VAT : Invitation to VAT Annual General Meeting 2023

VAT ANNUAL

GENERAL MEETING

2023:

Tuesday, May 16, 2023, 3.00 pm CEST

(doors open at 2.00 pm)

Olma Messen St. Gallen, hall 2.1,

Splügenstrasse 12, 9008 St. Gallen

Dear shareholders,

We are pleased to invite the shareholders of VAT Group AG to our Annual General Meeting 2023.

Haag, April 21, 2023

Dr. Martin Komischke

Chairman of the Board of VAT Group AG

2	VAT GROUP AG
ANNUAL GENERAL MEETING 2023
AGENDA AND PROPOSALS

Agenda and Proposals

Introductory remarks

The Annual General Meeting of Shareholders has a number of non-transferable powers. These are set out in Article 6 of the Articles of Association and Articles 698 and 964c of the Swiss Code of Obligations. Accordingly, the Board of Directors submits the following agenda items 1 to 10 together with their subitems to the Annual General Meeting for voting, approval and resolution. The topic for voting, approval and resolution is shown in the title of the respective agenda item.

1. Approval of 2022 Annual Report

ProposalThe Board of Directors proposes that the Annual General Meeting approves the 2022 Annual Report,­ the statutory financial statements of VAT Group AG and the consolidated financial statements for the 2022 financial year and acknowledges receipt of the audit report.

1. Appropriation of Results and Distribution of a Dividend

1. Appropriation of Results
   ProposalThe Board of Directors proposes that the Annual General Meeting approves that the accumulated profit of CHF 738,768,228 (comprising retained earnings of CHF 575,867,924 carried forward from the
   previous­ year and the gain for the period 2022 of CHF 162,901,304) be carried forward to the new account.

2.2. Dividend Distribution

ProposalThe Board of Directors proposes to the Annual General Meeting to pay a dividend of CHF 6.25 per registered share to be paid from accumulated gains.

If this proposal is approved, the distribution from accumulated gains will be made on Tuesday, May 23, 2023. The last trading day with entitlement to receive a distribution is Wednesday, May 17, 2023. The shares will be traded ex-dividend as of Friday, May 19, 2023.

3. Discharge of the Members of the Board of Directors and the Group Executive Committee

ProposalThe Board of Directors proposes that the Annual General Meeting grants discharge to all members of the Board of Directors and of the Group Executive Committee (GEC) for the 2022 financial year in a single vote.

4. Elections

4.1. Election of the Chairman of the Board of Directors and further Members of the Board of Directors

1. Re-electionof Martin Komischke as independent member of the Board of Directors and Chairman of the Board of Directors­
   ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Martin Komischke as independent member of the Board of Directors and Chairman of the Board of Directors until the end of the next Annual General Meeting.
2. Re-electionof Urs Leinhäuser as independent member of the Board of Directors

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Urs Leinhäuser as ­independent ­member of the Board of Directors until the end of the next Annual General Meeting.

4.1.3. Re-election of Karl Schlegel as independent member of the Board of Directors

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Karl Schlegel as

independent­member of the Board of Directors until the end of the next Annual General Meeting.

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ANNUAL GENERAL MEETING 2023
AGENDA AND PROPOSALS

4.1.4. Re-election of Hermann Gerlinger as independent member of the Board of Directors

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Hermann Gerlinger as independent member of the Board of Directors until the end of the next Annual General Meeting.

4.1.5. Re-election of Libo Zhang as independent member of the Board of Directors

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Libo Zhang as independent member of the Board of Directors until the end of the next Annual General Meeting.

4.1.6. Re-election of Daniel Lippuner as independent member of the Board of Directors

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Daniel Lippuner as independent member of the Board of Directors until the end of the next Annual General Meeting.

4.1.7. Re-election of Maria Heriz as independent member of the Board of Directors

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Maria Heriz as independent member of the Board of Directors until the end of the next Annual General Meeting.

4.1.8. Election of Petra Denk as independent member of the Board of Directors

ProposalThe Board of Directors proposes that the Annual General Meeting elects Petra Denk as independent new ­member of the Board of Directors until the end of the next Annual General Meeting.

A short CV of Petra Denk is available in Appendix A.

4.2. Re-election of the Members of the Nomination and Compensation Committee

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects individually the following­ persons each as members of the Nomination and Compensation Committee until the end of the next Annual General Meeting:

1. Re-electionof Urs Leinhäuser as member of the Nomination and Compensation Committee
2. Re-electionof Hermann Gerlinger as member of the Nomination and Compensation Committee
3. Re-electionof Libo Zhang as member of the Nomination and Compensation Committee

5. Re-election of the Independent Proxy

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects Roger Föhn, attorney-­at- law, Kalchbühlstrasse 4, 8038 Zurich, as Independent Proxy from May 16, 2023, until the end of the next ­Annual General Meeting.

6. Re-election of the Statutory Auditors

ProposalThe Board of Directors proposes that the Annual General Meeting re-elects KPMG AG, St. Gallen, as Statutory Auditors for the financial year 2023.

7. Changes of Articles of Association

The Board of Directors proposes to amend the Articles of Incorporation of VAT Group AG to comply with both the requirements of the revision of the Swiss Stock Corporation Law effective January 1, 2023, as well as to reflect current best practice in the area of corporate governance. For the explanations­ of the proposals and the proposed revised Articles of Association, please refer to the brochure "Explanations of the Board of Directors on the Revision of the Articles of Incorporation" published at https://ir.vatvalve.com/en/general-meeting.

7.1.	Purpose	Art. 2
7.2.	Form of Shares, Share Register and Opting-Out	Art. 4, 5 para 1, 33
7.3.	Annual General Meeting and Auditors	Art. 6, 7, 8, 9, 10, 11, 20, 21, 22, 30, 31
7.4.	Share Register and Transfer of Shares	Art. 5 para 2 & 3, 13
7.5.	Virtual Annual General Meeting	Art. 8
7.6.	Board of Directors and Compensation	Art. 15, 16, 17, 18, 23, 29

4	VAT GROUP AG
ANNUAL GENERAL MEETING 2023
AGENDA AND PROPOSALS

8.	Capital Band
8.1. Capital Band	Art. 3b
9.	Term of Office Board of Directors
9.1. Term of Office Board of Directors	Art. 15

10. Compensation

10.1. Consultative Vote on the Compensation Report for the Financial Year 2022

ProposalThe Board of Directors recommends that the Compensation Report 2022 contained in the Annual Report 2022 be approved (consultative vote).

ExplanationsThe Compensation Report incorporates the basic principles for the compensation of the Board of Directors and the Group Executive Committee, as well as the remuneration awarded to the members of these two bodies for the financial year 2022. The Board of Directors is submitting the Compensation Report to shareholders for a consultative vote. The Compensation Report can be found on pages 61 to 76 of the Annual ­Report. The Annual Report can be accessed on the internet at https://ir.vatvalve.com/en/financial-reports.

10.2. Approval of actual Short-Term Variable Compensation (STI) of the Group Executive Committee (GEC) for the Financial Year 2022

ProposalThe Board of Directors proposes that the shareholders approve the actual amount of CHF 869,093 for the short-term variable compensation of the GEC for the financial year 2022.

ExplanationsPursuant to the Articles of Association of VAT Group AG, shareholders annually approve the effective short-term variable compensation amount of the GEC for the previous financial year.

The overall financial and individual performance achievement of the GEC of 111% on average of target was marked by the strong financial performance of the Group. Net sales for the year increased by 27% to CHF 1.145 billion. Reflecting the strong business performance, VAT posted an all-time record EBITDA margin of

35%. The EBITDA,­ free cash flow and specification win targets outperformed, and the individual performance achievements ranged from 125% to 132% of target for the GEC members. However, the overall target achievement was lower compared to the prior year given the ambitious financial and specification win performance ­targets, resulting in a decreased payout of -6% for 2022 compared to 2021, with an overall average payout for the GEC of 111% of target. There was no discretion applied by the Board when determining the final performance achievements for 2022.

The actual short-term variable compensation amount of CHF 869,093 for the GEC for the financial year 2022 is disclosed in the Compensation Report 2022 on pages 72 ff.

10.3. Approval of the Maximum Aggregate Amount of Fixed Compensation of the GEC for the Financial Year 2024

ProposalThe Board of Directors proposes that the shareholders approve a maximum aggregate amount of CHF 2,700,000 for the fixed compensation of the GEC for the financial year 2024.

ExplanationsPursuant to the Articles of Association of VAT Group AG, shareholders annually approve the maximum aggregate amount of fixed compensation of the GEC for the next financial year.

The compensation policy of VAT is designed to support the business strategy of the company and to motivate executives to achieve the long-term goals of the company. The compensation of the GEC members is well balanced between fixed and variable compensation components, as well as between short-term and long-term incentives, so that their interests are aligned to those of our shareholders.

The amount of CHF 2,700,000 for the fixed compensation has been calculated on the basis of the compensation structure disclosed in the Compensation Report for four GEC members. It includes annual base salaries for the GEC, estimated social security costs and a reserve for unforeseen circumstances. The proposed amount is 8% higher than the total amount approved for the previous year by the Annual General Meeting 2022, in line

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ANNUAL GENERAL MEETING 2023
AGENDA AND PROPOSALS

with VAT's practice to set compensation of GEC members who are building experience in their role below ­market level and increase it to market level over time, subject to development and performance.

The overall compensation structure for the GEC is not expected to change and is described on pages 72 to 74 of the Compensation Report 2022. However, the Board decided to introduce share ownership guidelines for the GEC, starting from 2024 onwards. The fixed compensation actually paid to GEC members in financial year 2024 will be disclosed in the Compensation Report 2024, which will be submitted to a consultative vote by the shareholders at the Annual General Meeting in 2025.

10.4. Approval of the Maximum Aggregate Amount of Long-Term Incentive (LTI) Compensation of the GEC for the Financial Year 2024

ProposalThe Board of Directors proposes that the shareholders approve a maximum aggregate amount of CHF 2,150,000 for the long-term incentive (LTI) compensation of the GEC for the financial year 2024.

ExplanationsPursuant to the Articles of Association of VAT Group AG, shareholders annually approve the maximum aggregate amount of LTI compensation of the GEC for the next financial year.

The amount of CHF 2,150,000 for the LTI has been calculated on the basis of the compensation structure disclosed in the Compensation Report 2022 for four GEC members. The proposed amount is 7.5% higher than the total amount approved for the previous year by the Annual General Meeting 2022, in line with VAT's practice to set compensation of GEC members who are building experience in their role below market level and increase it to market level over time, subject to development and performance. The compensation structure for the GEC is not expected to change. The LTI is granted in form of Performance Share Units (PSU) that vest over a three-year period, conditionally upon the fulfillment of performance and employment conditions during the vesting period. The amount submitted to vote assumes a maximum vesting level of 200% and does not factor in the share price evolution during the vesting period. The LTI compensation actually to be granted to the GEC ­members in financial year 2024 will be disclosed in the Compensation Report 2024, which will be submitted to a consultative vote by the shareholders at the Annual General Meeting in 2025.

10.5. Approval of the Maximum Aggregate Amount of Compensation of the Board of Directors from the Annual General Meeting of 2023 to the Annual General Meeting of 2024

ProposalThe Board of Directors proposes that a maximum aggregate amount of compensation of CHF 1,550,000 of the Board of Directors be approved for the term of office from the Annual General Meeting 2023 to the Annual General Meeting 2024.

ExplanationsPursuant to the Articles of Association of VAT Group AG, shareholders annually approve the maximum aggregate amount of compensation of the Board of Directors for the term of office until the next Annual General Meeting of Shareholders.

In order to strengthen their independence, members of the Board of Directors of VAT receive a fixed compen- sation, delivered in cash (70%) and restricted shares (30%), as well as lump sum expenses. Members of the Board of Directors do not receive any performance-related compensation. Any pension participation required to comply with local regulation, is financed by the Board members at their own expense.

Structure and levels of Board compensation AGM 2023 until AGM 2024

Fixed basic fee

Board chair

Board vice-chair

Board member

Cash compensation

224,000

112,000

77,000

Share-based compensation

96,000

48,000

33,000

Lump sum expenses (in CHF gross)

1,500

1,500

1,500

Committee fees

Committee chair

Committee member

Cash compensation

17,500

10,500

Share-based compensation

7,500

4,500