Remuneration

Remuneration policy

Hydratec’s Supervisory Board applies a remuneration policy to the Management Board of the company that is based on the following:

• Remuneration of the Management Board must enable good managers to be recruited and retained.

• The remuneration policy must be consistent with the company’s corporate governance policy.

• Remuneration may not contain any incentives that serve the recipient’s own interests and which conflict with the company’s interests.

• Remuneration must reflect the strategic and financial targets and must be performance-based, with a good balance between short and long-term results and targets.

The remuneration policy for Hydratec’s Management Board was approved by the General Meeting of Shareholders held on 25 May 2022. The actual remuneration of the Management Board is determined by the Supervisory Board. Management Board salaries depend partly on the operating result, through a performance-based remuneration scheme payable in due course and compiled as follows:

Performance-based remuneration

• The decision to award performance-based remuneration is made in February when the annual figures are discussed.

• Performance-based remuneration (excluding the increase applicable as a member of the participation plan) is capped at 50% of fixed remuneration and is determined as follows:

• • 50% of performance-based remuneration is dependent on personal targets. The Supervisory Board makes agreements with the Management Board on personal targets. The targets are focused on the company’s long-term development, as well as on increasing contract quality and added value and raising awareness across the segments. This remuneration is allocated at the discretion of the Supervisory Board.

  • 50% of performance-based remuneration is dependent on the consolidated operating result (EBIT). The following ranges apply here:

  • • In case of an EBIT <5% there is no bonus payment.

    • In case of an EBIT of more than 7%, the maximum performance-based remuneration is paid.

    • In the case of an EBIT between 5% and 7%, this is determined proportionally.

After the bonus is awarded, the Management Board has the option of converting half of the performance-based remuneration into Hydratec shares as part of the shareholding programme. If the Management Board decides to do so, the performance-based remuneration is increased by 25% as an incentive to bind the Management Board to the company for the longer term. The shares are then issued on conversion at the average price during January and February and may not be sold for a period of three years.

Remuneration payable in due course

The remuneration payable in due course is a Stock Appreciation Right (SAR) where the Management Board receives remuneration based on the increased value of Hydratec over a period of at least five years. The entry value is set at 5x EBIT 2021. Up to 0.5% of the company’s value will be granted annually in the years 2022, 2023, 2024, 2025 and 2026. The value of the company is based on 5 times the average EBIT over the last 3 financial years. The amount of the annual allocation is based on performance criteria to be assessed by Hydratec’s supervisory board.

For 2025, 0.5% has been allocated. The SAR can only be exercised once within a period of one month after Hydratec’s consolidated annual figures have been approved by the auditor, and no sooner than after the year 2026. The SAR is also exercised if more than 50% of Hydratec’s shares are transferred to a third party. The exit value in that case is the higher of 5 times the average EBIT over the last 3 financial years and the value based on the sale price. The probability of this occurring is less than 50% and has therefore not been measured in accordance with IFRS 2. If significant acquisitions or sales are made during the term of the SAR, the SAR will be reasonably recalibrated to take this into account.

If the employment relationship between Hydratec and a board member ends before this scheme takes effect, the SAR will lapse, unless the employment was terminated by death or pursuant to Book 7, Article 669(3)(a) and (b) of the Dutch Civil Code. In that case, the board member is entitled to 33.3% of the amount. Any severance payments comply with the requirements of the Dutch Corporate Governance Code and will therefore not amount to more than one year’s salary. The pension plan for the Management Board includes a threshold amount above which members are required to make a personal contribution. The Supervisory Board regularly assesses the Management Board’s actual salaries against the remuneration policy and makes adjustments where necessary.

Remuneration report

The objective of the total remuneration package is that the total remuneration is commensurate with the level and complexity of the responsibilities. It must also be sufficiently competitive. The remuneration package should be based on the duties and responsibilities that the board under the articles of association and its members have towards the company. The internal wage structure is used as a reference and the outcome is compared with the external market.

For this purpose, the Supervisory Board compared the remuneration with that of Dutch listed companies of a similar size and complexity. Given the differences between companies, the Supervisory Board determined the remuneration autonomously.

The Management Board members’ annual fixed salary in 2025 was based on the principles above. The fixed salaries are periodically index-linked to inflation. No loans were issued or severance payments made in 2025, nor were there any clawbacks of previously awarded performance-based remuneration. The 2024 remuneration report was approved by a majority of votes at the General Meeting of Shareholders on 24 April 2025.

This 2025 remuneration report will be submitted to the 2026 General Meeting of Shareholders for an advisory vote. This will provide accountability for the implementation of the remuneration policy in the 2025 financial year. The Supervisory Board will take this advisory vote into account and will make an announcement in the 2026 remuneration report. The Management Board’s total remuneration is shown on the next page. The Supervisory Board has determined that the Management Board achieved positive results in 2025, despite the challenging market conditions. The Management Board has also stated its intention to join the share participation plan. In determining the variable income for 2025, the Supervisory Board took into account factors including the extent to which the 2025 budget was achieved. Although fluctuations occurred in some operating companies, growth in results was achieved at Group level. In addition, the Supervisory Board assessed progress on the specific strategic and operational objectives for each operating company; these include leadership and management development, cost control and process optimisation, and improvement and broadening of the product and market portfolio ‒ as well as strengthening commercial clout and operational performance in various regions. Economic and strategic challenges were sufficiently mitigated, resulting in margins being strengthened in 2025 and a foundation being laid to create sustainable value in the coming years. The Management Board’s commitment to sharing knowledge in the Group, active focus on ESG policy and exploration of M&A opportunities were also included in the assessment.

Remuneration of members of the Management Board

The Management Board under the articles of association receives employment terms appropriate to the position and responsibilities. In general, the other terms of employment of the Management Board are in the same range as those of other employees, such as the company car scheme. The entire remuneration policy was discussed and considered when the remuneration was being set.

The ratio of the average full-time salary for management relative to that for Hydratec employees is 15.0 (2024: 8.5). The ratio of the Management Board’s remuneration compared to employees increased due to higher remuneration payable in due course. As at the balance sheet date, Mr Aangenendt held 72,784 shares and Ms Slijkhuis held 1,260 shares. This number includes shares subject to a 3-year lock-up period.

The table below shows the salaries of the Management Board in the last five years in relation to the revenue, the operating result, the number of FTEs and the average salary of all employees within the Group.

Remuneration of the Supervisory Board

The remuneration of the Supervisory Board is approved by the General Meeting of Shareholders. The remuneration is not dependent on the company’s results. No remuneration in the form of shares or options is granted to the members of the Supervisory Board. The General Meeting of Shareholders set this remuneration at €40,000 a year for each member of the Supervisory Board on 24 April 2025. In addition, the chair of the Supervisory Board receives additional remuneration of €15,000 a year. Additional remuneration of €5,000 a year is granted to the chair of the Audit Committee. Below is an overview of the remuneration paid to the Supervisory Board for the past five financial years:

The management report as referred to in Part 9 of Book 2 of the Dutch Civil Code monitors the elements from the foreword to the historical summary inclusive. This version of the annual financial reporting of Hydratec Industries N.V. for the financial year ending on 31 December 2025 is not presented in the ESEF format as specified in the regulatory technical standards for ESEF (Delegated Regulation (EU) 2019/815). The set of ESEF reports can be downloaded at the download page.