report) was not made publicly available within 45 days of the end of the reporting period. A major reason for this was the later publication of financial reports by TTL AG's most significant associated company in 2024.

In future, TTL AG will again comply with recommendation F.2 of the Code.

Section G.1

Notwithstanding Section G.1, first and second indents, of the Code, the remuneration system for members of the Management Board does not specify a so-called "target total remuneration," which corresponds to the total remuneration in the event of 100% target achievement (based on variable remuneration components), and does not specify the relative proportions of individual remuneration components in the total remuneration in relation to such a "target total remuneration." According to the remuneration system for members of the Executive Board approved by the Annual General Meeting on March 26, 2021, their variable remuneration consists of a performance-related annual bonus (STI) and options on virtual shares of the company as an equity-based remuneration element with a long-term incentive effect (LTI). With regard to the STI, the Supervisory Board sets company-related and personal annual targets. The specific amount of payments from the STI upon achievement of the annual targets is at the discretion of the Supervisory Board and is determined ex post in connection with the Supervisory Board's assessment of target achievement. Payments from the LTI depend solely on the share price; therefore, no ex ante agreed "target amount" is provided for the LTI either. The Supervisory Board believes that the variable remuneration structure for the members of the Executive Board is clearly geared towards linking the performance of the members of the Executive Board with the level of remuneration (pay for performance) and that the design of the share-based remuneration element contributes to a greater alignment of the interests of the members of the Executive Board and the shareholders ( ). This structure promotes the strategic goal of long-term value enhancement for the company.

Section G.2

According to the recommendation in Section G.2 of the Code, a specific "target total remuneration" should be set annually for each member of the Management Board, which is commensurate with the tasks and performance of the member of the Management Board and the situation of the company and does not exceed the usual remuneration without special reasons. In accordance with the provisions of stock corporation law, the appropriateness of the total remuneration of the members of the Management Board is reviewed regularly and, if necessary, on a case-by-case basis (e.g., when deciding on a contract extension). As explained, the remuneration system does not provide for a "target total remuneration" within the meaning of the Code, so that there is no need to set a specific annual target. In the opinion of the Supervisory Board, the remuneration conditions specified in the Executive Board service contract and the subsequent determination of the amount of the payment from the STI provide sufficient scope to ensure the appropriateness of Executive Board remuneration across the board.

 

Section G.6

According to the recommendation in Section G.6 of the Code, long-term variable remuneration (LTI) should exceed the proportion of remuneration based on short-term targets (STI), with the Code using 100% target achievement as a basis for comparison. The options granted on virtual shares of the company (LTI) provide for a long-term remuneration component, which, however, does not normally account for the majority of the total variable remuneration granted. Even taking into account the fact that neither the STI nor the LTI provide for "target remuneration," a deviation from the recommendation in Section G.6 of the Code is declared. The Supervisory Board considers the long-term component of variable remuneration (LTI), which can account for up to 20% of total remuneration, to be sufficiently weighted ( ).

 

Section G.7, sentence 1

The recommendation in Section G.7, Sentence 1 of the Code, according to which the Supervisory Board should set performance criteria for each member of the Management Board for all variable remuneration components for the coming financial year, which are based not only on operational but above all on strategic objectives, is not followed insofar as no further performance criteria are specified for the long-term share price-based remuneration component (LTI), no further performance criteria are specified other than the dependence of the payout amount on the stock market price. The link to the stock market price contributes to a greater alignment of the interests of Management Board members and shareholders and promotes the strategic goal of long-term value enhancement for the company.

 

Section G.10, sentence 1

According to the recommendation in Section G.10, Sentence 1 of the Code, the variable remuneration granted should be predominantly share-based or invested in shares. The options granted on virtual shares of the company (LTI) provide for an equity-based remuneration component. However, as already explained, the equity-based remuneration component does not generally make up the majority of the variable remuneration. The reasons stated in Section G.6 apply.

 

Section G.10, sentence 2

Section G.10, sentence 2 of the Code recommends that members of the Management Board should only be able to dispose of their long-term variable remuneration after four years. The options on virtual shares in the company granted as long-term incentives ( , LTI) provide for a vesting period based on the term of the respective Management Board service contract, which is generally around two to five years and after which the options can be exercised at the earliest. Taking into account the term of the respective management board service contract, the four-year period recommended by the Code may therefore be shorter. In the opinion of the supervisory board, the fact that the vesting period is generally based on the respective term of appointment contributes sufficiently to the incentive effect of share-based remuneration.

 

Section G.11

Notwithstanding Section G.11 of the Code, the remuneration system and the existing Management Board contracts do not provide for any possibility agreed in advance to take account of exceptional developments and to withhold or reclaim variable remuneration in justified cases (so-called malus and clawback provisions). In the opinion of the Supervisory Board, the subsequent determination of the amount of the performance-related annual bonus (STI) at the discretion of the Supervisory Board and the limitation by the maximum remuneration provided for in the remuneration system, among other things, represent sufficiently effective means of taking into account any exceptional developments that may have occurred. In view of the statutory claims that exist in the event of a breach of duty, the Supervisory Board does not consider contractual malus and clawback provisions to be necessary.

Munich, December 20, 2024

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TTL Beteiligungs- und Grundbesitz-AG
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80539 Munich
Germany

Phone: +49 89 381611-0
Fax: +49 89 391592
Email: presse@ttl-ag.de