Annual Report 2024

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CEO Investment Opportunity

While the resolution to approve the compensation system for the members of the Managing Board was passed by a large majority at the 2021 Annual General Meeting (approval rate: 93.83%), the 2023 Compensation Report of HUGO BOSS was resolved with a lower majority of 68.78% at the 2024 Annual General Meeting. The Supervisory Board and Managing Board primarily attribute this outcome to possible concerns regarding the CEO Investment Opportunity, an agreement established between Daniel Grieder and the Marzotto family prior to his appointment as Chief Executive Officer at HUGO BOSS in June 2021. At the same time, the voting result is not seen as a fundamental criticism of the key elements of the compensation system or the structure of the compensation report itself.

With the aim of taking the voting result into account, addressing the feedback gathered from capital market participants and further enhancing the level of transparency, HUGO BOSS has expanded its disclosures on the CEO Investment Opportunity already in the 2023 Compensation Report. These additional details, as outlined below, aim to both acknowledge the concerns raised and provide a clearer understanding of the agreement. In doing so, the Supervisory Board seeks to ensure full transparency regarding the CEO Investment Opportunity and to reaffirm its view that the agreement does not create a conflict of interest with other shareholders of HUGO BOSS and instead is fully aligned with shareholder interests.

Third-party agreement and thus not part of the compensation system

Prior to Daniel Grieder assuming his duties, the CEO Investment Opportunity was agreed between Daniel Grieder and the Marzotto family, which aims to provide an additional incentive for a substantial and sustainable increase in the share price of HUGO BOSS. As such, the CEO Investment Opportunity represents a third-party agreement between Daniel Grieder and the Marzotto family and is thus explicitly not part of the compensation system in accordance with Sec. 87a AktG. Therefore, it is also not to be included in the maximum compensation of Daniel Grieder.

No conflicts of interest existing

The Supervisory Board discussed the CEO Investment Opportunity at a plenary meeting on June 16, 2020, and noted it with approval. In the opinion of the Supervisory Board, there are no conflicts of interest, particularly in regard to any other shareholder of HUGO BOSS, arising from the CEO Investment Opportunity as it is directly tied to the long-term share price performance of HUGO BOSS. Ultimately, all shareholders in HUGO BOSS benefit from a sustainable increase in the share price.

Sustainable increase in share price required

The CEO Investment Opportunity was implemented by setting up an investment vehicle titled ZPG HOLDING S.àr.l. (“ZPG”). ZPG bought 625,000 HUGO BOSS shares in mid-2021 for an average share price of EUR 46.40 and will hold these shares until the occurrence of a so-called liquidity event. In this context, Daniel Grieder invested a total amount of EUR 1.5 million in ordinary shares in ZPG, with the rest of the investment provided by PFC S.r.l. and Zignago Holding S.P.A., each controlled by the Marzotto family, and a third-party bank financing. PFC S.r.l. and Zignago Holding S.P.A. hold the remainder of ordinary shares and certain preference shares, with limited economic rights ranking senior to the ordinary shares. Liquidity events are the exercise of a call option by ZPG, the exercise of a put option by Daniel Grieder, or ZPG selling the HUGO BOSS shares to a third party.

The call option may be exercised by ZPG either in the event that Daniel Grieder leaves HUGO BOSS or in a period of 120 days following the ordinary expiration of his employment contract with HUGO BOSS. If the call option is exercised based on a reason for which Daniel Grieder is responsible (e.g., termination by Daniel Grieder not based on good cause), he will receive the lower of either the fair market value of his ZPG shares or the amount of his initial investment. If the call option is exercised without Daniel Grieder having given cause for it (e.g., termination by HUGO BOSS not based on good cause), he will receive the fair market value of his ZPG shares.

The put option may be exercised by Daniel Grieder once the average HUGO BOSS share price during a period of 120 days exceeds specific thresholds. The minimum share price required for exercising the put option is EUR 75.10, representing an increase of 62% compared to the average purchase price of HUGO BOSS shares (EUR 46.40) and a 68% increase compared to the share price of HUGO BOSS as of December 31, 2024. The consideration, both in the event of exercising the put option or in case ZPG sells its HUGO BOSS shares to a third party, is the fair market value of the ZPG shares held by Daniel Grieder.

The fair market value of the ZPG shares held by Daniel Grieder is linked to the difference between the average purchase price of HUGO BOSS shares (EUR 46.40) and the average share price of HUGO BOSS shares during the 120 days prior to the liquidity event. If the average share price of HUGO BOSS during the 120 days prior to the liquidity event ranges between EUR 46.40 and EUR 75.00, Daniel Grieder will receive back the contributed amount of EUR 1.5 million. If the average share price during the 120 days prior to the liquidity event is less than EUR 46.40, the amount will be correspondingly lower depending on the average share price. By contrast, if the average share price during the 120 days prior to the liquidity event is EUR 75.10 or higher, the fair market value of the ZPG shares held by Daniel Grieder increases depending on the share price performance of HUGO BOSS. For example, an average share price of EUR 75.10 would result in a fair market value of EUR 7.1 million, an average share price of EUR 100.00 in a fair market value of EUR 14.8 million, and an average share price of EUR 126.00 in a fair market value of EUR 23.6 million.

Liquidity event not occurred as of December 31, 2024

Against the backdrop of the challenging and volatile trading environment for consumer discretionary stocks in 2024, the share price of HUGO BOSS fluctuated between EUR 32.07 and EUR 66.62 throughout the fiscal year. As of December 31, 2024, the share price of HUGO BOSS was EUR 44.78 and thus well below the minimum threshold of EUR 75.10 required to exercise the put option. Consequently, as of the end of fiscal year 2024, there were no conditions in place that could have caused a potential liquidity event. Also, since the CEO investment opportunity was established, the average share price of HUGO BOSS has never reached the minimum threshold of EUR 75.10 over a consecutive 120-day period, thereby preventing the exercise of the put option.

This underscores the ambitious nature of the CEO Investment Opportunity, as it requires a successful long-term business development, ultimately driving a sustainable increase in the share price. In the view of the Supervisory Board, even once the minimum share price is reached, the CEO Investment Opportunity offers a strong incentive not to exercise the put option immediately, as its fair value is expected to increase further in line with potential share price appreciation. Our Share

In summary, the Supervisory Board of HUGO BOSS is convinced that the CEO Investment Opportunity aligns with the interests of all shareholders. By providing an additional incentive for the consistent, successful, and sustainable execution of the Company’s Group strategy, it supports long-term business success for HUGO BOSS, significant share price appreciation, and enhanced shareholder value.