Remuneration

Short-term variable compensation

The short-term variable compensation component of the Board of Management, the Annual Performance Payment (APP), was amended to take two financial performance criteria into account. Until now, the APP consists of a financial performance criterion (EBITDA pre exceptionals of the LANXESS Group), accounting for 80%, and a non-financial performance criterion (occupational safety with the Group's lost time injury frequency rate (LTIFR: accidents per million hours worked) for accidents with days lost), accounting for 20%.

From 2026, the financial performance criteria will be LANXESS Group’s operating result (EBIT) pre exceptionals (70% weighting) and free cash flow (30% weighting). EBIT pre exceptionals reflects operating performance adjusted for depreciation, amortization, and impairment reversals, offering a clearer view of operational efficiency. Free cash flow, defined as operating cash inflows minus capital expenditures, serves as a transparent indicator of financial health and future viability.
The target and threshold values as well as the payout curves of the performance criteria for the APP are determined annually by the Supervisory Board before the start of each fiscal year in view of the economic situation uniformly for all members of the Board of Management. Subsequent adjustments are generally not possible. Between the target value and the lower or upper limit (0% and 200%), the target achievement curve for the EBIT pre exceptionals follows a linear approach while for free cash flow it follows a step-wise approach. At the end of the fiscal year, the target achievement for the individual financial performance criteria is determined and combined to form a weighted average (overall target achievement). For ordinary members of the Board of Management, 100% overall target achievement corresponds to 90% of the annual base salary (APP target bonus) in line with the weighting of short-term and long-term compensation in accordance with the compensation system. For the Chairman of the Board of Management, 100% overall target achievement corresponds to 100% of the annual base salary. The percentage of overall target achievement multiplied by the individual APP target bonus results in the APP payout amount for the past fiscal year.
The Board of Management’s financial targets and the target achievement are published after the end of the fiscal year.
Under the APP, the previous Board of Management compensation system allowed for an ad hoc discretionary bonus of up to 20% of the annual base salary to reward exceptional performance or provide additional incentives. However, no such bonuses have been paid in recent years. To enhance transparency and clarity, the Supervisory Board decided to remove this option from the APP effective January 1, 2026. Going forward, emphasis is placed on clearly defined, measurable performance criteria within the variable compensation components.
As before, the Supervisory Board reserves the right to reduce the APP in the event of serious occupational safety and/or environmental problems.

Long-term compensation

Until now, the long-term variable compensation (Long-Term Incentive – LTI) consists of two measurable components: a share price performance criterion under the Long Term Stock Performance Plan (LTSP), accounting for 60% of the LTI, and a sustainability criterion under the Sustainability Performance Plan (SPP), accounting for 40%. The LTSP measures LANXESS’ stock performance relative to a reference index, while the SPP assesses the company’s Scope 1 and Scope 2 CO₂ emission reductions over a four-year period. Both components are evaluated over a uniform four-year assessment period.

The new LTI will be based on three measurable performance criteria, uniformly defined for all Board members and assessed over a four-year period, with annual cash payouts at the end of a four-year term. 

• A stock-based performance criterion, representing 70% of the individual LTI, is based on the LANXESS share price performance relative to an industry-specific benchmark index (formerly LTSP). The benchmark currently used is the FTSEurofirst 300 Eurozone Chemicals Index, which best reflects the LANXESS Group’s economic environment. Performance is assessed annually across four tranches, with the overall target achievement calculated at the end of each four-year tranche period based on the annual results. The target achievement curve follows a linear progression between the defined lower and upper thresholds. If the average outperformance of the LANXESS share reaches at least 115% compared to the reference index, the maximum target achievement of 200% is attained. If the share performance falls below 100%, the Supervisory Board may apply reductions. A performance below 85% results in a target achievement of zero percent.
• A sustainability performance criterion focused on environmental impact accounts for 15% of the individual LTI (formerly SPP). It is based on LANXESS’ published climate targets and aims to reduce CO₂e emissions from the company’s own operations and purchased energy (Scope 1 and 2). The assessment period spans four years. Each year, the Supervisory Board sets the target and threshold values as well as the payout curve for all Board of Management members. The target achievement curve follows a linear progression between the lower and upper thresholds (0% to 200%).
• A further sustainability performance criterion focused on occupational safety accounts for 15% of the individual LTI. It targets the lost time injury frequency rate (LTIFR), defined as the number of accidents with days lost per million hours worked. The assessment period spans four years. Each year, the Supervisory Board sets the target and threshold values as well as the payout curves uniformly for all Board of Management members. Target achievement is determined annually, and the average of the four annual values constitutes the overall target achievement, reported to one decimal place at the end of the assessment period. This approach ensures that occupational safety remains consistently prioritized throughout the entire period. The target achievement curve follows a step-wise structure to support the company’s established positive reporting culture for incidents.
• In addition, the LTI plan will be supplemented by a multiplier based on total shareholder return (TSR), which serves as a bracket to the three core performance criteria. This addition further emphasizes the stock-based nature of the Board of Management’s long-term variable compensation. After the four-year assessment period, the target achievement for each performance criterion is determined and consolidated into a weighted average. This overall target achievement is then multiplied by the TSR multiplier to calculate the final LTI payout. While the maximum target achievement for the three LTI performance criteria remains at 200% each, the maximum LTI payout, after applying the TSR multiplier, is capped at 250% of the individual LTI target bonus (payout cap).
• The current company pension scheme—comprising a defined contribution pension plan and personal contributions from deferred APP compensation—will be discontinued with the implementation of the new compensation system. In its place, a pension cash allowance will be introduced for all members of the Board of Management, paid alongside the base salary in cash each month. For the relevant members of the Board of Management, the pension level will be reduced from 56.25% (Chairman) and 50% (ordinary members) of the annual base salary to 40% and 35%, respectively. In addition, a general reduction of the pension level to 25%, that was already established for new appointments and re-appointments to the Board of Management since September 2023, will be applied in the form of the pension cash allowance to all new appointments and re-appointments of members of the Board of Management from January 1, 2026.
• Severance payments for terminated members of the Board of Management in the event of a change of control are capped at two annual base salaries plus the Board of Management’s APP and 0.8 LTI at 100% target attainment, accounting pro rata for the remaining term at the date of contract termination.
  The compensation system continues to include a cap on the total annual remuneration for members of the Board of Management. This cap encompasses all fixed and variable components based on full target achievement within a fiscal year. The maximum annual compensation per fiscal year is set at EUR 9.8 million for the Chairman of the Board of Management and EUR 4.4 million for each ordinary member.
• For the reporting year, the target values and degree of target attainment for the indicators relevant to the bonus will subsequently be published in the compensation report.

The compensation of the Supervisory Board is set out in § 12 of the Company's Articles of Association. Under the provisions of the German Stock Corporation Act, a resolution on the compensation of Supervisory Board members must be adopted by the Annual Stockholders' Meeting at least every four years in the case of listed companies. Pursuant to Section 113 Paragraph 3 of the German Stock Corporation Act, the Annual Stockholders' Meeting of LANXESS AG therefore adopted a resolution on the compensation of Supervisory Board members on May 22, 2025. The system of compensation for Supervisory Board members presented to the Annual Stockholders' Meeting was approved by a majority of 99.94% of the votes cast. The system itself was not changed.

The members of the Supervisory Board of LANXESS AG receive annual fixed compensation of €80 thousand. The Chairman of the Supervisory Board receives three times the fixed compensation, and his deputy one and a half times. Chairmanship and membership of Supervisory Board committees are compensated separately in accordance with the GCGC. Supervisory Board members who belong to a committee other than the Nomination Committee additionally receive half the fixed compensation. Supervisory Board members who belong to the Nomination Committee additionally receive one-eighth of the fixed compensation. The Chairman of the Audit Committee receives an additional half of the fixed compensation. Supervisory Board members who chair a committee other than the Audit Committee additionally receive one quarter of the fixed compensation. No additional compensation is paid for membership of the committee to be formed pursuant to § 27 (3) of the Codetermination Act (MitbestG) or for chairing the Nomination Committee. In total, however, the maximum overall compensation of any member of the Supervisory Board (other than the attendance fee which amounts to €1.5 thousand for each Supervisory Board meeting) is three times the fixed compensation.In addition, Supervisory Board members are reimbursed for their expenses.