In 2023, the Human Resources Committee convened five times, while also maintaining regular contact throughout the year. The Human Resources Committee comprises Urs Riedener (Chairman), Robert F. Spoerry, and, since being elected at the 2023 Annual General Meeting, Inge Delobelle. Generally, the Chairman of the Board of Directors, the CEO, and the Group CHRO also participate in meetings in an advisory capacity, albeit not when their own compensation is discussed.

The guidelines for further development in human resources and compensation are based on the three areas of action included in Bystronic AG's medium-term strategy:

• In the area of Culture & Leadership, performance and learning culture, diversity and inclusion, employer branding, and the development of leadership competencies are being addressed.
• In Talent Management & Performance Management, the focus is on recruitment, talent development and retention, career advancement opportunities, succession planning, and employee engagement.
• Efficiency & Effectiveness is being addressed through the optimization of existing HR processes and the development of new ones (e.g. compensation models), through standardization, the improvement of HR systems, use of data analytics, and the provision of knowledge databases.

Bystronic made significant progress in the ongoing development of the company's global HR processes. A significant focus in 2023 was succession-planning. Using an evaluation matrix, the necessary competencies and experience required in analyzed positions were collected and aligned with future requirements. In addition, measures were introduced to systematically develop and promote employees across all levels.

The appointment of a new head of the Americas region contributed to the rejuvenation and expansion of the Executive Committee.

In the area of employer branding, the development of a clear employer value proposition and the launch of an attractive career webpage, laid an important foundation for talent acquisition and retention.

Employees continue to be highly engaged as confirmed by a response rate of 90% on the global employee survey in Summer 2023.

The important area of diversity, equity, and inclusion was advanced through various training sessions and workshops.

In the 2022 financial year, initial compensation elements, particularly the STI (Short-Term Incentive), were linked more closely to Bystronic's business success. In addition to the four performance components of sales, EBIT, operating free cash flow, and individual goal achievement, the Executive Committee included the achievement of ESG targets with a weight of 10% in 2023. Furthermore, a common STI approach has been introduced group-wide for senior management.

In 2023, the model for the LTI (Long-Term Incentive) developed the previous year went into effect for the first time. This change was conceptualized to better align the interests of shareholders and management, to appropriately compensate challenging performance conditions, and to achieve a higher level of commitment from the participants to the long-term success of the company. This model calls for PSUs (Performance Share Units) to be issued as part of annual compensation in the form of grants. These PSUs have a three-year vesting period and are converted into vested PSUs based on the performance of EPS (Earnings Per Share) and TSR (Total Shareholder Return) compared to their target values. Participants are obliged to retain 60% of their acquired shares for at least two years. The first group of participants comprise the Executive Committee and the Extended Executive Committee. The initial plan cycle began in 2023 with the first allocation of PSUs with a three-year term. The implementation of this plan will be monitored by the Human Resources Committee, and the necessary decisions will be submitted to the Board of Directors in accordance with the Organizational Regulations.

The compensation system for the Board of Directors remained unchanged in the reporting year.

The regular review and further development of our compensation system is undertaken through an ongoing dialogue with different stakeholders and in consideration of our business strategy, best practices and market trends.

Objectives were defined for human resources in the Bystronic Group’s first Sustainability Report. The company certified that it meets the equal-pay requirement mandated in Switzerland.

Competency and diversity were elevated in importance with the election of Eva Zauke and Felix Schmidheiny to the Board of Directors.

The performance targets set at the beginning of the year were assessed, and the compensation for the Executive Committee and the Board of Directors was determined and submitted to the respective committees.

The compensation budgets for the Board of Directors and the Executive Committee approved at the 2022 and 2023 Annual General Meetings were adhered to in accordance with the Articles of Association. At the 2024 Annual General Meeting, the shareholders will decide on the future compensation budgets for the Board of Directors and the Executive Committee, and express their opinion on the 2023 Compensation Report by way of a consultative vote.

Our goal is to enhance people’s interest in Bystronic and to deliver a performance that aligns with the interests of our shareholders and generates sustainable added value.

Urs Riedener

Chairman of the Human Resources Committee