26. Related party disclosures

Business transactions between the Group and non-consolidated subsidiaries and associates or their subsidiaries as well as joint ventures primarily relate to supply relationships in connection with the purchase of raw materials or the sale of finished goods and are conducted at arm’s length. They are included in the following items of the Consolidated Financial Statements:

The substantial decline in revenue on transactions with associates and non-consolidated subsidiaries in the business year 2023/24 is due to the expiry of raw material deliveries to ArcelorMittal Texas HBI Holdings LLC (ArcelorMittal Texas HBI Group).

Receivables from and liabilities to associates and joint ventures as well as non-consolidated subsidiaries comprise both direct and indirect relationships.

In addition, there are business transactions with core shareholders that document a significant influence because the voestalpine shares are consolidated using the equity method. Business transactions are conducted at arm’s length and are presented as follows:

Interest expense of EUR 2.7 million (2022/23: EUR 1.5 million) was recognized in connection with the aforementioned financial liabilities as well as trade and other payables.

There are no trade payables from bills of exchange and trade payables from reverse factoring agreements with core shareholders as of the reporting date.

Under the first type of factoring agreement (see Note 29. Disclosures of transactions not recorded in the statement of financial position), receivables are sold to core shareholders at arm’s length. As of March 31, 2024, these receivables were recognized at a total of EUR 191.5 million (2022/23: EUR 230.7 million). Interest expense of EUR 5.4 million (2022/23: EUR 2.8 million) was recognized for the business year 2023/24 in this connection.

The non-inclusion of the non-consolidated entities in the Consolidated Financial Statements has no material impact on the Group’s net assets, financial position, and results of operations.

MANAGEMENT BOARD

The fixed compensation of the Management Board is determined by the General Committee of the Supervisory Board pursuant to Austrian legal requirements and is reviewed periodically.

The award of a bonus is subject to a target agreement to be concluded with the General Committee of the Supervisory Board that consists of quantitative and qualitative targets. The maximum bonus is limited to 200% of the annual gross salary for members of the Management Board and to 250% of the annual gross salary for the Chairman of the Management Board. If the agreed quantitative targets are achieved exactly, 60% of the maximum bonus applies; if the agreed qualitative targets are achieved, 20% of the maximum bonus applies. Any overachievement of the quantitative targets is taken into consideration proportionately until the maximum bonus is reached. The quantitative targets are “earnings before interest and taxes” (EBIT); “return on capital employed” (ROCE); and “operating working capital as a percentage of revenue.” The specific target amounts applicable to EBIT and ROCE are determined periodically (in each case for a period of three years) by the General Committee of the Supervisory Board in consultation with the Management Board. The target amount for operating working capital as a percentage of revenue is determined specifically for a given business year. The given target amounts are computed independently of the respective budget and/or the medium-term business plan, i.e., budget compliance does not mean that a bonus is granted. The qualitative targets for the business year 2023/24 were as follows: (1) the structuring, cost comparison and further development of the strategic energy and raw materials supply of the voestalpine Group up to calendar year 2030 and beyond on the basis of the structurally changed energy and raw materials requirements; and (2) “Employees: the competitive factor of the future,” development of a holistic HR strategy up to calendar year 2030 and beyond with special consideration of increasing the underrepresented gender in management positions.

In the reporting period, two members of the Management Board are entitled to a defined benefit pension due to pension commitments under legacy contracts or activities within the Group that preceded their appointment to the Management Board. The amount of the contractual pension payable to these two Management Board members depends on the length of their service. The amount of the annual pension equals 1.2% of the most recent annual gross salary for each year of service. However, the pension benefit may not exceed 40% of their most recent annual gross base salary.

A review of the adequacy of the claim to pension resulting from the contributions paid up to the time at which three members of the Management Board were reappointed to their positions was conducted in 2018, and an additional contribution to the existing defined contribution agreement was resolved (= 15% of the annual gross base salary). Disbursement of the additional defined contribution payment in five annual instalments started in the business year 2019/20 and ended on March 31, 2024.

Upon termination of their director’s contracts, Management Board members are granted severance pay that is modelled on the approach set forth in the Austrian Employment Act (Angestelltengesetz – AngG), pursuant to which the maximum allowable under the law may not be surpassed.

D&O insurance has been purchased for the members of the Management Board (as well as for the Group’s executives) and for the members of the Supervisory Board; the cost is borne by the company.

The compensation paid to the members of the Management Board of voestalpine AG for the business year 2023/24 comprises the following:

As of the reporting date, the outstanding balance of the variable compensation was EUR 5.02 million (2022/23: EUR 12.00 million), EUR 0.82 million of the post-employment benefits and EUR 0.47 million of the termination benefits. No advances or loans were granted to the members of the Management Board of voestalpine AG.

Pension payments in the amount of EUR 1.74 million (2022/23: EUR 1.61 million) were paid by the pension fund for former members of the Management Board with defined benefit pension agreements.

Dr. Carola Richter and Mag. Gerald Mayer were appointed members of the Management Board in the business year 2023/24, each with effect from April 1, 2024. In this context, Dr. Carola Richter was paid a sign-in bonus of EUR 1,200,000, gross, and Mag. Gerald Mayer was paid a sign-in bonus of EUR 585,000, gross, in the business year 2023/24.

SUPERVISORY BOARD

Pursuant to Article 15 of the AoA of voestalpine AG, the amount of the compensation and of the attendance fee payable to the Supervisory Board members elected by the Annual General Meeting (AGM)—i.e., the shareholder representatives—is determined by the AGM.

The members of the Supervisory Board nominated by the Works Council are not entitled to any compensation for their work on the Supervisory Board, nor to any attendance fees.

The Management Board and the Supervisory Board will propose the following Supervisory Board compensation and the amount of the attendance fee to the Annual General Meeting on July 3, 2024:

Subject to approval by the Annual General Meeting on July 3, 2024, the total compensation payable to the Supervisory Board (including attendance fees) for the business year 2023/24 is EUR 0.60 million (2022/23: EUR 0.51 million).

The compensation of the Supervisory Board for the business year 2023/24 will be paid at the latest 14 days after the Annual General Meeting on July 3, 2024.

No advances or loans were granted to members of the Supervisory Board of voestalpine AG.