4.2 2023 remuneration report

The Board hereby presents the remuneration report for the members of the Board of Directors under the articles of association and the Supervisory Board for the 2023 financial year.

The remuneration report complies with the provisions of Article 2:135(b) of the Dutch Civil Code and the Corporate Governance Code. The remuneration report provides information about the remuneration policy pursued during the 2023 financial year to ensure transparency for all stakeholders. On 8 April 2021, the annual general meeting adopted the current remuneration policy for the Board of Directors.

The purpose of the remuneration policy for the Board of Directors (Board of Directors remuneration policy) is – by analogy with the policy for employees – to be able to attract, motivate and retain qualified and experienced people for our Board of Directors under the articles of association.

The Board of Directors remuneration policy resonates fully with Nedap’s vision and strategy. It focuses on the company’s continuity and is geared towards sustainable long-term value creation, offering remuneration that is intended to foment ongoing development of employees and the organisation, so as to ensure the continued success of Nedap’s products and technologies in the various markets in which Nedap operates. Scenario analyses were considered in drawing up the remuneration policy and before calculating individual directors’ remuneration.

Accountability for remuneration policy implementation in 2023

At the annual general meeting of 13 April 2023, the 2022 remuneration report was approved by a majority of votes cast (99.95%). Upon review and consideration of this meeting's proceedings on this subject, no amendments to the 2023 remuneration report were deemed necessary. Consequently, the report has been drawn up in the same way.

This 2023 remuneration report will be submitted to an advisory vote at the 2024 annual general meeting, thus rendering account on the implementation of the remuneration policy in the 2023 financial year. The Board will take the result of this advisory vote into account and cite it in the remuneration report for 2024.

Remuneration summary

The table below provides a summary of the costs for current board members under the articles of association as recognised in the financial statements.

The table below provides a summary of the remuneration awarded to current board members under the articles of association.

^{Note: Former CFO E. Urff received matching depositary receipts with a value of 45 in 2023 (46 in 2022).}

• 1The basic salary does not include the employer’s social security contributions.
• 2‘Depositary receipts’ means ‘certificates’.
• 3This is the amount of the discount given on the purchase of depositary receipts in the financial year.
• 4This is the value of the depositary receipts awarded.

Fixed annual income

The fixed annual income is in line with the current remuneration policy and incremented at the same rate as the rate used for employees, as agreed in Nedap’s collective labour agreement.

Variable annual income

Based on the remuneration policy and on previously set targets, the Board has determined the variable component of the annual income for 2023 payable to the Board of Directors under the articles of association. The remuneration policy states that 50% of the variable component is determined by financial targets, 25% by employee engagement targets, and 25% by sustainable organisational and revenue model targets.

Financial targets

The financial targets have been split up into four sub-targets. The table below shows each sub-target, along with the extent to which it was achieved in the 2023 financial year and how much of the variable remuneration it represents.

Based on the above table, the Board of Directors is awarded a financial targets-related variable component of their annual income that represents 32% of their fixed annual income.

Employee engagement targets

Employee engagement levels at Nedap are measured on an annual basis. Based on an evaluation of the outcome of the measurements by the Remuneration Committee, Nedap is positioned in the highest quartile of employee engagement in 2023.

In 2023, the Nedap Life program, designed to enhance the quality and intensity of internal communication in relation to the Step Up! strategy, was successfully conducted. This initiative fostered more interactive communication across the organisation, featuring global updates, strategic insights, and practical stories to align team efforts with company goals. Additionally, regular updates and sessions with leadership further improved transparency and engagement.
The Nedap Family Day further strengthened the Nedap community, deepening employee involvement in the company.

In 2023, Nedap emphasised leadership development, aligning it with strategic objectives to enhance performance and adaptability. Senior management participated in development discussions according to the Nedap Leadership Model, resulting in actionable plans. The ongoing Nedap Leading Business program focuses on enhancing leadership skills, underscoring Nedap's commitment to nurturing talent and increasing organisational capacity, which is pivotal for fostering innovation and addressing future challenges.

Concluding that the Board of Directors made good progress in this area, the Board has allocated the Board of Directors 15% variable pay for their achievements on Employee engagement targets.

Sustainable organisational and revenue model targets

In 2023, Nedap focused on refining strategies for the 4 Key Markets, leveraging detailed market analyses to make these strategies more explicit and actionable. This resulted in sharpened, well-communicated strategies within the key markets, aligned with specific goals and development roadmaps. Important strides were also made in portfolio management, including acquisitions and strategic divestments. A major initiative was the development and implementation of a Diversity, Equity & Inclusion policy. This led to a widely supported DEI policy formally adopted by the Supervisory Board, along with in-depth discussions on promoting female leadership. Additionally, Nedap made significant advancements in sustainability, introducing a CO₂ impact dashboard for product life cycles and integrating sustainability targets into the budget process. This aligns with the Science Based Targets Initiative methodology, and a comprehensive materiality analysis was conducted to prepare for the CSRD standards in 2024, making sustainability a key part of annual business unit reviews.

Good progress was made in various areas, which is reason for the Board to allocate the Board of Directors a variable remuneration component of 18% of their fixed annual income.

To recap, the Supervisory Board is of the view that the performance of the Nedap organisation and the Board of Directors was strong. Based on the above supporting information and in line with the remuneration policy, the Supervisory Board awards the Board of Directors under the articles of association a variable annual income totaling 65% of the fixed annual income. In calculating the variable annual income, account was taken of scenario analyses.

Directors pay mix

Board member remuneration scenarios (as % of basic salary)

Deferred remuneration/MPP

Under the remuneration policy, directors under the articles of association have to use at least 50% of their variable annual income for 2023 to buy depository receipts for Nedap shares, which are subsequently locked up for a period of five years. After four years, one bonus depositary receipt is awarded for every four depositary receipts held. If the targets have been met, the variable annual income will be 60% of the fixed annual income. Total remuneration will then be 62.5% fixed annual income and 37.5% variable annual income. The CEO, CFO and CCO have opted to use the full amount of their variable pay to purchase depositary receipts.

_{If a director or Supervisory Board member was a member of the Board of Directors or Supervisory Board for only part of a year, their remuneration is presented on a pro rata basis for comparison purposes. The change in remuneration for the members of the Board of Directors and Supervisory Board is measured by dividing remuneration for the financial year by remuneration received in the previous financial year. If the date of appointment as director under the articles of association or Supervisory Board member is not 1 January, the change is recognised on a pro rata basis in the financial year following the year of joining.}

_{The 2023-2019 column shows the relative change as at year-end 2023 compared to the beginning of 2019.}

^{The change in Nedap’s performance in any financial year is the change in the closing price of Nedap shares in the financial year, plus the dividend paid for the financial year, divided by the closing price of Nedap shares in the previous financial year.}

^{The definition of the CEO pay ratio and the change in median employee pay was changed in the 2021 financial year. Nedap follows the recommendation by the Corporate Governance Code Monitoring Committee as of the 2021 financial year. Based on this definition, the CEO pay ratio would have been 9.7 in 2020. Please refer to the pay ratio paragraph in this section for the definition of the pay ratio.}

Use of penalty and recovery scheme

This scheme was not used.

Deviations from the remuneration policy

There were no deviations from the remuneration policy. The company has not granted members of the Board of Directors any loans or guarantees.

Pay ratio

Up to 2020, Nedap calculated the pay ratio as the ratio of the CEO’s current fixed annual income to the median pre-tax fixed annual income (including holiday pay and 13th-month bonus) of all Nedap employees worldwide as at 31 December of the financial year (‘median salary’). The annual salaries of the directors under the articles of association are not included in the calculation of the median salary. As of 2021, Nedap follows the recommendation made by the Corporate Governance Monitoring Committee in late December 2020. In its recommendation, the committee defines pay ratio as follows: the ratio of (i) total annual CEO pay to (ii) the median annual pay of the employees of the company and group companies consolidated in the company’s financial statements, whereby:

• Total annual CEO pay includes all pay components (such as fixed pay, variable pay in cash (bonus), share-based pay, social security contributions, pension, expense allowance, etc.), as recognised in the (consolidated) financial statements prepared based on IFRS standards;

• employees’ median annual pay is calculated by dividing total wage and salary costs in the financial year (as recognised in the (consolidated) financial statements prepared based on IFRS standards) by the average number of FTEs at the company during the financial year. The pay of insourced external workers is factored in on a pro rata basis, on the condition that they worked for the company for at least three months during the financial year; and

• the value of the share-based part of the pay is calculated on the date that it is awarded, as per the applicable IFRS requirements.

• The pay ratio for 2023 is 9.2. In 2022, the pay ratio was 9.6.

Supervisory Board member remuneration

On 8 April 2021, the annual general meeting adopted the current remuneration policy for the Supervisory Board. The amounts paid are in line with the remuneration policy for Supervisory Board members. The table below lists the remuneration that (former) Supervisory Board members received for the 2023 and 2022 financial years.

The company has not granted Supervisory Board members any loans or guarantees.