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Expert Corporate Governance Service (ECGS)
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HeidelbergCement - AGM 09 May 2019

Item 5: Ernst & Young, Stuttgart, is proposed as auditor for the current financial year.

We have no concerns over the ratio of non-audit/audit fees. However, we note that Ernst & Young has audited the Company since the financial year 1948 which significantly exceeds our maximum acceptable term of office. We therefore recommend opposing the re-election of Ernst & Young as auditor.

Items 6a, 6b, 6c and 6e: We recommend to oppose the re-election of Fritz-Jürgen Heckmann, Ludwig Merckle, Tobias Merckle and Prof. Dr. Marion Weissenberger-Eibl to the Supervisory Board due to our concerns over the insufficient independent representation on the Board and/or concerns over aggregate time commitments.

Item 7: Approval is sought for the amended remuneration system for the Management Board which is applicable since financial year 2019. The amended remuneration system is considered as an improvement compared to the previously existing remuneration system: The Supervisory Board's range of discretion to adjust the annual bonus and the long-term incentive (LTI) of Management Board members is being reduced, a defined contribution pension system is being introduced, the existing share ownership guidelines are being adjusted and a clawback/malus clause is being introduced. However, we have concerns over the absolute level and structure of remuneration being paid to Management Board members: The maximum total remuneration (excluding pension benefits and benefits in kind) for the CEO may reach up to EUR 10.36m (~638% of base salary) which significantly exceeds ECGS guidelines. We therefore recommend to oppose the amended remuneration system for Management Board members.

Underlying
HeidelbergCement AG,

HeidelbergCement is engaged in the production and distribution of cement and aggregates, concrete and building products. Co.'s product range is complemented by downstream activities, such as ready-mixed concrete, concrete products, and concrete elements; in some countries, asphalt and building products, such as bricks and roof tiles, lime, or sand-lime bricks, are also manufactured. Furthermore, Co. provides services such as worldwide trading in cement and coal by sea. Co.'s products are used for the construction of houses, infrastructure, and commercial and industrial facilities.

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Expert Corporate Governance Service (ECGS)

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