Report of the Supervisory Board

Dear Readers,

Overall conditions on the capital markets have changed significantly over the past two years. The abrupt turnaround in interest rates put the economy – and the real estate market along with it – under severe pressure. Vonovia did not escape these developments unscathed either. The impact was particularly evident in the value adjustments that had to be made to the residential property portfolio and in the Management Board’s decision to adjust the company’s investment policy, particularly with regard to the new construction business.

In a challenging environment, the Management Board proposed an appropriate solution for the challenges of 2023. Selective portfolio sales and increased cost discipline ensured that the Group remains on a stable foundation. The intact business model, which Vonovia used to provide its customers with reliable support once again over the past year, remains a key pillar.

In the 2023 fiscal year, the Supervisory Board continuously monitored the Management Board’s management activities and provided the Management Board with regular advice concerning the running of the company. We were able at all times to establish that their actions were lawful, expedient and regular. The Management Board notified us regularly, promptly and comprehensively, both in writing and verbally, of all circumstances and measures that were relevant to the company. The Management Board fulfilled its information obligations to an appropriate extent at all times.

At our plenary meetings and in our committees, we always had ample opportunity to critically appraise the reports and proposals submitted by the Management Board and to contribute our own suggestions. We discussed and tested the plausibility of all business occurrences of significance to the company, as communicated to us by the Management Board in written and verbal reports, in detail. Where required by law or the Articles of Association, we granted our consent to individual business transactions.

Cooperation Between the Management Board and the Supervisory Board

The Supervisory Board consisted of twelve members in the past fiscal year, and ten members as of the end of the Annual General Meeting on May 17, 2023. We were on hand to support the Management Board in the various meetings held and also in its key decisions. We also kept a close eye on the company’s business development outside of meetings. The Management Board regularly informed us about key events and the company’s strategic direction as part of a collaboration based on trust.

My predecessor Jürgen Fitschen and I, as Chair of the Supervisory Board, maintained regular and close dialogue with the Chairman of the Management Board in particular, but also with the other Management Board members, even outside of the Supervisory Board meetings. The employee representative bodies were involved in communications on key company matters via the Management Board.

The Chairman of the Management Board informed me on company-related topics emerging from the Management Board’s discussions with representatives of the Group works council, going into an appropriate level of detail. Other members of the Supervisory Board were notified of any important findings promptly, or at the latest by the next board meeting.

Last year, we decided to carry out an effectiveness test within the Supervisory Board with the involvement of an experienced external consultancy firm. The evaluation was performed at the end of 2023. It revealed that our Supervisory Board works efficiently in both its work in plenary sessions and in its committee work. In the first quarter of 2024, we will address the results of the evaluation again separately in order to see how we can implement the recommendations for action they include.

Main Remit

In line with the duties assigned to the Supervisory Board by law, the Articles of Association and the rules of procedure, we once again closely scrutinized the Group’s operational, economic and strategic progress in the 2023 fiscal year. The main issues covered included the development of overall conditions on the markets, changes in the capital market environment and their impact on portfolio and new investments. We also discussed the topics of digitalization, portfolio strategy and regulation with the Management Board in detail.

Once again, the topic of governance was a key issue for the Supervisory Board. The regulatory requirements also require us to analyze our business activities and the corresponding implementation. We will be providing close support in this matter.

We also took an in-depth look at the future structure of the Supervisory Board and the Management Board. As far as the Management Board is concerned, we discussed the management structure, including possible succession arrangements. In 2023, the Supervisory Board was faced with the task of (re)appointing candidates for numerous Supervisory Board mandates. Discussions were held and preparations made in this regard as part of the strategic succession planning process.

The Chair of the Supervisory Board is engaged in dialogue with the relevant investors on governance issues as part of a regular Governance Roadshow, the last of which was held at the end of February 2023.

Meetings

In the 2023 fiscal year, the Supervisory Board met a total of seven times to consult and pass resolutions: four times at face-to-face meetings (March, May, September, December) and three times via conference call (February, August, October). The Committee made decisions using a written circular in seven cases (February, April, three times in May, twice in December).

Any individual members absent from the seven meetings had always been excused. Particularly in the case of the extraordinary meetings, these absences were work-related. The absent members looked at the meeting documents in detail and participated in the decisions made by issuing voting instructions to the Chair of the Supervisory Board.

The attendance rate for Supervisory Board and committee meetings averaged 96%. No member of the Supervisory Board took part in less than half of the meetings during their term of office. The same applies to participation in committee meetings. In preparation for the meetings, the Management Board submitted timely, comprehensive and valid written reports and resolution proposals to us.

Information on the Individual Meetings and Written Resolutions

On February 28, 2023, the Supervisory Board came together at an extraordinary meeting held as a video conference. The joint venture project with Apollo was the main topic of discussion. Following a detailed discussion of the key economic and legal parameters, we approved the joint venture transaction proposed by the Management Board and authorized the Management Board to conduct the final negotiations and sign the agreement. We also discussed possible dividend scenarios and took the findings from the Governance Roadshow on board. We also discussed HR matters relating to the Management Board and the Supervisory Board. Prior to the discussions on HR matters relating to the Management Board, a resolution regarding amendments to the relevant employment contracts had been adopted using the written procedure on February 20, 2023.

On March 16, 2023, we met to adopt the balance sheet. We approved the company’s annual and consolidated financial statements as of December 31, 2022, including the combined management report and the Non-financial Declaration. We also approved the ESG Report, the Remuneration Report and the Supervisory Board Report for 2022.

We approved the proposal for the appropriation of profit to be made to the Annual General Meeting as well as the proposal that the dividend be paid either in cash or in the form of shares. Within this context, we transferred the corresponding authorities to utilize the authorized capital 2022 to the Finance Committee. We approved the recommendation made by the Audit Committee to appoint PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft in Essen as the auditor of the annual and consolidated financial statements for the 2023 fiscal year, and as the auditor for the review of interim financial reports for the 2023 fiscal year and the first quarter of 2024. We also engaged PwC to review the Non-financial Group Declaration and ESG reporting, as well as the Sustainability Report for the 2023 fiscal year.

Over and above the Group’s overall performance, we discussed the operational and economic situation in the Development, Value-add and Care segments in particular. Other points of discussion included capital market developments, the joint venture project with the potential partner Apollo, and further portfolio disposals.

One extraordinary topic of discussion was a compliance case that led to a search being performed at the corporate headquarters on March 6. The Management Board explained that Vonovia was listed as an injured party in the investigation proceedings. It gave us a detailed account of the context and the measures it had taken/initiated. The Management Board assured us that, based on the information currently available, this would not result in any material impact on Vonovia’s net assets, financial position and results of operations. We acknowledged and approved these statements.

Under the “HR-related matters” agenda item, we discussed remuneration issues relating to the Management Board (including target agreements, short-term and long-term incentive plans, the target achievement level under the 2022 short-term incentive plan, payment of the 2019 long-term incentive plan tranche) and passed corresponding resolutions.  We discussed and adopted resolutions on the candidates proposed for election to the Annual General Meeting with regard to the composition of the Supervisory Board. As regards the Management Board, we discussed the establishment of a Chief Human Resources Officer (CHRO) position and a corresponding appointment.

We used the written procedure to approve the joint venture with the investor Apollo regarding a stake in the Südewo portfolio on April 23, 2023. On May 3, 2023, we passed written resolutions on two contractual provisions with members of the Management Board and an adjustment to the distribution of duties within the Management Board.

After the Annual General Meeting, we held our inaugural meeting on May 17, 2023. At this meeting, Clara-Christina Streit was appointed Chair and Vitus Eckert her deputy. We then passed a resolution to amend the rules of procedure for the Supervisory Board and the Management Board, and elected the Supervisory Board committees in accordance with the new rules of procedure. Clara-Christina Streit (as Chair), Vitus Eckert and Dr. Ariane Reinhart were elected to the Governance and Nomination Committee. Dr. Ariane Reinhart (as Chair), Jürgen Fenk, Dr. Florian Funck and Clara-Christina Streit were elected as members of the HR and Remuneration Committee. Dr. Florian Funck (as Chair), Vitus Eckert, Dr. Ute Geipel-Faber and Matthias Hünlein were appointed to the Audit, Risk and Compliance Committee. The Strategy, Finance and Sustainability Committee was elected with Jürgen Fenk (as Chair), Dr. Daniela Gerd tom Markotten, Hildegard Müller, Clara-Christina Streit and Christian Ulbrich. We confirmed these resolutions in a video conference held on August 3, 2023.

On September 6 and 7, 2023, we held a two-day meeting to discuss the company’s strategy in detail. Together with the Management Board, we discussed the changes in the overall conditions on the capital markets and their impact on Vonovia in the first part of the meeting. The Management Board explained the measures taken by the company in response to the lower value of the portfolio in order to safeguard Vonovia’s financial stability, and presented scenarios for future action. We encouraged the Management Board in its strategic approach, taking into account the issues of balance sheet stability, cost discipline and perception on the capital market (including rating).

We continued with the strategic discussions in the second part of the meeting, addressing the corporate mission statement, the business model in the context of megatrends, the potential offered by the management platform, optimization of the capital structure and the cost of capital, and the investment program. Further topics of discussion included development opportunities for the Value-add and Development segments, as well as potential courses of action for the companies outside of Germany.

We also took an in-depth look at the reports from the newly established committees: We approved the recommendation made by the Governance and Nomination Committee to seek professional support for succession planning for the Management Board going forward, and to engage an HR consultancy firm for this purpose. We also discussed proposals for external consultancy services for the planned Supervisory Board effectiveness test. The HR and Remuneration Committee reported on the results of the review of the remuneration system to ensure compliance with corporate governance requirements and check that the remuneration components were in line with standard market levels.

On October 25, 2023, we held an extraordinary video conference with the Management Board to discuss a further joint venture with Apollo and, within this context, the sale of shares in a selected portfolio of residential properties. We authorized the Management Board to finalize the negotiations and conclude the agreements.

At a face-to-face meeting of the Supervisory Board held on December 5 and 6, 2023, we discussed the 2024 budget presented by the Management Board in detail and addressed, among other things, the reports from the committees: During the first part of the meeting on December 5, 2023, we mainly dealt with matters relating to the Supervisory Board and HR matters concerning the Management Board. In line with the recommendation put forward by the Governance and Nomination Committee, we decided to carry out an effectiveness test within the Supervisory Board with the support of an experienced external consultancy firm.

We also discussed the topics to be addressed in further training sessions for the Supervisory Board and confirmed our decision to continue to include specific topics related to the residential real estate sector and governance in future training. We also took advantage of presentations offered by management and executives within this context. We took a detailed look at rent trends, the rent indices and their application, as well as the effects of application on business development.

As part of our discussions on HR-related matters, we discussed succession planning for the Management Board and Supervisory Board. The Governance and Nomination Committee is supported in this work by an HR consultancy firm. Based on an evaluation of market mapping exercises carried out based on predefined qualifications profiles, we compiled a pool of potential candidates to fill any Board positions that become vacant. These lists of potential candidates are being maintained in order to safeguard succession planning by the Supervisory Board committees.

With the help of an experienced remuneration consultant, we looked at the remuneration paid to the Management Board and found it to be in line with market practice. As a result, we followed the recommendation made by the HR and Remuneration Committee and confirmed the appropriateness of the remuneration paid to the Management Board members. This involved discussing whether an individual performance criterion should be agreed with the members of the Management Board for the purposes of their variable remuneration (short-term incentive).

We also endorsed the recommendation made by the Governance and Nomination Committee to issue an updated Declaration of Conformity.

The second part of the Supervisory Board meeting held on December 6, 2023 focused on the Management Board’s budget and medium-term planning. The Management Board provided us with information on current economic developments and explained its key planning assumptions for 2024 and beyond. The Management Board also addressed development opportunities for the Development segment within this context. We approved the 2024 budget presented and acknowledged the five-year plan presented by the Management Board.

On December 18, 2023, we used the written procedure to approve the target values for the Sustainability Performance Index (SPI) as part of the 2024 budget.

Also on December 18, 2023, we used the written procedure to adopt the agreement of an individual target with the members of the Management Board as part of their variable remuneration. The individual contributions to be made by the members of the Management Board are to be defined in the first quarter of 2024.

Committees and Their Work

We have established committees within the Supervisory Board in order to perform our duties effectively. The committees prepare subjects which are to be discussed and/or resolved by the Supervisory Board. In addition, they pass further resolutions that we have delegated to them instead of passing them on the Supervisory Board as a whole.

Up until the Annual General Meeting held on May 17, 2023, our work was supported by three committees: the Audit Committee, the Finance Committee and the Executive and Nomination Committee.

At the inaugural meeting on May 17, 2023, we split tasks and key topics among four committees. The Executive and Nomination Committee was abolished and two new committees formed, a Governance and Nomination Committee and an HR and Remuneration Committee. Duties were reassigned and additional duties were entrusted to the committees.

• Governance and Nomination Committee: This committee holds regular discussions on long-term succession planning for the Management Board and Supervisory Board, as well as the company’s corporate governance.
• Audit, Risk and Compliance Committee: This committee handles, in particular, the monitoring of the accounting process, issues related to valuation, the effectiveness of the internal control system, risk management system and internal audit system, the audit of the annual financial statements and compliance.
• Strategy, Finance and Sustainability Committee: This committee advises the Management Board on corporate and divisional strategy and on sustainability strategy, in particular on planning the strategic framework for all Group-wide sustainability measures and on matters of strategic importance to the company and its affiliated companies. It also advises the Management Board on issues related to the digitalization of society, including the topics of technological innovation and transformation.
• HR and Remuneration Committee: This committee prepares resolutions of the Supervisory Board regarding the introduction of, and amendments to, the remuneration system for the Management Board, including key contractual elements, targets and performance, as well as the definition of the specific remuneration to be paid to individual Management Board members. It also advises the Management Board on matters related to HR strategy (including employer branding, human capital development, performance management, remuneration) and restructuring measures.

Details on the establishment of the committees and their tasks were included in the rules of procedure for the Supervisory Board and are explained in the corporate governance declaration.

The Audit Committee, and later the Audit, Risk and Compliance Committee, maintained close contact with the auditors of the financial statements at the quarterly meetings. The Committee, represented by the Chair, and the auditors also maintained close dialogue in the run-up to the quarterly Audit Committee meetings.

In addition to regular dialogue between the Audit Committee/Governance and Nomination Committee and the auditors at the quarterly meeting, there is also regular communication between the Chair of the Audit Committee and the auditors, particularly before the quarterly meetings of the Audit Committee.

Audit Committee (until May 17, 2023)

The Audit Committee had four members up until the 2023 Annual General Meeting. The Chairman was Prof. Dr. Edgar Ernst. The other members were Vitus Eckert, Jürgen Fenk and Dr. Florian Funck. Jürgen Fitschen and Clara-Christina Streit attended the meetings held in 2023 as permanent guests. The Audit Committee met twice in 2023 (March, May).

At the hybrid meeting held on March 15, 2023, the Committee assessed the annual and consolidated financial statements as of  December 31, 2022, as well as the combined management report for the 2022 fiscal year. The Committee’s review took account of both the company’s reports and the reports prepared by the auditor KPMG. The auditor audited the presentation of the consolidated financial statements in ESEF format (European Single Electronic Format), as required in the 2022 fiscal year, and confirmed that it is legally compliant. KPMG also issued an unqualified audit opinion for the Non-financial Declaration, including the taxonomy reporting as part of a limited assurance engagement.

The Committee recommended that the Supervisory Board adopt the annual financial statements and the combined management report for the 2022 fiscal year and that it approve the consolidated financial statements and the combined management report for the 2022 fiscal year. The Committee also recommended that Vonovia SE’s Non-financial Declaration and ESG Report be approved. The Audit Committee approved the proposal for the appropriation of profit made by the Management Board.

In line with a decision already made as part of a selection procedure, the Committee recommended that the Supervisory Board appoint PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft in Essen as the auditor of the annual and consolidated financial statements for the 2023 fiscal year, and as the auditor for the review of interim financial reports for the 2023 fiscal year.

The Audit Committee also addressed the 2022 annual report of the Internal Audit function and a compliance case that led to a search being conducted at the corporate headquarters as a result of criminal investigations against current and former employees. It obtained detailed information about the background, the current situation and the measures taken by the company. It acknowledged and approved these measures, asking to be kept up-to-date on further developments at regular intervals. The Committee also acknowledged and approved the Internal Audit reports on the internal control system.

At a hybrid meeting held on May 3, 2023, the Audit Committee looked at the condensed consolidated interim financial statements as of March 31, 2023. The new auditor PwC confirmed that the transition to the mandate had gone smoothly. The Committee acknowledged and approved the auditor’s report and the condensed consolidated interim financial statements and interim statement as of March 31, 2023. It consulted with the Management Board on the economic development of the Group and the segments, the valuation of the portfolio and planned transactions.

In connection with the compliance report, the Committee also discussed the status of the ongoing investigations into the above-mentioned compliance case in detail at this meeting. The Committee also addressed the Group’s risk-bearing capacity, the risk management report, the report on the company’s tax situation and the Internal Audit status report.

Audit, Risk and Compliance Committee (as of May 17, 2023)

The Audit, Risk and Compliance Committee had four members in the reporting year. Dr. Florian Funck was Chair of this Committee. The other members were Vitus Eckert, Dr. Ute Geipel-Faber and Matthias Hünlein. Clara-Christina Streit attended the meetings as a permanent guest. The Audit, Risk and Compliance Committee held two meetings in 2023 (August, November).

At its first meeting held on August 3, 2023 as a hybrid event, the Committee discussed the future organization of collaboration and the future focus of its work. The decision was made to involve the auditing firm even more closely in the topics to be covered at the meetings. The Committee acknowledged and approved the consolidated half-year financial statements, including the interim financial report, as of June 30, 2023. The Committee approved the 2023 audit budget and the additional audit expenses for 2022. Other topics of discussion included real estate valuation and compliance, including the current compliance case.

On November 2, 2023, the Audit, Risk and Compliance Committee discussed the condensed consolidated interim financial statements as of September 30, 2023 at a hybrid meeting, acknowledging and approving them. The discussions covered topics including the report of the company and the auditor. The Committee joined the Management Board to discuss the success of sales projects, financing issues and credit ratings as well as the forecast for 2023 and the outlook for 2024.

The auditor presented information on the procedure for the audit of the annual financial statements and quality assurance. The following key audit matters were also explained: the valuation of investment properties, the goodwill impairment test, the valuation of development projects and the valuation of shares in affiliated companies.

The Committee obtained detailed information on the importance of cyber security for the Vonovia Group and the implementation status of the cyber security measures. Other topics covered included risk developments in the second half of 2023, key legal disputes, potential conflicts of interest, the compliance report and the internal audit report on the status of the audits. The Committee approved the Internal Audit department’s audit plan for the 2024 fiscal year.

Finance Committee (until May 17, 2023)

In 2023, the Finance Committee comprised five members. The Chairperson was Clara-Christina Streit. The other members were Jürgen Fitschen, Dr. Ute Geipel-Faber, Daniel F. Just and Christian Ulbrich. The Finance Committee met twice in the reporting year (February and May).

In a video conference held on February 23, 2023, the Finance Committee discussed the status of negotiations with the joint venture partner Apollo. As well as discussing the contractual details, the Management Board explained to the Committee the financial appeal of the joint venture structure compared with other currently available financing options and explained the likely classification of the investment as equity by the rating agencies. The Committee also discussed possible dividend considerations with the Management Board.

On May 1, 2023, the Finance Committee used the written procedure to approve a transaction to sell a real estate portfolio with a volume of € 550 million.

At a hybrid meeting held on May 16, 2023, the Finance Committee addressed the topic of dividends and approved the Management Board’s fundamental resolution on the partial use of the 2022 authorized capital in connection with the 2023 scrip dividend.

Strategy, Finance and Sustainability Committee (as of May 17, 2023)

The Strategy, Finance and Sustainability Committee comprised five members in 2023. It was chaired by Jürgen Fenk. The other members were Dr. Daniela Gerd tom Markotten, Hildegard Müller, Clara-Christina Streit and Christian Ulbrich. The Strategy, Finance and Sustainability Committee met five times in the reporting year (twice in August, once in November, twice in December).

On June 9, 2023, the Committee used the written procedure to approve the Management Board’s resolution on the use of the 2022 authorized capital as part of a non-cash capital increase in connection with the granting of the 2023 scrip dividend.

At its meeting held on August 3, 2023, the Committee addressed the preparation of the strategy discussion at a plenary Supervisory Board session in detail. At the meeting, the Management Board explained the importance of the capital market, the general market situation and sustainability for the company’s future strategic course.

The Committee continued these discussions in a video conference held on August 28, 2023. The interplay between the situation on the real estate and financial markets and Vonovia’s business decisions was examined in greater depth.

A committee meeting held on November 16, 2023 by video conference focused on the development strategy and budget planning for 2024. The Management Board supplied the committee members with information on the company’s response to the changes in market conditions and explained its decision to continue to develop construction projects for the future so that they would be ready for construction at the right time.

The video conference held on December 1, 2023 once again addressed the topic of the budget for 2024. With the support of the Management Board, it went into greater detail during the discussion, taking into account relevant aspects such as earnings, investments, liquidity, debt and dividends.

At its final meeting of the year held on December 14, 2023, the Committee discussed the Sustainability Performance Index (SPI) target values, confirmed them for the 2024 budget in line with the Management Board’s proposal, and recommended that the Supervisory Board approve them.

Executive and Nomination Committee (until May 17, 2023)

In the fiscal year under review, the Executive and Nomination Committee consisted of five members. The Committee was headed up by Jürgen Fitschen as Chairman of the Supervisory Board. The other members were Matthias Hünlein, Hildegard Müller, Dr. Ariane Reinhart and Clara-Christina Streit. The Executive and Nomination Committee met twice in 2023 (March and April).

At a video conference held on March 8, 2023, the Committee discussed the appointment of the position of CHRO on the Management Board and Management Board remuneration issues. Prior to the discussions on HR-related matters relating to the Management Board, a resolution regarding amendments to the relevant employment contracts had been adopted using the written procedure on February 14, 2023.

Following a discussion on target achievement for the purposes of variable remuneration under the STIP (Short-Term Incentive Plan) for the 2022 fiscal year and the LTIP (Long-Term Incentive Plan) 2019 tranche, the Committee decided to recommend to the Supervisory Board that the payout amounts be defined in accordance with the results presented.

The Committee also discussed and approved the nomination proposals for appointments to the Supervisory Board to be presented at the Annual General Meeting on May 17, 2023.

On April 28, 2023, the Executive and Nomination Committee held a video conference to discuss, among other things, the distribution of duties within the Management Board. The Committee recommended to the Supervisory Board that Ruth Werhahn be appointed to the CHRO position on the Management Board. Another topic was possible succession planning for Supervisory Board mandates at the 2025 Annual General Meeting.

On May 2, 2023, the Committee passed written resolutions on two decisions regarding contractual provisions with members of the Management Board and an adjustment to the distribution of duties. It also made a corresponding recommendation for a resolution to be adopted by the Supervisory Board.

Governance and Nomination Committee (as of May 17, 2023)

The Governance and Nomination Committee consisted of three members in the reporting year. The Committee was headed up by Clara-Christina Streit as Chair of the Supervisory Board. The other members were Vitus Eckert and Dr. Ariane Reinhart. The Governance and Nomination Committee met three times in the fiscal year (July, September, November).

At a video conference held on July 31, 2023, the Committee addressed the Supervisory Board effectiveness test conducted with the support of an external consultancy firm. The Committee discussed performance management and mandatory succession planning for the Supervisory Board. The Committee also discussed the involvement of experienced external HR consultants in the mandatory succession planning process for the Management Board. In addition, the Committee addressed the topic of a permanent education agenda in order to be able to recommend a selection of suitable further training events to the Supervisory Board.

At the meeting held on September 6, 2023, the Committee addressed the succession planning process for the Management Board. With the support of an HR consultant, the committee members agreed on skills and qualifications profiles to be used in the market mapping process. The Committee recommended that the Supervisory Board draw up a list of names for existing management functions to enable the Supervisory Board to approach potential candidates if need be.

The meeting on November 30, 2023 involved a discussion of the results of the suitability assessment performed by the Supervisory Board in November. As part of the self-assessment, the Supervisory Board members provided information on their qualifications and skills profile as well as other governance requirements. This was used as a basis to confirm and expand the qualifications and skills profile already stored for the Supervisory Board. The Committee verified the information provided by the members of the Supervisory Board and found that the company complies with the governance regulations. It made a recommendation to the Supervisory Board regarding the issue of the annual Declaration of Conformity. It also recommended that the Supervisory Board appoint a consultancy firm to support the Supervisory Board in its effectiveness test.

The Committee also dealt with the disclosure of a conflict of interest by a member of the Supervisory Board. In the context of a tender for consultancy services, a company in which the Supervisory Board member concerned holds a management position was to be included. The committee acknowledged the Supervisory Board member’s declaration stating that he was not involved in the tender process and decided that the company could participate in the tender. This decision did not set any precedent regarding the need for the Committee’s approval of any contract that might be concluded. The Committee also dealt with HR matters relating to the Management Board.

HR and Remuneration Committee (as of May 17, 2023)

In the fiscal year under review, the HR and Remuneration Committee consisted of five members. Dr. Ariane Reinhart assumed the position of Chair. The other members were Vitus Eckert, Jürgen Fenk, Dr. Florian Funck and Clara-Christina Streit. The HR and Remuneration Committee met three times during the fiscal year (in September and twice in November).

At the meeting held on September 6, 2023, the Committee addressed the Management Board remuneration system. A review assisted by a remuneration consultant confirmed both that the system complied with the German Corporate Governance Code (GCGC) and that the renumeration components were in line with market practice.

Given that the Management Board remuneration system was found to be compliant with the relevant regulations, the Committee used the video conference held on November 16, 2023 to discuss areas of action that could be taken into account in an adjusted remuneration system to enhance the latter in order to be able to present these findings to the Annual General Meeting for approval in 2025.

The Committee used the meeting on November 30, 2023 to verify that the Management Board remuneration was in line with market practice. The Committee consulted market data and the expertise of a remuneration consultant as part of this process. The Committee found that the remuneration paid to members of the Management Board does not exceed the standard market remuneration, and recommended that the Supervisory Board confirm the appropriateness of the remuneration for members of the Management Board. The Committee also discussed the variable remuneration paid to the Management Board (STIP and LTIP). As regards the STIP, the Committee recommended to the Supervisory Board that an individual target be agreed with each member of the Management Board.

Corporate Governance

The Management Board and Supervisory Board of Vonovia SE are committed to the principles of good corporate governance. As a result, the members of the Supervisory Board once again looked at the German Corporate Governance Code in the reporting year. On December 12, 2023, the Management Board and the Supervisory Board issued a Declaration of Conformity pursuant to Section 161 of the German Stock Corporation Act (AktG). The Management Board also reports, including on behalf of the Supervisory Board, on corporate governance at Vonovia in the declaration on corporate governance. Both declarations will be permanently published by the company on its website for perusal.

Audit

After being appointed at the Annual General Meeting on May 17, 2023 to audit the financial statements for the 2023 fiscal year, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Essen, has duly audited the annual financial statements and consolidated financial statements of Vonovia SE as of December 31, 2023, and the combined management report for the 2023 fiscal year and has expressed an unqualified opinion thereon. The Non-financial Group Declaration, which is set out in a separate section of the combined management report, was subjected to a separate limited assurance audit conducted by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Essen, in accordance with ISAE 3000. In accordance with Section 317 (4) of the German Commercial Code (HGB), KPMG also assessed the risk early warning system of Vonovia SE.

The auditor had affirmed its independence to the Chair of the Audit, Risk and Compliance Committee and duly declared that no circumstances exist that could give grounds for assuming a lack of impartiality on its part. The audit assignment was awarded to PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Essen, by the Chair of the Audit Committee in line with the Committee’s resolution and the choice of auditor made by the shareholders at the Annual General Meeting.

The annual financial statements were prepared by the Management Board in accordance with the German commercial law and stock corporation law provisions, including the generally accepted accounting practice. The consolidated financial statements were prepared by the Management Board in accordance with the International Financial Reporting Standards (IFRS), as applied in the European Union, as well as the supplementary provisions applicable pursuant to Section 315e (1) HGB.

For the annual financial statements and the consolidated financial statements, Vonovia SE prepared a combined management report based on the requirements set out in Sections 315, 298 (2) HGB. Every member of the Supervisory Board received copies of the annual financial statements, the consolidated financial statements, the combined management report and the auditor’s report in good time. On the basis of the preliminary examination and assessment by the Audit, Risk and Compliance Committee, about which the Audit, Risk and Compliance Committee Chair reported to the Supervisory Board, the Supervisory Board has scrutinized in detail the annual financial statements, consolidated financial statements and combined management report of Vonovia SE for the 2023 fiscal year and also considered the Management Board’s proposal for the appropriation of profit. With regard to the Non-financial Declaration to be published pursuant to the CSR Directive Implementation Act, the Supervisory Board complied with its review obligation.

At both the joint meeting on March 14, 2024 with the Audit Committee and the Supervisory Board meeting on March 14, 2024, the auditors reported on their findings, including the strategic audit objectives and key audit matters. The strategic audit objectives and the key audit matters set out in the auditor’s report had been defined by the auditor within the context of his independent mandate in the second half of 2023, and had already been discussed and agreed upon with the Audit Committee in advance.

In the 2023 fiscal year, with regard to the consolidated financial statements, particularly key audit matters included the valuation of investment properties, the value of goodwill and the valuation of properties in development and construction. One focal point of the audit of the individual financial statements was the valuation of shares in affiliated companies in light of the increased interest rates.

The auditors gave detailed answers to our questions. After an in-depth review of all documentation, we found no grounds for objection. As a result, we concurred with the auditors’ findings. On March 14, 2024, we followed the Audit Committee’s recommendation and approved the annual financial statements and consolidated financial statements of Vonovia SE, as well as the combined management report. The annual financial statements are thus duly adopted.

Remuneration Report

The Management Board and Supervisory Board prepared a report on the remuneration granted and owed to the members of the Management Board and the Supervisory Board in the 2023 fiscal year. The remuneration report was reviewed by the auditor to check that it included the disclosures required by law under Section 162 (1) and (2) AktG. As well as checking the statutory requirements, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Essen, also audited the content of the report. The remuneration report, including PwC’s audit report, was published on the company’s website.

Dividend

The Supervisory Board considered the Management Board’s proposal for the appropriation of profit. It gave particular consideration to the liquidity of the company/the Group, tax-related aspects and financial and investment planning. Following the audit, we agree with the proposal for the appropriation of profit set out by the Management Board, namely the proposal that, from the profit for the 2023 fiscal year, a dividend of € 0.90 per share or € 733,180,498.20 in total on the shares of the share capital as of December 31, 2023 be paid to the shareholders and the remaining amount be carried forward to the new account or be used for other dividends on shares carrying dividend rights at the time of the Annual General Meeting that go beyond those as of December 31, 2023.

As in the previous fiscal years, including 2022, the dividend for the 2023 fiscal year, payable after the Annual General Meeting in May 2024, will again include the option of a non-cash dividend in shares, to the extent that the Management Board and the Supervisory Board consider this to be in the interests of the company and its shareholders.

Personnel

The following changes arose on the Management Board in the reporting year: With effect from July 1, 2023, Helene von Roeder left the Management Board at her own request. Ruth Werhahn joined the Management Board with effect from October 1, 2023. In her role as Chief Human Resources Officer (CHRO), she is responsible for the newly established HR executive division.

The following changes arose on the Supervisory Board in the reporting year: At the end of the Annual General Meeting on May 17, 2023, Jürgen Fitschen, who had previously chaired the Supervisory Board, his deputy Prof. Edgar Ernst and Daniel F. stepped down from the Supervisory Board. On behalf of the Supervisory Board as a whole, I would like to thank the members of the Supervisory Board who have left for their long-standing commitment and constructive cooperation in the spirit of trust.

Dr. Daniela Gerd tom Markotten was appointed as a new member of the Supervisory Board at the Annual General Meeting. Clara-Christina Streit took over as Chair of the Supervisory Board at the inaugural Supervisory Board meeting held on May 17, 2023, with Vitus Eckert assuming the position of Deputy Chair. By the end of the Supervisory Board meeting, the number of Supervisory Board members had been reduced from twelve to ten.

Concluding Remarks

On behalf of the Supervisory Board, I would like to thank the Management Board for once again successfully guiding the company through a challenging fiscal year. We would like to thank the company’s employees for their considerable commitment and for being there for our customers and partners. We would like to thank the employee representative bodies for another year of constructive collaboration.

Bochum, March 14, 2024

On behalf of the Supervisory Board

Clara-Christina Streit