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Remuneration Report 2022

Continental AG > 2022 Remuneration Report

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Remuneration Report Pursuant to Section 162 of the German Stock Corporation Act (Aktiengesetz - AktG)

This remuneration report describes the key elements of the remuneration system as well as the structure and amount of the remuneration for individual members of the Executive Board and Supervisory Board in fiscal 2022 (reporting year) in accor­ dance with Section 162 AktG. It also outlines the principles of the remuneration system for the members of the Executive Board and the Supervisory Board.

The complete version of the remuneration system is available online at www.continental.com under Company/Executive Board.

Earnings position in fiscal 2022

Consolidated sales increased by €5,643.7 million or 16.7% year-on-year in 2022 to €39,408.9 million (PY: €33,765.2 million). Before changes in the scope of consolidation and exchange- rate effects, sales rose by 12.3%. The sales performance in the Automotive, Tires and ContiTech group sectors was shaped primarily by price adjustments to offset higher costs for raw materials, logistics and energy. In Automotive, rising automobile production and strong organic growth also had a positive effect, while Tires was additionally able to implement favorable changes to its product mix. Contract Manufacturing reduced its sales in accordance with the contractually agreed procedure between Continental and Vitesco Technologies.

The Continental Group's sales performance was impacted by positive exchange-rate effects totaling €1,513.7 million, while changes in the scope of consolidation had a negligible effect. Adjusted EBIT for the Continental Group increased by €96.0 million or 5.2% year-on-year to €1,950.7 million

(PY: €1,854.7 million) in 2022, corresponding to 5.0% (PY: 5.5%) of adjusted sales.

Resolution of the Annual Shareholders' Meeting on the approval of the 2021 remuneration report (Section 162 (1) No. 6 AktG)

A remuneration report pursuant to Section 162 AktG was prepared for the first time in fiscal 2021. The Annual Share­ holders' Meeting approved the 2021 remuneration report on April 29, 2022, with an approval rate of 68.29%. To create more transparency, the 2022 remuneration report additionally contains a tabular overview of the individual remuneration com­ ponents. It also includes further explanations, in particular on the maximum target achievement for the variable remuneration components, the maximum remuneration and the retirement benefits for the members of the Executive Board.

Significant changes in Executive Board remuneration compared with fiscal 2021

The pay-for-performance principle set out in the remuneration system is reflected in the amount of variable remuneration. The relevant performance criteria were not fully achieved in fiscal 2022. This resulted in low variable remuneration for fiscal 2022 compared with the previous year.

The remuneration conditions for Executive Board members were standardized in 2022. There is currently a differentiation between the chairman and the other members of the Execu­ tive Board. The remuneration of the chairman of the Executive Board and (individual) members of the Executive Board did not increase in fiscal 2022. The remuneration of the Executive Board has therefore not increased since the introduction of the new remuneration system on January 1, 2020.

There were no personnel changes on the Executive Board in fiscal 2022.

There were multiple personnel changes on the Supervisory Board in fiscal 2022. On January 1, 2022, Mr. Stefan Erwin Buchner succeeded Prof. Siegfried Wolf, who left the board on December 31, 2021. On April 29, 2022, Ms. Dorothea von Boxberg succeeded Ms. Maria Elisabeth Schaeffler-Thumann, who left on the same day.

Overview of the Remuneration System as of January 1, 2020

The remuneration of the active members of the Executive Board is based on the remuneration system in effect since January 1, 2020, which was developed with an independent consultant and finalized by the Supervisory Board at its meeting on March 17, 2020. It takes into account the general legal conditions and the requirements of the German Corporate Governance Code and was approved by the Annual Share­ holders' Meeting of Continental AG on July 14, 2020, with an approval rate of 97.41% (hereinafter "remuneration system"). Another regular approval will take place at the Annual Share­ holders' Meeting in 2024.

The following overview shows the key elements of the current Executive Board remuneration system. The remuneration system for members of the Executive Board comprises a fixed component that is unrelated to performance and a variable component that is based on performance.

Continental AG > 2022 Remuneration Report

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Executive Board remuneration system

Fixed remuneration	Basic remuneration		> Fixed, contractually agreed remuneration, paid in 12 monthly installments
	Additional benefits		> Company car, reimbursement of travel expenses, as well as relocation costs
				and expenses for running a second household, where this is required for
				work reasons, a health check, directors' and officers' (D&O) liability insurance
				with deductible, accident insurance, employers' liability insurance association
				contribution­	including, where necessary, income tax incurred as a result, health
				insurance and long-term care insurance contributions
	Future benefit rights	Type	> Defined contribution commitment
		Contribution	> Contractually agreed annual fixed amount, which is multiplied by an age factor
				and credited to the pension account as a capital component
Variable remuneration	Short-term variable	Type	> Performance bonus (short-term incentive, STI)
	remuneration
	Cap	> 200% of the contractually agreed target amount of the STI
		Performance criteria	> Financial performance criteria
				- 40% EBIT target/actual comparison
				- 30% ROCE target/actual comparison
				- 30% consolidated free cash flow target/actual comparison
				- Share of EBIT and ROCE in the earnings of the Continental Group and,
				if applicable, the group sector, depending on area of responsibility
				- Degree of target achievement: on a straight-line basis from 0% to 200%
			> Non-financial performance criteria
				- Possibility of defining additional non-financial performance criteria regarding
				market development and customer focus, implementation of transformation
				projects, and organizational and cultural development
				- Definition of target achievement in the form of a personal contribution factor
				(PCF) between 0.8 and 1.2
				- Multiplier of the result of the financial performance criteria by the PCF
				- PCF = 1.0 if non-financial performance criteria have not been defined
				- Cap of 200% to be observed even when applying the PCF
		Payment	> 60%1 in the year after the Annual Shareholders' Meeting
	Long-term variable	Equity deferral
	remuneration
			>	40%1 of the payout amount of the performance bonus/STI
				must be invested in shares
			>	Holding period: three years
		Long-term incentive (LTI)
		Plan type	> Phantom share plan performance
		Cap	> 200% of the contractually agreed allotment value
		Performance criteria	> Total shareholder return (TSR) of the Continental share compared with
				the STOXX Europe 600 Automobiles & Parts (SXAGR) index - relative TSR;
				factor between 0 and 1.5
			>	Sustainability factor (up to six targets) between 0.7 and 1.3
			>	Multiplicative link
			>	Share price performance
		Term	> Four years
Maximum remuneration			> €11.5 million (chairman of the Executive Board) and
				€6.2 million (members of the Executive Board)
			>	Caps (performance bonus and LTI each max. 200%) remain unaffected
Share ownership guideline (SOG)			> Obligation to invest 200% (chairman of the Executive Board) or
				100% (other members of the Executive Board) of basic remuneration
			>	Accumulation period: four years after appointment
			>	Investments from the equity deferral are counted toward the total
			>	Holding obligation: two years after the end of term of office

1 Net amount: from the net inflow of the performance bonus, shares of Continental AG with a value of 20% of the total gross amount of the performance bonus must be purchased and held for a period of three years; the corresponding gross amount was calculated assuming a tax and contribution ratio of 50% flat.

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The remuneration system for members of the Executive Board comprises in detail the following components:

1. Fixed remuneration component

The fixed component that is unrelated to performance com­ prises the fixed annual salary, additional benefits and future benefit rights.

Additional benefits include (i) provision of a company car, which can also be for personal use, (ii) reimbursement of travel expenses, as well as relocation costs and expenses for running a second household, where this is required for work reasons, (iii) a regular health check, (iv) directors' and officers' (D&O) liability insurance with deductible in accordance with Section 93 (2) Sentence 3 AktG, (v) accident insurance,

1. the employers' liability insurance association contribution including, where necessary, income tax incurred as a result, as well as (vii) health insurance and long-term care insurance contributions based on Section 257 of Book V of the German Social Code (SGB V) and Section 61 of Book XI of the German Social Code (SGB XI).

In accordance with their future benefit rights, each member of the Executive Board is granted post-employment benefits that are paid starting at the age of 63, but not before they leave the service of Continental AG (hereinafter "insured event"). From January 1, 2014, the company pension for the members of the Executive Board was changed to a defined contribution commitment. A capital component is credited to the Executive Board member's pension account each year. To determine this, a fixed contribution, agreed by the Supervisory Board in the Executive Board member's service agreement, is multiplied by an age factor that represents an appropriate return. When the insured event occurs, the benefits are paid out as a lump sum, in installments or - as is normally the case due to the expected amount of the benefits - as a pension. Post-employment bene­ fits must be adjusted after commencement of such benefit payments by 1% p.a. in accordance with Section 16 (3) No. 1 of the German Company Pensions Law (Betriebsrentengesetz - BetrAVG).

For Nikolai Setzer, the future benefit rights accrued until Decem­ ber 31, 2013, were converted at that time into a starting compo­ nent in the capital account. In this case, post-employment benefits must be adjusted after commencement of such benefit pay­ ments by 1.75% p.a. to take account of the obligation stipulated in Section 16 (1) BetrAVG.

2. Variable remuneration component

The variable components that are based on performance comprise a short-term remuneration component (performance bonus without equity deferral, also short-term incentive, STI) as well as long-term remuneration components (long-term incen­ tive (LTI) and equity deferral of the performance bonus). For the variable remuneration components, before the start of each fiscal year, target criteria are determined by the Supervisory Board with a view to its strategic goals, the provisions of Sections 87 and 87a AktG and the German Corporate Governance Code in its respective valid version, whereby the degree to which these criteria are met will determine the actual amount paid out.

The Supervisory Board may take the function and area of res­ ponsibility of the individual members of the Executive Board into account accordingly when determining the amount of the total target-based remuneration. As part of this, shares of the individual remuneration component for the total target-based remuneration are indicated below in percentage ranges. The precise proportions therefore vary depending on the functional differentiation as well as a possible change within the frame­ work of the yearly remuneration review.

The fixed annual salary comprises 22% to 28% of the target re­ muneration, the performance bonus (excluding equity deferral) between 17% and 22%, and the equity deferral and long-term incentive between 33% and 38%. Future benefit rights make up between 17% and 23% of the target remuneration, and additional benefits make up approximately 1%.

Continental AG > 2022 Remuneration Report

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Remuneration of an Executive Board member responsible for a group sector (example)

• millions
  6

5

4

3

2

1

0

Four-year term

Maximum remuneration

Target remuneration (100% target achievement)

Minimum remuneration

Fixed	Additional	Service
remuneration	benefits	costs

Performance	Long-term	Total
bonus ,	incentive	remuneration

1 Average figure.

2 Based on a target bonus (here €1.167 million) for 100% achievement of defined EBIT, ROCE and FCF targets as well as a personal contribution factor (PCF) of 1.0. A maximum of 200% of the target bonus can be achieved.

3 From the net inflow of the performance bonus, shares of Continental AG with a value of 20% of the total gross amount of the performance bonus must be purchased and held for a period of three years.

4 Based on the allotment value (here €783 million), which is converted into virtual shares of Continental AG. The payment amount depends on the rela- tive total shareholder return, the sustainability criteria achieved and the share price before the payment. A maximum of 200% of the allotment value can be achieved.

a) Performance bonus (short-term incentive, STI)

In the service agreement, the Supervisory Board agrees to a target amount for the performance bonus (hereinafter "STI target amount") that is granted to each member of the Executive­ Board in the event of 100% target achievement. The maximum amount of the performance bonus is limited to 200% of the STI target amount.

The amount of the performance bonus to be paid out depends on the extent to which a member of the Executive Board achieves the targets set by the Supervisory Board for this Executive­ Board member for the following three key financial indicators­ as perfor­­ mance criteria within the meaning of Section 87a (1) Sentence 2 No. 4 AktG:

• Earnings before interest and tax (hereinafter "EBIT"), adjusted for goodwill impairment as well as gains and/or losses from the disposal of parts of the company.
• Return on capital employed (hereinafter "ROCE") as the ratio of EBIT (adjusted, as mentioned above) to average operating assets for the fiscal year.
• Cash flow before financing activities (hereinafter "free cash flow"), adjusted for cash inflows and outflows from the dis­ posal or acquisition of companies and business operations.

The degree to which the EBIT target is achieved is weighted at 40%, the ROCE target at 30% and the free cash flow target at 30% in the calculation of the performance bonus.

For each financial performance criterion, the target value for 100% target achievement corresponds to the value that the Supervisory Board agreed in each case for this financial performance criterion in the planning for the respective fiscal year.

Prior to the start of a fiscal year, the Supervisory Board deter­ mines for each financial performance criterion the values for target achievement of 0% and 200% on an annual basis. It is not possible to adjust or change these performance criteria after the end of a fiscal year. The degree to which the target is achieved is calculated on a straight-line basis between 0% and 200% by comparing the target value with the respective actual value for the fiscal year.