Declaration of Conformity

Declaration of Conformity with the German Corporate Governance Code, issued by the Supervisory Board and Management Board in accordance with Section 161 of the German Stock Corporation Act

Pursuant to Section 161 of the German Stock Corporation Act (Aktiengesetz – AktG), the supervisory board and management board of exchange-listed stock corporations are obliged to issue an annual declaration stating that the recommendations of the "Code of the Government Commission on German Corporate Governance" have been and will continue to be complied with and, if applicable, specifying which recommendations have not been or will not be applied. Any departures from the recommendations must be explained.

The Management Board and Supervisory Board of ElringKlinger AG hereby issue a Declaration of Conformity pursuant to Section 161 AktG, stating that the Company has complied with, currently complies with and will in future comply with the recommendations of the "Government Commission German Corporate Governance Code" in the version dated February 7th, 2017, with the following exceptions.

• Section 3.8 paragraph 3: The deductibles agreed for the Supervisory Board as part of the company's D&O insurance differ from those specified for the Management Board.
  The D&O insurance policy for the Supervisory Board contains a deductible. However, this deductible is lower than that defined for the members of the Management Board. The company is of the opinion that inconsistency in the treatment of the Management Board and the Supervisory Board is objectively justified due to the different functions of the aforementioned bodies. Legislators accept such a differentiation, as they have not specified any regulations for the Supervisory Board that are comparable to the provisions governing deductibles for Management Board members.
   
• Section 5.1.2: No age limit has been set for members of the Management Board.
  There is no general age limit for Management Board members. The main focus for ElringKlinger is on the qualifications as well as the experience required by candidates to be appointed to the board. Given the provisions set out in the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG), which does not apply directly to this case but at the very least provides a basis for analogous application, the company is of the opinion that the approach of specifying an age limit is inappropriate.
   
• Section 5.3.3: At present there is no Nomination Committee to propose possible candidates for the election of shareholder representatives to the Supervisory Board.
  Given the current size of the company's Supervisory Board, both the Management Board and the Supervisory Board are of the opinion that there is no need to form a Nomination Committee.
   
• Section 5.4.1 paragraph 2: Regarding the composition of the Supervisory Board, concrete objectives will not be predefined. To date, no profile of skills and expertise has been prepared for the entire Board. Neither regular limit of length of membership nor age limit has been set for members of the Supervisory Board.
  
  Relevant selection criteria for the appointment of the Supervisory Board are also suitability, experience and qualification. A commitment to specifications concerning prospective appointments constricts flexibility without ulterior advantage for the company. This applies all the more as the representatives of the shareholders can temporarily only elect six members of the Supervisory Board with codetermination. Within this context, the specifications mentioned in the Code’s recommendation are per se further important criteria for the constitution of the Supervisory Board. So because of the mentioned reasons there is no need of a predefinition of concrete objectives except for the specification of Section 111 (5) AktG. The share of women on the Supervisory Board is 30 percent. The legal requirements are fulfilled. For the aforementioned reasons, no profile of skills and expertise has yet been drawn up for the entire Board.
  
  A regular limit of length of membership in the Supervisory Board is not defined. Each membership in the Supervisory Board is limited until the new election of the Supervisory Board by the Annual General Meeting as specified by the German stock corporation law. It is up to the Annual General Meeting to decide about the reelection of a member of the Supervisory Board or not.
  
  No general age limit has been set for members of the Supervisory Board, as the expertise of the individual members is considered an overriding priority. Within this context, experience in particular is seen as an integral element. Given the provisions set out in the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG), which does not apply directly to this case but at the very least provides a basis for analogous application, the company is of the opinion that the approach of specifying an age limit is inappropriate.
  
  As no profile of skills and expertise for the entire Board in accordance with Section 5.4.1 paragraph 2 has been drawn up to date, possible proposals by the Supervisory Board cannot aim to complete this profile of skills and expertise within the meaning of the recommendation of Section 5.4.1 paragraph 4 sentence 1.
   
• Section 5.4.6 paragraph 2 sentence 2: Compensation of the members of the Supervisory Board consists of a variable or performance-based component that is determined according to the Group's earnings before taxes in the financial year just ended.
  
  The company is of the opinion that the current structure of Supervisory Board compensation adequately reflects the responsibilities of the Supervisory Board in respect of business performance. Profitability is of key importance to the sustained development of the company. This aspect is to be reflected in the assessment of compensation. However, it is intended to revise the structure of Supervisory Board remuneration for the future.

Dettingen/Erms, November 29th, 2019

On behalf of the Supervisory Board

Management Board