Invitation

Transcription

1 Invitation to the General Meeting of OSRAM Licht AG, on February 14, 2017

2 OSRAM Licht AG Munich, Germany Securities identification number (WKN) LED 400 ISIN DE000LED4000 Dear shareholders, We hereby give notice of the General Meeting of OSRAM Licht AG to be held at the ICM (Internationales Congress Center München), Am Messesee 6, Messegelände, Munich, Germany, on Tuesday, February 14, 2017, starting at 10 a.m. Agenda 1. Presentation of the adopted annual financial statements, the approved consolidated financial statements, and the combined management report for OSRAM Licht AG and the Group for fiscal year 2015/2016, including the explanatory report on the disclosures in accordance with sections 289(4) and 315(4) of the German Commercial Code (Handelsgesetzbuch) as of September 30, 2016, plus the report of the Supervisory Board, the corporate governance report, and the remuneration report for fiscal year 2015/2016 The documents referred to above are available on our website at and may be inspected at the registered office of OSRAM Licht AG, Marcel-Breuer-Strasse 6, Munich. They will also be sent to shareholders on request. In addition, the documents will be available at the General Meeting, where they will be explained in more detail. The Supervisory Board has already approved the annual financial statements prepared by the Managing Board and the consolidated financial statements; the annual financial statements have thus been adopted (section 172 of the German Stock Corporation Act (Aktiengesetz)). For this reason, the General Meeting does not have to vote on any resolution relating to Agenda Item Resolution on the appropriation of OSRAM Licht AG s net retained profit The Supervisory Board and the Managing Board propose that OSRAM Licht AG s net retained profit of 157,949, for fiscal year 2015/2016 be used to distribute a dividend of 1.00 per dividend-bearing share and to appropriate an amount of 53,260, to other retained earnings, with the remaining amount being carried forward to the next accounting period. The total dividend thus amounts to 98,595,968 for 98,595,958 dividend-bearing shares. The 6,093,432 treasury shares held by the Company at the time the annual financial statements for fiscal year 2015/2016 were prepared are not eligible for dividends and are not included in the abovementioned number of dividend-bearing shares forming the basis for the calculation of the total dividend. The proposal for the appropriation of net retained profit is therefore as follows: Net retained profit: 157,949, Dividend to be paid to shareholders: Appropriation to other retained earnings: 98,595, ,260, Profit carried forward: 6,093, If the number of dividend-bearing shares for fiscal year 2015/2016 changes in the period up to the date of the General Meeting, an amended resolution will be presented to the General Meeting for voting. In such amended version, the proposed dividend will remain at 1.00 per dividend-bearing share, but the sum to be distributed and the profit carried forward will be adjusted to accommodate the changes. 2 3

3 In accordance with section 58(4) sentence 2 of the German Stock Corporation Act (as amended on January 1, 2017), the due date for the dividend payment claim is the third business day following the resolution by the General Meeting, i.e. February 17, Resolution on the approval of the actions of the members of the Managing Board for fiscal year 2015/2016 The Supervisory Board and the Managing Board propose that the actions of the members of the Managing Board in office in fiscal year 2015/2016 be approved for this period. 4. Resolution on the approval of the actions of the members of the Supervisory Board for fiscal year 2015/2016 The Supervisory Board and the Managing Board propose that the actions of the members of the Supervisory Board in office in fiscal year 2015/2016 be approved for this period. 5. Resolution on the appointment of the auditor of the annual financial statements and consolidated financial statements as well as the auditor to review the interim report Based on the recommendation of the Audit Committee, the Supervisory Board proposes that Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, be appointed as the auditor of the annual financial statements and consolidated financial statements for fiscal year 2016/2017 and as the auditor to review the condensed interim consolidated financial statements and the Group interim management report for the first half of fiscal year 2016/ Resolution on the amendment of Article 2 of the Articles of Association (Object of the Company) In view of the greater relevance of semiconductor technologies in the lighting market, coupled with associated growth in the importance of electronics and software and the increased significance of automotive products and systems in the range of goods and services offered by the corporate group headed by OSRAM Licht AG, it is intended to give these products, systems, and solutions greater emphasis in the object of the Company as well as make a few additional changes. The Supervisory Board and Managing Board therefore propose the following resolution: Article 2 of the Articles of the Association of OSRAM Licht AG shall be amended and re-worded as follows: Article 2 Object of the Company (1) The object of the Company is heading a group of enterprises that operate, in particular, in the following areas of activity: (a) the development, design, manufacture, and distribution (i) of electronic components, electronic systems and software, and lighting, illumination, and photonic, especially light-converting, products, systems, and solutions, including lamps, luminaires, operating and manufacturing devices and machinery, control systems, pre-materials, parts and accessories for such products, systems, and solutions, as well as products, systems, and solutions in associated or related areas of activity, and (ii) of components and systems for vehicles of any kind; (b) the provision of consulting, servicing and other services in the areas of activity specified in (a). 4 5

4 (2) The Company may itself also operate in the areas of activity specified in paragraph 1. It is authorized to engage in any action, implement any measure, or operate any business that is associated with the object of the Company or appropriate to supporting the object of the Company, either directly or indirectly. The Company may also establish, acquire, or hold investments in other enterprises, either in Germany or other countries, especially such enterprises in which the object of the enterprise covers, either partially or as a whole, the areas of activity specified in paragraph (1), and may lead or manage such enterprises or limit itself to the administration of the investment. The Company may have its operations, including the investments that it holds, managed entirely or partially by affiliated companies or may transfer or outsource its operations to such affiliated companies and enter into corporate agreements. The Company is also permitted to set up branches and permanent establishments in Germany and in other countries. The Company may limit its operations to a portion of the areas of activity specified in paragraph 1. A comparison with the existing version showing the exact changes is available on our website at en/investors/annual-meeting and may be inspected at the registered office of OSRAM Licht AG, Marcel-Breuer-Strasse 6, Munich. In addition, it will be sent to shareholders on request. The comparison will also be available at the General Meeting. 7. Resolution on the authorization to repurchase and use treasury shares in accordance with Section 71 (1) no. 8 of the German Stock Corporation Act (Aktiengesetz) including the authorization to exclude tender and subscription rights as well as to redeem repurchased shares and decrease share capital, as well as on the cancellation of the existing authorization The Extraordinary General Meeting of OSRAM Licht AG held on June 14, 2013, passed a resolution authorizing the Managing Board to repurchase and make use of treasury shares in the period up to February 28, To enable the Managing Board to continue to repurchase treasury shares in the future, it is intended to revoke the existing authorization at this year s General Meeting and replace it with a new authorization enabling the Managing Board to repurchase and make use of treasury shares. The Supervisory Board and Managing Board propose the following resolution: 1) The Managing Board is authorized to repurchase in the period up to February 13, 2022, for any purpose to the extent permitted by law and in accordance with the following provisions, treasury shares equating to up to a total of 10% of the lower of the capital stock in existence at the time authorization comes into effect and the capital stock in existence each time that this authorization is exercised. The shares purchased on the basis of this authorization, together with other treasury shares that the Company has already purchased and holds, or that are attributable to it, must not account for more than 10% of the capital stock at any point. The authorization may be used by the Company, or by its Group companies, or by third parties engaged by the Company or by a Group company for the Company s or a Group company s account, provided that the statutory requirements, in particular those specified in section 71(2) of the German Stock Corporation Act (Aktiengesetz), have been satisfied. The shares may be repurchased through the stock exchange by means of a public offer to buy to all shareholders, by means of a public invitation to all shareholders to submit tender offers, or by means of granting rights to tender. 6 7

5 If the shares are repurchased through the stock exchange, the consideration per share (excluding purchase-related costs) paid by the Company must not exceed by more than 10%, or fall below by more than 20%, the average market price of the Company s shares in the closing auction in the XETRA trading system (or similar successor system) on the Frankfurt Stock Exchange over the three exchange trading days preceding the day on which the Company enters into the purchase obligation. If the shares are repurchased through a public offer to buy, the consideration per share (excluding purchase-related costs) paid by the Company must not exceed by more than 10%, or fall below by more than 20%, the average market price of the Company s shares in the closing auction in the XETRA trading system (or similar successor system) on the Frankfurt Stock Exchange over the last three exchange trading days preceding the final decision by the Managing Board on the issue of an offer to buy. If the shares are repurchased through a public invitation to submit tender offers, or by granting rights to tender, the consideration per share (excluding purchase-related costs) paid by the Company must not exceed by more than 10%, or fall below by more than 20%, the average market price of the Company s shares in the closing auction in the XETRA trading system (or similar successor system) on the Frankfurt Stock Exchange over the last three exchange trading days preceding the day on which the tender offers are accepted or the day on which rights to tender are granted. If, after a public offer to buy or a public invitation to submit tender offers has been issued, or after rights to tender have been granted, there are significant deviations in price from the offered buying or selling price, or from the limits of any buying or selling price margin, the offer to buy, invitation to submit tender offers, or the rights to tender can be modified up to the date of acceptance. In this case, the relevant amount is determined in accordance with the appropriate price on the last exchange trading day prior to the final decision by the Managing Board on the modification; the 10% excess and 20% shortfall limits must be applied to this amount. The volume of a public offer to buy or a public invitation to submit tender offers can be limited. If a public offer to buy or a public invitation to submit tender offers is oversubscribed, the acquisition or acceptance must be carried out by quota in relation to the offered shares to be taken into account in each case, subject in this respect to the partial disapplication of any rights of shareholders to tender their shares. The arrangements may provide for a preferential acquisition or preferential acceptance of a low number of shares (up to 150 shares per shareholder), and for rounding, subject in this respect to the partial disapplication of any rights of shareholders to sell their shares. The total volume of rights to tender offered to shareholders can also be limited. If shareholders are granted rights to tender for the purposes of the acquisition, these rights are allocated to shareholders in relation to their shareholdings, the percentage being derived from the relationship between the volume of shares to be bought back by the Company and the total capital stock outstanding. Fractional amounts arising from rights to tender must not be allocated; in such cases, any partial rights to tender are excluded. The detailed structure of each acquisition, in particular any offer to buy or any invitation to submit tender offers, is determined by the Managing Board. This also applies to the detailed structure of any rights to tender, especially with regard to maturity and, where appropriate, the extent 8 9

6 to which such rights can be traded. Capital market and other statutory restrictions and requirements must be observed in this regard. 2) The Managing Board is authorized to use the treasury shares repurchased on the basis of this or earlier authorizations, as follows: a) The shares may be sold on the stock exchange or, subject to the consent of the Supervisory Board, through a public offer to all shareholders in relation to their existing holdings. In the case of the latter, the subscription rights are excluded for fractional amounts. b) In addition, subject to the consent of the Supervisory Board, the shares may be sold by some other method for cash at a price that is not materially below the market price of the Company s shares with the same terms on the date of sale (sections 71(1) no. 8 sentence 5 and 186(3) sentence 4 of the German Stock Corporation Act (Aktiengesetz)). The proportion of capital stock attributable to the number of shares sold under this authorization must not exceed 10% of the lower of the capital stock in existence on the effective date of this authorization and the capital stock of the Company in existence on each date that this authorization is exercised. The following must be deducted from the 10% limit: the pro rata amount of capital stock from new shares that, since the General Meeting passed the resolution regarding this authorization, have been issued on the basis of any authorizations to issue shares from authorized capital with the disapplication of subscription rights in accordance with section 186(3) sentence 4 of the German Stock Corporation Act (Aktiengesetz); and, the pro rata amount of capital stock attributable to warrant-linked bonds and/or convertible bonds with an option or conversion right, or with a conversion or exchange obligation, or with a right to tender, that has been issued on the basis of any authorizations in accordance with section 221(4) and section 186(3) sentence 4 of the German Stock Corporation Act (Aktiengesetz) since the General Meeting passed the resolution on this authorization. c) The shares may also be offered for sale to persons who are or were employed by the Company or by one of its affiliated companies, or to present or former members of executive or supervisory bodies of the Company s affiliated companies (such persons being referred to as beneficiaries ), or may be granted or transferred to them subject to a holding or lock-up period of not less than two years, whereby the recipient must be employed by the Company or by one of its affiliated companies or be a member of an executive or supervisory body of an affiliated company of the Company at the time of the offer or grant. The shares may be transferred to beneficiaries to whom shares were promised in connection with the admission of the Company s shares to trading on the stock exchange. The further details relating to any offers, grants or transfers, including any direct consideration, any prerequisites for an entitlement, and vesting or settlement arrangements, especially for special circumstances such as retirement, incapacity for work, or death, are determined by the Managing Board. d) Subject to the consent of the Supervisory Board, the shares may be offered and transferred in return for non-cash payment, especially as (part) consideration in the direct or indirect acquisition 10 11

7 of businesses, parts of businesses, or investments in businesses, or other assets, including receivables due from the Company, or in the purchase of rights to acquire assets, or as part of business combinations. e) The shares may be used to service acquisition obligations or acquisition rights to OSRAM Licht AG shares arising from or in connection with convertible bonds or bonds with warrants issued by the Company or its Group companies. f) The shares may also be redeemed without the need for any further General Meeting resolution to approve the redemption or its implementation. A redemption of shares leads to a reduction in capital. Alternatively however, in accordance with section 237(3) no. 3 of the German Stock Corporation Act (Aktiengesetz), the Managing Board may specify that the capital stock should not be reduced, but that instead the proportion of capital stock attributable to the remaining shares should be increased in accordance with section 8(3) of the German Stock Corporation Act (Aktiengesetz). In this case, the Managing Board is authorized in accordance with section 237(3) no. 3, second-half sentence, of the German Stock Corporation Act (Aktiengesetz) to adjust the details of the number of shares in the Articles of Association. 3) The Supervisory Board is authorized to use shares repurchased by the Company as follows, unless the shares have to be used for a specified alternative purpose: a) The shares may be used to service acquisition obligations or acquisition rights to the Company s shares that are or have been agreed with the members of the Managing Board of the Company as part of the arrangements for the remuneration of the Managing Board. In addition, as part of the arrangements for the remuneration of the Managing Board, the shares may be offered to the members of the Managing Board or future members of the Managing Board for purchase or granted or transferred with a holding or lock-up period that ends no earlier than the end of the second day after the Company s results are published in the fourth calendar year following the year of grant or transfer (whichever is the sooner). b) The shares may be transferred to former members of the Company s Managing Board to whom shares were promised in connection with the admission of the Company s shares to trading on the stock exchange. c) The further details relating to any grants or transfers, including any direct consideration, any prerequisites for an entitlement, and vesting or settlement arrangements, especially for special circumstances such as retirement, incapacity for work, or death, are determined by the Supervisory Board in compliance with the requirements specified in section 87 of the German Stock Corporation Act (Aktiengesetz). 4) The subscription rights of shareholders to treasury shares are excluded to the extent that these shares are used in accordance with the authorizations set out above under numbers 2) a) to e) and 3). 5) The authorizations to repurchase treasury shares, to sell them, to use them in any other way, or to redeem them may be exercised independently of each other, on one or more occasions, either as a whole or in part

8 6) The existing authorization to repurchase and use treasury shares that was approved by the General Meeting on June 14, 2013 and will expire on February 28, 2018 is revoked for the period from the effective date of this new authorization and is superseded by the provisions under this resolution. 8. Resolution on the authorization to use equity derivatives in connection with the repurchase of treasury shares in accordance with section 71 (1) no. 8 of the German Stock Corporation Act (Aktiengesetz) including the authorization to exclude tender and subscription rights as well as on the cancellation of the existing authorization At the General Meeting of OSRAM Licht AG on February 26, 2015, the Company was also authorized to use equity derivatives to repurchase treasury shares to supplement the authorization of June 14, 2013, enabling the Company to buy back its own shares. In addition to the resolution under Agenda Item 7 on the proposed authorization to repurchase treasury shares, it is intended to revoke the authorization of February 26, 2015, and to reissue it. This resolution is not intended to increase the total volume of shares that may be repurchased. The aim is simply to make available additional options for repurchasing treasury shares. The Supervisory Board and Managing Board therefore propose the following resolution: 1) To supplement the authorization to repurchase treasury shares proposed under Agenda Item 7, treasury shares may, subject to the consent of the Supervisory Board, be repurchased in the period up to February 13, 2022, by also using equity derivatives in addition to the methods described in that authorization. Subject to the consent of the Supervisory Board, the Managing Board is authorized to: a) purchase options that entitle the Company to repurchase shares in the Company when the options are exercised (call options), b) sell options that oblige the Company to repurchase its own shares if the options are exercised by the holders of the options (put options), c) enter into forward purchases that entitle and oblige the Company to repurchase shares in the Company on a specified date in the future, and d) combine the use of put options, call options, and forward purchases to repurchase treasury shares (all the methods set out above being referred to hereinafter as derivatives ). 2) The total number of shares involved in the repurchase of shares using derivatives must not exceed the equivalent of 5% of the lower of the current capital stock of the Company or the capital stock in existence on the date this authorization is exercised. The shares repurchased in exercising this authorization must be taken into account in the acquisition limit specified in the authorization proposed to the General Meeting under Agenda Item 7. Furthermore, shares may only be repurchased on the basis of this authorization if the permitted volume under the authorization proposed in Agenda Item 7 has not yet been fully used up. The maturities of the individual derivatives must not be more than 18 months in each case; each derivative must mature no later than February 13, 2022 and must be selected such that shares cannot be repurchased in exercise of the options after February 13, ) The derivatives must be entered into with one or more banks or one or more other entities satisfying the requirements specified in section 186(5) sentence 1 of the German Stock Corporation Act (Aktiengesetz) 14 15

9 (together financial services entities ). The derivatives must be designed to ensure that they can only result in the delivery of shares that have been repurchased in compliance with the principle of equal treatment for all shareholders; this requirement is satisfied if the shares are repurchased through the stock exchange. 4) The price that the Company pays for call options, or receives for put options, or pays or receives for combinations of call and put options (in each case excluding purchase-related costs) must not materially exceed or fall below the theoretical fair value determined in accordance with generally accepted methods used in financial mathematics. The forward price agreed by the Company in forward purchases must not materially exceed the theoretical forward price determined in accordance with generally accepted methods used in financial mathematics, in the calculation of which the latest market price and the maturity of the forward purchase are to be taken into account, among other things. 5) The purchase price per share to be paid on exercise of put options or on maturity of forward purchases (in each case excluding purchase-related costs and, in the case of put options, net of the option premium received when the option transaction was entered into) must not exceed by more than 10%, or fall below by more than 20%, the average market price of the Company s shares in the closing auction in the XETRA trading system or similar successor system on the Frankfurt Stock Exchange over the three exchange trading days preceding the day on which the option transaction or forward purchase concerned is entered into. A call option may only be exercised if the purchase price to be paid (excluding purchase-related costs but plus the value of the option on exercise) does not exceed by more than 10%, or fall below by more than 20%, the average market price of the Company s shares in the closing auction in the XETRA trading system or similar successor system on the Frankfurt Stock Exchange over the three exchange trading days preceding the day on which the shares are repurchased. 6) If treasury shares are repurchased using derivatives in compliance with the above provisions, any shareholder rights to enter into such derivatives with the Company and any shareholder rights to tender are excluded. 7) The provisions set out in numbers 2), 3), and 5) of the proposed resolution in Agenda Item 7 apply mutatis mutandis in respect of the use of treasury shares that have been repurchased by using derivatives. The subscription rights of shareholders to treasury shares are excluded to the extent that these shares are used in accordance with the authorizations set out under numbers 2) a) to e) and 3) of the proposed resolution in Agenda Item 7. 8) The existing authorization to repurchase and use treasury shares with the help of equity derivatives that was approved by the General Meeting on February 26, 2015 and will expire on February 28, 2018 is revoked for the period from the effective date of this new authorization and is superseded by the provisions under this resolution. Reports by the Managing Board to the General Meeting 1. Report by the Managing Board to the General Meeting regarding Agenda Item 7 pursuant to section 71(1) no. 8 of the German Stock Corporation Act (Aktiengesetz) in conjunction with section 186(4) sentence 2 of the German Stock Corporation Act (Aktiengesetz) The Managing Board has submitted the following report in writing to the General Meeting in accordance with section 71(1) no. 8 of the German Stock Corporation Act (Aktiengesetz) in conjunction with section 186(4) sentence 2 of the German Stock Corporation Act (Aktiengesetz). The report 16 17

10 covers the reasons for the authorizations proposed in Agenda Item 7 to exclude any shareholder rights to tender when the Company repurchases treasury shares and to exclude subscription rights when the Company sells treasury shares that it has bought back. This report is available at the offices of the Company from the date on which the convening of the General Meeting is announced and will be sent to any shareholder on request. In addition, the report can be accessed online at en/investors/annual-meeting and will also be available at the General Meeting. The full text of the report is shown below. General Agenda Item 7 contains a proposal to authorize the Company, in compliance with section 71(1) no. 8 of the German Stock Corporation Act (Aktiengesetz) and in accordance with standard business practice, to repurchase, in the period up to February 13, 2022, treasury shares totaling up to 10% of the lower of the current capital stock and the capital stock in existence on the date this authorization is exercised. The existing authorization approved by resolution of the General Meeting on June 14, 2013 expires on February 28, Up to and including the date on which the General Meeting was convened, 7,358,735 treasury shares have been repurchased on the basis of this authorization. This equates to 7.03% of the present capital stock of the Company. To enable the Company to continue to repurchase its own shares in the future, it is intended to ask this General Meeting to approve a new authorization. Acquisition When acquiring treasury shares, the Company must uphold the principle of equal treatment pursuant to section 53a of the German Stock Corporation Act (Aktiengesetz). The proposed acquisition of the shares through the stock exchange, by means of a public offer to purchase or by means of a public invitation to submit tenders, or through the issue of rights to tender to shareholders complies with this principle. If a public offering is oversubscribed, i.e., more shares are offered for sale to the Company in total than the Company intends to buy, the offers must be accepted on a quota basis. In this regard, the relevant factor is the ratio between the different numbers of shares offered by each individual shareholder. In contrast, it is irrelevant how many shares are held in total by a shareholder who offers shares for sale back to the Company. This is because only the offered shares are available for sale. Furthermore, it would not be feasible to carry out a review of the shareholdings of each individual shareholder. To this extent, any right of shareholders to tender their shares is excluded. The arrangements may provide for a preferential acquisition or preferential acceptance of small numbers of tendered shares (up to 150) from each shareholder and for rounding of numbers. The purpose of these provisions is to prevent fractional and small residual amounts when determining the quotas to be purchased, and thereby make it easier to process the purchase from a technical perspective. The same also applies where rights to tender are granted. Again, to this extent, any rights of shareholders to tender their shares are therefore excluded

11 Disposal of the shares or use in other ways Under the proposed authorization, the treasury shares repurchased by the Company may with or without a reduction in the capital stock be redeemed or be sold again by means of a public offering to all shareholders or through the stock exchange. In the case of the last two options, the right of shareholders to equal treatment will be upheld, even if the shares are sold. In addition, the treasury shares repurchased by the Company may be used for other purposes; in this case, the subscription rights of the shareholders can be wholly or partially excluded or may be necessarily excluded: 1) If the treasury shares are to be sold by means of a public offering to all shareholders, the Managing Board shall have the right to exclude the subscription rights of the shareholders for fractional amounts, subject to the consent of the Supervisory Board. The disapplication of subscription rights for fractional amounts is necessary to make it technically feasible to issue an offer to sell repurchased treasury shares to the shareholders. The fractional amounts of shares for which the subscription rights of the shareholders have been excluded are sold to generate the best possible benefit for the Company, either through a stock market sale or in some other way. 2) The proposed authorization to exclude subscription rights in the event of a sale of shares for cash at a price that is not materially below the market price of the Company s shares with the same terms as of the date of the sale makes use of the permitted option to exclude subscription rights in section 71(1) no. 8 of the German Stock Corporation Act (Aktiengesetz) in conjunction with section 186(3) sentence 4 of the German Stock Corporation Act (Aktiengesetz). The notion of protecting shareholders against dilution is taken into account by the fact that the shares must only be sold at a price that is not materially below the relevant market price. The selling price for the treasury shares is determined as closely as possible to the time of sale. The Managing Board will set any discount to the market price as low as permitted by the prevailing market conditions at the time of the placement. The discount to the market price at the time the authorization is exercised will not equate to more than 5% of the current market price under any circumstances. This authorization applies subject to the proviso that the treasury shares sold in this way must not exceed 10% of the capital stock taking into account the deductions specified in the proposed resolution, either on the effective date of the authorization or if the amount of capital stock is lower on the date the authorization is exercised. These deductions ensure that repurchased treasury shares cannot be sold with the disapplication of subscription rights in accordance with section 186(3) sentence 4 of the German Stock Corporation Act (Aktiengesetz) if this would lead to a situation in which the subscription rights of the shareholders would be excluded in direct or indirect application of section 186(3) sentence 4 of the German Stock Corporation Act (Aktiengesetz) for more than 10% of the capital stock overall. This restriction and the requirement that the issue price must be based on the market price appropriately safeguard the interests of the shareholders in terms of their assets and voting rights. The shareholders could obtain the number of shares they need to maintain their shareholding ratio by acquiring shares through the stock exchange on approximately the same terms. In other respects, the authorization is in the interests of the Company because it helps to provide greater flexibility and offers the option of broadening the range of shareholders, including by targeting the issue of shares to strategic partners, institutional investors, or financial investors. The authorization is also intended to enable the Company to respond rapidly and flexibly to favorable circumstances in the stock markets

12 3) Subject to the consent of the Supervisory Board, the aim is also for the Company to retain the option of offering treasury shares in return for non-cash payment, especially as (part) consideration in the direct or indirect acquisition of businesses, parts of businesses, or investments in businesses, or other assets, including receivables due from the Company, or in the purchase of rights to acquire assets, or as part of business combinations. The aim of the authorization proposed for this reason is to strengthen OSRAM Licht AG s position when competing for attractive acquisitions and to enable it to respond rapidly and flexibly to the opportunities that arise for acquiring such assets using treasury shares while conserving liquidity. This is taken into account by the proposed exclusion of subscription rights. When specifying the pricing parameters, the Managing Board will ensure that shareholders interests are appropriately safeguarded. Generally, the Managing Board will measure the value of the shares given as consideration on the basis of the market price of the Company s shares. An automatic link to a market price is not envisaged, largely so that once negotiated outcomes have been achieved, they are not questioned due to fluctuations in the market price. 4) The Managing Board is also to be authorized to offer treasury shares for purchase by individuals who are or were employed by the Company or by one of its affiliated companies, or by present or former members of executive or supervisory bodies of the Company s affiliated companies (each such person being referred to as a beneficiary ). In this case, the authorization is to issue stock options. The proposed exclusion of subscription rights is a prerequisite for issuing such stock options. Under the German Stock Corporation Act (Aktiengesetz), the use of treasury shares to issue stock options is permitted even without an authorization from the General Meeting (section 71(1) no. 2 of the German Stock Corporation Act (Aktiengesetz)), but in that case only to issue shares to employees within one year of acquisition (section 71(3) sentence 2 of the German Stock Corporation Act (Aktiengesetz)). In contrast, the proposed resolution authorizes the Managing Board to use treasury shares for stock options without the need to comply with a deadline and also to offer, grant, or transfer them to present or former members of executive or supervisory bodies of the Company s affiliated companies. The Managing Board may, particularly within the bounds of standard practice and within reason, offer the shares for purchase at a price below the current market price as an incentive. The issue of shares to beneficiaries encourages these beneficiaries to identify with the Company and share responsibility. The issue of shares to beneficiaries is thus in the interests of the Company and its shareholders. The use of available treasury shares instead of implementing a capital increase or making a cash payment to beneficiaries can make sense from a financial perspective; in this respect, the authorization aims to deliver greater flexibility. 5) In addition, the Supervisory Board is to be authorized to offer treasury shares to members of the Managing Board of the Company to service acquisition obligations or rights to purchase shares in the Company. Again, the use of available treasury shares instead of implementing a capital increase or making a cash payment to members of the Managing Board can make sense for the Company from a financial perspective; in this respect, the authorization aims to deliver greater flexibility. The authorization for the Supervisory Board is also intended to encompass the option of offering, granting, or transferring treasury shares to members of the Managing Board of the Company as part of the remuneration arrangements. The aim is to put in place the foundations that will allow members of the Managing Board also to be granted shares in the Company in the future as a component of variable remuneration instead of a cash payment, thereby creating an incentive for a long-term approach to management based on sustainability

13 The further details will be determined by the Supervisory Board to the extent permitted by its statutory authority. In particular, it will decide on whether, when, and to what extent it will make use of the authorization (section 87(1) of the German Stock Corporation Act (Aktiengesetz)). However, based on the statutory allocation of powers, the Supervisory Board does not itself have the authority to act as a representative body of the Company and repurchase shares in the Company for the purposes of Managing Board remuneration, nor can it force the Managing Board to buy back shares for this purpose. 6) The authorization also provides for the possibility of transferring the shares both to beneficiaries and to former members of the Company s Managing Board to whom shares were promised in connection with the admission of the Company s shares to trading on the stock exchange. As part of the Company s stock market listing in 2013, commitments of this nature were made for 198,104 shares. 7) The proposed authorization to exclude subscription rights if the repurchased shares are used to service acquisition obligations or rights to purchase shares in OSRAM Licht AG arising from or in connection with convertible bonds or bonds with warrants issued by the Company or its Group companies enables the Company to avoid issuing new shares in the Company in such cases especially shares from contingent capital and instead to use treasury shares that it has previously repurchased. 8) Finally, the authorization also provides for repurchased treasury shares to be redeemed. The aim is to ensure that a redemption of shares can be designed such that either the capital stock of the Company is reduced or no such capital reduction is carried out and, instead, there is a simple redemption of the shares with a simultaneous increase in the proportion of capital stock attributable to the remaining shares. The rights of the shareholders are not prejudiced in either of the variants described above. Pursuant to section 71(3) sentence 1 of the German Stock Corporation Act (Aktiengesetz), where appropriate in conjunction with section 160(1) no. 2 of the German Stock Corporation Act (Aktiengesetz), the Managing Board will report to the next General Meeting following any use of the authorization to repurchase treasury shares. 2. Report by the Managing Board to the General Meeting regarding Agenda Item 8 pursuant to section 71(1) no. 8 of the German Stock Corporation Act (Aktiengesetz) in conjunction with section 186(4) sentence 2 of the German Stock Corporation Act (Aktiengesetz) To add to the report relating to Agenda Item 7, the Managing Board is also submitting herewith a written report pursuant to sections 71(1) no. 8 and 186(4) sentence 2 of the German Stock Corporation Act (Aktiengesetz) relating to the proposed resolution under Agenda Item 8. The full text of the report is as follows: Exclusion of any shareholder right to tender when treasury shares are repurchased using equity derivatives In addition to the options for repurchasing treasury shares provided for in Agenda Item 7, it is also intended to authorize the Company to purchase treasury shares using certain derivatives. This authorization is not intended to increase the total volume of shares that may be repurchased. The aim is simply to make available additional options for repurchasing treasury shares. These additional options will broaden the ways in which the Company can structure the purchase of treasury shares on a flexible basis. The Company can only enter into derivatives with the consent of the Supervisory Board

14 It may be beneficial for the Company to purchase call options, sell put options, or repurchase shares using a combination thereof or by using a forward purchase agreement instead of buying the Company s shares directly. From the very start, these alternatives are capped at 5% of the lower of the capital stock as of the date on which the General Meeting passes the resolution and the capital stock in existence each time the authorization is exercised. The maturity of the derivatives must not exceed 18 months in each case, and each derivative must be selected in such a way as to ensure that the repurchase of the OSRAM Licht shares by means of the derivative does not take place after February 13, This ensures that the Company will not repurchase any treasury shares after the expiry of the authorization to repurchase treasury shares, which is valid until February 13, 2022, unless a new authorization is issued. When a call option is agreed, the Company pays an option premium and in return receives from the relevant option seller the right to buy a predetermined number of shares in the Company at a specified price (strike price) within a given period or at a specified time. From the Company s perspective, it generally makes sense to exercise the call option if the share price is higher than the strike price because the Company can then buy the shares from the option seller at a price that is lower than the market price. The same also applies if exercising the option enables the Company to repurchase a block of shares that otherwise would be more expensive to purchase. The use of call options also benefits the liquidity of the Company because the strike price for the shares only has to be paid when the call option is exercised. Viewed on a case-by-case basis, these advantages could justify the use of call options for a planned repurchase of treasury shares. The option premium must be determined at market rates, i.e., must largely reflect the value of the call option, taking into account factors such as the strike price, the maturity of the option, and the volatility of the shares. From the Company s perspective, the consideration paid to purchase the shares is increased by the current value of the option when a call option is exercised. If the Company decides not to exercise the option, it could recover this value, in particular, by selling the option; it is a monetary benefit that indirectly increases the purchase price when the option is exercised. It reflects the current value of what was originally paid as an option premium and should therefore be taken into account as part of the purchase price of the shares. When entering into put options, the Company grants the relevant holder of the put option the right to sell shares in the Company to the Company at a price specified in the put option (strike price) within a predetermined period or at a particular time. The Company receives an option premium as the consideration in return for entering into an obligation to buy treasury shares under the put option. This option premium must be in line with market terms and conditions, i.e., must largely reflect the value of the put option, taking into account factors such as the strike price, the maturity of the option, and the volatility of the shares. Generally speaking, it only makes financial sense for the option holder to exercise the put option if the share price is below the strike price on the date the option is exercised because the option holder can then sell the shares to the Company at a price that is higher than the market price; in turn, the Company can mitigate too great a risk from changes in the share price by entering into hedges in the marketplace. A share buyback using put options offers the Company the advantage of being able to determine a particular strike price as soon as it enters into the option deal but only pay out the associated cash amount on the exercise date. From the Company s perspective, the consideration paid to purchase the shares is reduced by the option premium received. If the option holder does not exercise the option, primarily because the share price on the exercise date or in the exercise period is higher than the strike price, the Company does not then receive any treasury shares under this method, but it does get to keep the option premium income without any further consideration being required

15 In the case of a forward purchase, the Company buys the shares in accordance with the agreement with the forward seller on a predetermined date in the future at the purchase price specified in the forward agreement. It can be sensible for the Company to enter into forward purchases if it needs to secure a supply of treasury shares on a particular date at a certain price. When options are used, the consideration to be paid by the Company for the shares is the relevant strike price (in each case excluding purchase-related costs, but plus the current value of the option in the case of call options, and minus the option premium received in the case of put options). The strike price can be higher or lower than the market price of the Company s shares on the date the Company enters into the option deal or on the date the shares are repurchased when the option is exercised. The purchase price per share to be paid on exercise of put options or on maturity of forward purchases (in each case excluding purchase-related costs and, in the case of put options, net of the option premium received when the option transaction was entered into) must not exceed by more than 10%, or fall below by more than 20%, the average market price of the Company s shares in the closing auction in the XETRA trading system or similar successor system on the Frankfurt Stock Exchange over the three exchange trading days preceding the day on which the option transaction or forward purchase concerned is entered into. A call option may only be exercised if the purchase price to be paid (excluding purchase-related costs but plus the value of the option on exercise) does not exceed by more than 10%, or fall below by more than 20%, the average market price of the Company s shares in the closing auction in the XETRA trading system or similar successor system on the Frankfurt Stock Exchange over the three exchange trading days preceding the day on which the shares are repurchased. The undertaking only to enter into options or other derivatives with one or more banks or equivalent entities, and to ensure, in doing so, that the options or other derivatives only involve shares that had been acquired in transactions in which the principle of equal treatment had been upheld, ensures that shareholders are not disadvantaged in any acquisition of treasury shares using derivatives. In accordance with the statutory provision in section 71(1) no. 8 of the German Stock Corporation Act (Aktiengesetz), the acquisition of the shares through a stock exchange at the current market price of the Company s shares at the time of the purchase through the exchange is sufficient to satisfy the requirement to uphold the principle of equal treatment. As the option price is determined in line with market rates, the shareholders not involved in the option deals do not suffer any financial disadvantage. However, the Company has the opportunity to enter into suitable derivatives, enabling it to exploit market opportunities that present themselves at short notice. Any right of shareholders to enter into such derivatives with the Company is excluded, as is any shareholder right to tender. This disapplication of rights is necessary to enable the Company to use derivatives when buying back the Company s own shares and realize the associated benefits for the Company. It would not be feasible to enter into corresponding derivatives with all shareholders. After weighing up the interests of the shareholders and the interests of the Company on the basis of the benefits that could accrue to the Company from using derivatives, the Managing Board therefore believes that there are justifiable reasons for the authorization not to grant, or to restrict, any right of the shareholders to enter into such derivatives with the Company and not to grant, or to restrict, any shareholder right to tender. Use of repurchased treasury shares and disapplication of subscription rights With regard to the use of treasury shares that have been purchased using derivatives, the options for use are exactly the same as those suggested under Agenda Item 7. Please 28 29