Compensation of the members of the Managing Board in fiscal year 2021

Overview of the structure of the compensation system for the Managing Board

The compensation system complies with the requirements of the German Stock Corporation Act, in particular the requirements of the Act Implementing the Shareholder Rights Directive II (SRD II), and is based on the recommendations of the GCGC as amended on December 16, 2019. The compensation system of the Managing Board is an important element of the Group’s orientation and is intended to significantly contribute to driving operational performance and the successful execution of the Group strategy, and thus to the long-term success of HUGO BOSS. It is intended to support successful and sustainable corporate management. The compensation of the members of the Managing Board is therefore linked to the short- and long-term development of the Company. By selecting suitable performance criteria, important incentives are simultaneously set for the successful execution of the “CLAIM 5” strategy.

This means that the compensation of the members of the Managing Board is made up of non-performance-related and performance-related components. The target total compensation of the Managing Board consists of fixed compensation, fringe benefits, pension commitments, the target amount of the short-term incentive (STI) and the target amount of the long-term incentive (LTI), and thus mainly comprises performance-related compensation elements. The aim is to strengthen the performance aspect of the compensation system. The proportion of the target amount of the LTI, which has a total term of four years, in the total target compensation exceeds that of the STI (ratio of around 60:40). This is intended to ensure that the compensation structure as a whole is geared toward a sustainable and long-term successful business development.

Malus and clawback regulations are provided for the variable compensation components. The total annual compensation of the members of the Managing Board is also limited to a maximum compensation. In addition, the Share Ownership Guidelines form another essential element of the compensation system. The compensation system also regulates further compensation-related legal matters, such as agreement terms and commitments upon termination of Managing Board activities.

The following table shows the basic components of the compensation system for the Managing Board and their structure. The components and their specific application in fiscal year 2021 are explained in detail below.

The relative proportions of the individual compensation components in relation to the total target compensation (i.e., assuming a target achievement of 100% for the two variable compensation components) are detailed as follows:

Non-performance-related (fixed) compensation components

The fixed compensation components consist of the fixed basic compensation, fringe benefits and contributions to retirement benefits.

The fixed basic compensation is paid as a monthly salary. It takes into account the role assigned to the member of the Managing Board and the associated duties and responsibilities of that member. The current annual basic compensation is EUR 1,300 thousand for Daniel Grieder, EUR 750 thousand for Yves Müller, EUR 725 thousand for Dr. Heiko Schäfer, EUR 750 thousand for Oliver Timm and EUR 725 thousand for Ingo Wilts.

In addition to the basic compensation, members of the Managing Board also receive fringe benefits to a lesser extent which they tax individually in accordance with the applicable tax regulations to the extent that a non-cash benefit arises for them from private use. The fringe benefits primarily include private use of the company car, contributions to health and nursing care insurance, the conclusion of and contributions to accident and D&O insurance (with deductible in accordance with Sec. 93(2) sentence 3 AktG), a minor clothing allowance for purchasing HUGO BOSS products for representative purposes, the reimbursement of reasonable tax consultancy costs as well as, to a lesser extent, other equipment and benefits required for the performance of the duties of the Managing Board. In addition, for new members of the Managing Board, reasonable costs for accommodation in Metzingen, home and return flights and relocation costs in the event of moving to Metzingen (or the surrounding area) will be reimbursed.

The pension commitments to the members of the Managing Board are defined contribution pension commitments. HUGO BOSS pays an annual pension contribution of 40% of the individual basic compensation into an employer’s pensions liability insurance policy for the members of the Managing Board. The amount of retirement benefit in this regard corresponds to the amount accumulated by means of the individual employer’s pension liability insurance. This results from the total annual pension contributions plus an annual interest rate depending on the respective insurance tariff. An entitlement to retirement benefits arises on or after reaching a fixed age of 65 or in the event that the Managing Board member becomes permanently unable to work due to illness or accident before reaching the age limit and leaves the Company. In the event of the death of the member of the Managing Board, their spouse or registered partner under the German Civil Partnership Act and their orphans are entitled to a survivor’s pension. If the member of the Managing Board leaves the Company before retirement, the entitlement to pension benefits is retained for a pensionable service period of more than three years. If the member of the Managing Board leaves the Company before reaching the fixed retirement age, the entitlement amount corresponds to the benefits from the non-contributory reinsurance policy at the time of departure. Ongoing pension payments are adjusted annually by at least 1%. The Supervisory Board received guidance from an independent compensation expert when designing the contribution-based pension scheme for the current members of the Managing Board.

A pension commitment exists through the Company for Mark Langer, former Chairman of the Managing Board (CEO), in the form of a benefit-based pension commitment. The amount of the subsequent post-employment benefit is limited to 60% of the pensionable income in this regard. A post-employment benefit shall be paid to the surviving dependents in the form of a widow’s or an orphan’s pension. If the Chairman of the Managing Board (CEO) leaves the Company before becoming eligible for a pension, the period by which the benefits become vested has been agreed in accordance with the statutory regulations. However, there was no pro rata temporis reduction of the pension entitlement as provided for under legal provisions. For pension purposes, Mark Langer is placed in the position as if the employment had lasted until December 31, 2021 as originally planned. Ongoing pension payments are adjusted annually by at least 1%.

In addition, HUGO BOSS offers the members of the Managing Board the option of acquiring additional pension benefits under deferred compensation agreements. This supplementary pension plan can take the form of retirement benefits or, alternatively, the form of occupational incapacity benefits and/or surviving dependents’ benefits and/or the form of a lump-sum death grant. The pension benefits take the form of monthly payments, while surviving dependents’ benefits can also be granted in the form of a lump-sum capital payment. The contributions from deferred compensation agreements are included in the statement of the non-performance-related compensation awarded and due for the respective fiscal year. Provisions and plan assets are recognized at the same amount.

Performance-related (variable) compensation components

The compensation system of the Managing Board comprises two performance-related components: short-term variable compensation (STI) and long-term variable compensation (LTI). Both are linked to the performance of the Company and are intended to provide incentives for the successful execution of the Group strategy and for the value-creating and long-term development of HUGO BOSS. The performance criteria and the key indicators used in fiscal year 2021 for the performance assessment in the context of variable compensation are consistent with the Group strategy, and derived from the strategic targets as well as operational performance indicators of HUGO BOSS. In addition, they correspond to the applicable compensation system.

Short-term incentive (STI) for 2021

General functioning

The STI is the short-term variable compensation component, with its general functioning and structure remaining unchanged from the previous compensation system, which was applicable up to and including April 1, 2021. The term is one fiscal year. The amount of the STI is based on the development of financial performance criteria. In accordance with the Group’s management system, the Supervisory Board has defined the following three financial performance criteria as target components:

• Sales (the sales proceeds recognized in the consolidated financial statements using the exchange rates underlying the budget)
• EBIT (the Group’s net income before interest and taxes)
• Trade net working capital (TNWC; the total of raw and finished goods as well as trade receivables less trade payables) as a percentage of sales Group Management

EBIT contributes a weighting of 40% to the overall target achievement of the STI, while sales and TNWC each contribute 30% to the overall target achievement.

The STI payout is calculated, on the basis of an individual target amount for each member of the Managing Board as defined in the respective service agreement and the overall target achievement, as follows:

The maximum payout from the STI is capped at a total of 150% of the target amount. There is no guaranteed minimum target achievement. Consequently, the payout can also be waived completely. The STI is payable within a week of the Supervisory Board approving the consolidated financial statements for the respective fiscal year.

Contribution to the long-term development of the Group

The STI is intended to ensure the ongoing execution of the operational targets, the achievement of which is of material importance for the long-term success of the Group. In light of the “CLAIM 5” strategy, which aims at achieving significant top- and bottom-line improvements by 2025, sales and EBIT are key target figures of the STI. At the same time, the TNWC is the most important indicator for managing the efficient use of capital and is therefore taken as the third financial performance criterion in the STI.

Financial performance criteria

At the beginning of the fiscal year, the Supervisory Board decided on a target, a minimum target and a maximum target for the three financial performance criteria of sales, EBIT and TNWC. The target for the respective financial performance criterion is derived from the budget plan approved by the Supervisory Board. If the target is reached, target achievement is 100%. If the target value is greater than or equal to the maximum target, target achievement is 150%. In this case, a further increase in the target value does not lead to a further increase in target achievement. If the minimum target is reached, target achievement is 75%. If the target value is below the minimum target, target achievement is 0%. Target achievement between the specified targets (75%; 100%; 150%) is interpolated on a linear basis.

For fiscal year 2021, the Supervisory Board has set the following target achievement corridors at the beginning of the fiscal year with regard to the respective financial targets:

In the event of 100% target achievement for the STI 2021, a total amount of EUR 3,015 thousand would be paid out (Daniel Grieder EUR 875 thousand, Yves Müller EUR 500 thousand, Dr. Heiko Schäfer EUR 500 thousand, Oliver Timm EUR 650 thousand and Ingo Wilts EUR 490 thousand). For Daniel Grieder, the target value is calculated pro rata temporis from the start of his Managing Board activities on June 1, 2021. On a one-off basis, Daniel Grieder was guaranteed a target achievement of 100% for fiscal year 2021.

With regard to the financial performance criteria relevant for fiscal year 2021, the Supervisory Board determined the following target achievement based on the performance corridors defined at the beginning of the fiscal year:

For fiscal year 2021, the average target achievement is therefore 139%.

Target achievement STI 2021

The individual payout amounts for the STI 2021, which are allocated to the compensation awarded and due in fiscal year 2021, are therefore as follows:

To settle the entitlement from the STI 2021, the former Chairman of the Managing Board (CEO) Mark Langer will receive a payment of EUR 725 thousand based on a target compensation of EUR 750 thousand and a maximum amount of EUR 725 thousand agreed in the separation agreement dated April 2020. Payment will be made at the same time as the payment of the STI 2021 to the current members of the Managing Board in fiscal year 2022.

Outlook for the STI for fiscal year 2022

For the STI for fiscal year 2022, the three financial performance criteria described above, together with their respective weighting, remain unchanged. The specific targets for the three performance criteria will be disclosed and described in the compensation report for fiscal year 2022.

Long-term incentive (LTI) for 2021

General functioning

The LTI is the long-term variable compensation component with its general functioning and structure remaining largely unchanged from the previous compensation system, which was applicable up to and including April 1, 2021. Differences from the previous compensation system are indicated as such. The LTI is designed in the form of a performance share plan that takes into account both financial targets relevant to the Group strategy and non-financial ESG (environment, social, governance) targets. Consequently, the LTI is intended to ensure that the members of the Managing Board of HUGO BOSS pursue a sustainable business policy which is aligned to the interests of the Company. Accordingly, the Supervisory Board has determined the following four performance criteria as additively linked target figures for the LTI:

• Relative total shareholder return (RTSR) of the HUGO BOSS share
• Return on capital employed (ROCE)
• Employee satisfaction
• The Company’s performance in the field of sustainability

The targets for the RTSR and ROCE performance criteria each account for one third of the LTI, while the targets for employee satisfaction and sustainability each account for one sixth.

The LTI is granted in annual tranches. Each tranche has a three-year performance period, which corresponds to the Group’s medium-term planning horizon and which is followed by an additional qualifying period of one year, during which the performance of the share price continues to be taken into account. This results in a total term of four years.

The LTI provides that the members of the Managing Board receive a defined number (“initial grant”) of virtual shares (“tranches”) at the beginning of the plan or at the start of their activity. The initial grant is determined by the size of a target amount (“LTI budget”) defined in the respective service agreement divided by the price of the HUGO BOSS share for the last three months prior to the date of granting the initial grant. After the end of the performance period, the final number of virtual shares (“final grant”) is calculated based on the achievement of certain targets. The final payout entitlement is calculated by multiplying the final grant by the Company’s share price during the last three months of the qualifying period and is paid out in cash.

The actual payout from the LTI is therefore calculated as follows:

The target achievement of the individual LTI target components is limited to a maximum of 200%, while the resulting LTI payout is capped at a total of 250% of the individual target amount.

Contribution to the long-term development of the Group

The long-term goal of HUGO BOSS is to sustainably increase the enterprise value. In this regard, the share price performance of HUGO BOSS is of particular importance. The RTSR therefore takes into account the relative shareholder return of HUGO BOSS compared to the relevant competitive environment. This is intended to provide an incentive to outperform competitors in the long term. The ROCE, another financial performance criterion, also sets incentives for increasing the profitability of HUGO BOSS and using capital efficiently. The inclusion of two non-financial performance criteria in the LTI emphasizes social and environmental responsibility and the goal of sustainable corporate development. As a result, the Managing Board compensation is closely aligned with the interests of shareholders and other stakeholders.

Individual LTI budget for the LTI 2021–2024 issued in fiscal year 2021

The following table shows the grants for the LTI 2021–2024 issued in fiscal year 2021. It includes the target amount, the number of provisionally granted virtual shares, the payout cap and the fair value at grant date in accordance with “IFRS 2 Share-based Payment”. In the case of Daniel Grieder, the LTI budget is determined pro-rata temporis from the start of his Managing Board activities on June 1, 2021.

Financial and non-financial performance criteria for the LTI 2021–2024 issued in fiscal year 2021

The targets and thresholds set out below for the LTI’s four performance criteria apply throughout the entire performance period of the tranche.

The RTSR is a benchmark for the sustainable increase in enterprise value. It measures the share price performance and notionally reinvested dividends of HUGO BOSS compared to a selected group of relevant competitors in the premium segment of the global apparel industry over the performance period. The composition of the peer group is shown in the following table:

The Supervisory Board is convinced that the comparison with relevant competitors in the premium segment of the global apparel industry best reflects the strategic positioning of the two brands BOSS and HUGO. In the previous compensation system applicable up to and including April 1, 2021, the RTSR was based on a comparison with the MSCI World Textiles, Apparel & Luxury Goods Performance Index.

To determine the target achievement level of the RTSR, the TSR (share price performance and notionally reinvested dividends) of HUGO BOSS and the peer companies is determined for each year of the performance period. The TSR values of the individual companies are then ranked by size and assigned to percentile ranks. The average value of the percentile ranks of HUGO BOSS in the three years of the performance period determines the target achievement. If the 50th percentile (median) is achieved, i.e., HUGO BOSS is exactly in the middle of the ranking of the peer companies, target achievement corresponds to 100%. If the TSR of HUGO BOSS is in the 75th percentile or higher, i.e., HUGO BOSS is among the 25% best companies, target achievement is 200%. Higher percentile ranks do not lead to any further increase in target achievement. If the 25th percentile is achieved, target achievement corresponds to 50%. If the TSR of HUGO BOSS is below the 25th percentile, i.e., HUGO BOSS is among the bottom 25% of companies, target achievement is 0%. Target achievement between the specified targets (50%; 100%; 200%) is interpolated on a linear basis.

The ROCE represents the return on capital employed and is determined by dividing the EBIT by average capital invested.

The degree of employee satisfaction is measured by the “Employee Trust Index”, part of an employee survey conducted annually by an independent institute. For the LTI 2018–2021 , the degree of employee satisfaction is also compared with the top 100 companies in Germany.

The sustainability performance is determined by the Company’s ranking in the Dow Jones Sustainability Indices (DJSI) DJSI World and DJSI Europe, in which the sustainability performance of listed companies is assessed by an independent index provider.

Target achievement for the performance criteria ROCE, employee satisfaction and sustainability performance is measured for each fiscal year during the three-year performance period against the respective target value set before the start of the tranche and determined using of the above performance corridors.

The Supervisory Board sets a target, a minimum target and a maximum target for ROCE, employee satisfaction and sustainability in each case. If the target is reached, the target achievement is 100%. If the target value is greater than or equal to the maximum target, target achievement is 200%. A further increase in the target value does not lead to a further increase in the target achievement above 200%. When the minimum target is reached, target achievement is 50%. If the target value is below the minimum target, target achievement is 0%. Target achievement between the specified targets (50%; 100%; 200%) is interpolated on a linear basis.

Annual target achievement levels of the performance criteria for the LTI 2021–2024 issued in fiscal year 2021

As shown, target achievement for the LTI’s performance criteria is determined on an annual basis. For fiscal year 2021, the Supervisory Board has determined the following target achievement for the LTI 2021–2024:

For fiscal year 2021, the target achievement level (on a preliminary basis) of the LTI 2021–2024 is 166%.

Payout from the LTI 2018–2021 issued in fiscal year 2018

The following table provides an overview of the overall target achievement of the LTI 2018–2021 awarded in fiscal year 2021 (payout in fiscal year 2022):

The final target achievement level of the LTI 2018–2021 is 60%. The individual payout amounts resulting from the LTI 2018–2021 (payout in fiscal year 2022) are as follows:

Daniel Grieder, Dr. Heiko Schäfer and Oliver Timm will not receive any payment from the LTI 2018–2021, as they were not yet members of the Managing Board in fiscal year 2018.

Under the separation agreement of September 2019, former member of the Managing Board Bernd Hake was entitled payments for the pro-rata earned tranches of the LTI 2018–2021, LTI 2019–2022 and LTI 2020–2023 totaling EUR 664 thousand, in accordance with the service agreement and the agreed severance payment cap, which became due on February 29, 2020.

Total number of virtual shares outstanding at the end of fiscal year 2021

The following overview shows the total number of virtual shares (initial grant) held by the members of the Managing Board at the end of fiscal year 2021:

Outlook on the financial and non-financial performance criteria of LTI 2022–2025

The Supervisory Board is convinced that the four target components described above promote the sustainable and long-term development of the Company. For this reason, the four target components also apply to the LTI 2022–2025 to be issued in fiscal year 2022.

Special compensation (sign-on, bonuses)

The compensation system does not provide for the possibility of special compensation for extraordinary performance, which may be granted at the discretion of the Supervisory Board. Under certain circumstances, it may be necessary to grant additional special compensation elements on a temporary basis. These involve one-off payments to new members of the Managing Board, for example to compensate for the loss of variable compensation from former employers, in order to attract the Managing Board member to HUGO BOSS (sign-on). In addition, the Supervisory Board is able to compensate a member of the Managing Board in the event they take on additional responsibility on an interim basis for these temporary increased duties (bonus). Any special compensation is limited in its amount, as it falls under the maximum compensation defined in section III in accordance with Sec. 87a (1) sentence 2 No. 1 AktG.

Following the departure of Mark Langer in July 2020, Yves Müller, in addition to his role as Chief Financial Officer, also assumed the position of Spokesperson of the Managing Board and was thus responsible for part of Mark Langer’s former duties (Corporate Strategy, Corporate Communication, Group’s own retail business, and Wholesale). These responsibilities were then handed over again when Oliver Timm joined the Managing Board on January 1, 2021, (handover of the Group’s own retail business and Wholesale) and when Daniel Grieder joined as Chairman of the Managing Board (CEO) on June 1, 2021 (handover of Corporate Strategy and Corporate Communication). Against this backdrop, the Supervisory Board had decided to grant a performance-related bonus of up to EUR 600 thousand for the additional duties and responsibilities, at the sole discretion of the Supervisory Board. Non-financial criteria were chosen for the performance assessment in the form of successful performance of the office of Spokesperson and a smooth handover to Daniel Grieder. A partial amount of EUR 200 thousand was already paid out in fiscal year 2020. Following the handover of Yves Müller to Daniel Grieder, the Supervisory Board, on the recommendation of the Personnel Committee, determined a maximum target achievement of 100% and therefore a total bonus of EUR 600 thousand in view of the excellent work and smooth handover. The remaining EUR 400 thousand was paid out in fiscal year 2021.

The Supervisory Board also decided to grant a one-off payment (sign-on) of EUR 500 thousand to Oliver Timm, who has been a member of the Managing Board since January 1, 2021. This serves to partially compensate for the loss of variable compensation components (restricted stock units) from his former employer. A partial amount of EUR 300 thousand was already paid out in fiscal year 2021. A further EUR 100 thousand will be paid out in each of the fiscal years 2022 and 2023.

Malus and clawback regulations

Under the current compensation system, the service agreements of the members of the HUGO BOSS Managing Board shall contain malus and clawback regulations that enable the Supervisory Board, under certain conditions, to reduce variable compensation components that have not yet been paid out (malus) or to reclaim variable compensation components that have already been paid out (clawback). The Supervisory Board is therefore able, at its reasonable discretion, to withhold or reclaim part or all of the variable compensation if the member of the Managing Board is in breach of a material obligation to exercise due diligence within the meaning of Sec. 93 AktG, a material obligation under the service agreement or of the essential rules and conduct principles laid down in the Company’s Code of Conduct (compliance malus and compliance clawback). The Supervisory Board is also entitled to claim back a variable compensation that has already been paid if it becomes apparent after the payment that the audited and approved consolidated annual financial statements on which the calculation of the amount of the payment was based were incorrect and therefore had to be corrected in accordance with the relevant accounting rules (performance clawback).

In fiscal year 2021, the Supervisory Board did not make use of the option to reduce or reclaim variable compensation components.

Share Ownership Guidelines

The Share Ownership Guidelines (SOG) are an essential part of the Managing Board compensation system. In order to further align the interests of the Managing Board and shareholders, the SOG are intended to oblige the members of the Managing Board to buy and hold shares in HUGO BOSS AG. The size of the share ownership obligation (SOG target) is measured based on the individual gross base salary of each member of the Managing Board. The Chairman of the Managing Board must invest two times and all other ordinary members of the Managing Board must invest one time their gross basic compensation and maintain these shares for the entire duration of their Managing Board activities.

The required number of shares must be held within five years, with the required number of shares being built up on a linear basis and reviewed annually by the Group General Counsel at the end of each year. The annual minimum holding may be exceeded at any time. The rules and time limits of the Market Abuse Regulation must be observed when buying and selling the shares.

According to the compensation system, the number of shares to be held is determined based on the average closing price of the HUGO BOSS shares in Deutsche Börse’s Xetra trading in the month prior to the appointment of the respective member of the Managing Board or prior to the respective last adjustment of the basic salary of the Managing Board member.

The members of the Managing Board are entitled to contribute any existing pre-held shares. The following table shows the shares held by the members of the Managing Board as of December 31, 2021:

Maximum compensation

The compensation of the members of the Managing Board is limited in two respects. Firstly, the performance-related components are subject to maximum limits, which amount to 150% of the target amount for the STI and 250% for the LTI. These limits were complied with in all cases with respect to the performance-related compensation awarded and due in fiscal year 2021, as shown in the following table:

Compliance with the maximum compensation for the performance-related compensation of the Managing Board awarded and due in fiscal year 2021

Secondly, in accordance with Sec. 87a (1) sentence 2 No. 1 AktG, the Supervisory Board has determined a maximum compensation that limits the total amount actually payable for the compensation awarded for a particular fiscal year, consisting of basic compensation, fringe benefits, expenses for the pension commitment, any special compensation and short-term variable and long-term variable compensation. This maximum compensation can only be reviewed retrospectively once payment has been made from the LTI tranche issued in the respective fiscal year.

The maximum compensation valid for fiscal year 2021 is EUR 11.0 million for the Chairman of the Managing Board and EUR 5.5 million for the ordinary members of the Managing Board. Compliance with the maximum compensation for fiscal year 2021 can only be reported in the compensation report for fiscal year 2024, since the final payout for the LTI 2021–2024 depends on the share price performance of HUGO BOSS in the fourth quarter of 2024.

Compensation-related legal matters

Regulations for the termination of Managing Board activity

In the event of premature termination of the service agreement (in the absence of due cause for terminating the service agreement by the Company), the respective member of the Managing Board is entitled to a severance payment which is always limited to the amount of the total compensation, including fringe benefits, for a period of 24 months, but is not compensated more than the remaining term of the agreement (“severance payment cap”). In the current Managing Board agreements, the period for calculating the severance pay varies, but in no case exceeds 24 months. When agreements are extended, the severance pay scheme is also standardized for all members of the Managing Board. For these purposes, the total compensation is calculated on the basis of the total compensation received for the last full fiscal year and, where appropriate, on the basis of the predicted total compensation for the current fiscal year. In the event of termination of a Managing Board agreement, the payment of any outstanding variable compensation components is made in accordance with the originally agreed targets and comparison parameters and according to the due dates or holding periods specified in the agreement.

The service agreements do not provide for any severance payment in the event of premature termination of the service agreement for due cause for which the respective member of the Managing Board is responsible. In the event of regular termination, the service agreements do not include a severance payment scheme.

The service agreements with the members of the Managing Board Yves Müller, Dr. Heiko Schäfer and Ingo Wilts contain a provision under which, in the event of a change of control (acquisition of more than 30% of the voting rights in HUGO BOSS AG), the respective member of the Managing Board is granted an extraordinary right to termination and, if the service agreement is indeed terminated, a severance payment to the respective member of the Managing Board. In principle, the amount of severance pay corresponds to the severance payment to be made in the event of the service agreement being terminated prematurely and is therefore subject to the same severance payment cap. The agreements of Daniel Grieder and Oliver Timm do not provide for any corresponding provisions for a change of control.

For new appointments or extension agreements with members of the Managing Board, provisions for a change of control are waived for all members of the Managing Board. There are no other compensation agreements.

Post-contractual non-compete clause

A post-contractual non-compete clause has been agreed for the members of the Managing Board. For a period of 12 months after termination of the service agreement, members of the Managing Board are not entitled, directly or indirectly, to work for or to form or invest in any other company in the area of premium or luxury brand fashion and/or accessories. This post-contractual non-compete clause applies to the countries in which HUGO BOSS and the affiliated companies of HUGO BOSS within the meaning of Sec. 15 et seq. AktG are operating at the time of termination of the service agreement. HUGO BOSS is obliged to pay the member of the Managing Board a monthly amount of one twenty-fourth (Daniel Grieder, Oliver Timm) or one twelfth (Yves Müller, Dr. Heiko Schäfer, Ingo Wilts) of the annual target compensation (basic compensation as well as STI and LTI with a respective target achievement of 100% each) for the duration of this post-contractual non-compete clause.

For new appointments or extension agreements, the regulations are standardized and an agreement is reached for any severance payments to be credited to the payment for the post-contractual non-compete clause.

Individualized disclosure of the compensation of the Managing Board

Compensation awarded and due to current members of the Managing Board in the past fiscal year pursuant to Sec. 162 AktG

The following table shows the non-performance-related and performance-related compensation components awarded and due to current members of the Managing Board (active as of December 31, 2021) in the past fiscal year, including the respective relative share in accordance with Sec. 162 AktG. These include the basic compensation paid in the fiscal year, the fringe benefits accrued in the fiscal year, the pension allowance paid in the fiscal year, the STI 2021 awarded in fiscal year 2021 (payout in fiscal year 2022), the LTI 2018–2021 awarded in fiscal year 2021 (payout in fiscal year 2022), and any special compensation.

Compensation awarded and due to former members of the Managing Board in the past fiscal year

The following table shows the non-performance-related and performance-related compensation components awarded and due to former members of the Managing Board who terminated their activities within the last ten fiscal years, including the respective relative share in accordance with Sec. 162 AktG:

No non-performance-related or performance-related compensation components were awarded and due to the former members of the Managing Board Claus-Dietrich Lahrs (Chairman of the Managing Board from August 1, 2008 to February 29, 2016) and Christoph Auhagen (ordinary member of the Managing Board from December 1, 2009 to April 22, 2016) in fiscal year 2021 or in fiscal year 2020.

Target compensation and actual compensation of the members of the Managing Board for the past fiscal year

The following table shows the respective target compensation of the current members of the Managing Board active as of December 31, 2021 for fiscal year 2021. This includes the target compensation agreed for the fiscal year in the event of a target achievement of 100%, supplemented by details of the minimum and maximum compensation achievable on an individual basis. In addition, the allocation for the fiscal year are stated as actual compensation according to the GCGC. This actual compensation comprises the fixed compensation paid out in the fiscal year, the fringe benefits accrued in the fiscal year, the pension allowance due for the fiscal year, the payout due in March 2022 from the STI 2021, and the payout due in March 2022 from the LTI 2018–2021. The ongoing pension commitments also include the service costs incurred for the fiscal year in accordance with IFRS.