Corporate Governance Roadshow November/December 2017 · E.ON‘s corporate governance structure provides an efficient framework to support and control management in times of significant

Corporate Governance Roadshow

November/December 2017

Agenda

1. E.ON Delivering Step by Step

2. Supervisory Board and Committee Work

3. Management Remuneration

4. Back Up

E.ON Delivering Step by Step

3

• Nuclear de-risking completed: transfer of ~€10bn to government fund finalizes KFK1 solution

• Nuclear fuel tax (NFT) refund paves way to potential over-achievement of leverage target

• Payout ratio raised for the second time in 2017 (minimum of 65%2)

Key Achievements in 2017

90

100110

120

130

140150

160

01.11. 01.01. 01.09. 01.05. 01.07. 01.01. 01.03.

E.ON Stoxx Utilities

E.ON Delivering Step by Step Supervisory Board and Committee Work

Management Remuneration

Renewables Customer Solutions

Energy Networks

€1.7bn EBIT in 2016 €0.8bn EBIT in 2016 €0.4bn EBIT in 2016

€19bn RAB >22m

Customers Across Europe 6 GW Renewable capacity delivered

3

NFT decision

€1.35bn capital increase

Announcement of Fortum offer for Uniper shares

KFK solution finalized

1. Kommission zur Überprüfung des Kernenergieausstiegs (KFK)

2. Based on Adjusted Net Income, from FY 2018 (payable in 2019) onwards; Specification of Range with FY17

+42%

+7% H1 17 results

9M17 results

E.ON’s Two-Tier Governance Structure

4

• German Co-Determination Act not applicable to SE, instead agreement on the involvement of employees

• More flexibility regarding size and composition of Supervisory Board, especially regarding internationality of employee representatives

Special features of an SE Supervisory Board



E.ON Supervisory Board: Experienced, Diverse and Independent

5

67%

33%

<65

65+

18 Board Members

Age Place of birth

Member of the E.ON Supervisory Board for

Work experience gained1

13

14

11 - 15 Years 6 - 10 Years 1 - 5 Years

5

1

3

>2 Other Companies

2 Other Companies

1 Other Company

9

9

Shareholder Representatives

Employee Representatives

44% 56%

Outside Germany

Germany

1. Only Shareholder Representatives



E.ON Supervisory Board Shareholder Representatives

6

Baroness Denise Kingsmill, CBE Born 1947, New Zealand Member since 2011 Comprehensive legal and compliance expertise and expertise in regulated businesses

Ewald Woste Born 1960, Germany Member since 2016 Extensive expertise in the energy sector

Carolina Dybeck Happe Born 1972, Sweden Member since 2016 Profound experience in finance and digital transformation of products and services

Erich Clementi Born 1958, Italy Member since 2016 Expert in digital transformation and strategy

Prof. Dr. Ulrich Lehner Deputy Chairman Born 1946, Germany Member since 2003 Extensive leadership and supervisory board experience

Dr. Theo Siegert Born 1947, Germany Member since 2007 Recognised expert in accounting and financial governance, strategy and compliance

Dr. Karen de Segundo Born 1946, Netherlands Member since 2008 In-depth knowledge of energy market and regulated industries experience

Andreas Schmitz Born 1960, Germany Member since 2016 Particular expertise in financial analysis and capital markets

Dr. Karl-Ludwig Kley Chairman of the Supervisory Board Born 1951, Germany Member since 2016 Extensive leadership and supervisory board experience



E.ON Supervisory Board Employee Representatives

7

Andreas Scheidt Deputy Chairman of the Supervisory Board Born 1964, Germany Member since 2015 In-depth knowledge of the energy business

Eugen Gheorghe Luha Born 1957, Romania Member since 2012 Profound expertise in the gas business

Albert Zettl Born 1966, Germany Member since 2016 Background in the fields of grid management, grid distribution

Thies Hansen Born 1970, Germany Member since 2015 Profound expertise in technical aspects of the Energy Business, especially grids

Tibor Gila Born 1967, Hungary Member since 2016 Experience in Energy grids and HR

Clive Broutta Born 1960, United Kingdom Member since 2014 Expert in HSE and Sustainability

Elisabeth Wallbaum Born 1975, Germany Member since 2016 Expertise in Energy generation and IT-based process control

Silvia Šmátralová Born 1950, Slovakia Member since 2016 Practical experience in the fields of accounting and procurement

Fred Schulz Born 1962, Germany Member since 2014 Experience in grid operations and HR management



Nomination Process of New Candidates

8

Nomination committee consults on potential candidates based on requirement profile.

Step 2 Step 3

Selection results are being presented to all supervisory board members.

Step 4

Supervisory board presents appointment proposal at annual shareholders meeting where decision is up for vote.

• Skill matrix • Diversity concept

• Self imposed composition targets

Skills • Industry

knowledge • Functional

expertise

Diversity • International

work experience • Representation

of Women • Age diversity

Experience • Work experience

in other companies

• Different functions

• Leadership roles

Step 1 - Define requirement profile

Other • Independence • Max. age • Max. # of terms • Sufficient time • Etc.

Step 2 Step 3 Step 4



Terms of Six Shareholder Representatives end in 2018

9

Dr. Karl-Ludwig Kley

Prof. Dr. Ulrich Lehner

Carolina Dybeck Happe

Baroness Denise Kingsmill

Dr. Karen de Segundo

Dr. Theo Siegert

Erich Clementi

Andreas Schmitz

Ewald Woste

2013 2016 2017 2018 2019 2020 2021



Efficient Cooperation in Board Committees

10

Presidial Committee

Investment and Innovation Committee Nomination Committee

Audit and Risk Committee

Shareholder Representatives Employee Representatives

• Recommends to the Supervisory Board candidates for election to the Supervisory Board by the Annual Shareholders Meeting

Members • Dr. Karl-Ludwig Kley, Chairman • Prof. Dr. Ulrich Lehner, Deputy Chairman • Dr. Karen de Segundo

• Approves among others investment, M&A and financing transactions • Advises the Management on innovation and business opportunities

Members

• Dr. Karen de Segundo, Chair • Albert Zettl, Deputy Chairman • Clive Broutta • Carolina Dybeck Happe • Eugen-Gheorghe Luha • Ewald Woste

• Prepares the supervisory board’s personnel decisions and presents proposal regarding management remuneration

• Advises the Board of Management on e.g. strategic developments

Members • Dr. Karl-Ludwig Kley, Chairman • Prof. Dr. Ulrich Lehner, Deputy Chairman • Andreas Scheidt, Deputy Chairman • Fred Schulz

• Monitors the accounting process and internal control systems • Examines effectiveness of internal control and risk management

systems

Members • Dr. Theo Siegert, Chairman • Fred Schulz • Thies Hansen • Andreas Schmitz



High Level of Dedication

11

Presidial Committee

Investment and Innovation Committee

Nomination Committee


7 Annual Meetings1

4 Annual Meetings1

5 Annual Meetings1

2 Annual Meetings1

6 Annual Meetings1 Presidial

Committee

1. Meetings refer to actual frequency of meetings in 2016

+

+

+

+

Supervisory Board Meetings


Finance and Investment Committee

Nomination Committee Supervisory Board member

Executive Board: 26 Meetings in 2016

Supervisory Board Attendance of Supervisory Board and committee meetings



12

• The Supervisory Board conducts an efficiency review of its work on a two year basis, in line with the German Corporate Governance Codex.

• All Supervisory Members fill out a detailed questionnaire to provide feedback.

• The Chairman conducts bilateral meetings with each Supervisory Board Member and follows up on their remarks.

• The review is considered a very valuable tool as it enables open discussion, mitigates conflicts and builds the basis for continuous improvement.

Efficiency Review to Continuously Improve Supervisory Board Work



Remuneration System Closely Aligns Management and Shareholders Interest

13

• New remuneration system approved by AGM 2016 (91% approval); in place since January 1st, 2017.

• Both variable compensation elements were adjusted and share ownership guidelines were introduced.

• The level of base salary and total compensation as well as the level of pension benefits remained constant.

New Compensation Elements

Share Ownership Guidelines (SOG)

Pension

Long-Term Incentive (LTI)

Bonus (STI)

Base Salary

• Mandatory share ownership: • CEO: 200% of base salary • Other board members: 150% of base

salary

• Criteria: relative TSR vs. STOXX Europe 600 Utilities and absolute share price

• Payout: Cash • Cap: 200% of target value • Zero payout at underperformance

• Yearly contribution max. 21% of pensionable income

• Criteria: EPS, individual and team performance

• Payout: Cash • Cap: 200% of target value • Zero payout at underperformance

+

+

+



The Short-Term Bonus (STI)

14

The STI combines the group’s financial target (EPS) with individual targets.

EPS is the basis for dividend payout, thus closely aligns executive incentives and shareholder interest. EPS is one of E.ON’s key performance indicators, reflects E.ON’s business strategy appropriately and serves as an

indicator of E.ON’s profitability. The multiplier ensures the flexibility to adjust payouts according to individual performance. R

atio

nal

e

STI – Basic Functionality

STI Target Value

Cash Payout

STI Actual Value (Cap at 200%

of Target Value)

x =

Actual EPS vs. Budget1

Company Performance

Target Achievement

Team targets & indiv. targets Multiplier from

0.5 – 1.5

Individual Performance

x

1. The EPS target for each year is set by the Supervisory Board, taking into account the approved budget.



The Long-Term Incentive (LTI)

15

The Performance Share Plan is based on the comparison of the relative total shareholder return (TSR) with an industry index.

Performance Share Plan – Basic Functionality

The Performance Share Plan is aligned with the capital market perspective by focusing on share price development as well as dividends paid and strengthens shareholder-oriented culture.

Relative TSR is a well-established and accepted performance measure from an investor’s point of view, focusing on absolute share price performance and comparison with peers. R

atio

nal

e

Initial number of granted share units

Final payout in cash

(Cap: 200% of target value)

Share price +

dividends x x TSR of the E.ON share compared

to the companies of the STOXX® Europe 600 Utilities index

(Cap at 150%)

Relative TSR performance

Target Achievement over 4 Years

=

LTI target value divided by fair

market value per share1

1. The fair market value per share unit at grant date is determined by applying methods accepted in financial mathematics, taking into account the expected future payout, and hence, the volatility and risk associated with performance share plan.



Key Takeaways

• The supervisory board actively controls and guides E.ON’s strategic transformation.

• E.ON is well positioned to succeed in the new energy world with effective governance structures.

• E.ON‘s supervisory board is qualified, experienced and highly committed.

• E.ON‘s remuneration system strongly aligns management board with shareholder interests.

16

E.ON‘s corporate governance structure provides an efficient framework to support and control management in times of significant change.



Back up

Back up Supervisory Board Remuneration

18

• The Chairman of the Supervisory Board receives fixed compensation of €440,000.

• The Deputy Chairmen, €320,000.

• Other members of the Supervisory Board receive compensation of €140,000.

• The Chairman of the Audit and Risk Committee receives an additional €180,000.

• The members of the Audit and Risk Committee, an additional €110,000.

• Other committee chairmen receive an additional €140,000; committee members, an additional €70,000.

Back up E.ON‘s Authorized and Conditional capital

Authorizations renewed in 2017, now valid until 2022, no change in comparison to 2012.

E.ON considers these capital authorizations part of a company‘s „standard finance tool box“.

Authorized Capital

with subscription rights

without subscription rights

Contribution in cash and / or in kind

Up to 460m EUR (460m shares; ~ 21% of share capital)

Up to 10% of share capital

Conditional Capital

Up to 175m EUR (175m shares, ~ 8% of share capital)

Up to 20% of share capital

Contribution in cash

Contribution in kind

max. 20% of share capital

max. 10% of share capital

max. 460m EUR (~21% of share capital)

19

Back up CV‘s of Shareholder Representatives

20

Erich Clementi Born 1958, Italy Member since 2016

Prof. Dr. Ulrich Lehner Deputy Chairman of the Supervisory Board Born 1946, Germany Member since 2003

Dr. Karl-Ludwig Kley Chairman of the Supervisory Board Born 1951, Germany Member since 2016

The supervisory board seats are marked as follows: * Membership in other statutory supervisory boards, + Membership in comparable German and foreign supervisory bodies of corporations, 1) Listed Company

Other supervisory board seats

In 1982, he began his career with Bayer AG, where he initially worked in Corporate Finance and later became assistant to the Chairman of the Management Board. He was Chief Financial Officer of Bayer in Japan, Head of the Pharmaceutical Division Sales and Marketing Overseas, Head of the Pharmaceutical Division of Bayer’s Italian subsidiary and later served as Head of Finance and Investor Relations of Bayer AG until 1998. From 1998 to 2006, Dr. Kley was a member of the Executive Board of Deutsche Lufthansa AG, where he served as Chief Financial Officer, before joining Merck KGaA as a member and Vice Chairman of the Executive Board in 2006. From April 2007 until April 2016 he was Chairman of the Executive Board and CEO of Merck KGaA.

* BMW AG1)

* Deutsche Lufthansa AG (Chairman) 1) + Verizon Communications Inc.1)

Professor Lehner began his career in 1975 as a tax consultant and auditor at KPMG AG in Düsseldorf, before he joined Henkel KGaA in 1981. After a short period of working in the Controlling function of Friedrich Krupp GmbH, he returned to Henkel in 1986. In 1991, he was appointed Managing Director of Henkel Asia Pacific, and in 1995, member of the Management Committee and Vice President Finance/Logistics of Henkel AG & Co. KGaA. From 2000 to 2008, he served as Chairman of the Management Board of Henkel AG & Co. KGaA.

* Deutsche Telekom AG (Chairman) 1) * ThyssenKrupp AG (Chairman)1) * Porsche Automobil Holding SE1) + Henkel AG & Co. KGaA1)

Mr. Clementi began his career with IBM in Italy in 1984. Initially, he held various positions in IBM’s sales, marketing & engineering functions in Eastern Europe and Germany, before he was appointed Vice President Enterprise Systems Group for Europe, the Middle East and Africa in the United Kingdom. In 2003, he moved to the United States, where he first held the position of General Manager, was then appointed Vice President Strategy & General Manager Enterprise Initiatives and, prior to his current position, Senior Vice President & Group Executive Global Technology Services in the United States. Since 2015, Mr. Clementi has been Senior Vice President IBM Global Markets and Chairman Europe.

None

Other supervisory board seats Other supervisory board seats


21

Andreas Schmitz Born 1960, Germany Member since 2016

Baroness Denise Kingsmill, CBE Born 1947, New Zealand Member since 2011

Carolina Dybeck Happe Born 1972, Sweden Member since 2016


Other supervisory board seats + Inditex S.A.1)

+ International Consolidated Airlines Group S.A.1)

+ Monzo Bank Ltd. (Chairman) + Telecom Italia S.p.A.1)

* HSBC Trinkaus & Burkhardt AG (Chairman)1)

* Scheidt & Bachmann GmbH (Chairman) * KfW


ASSA ABLOY1) 9 Internal memberships: + ASSA ABLOY Asia Holding AB (Chair), + ASSA ABLOY East Europe AB (Chair), + ASSA ABLOY Entrance Systems AB (Chair), + ASSA ABLOY Financial Services AB (Chair), + ASSA ABLOY Finans AB (Chair), + ASSA ABLOY IP AB (Chair), + ASSA ABLOY Kredit AB (Chair), + ASSA ABLOY Mobile Services AB (Chair)

At the beginning of her career, Ms. Dybeck Happe held various positions with EF Education First Ltd. in the United States, Switzerland and Russia. From 2000 to 2002, she was Chief Financial Officer of Establish AB in Sweden. In 2002, she joined ASSA ABLOY in Germany as Chief Financial Officer for the German-speaking regions; in 2007, she went to ASSA ABLOY in the United Kingdom, where she served as Chief Financial Officer for Europe, the Middle East and Africa. In 2011 she went to Trelleborg AB in Sweden, where she served as Chief Financial Officer. Since 2012 she is in her current position as Chief Financial Officer of ASSA ABLOY AB, a publicly listed company in Sweden.

At the beginning of her career, Baroness Kingsmill worked as a marketing manager in the textile and fashion industry in London and Paris. In 1980, she passed the bar exam and began her work as a solicitor in London. From 1997 to 2003, she was Deputy Chairman of the UK Competition Commission. During her time at the Commission, she chaired many regulatory inquiries into various sectors. She undertook two inquiries for the UK government into pay and recruitment of women as well as human capital management. In the year 2000, Baroness Kingsmill was awarded a CBE (Commander of the Order of the British Empire), and in 2006, she was appointed as a member of the House of Lords, where she is a member of the Economic Affairs Committee.

Mr. Schmitz began his career with HSBC Trinkaus & Burkhardt AG in 1989. Until 2000, he held various positions in the corporate clients business and in investment banking. From 2000 to 2002, he was a member of the extended management board, in charge of Investment Banking and, since 2001, additionally in charge of Debt Capital Markets. From 2002 to 2004, he was a personally liable partner, responsible for Corporate & Investment Banking and Debt Capital Markets, before he was appointed Spokesman of the Personally Liable Partners. From 2006 to 2015, he was Chairman of the Management Board, and since June 2015, he has been Chairman of the Supervisory Board of HSBC Trinkaus & Burkhardt AG.


22

Dr. Theo Siegert Born 1947, Germany Member since 2007

Dr. Karen de Segundo Born 1946, Netherlands Member since 2008


Other supervisory board seats * Henkel AG & Co. KGaA1) * Merck KGaA1) + DKSH Holding Ltd. + E. Merck KG

* Thüringer Energie AG (Chairman) * GASAG AG * GreenCom Networks AG + TEN Thüringer Energienetze GmbH & Co. KG + Energie Steiermark AG + Deutsche Energie-Agentur GmbH (dena)


None

Dr. de Segundo began her career in 1971 when she joined the Royal Dutch / Shell Group, where she initially pursued an international commercial career in the gas and power business as well as in sales and marketing of oil products. She held various positions in five countries before she was appointed as a member of the Shell Brazil Management Board in charge of oil products in 1990. In 1996, Dr. de Segundo became External Affairs Director for the Shell Group. In 1998, she was appointed Chief Executive Officer of Shell Gas & Power and Chairman of Shell Coal; and from the year 2000 until 2005, when she left Shell, she served as Chief Executive Officer at Shell Renewables and President of Shell Hydrogen.

Dr. Siegert joined Franz Haniel & Cie. GmbH in 1975 and was appointed Director of Commercial Operations at Haniel Umweltschutz GmbH in 1981. In 1986, he became a member of the management of Franz Haniel & Cie. GmbH, before being appointed an ordinary member of the Management Board in 1996. In 2005, he served as Chairman of the Management Board of Franz Haniel & Cie. GmbH and then was appointed as Managing Partner of de Haen Carstanjen & Söhne in Düsseldorf. He served as an honorary professor at the University of Munich over a period of twenty years

Mr. Woste began his professional career as assistant to the management of heroal, before joining Benteler AG as a controller in 1989. He has worked in the energy industry since 1992, when he joined the municipal utility of Paderborn. From 1998 to 2003, he was Managing Director of Städtische Werke Nürnberg GmbH and member of the boards of management of Verkehrsaktiengesellschaft Nürnberg and N-ERGIE Aktiengesellschaft. In 2004, he was appointed Chairman of the Board of Management of Mainova AG, and from 2007 to 2014, he served as Chairman of the Board of Management of Thüga Aktiengesellschaft. From 2010 to 2014, he was President of BDEW Bundesverband der Energie- und Wasserwirtschaft e.V. (German Association of Energy and Water Industries). Since 2015, he has provided consultancy services to various companies, including EQT and the Australian financial service provider Macquarie.

Ewald Woste Born 1960, Germany Member since 2016

Your E.ON Contacts

T +49 201 184 28 06 [email protected]

Alexander Karnick T+49 201 184 28 38

Head of Investor Relations [email protected]

Martina Burger T +49 201 184 28 07

Manager Investor Relations [email protected]

Melanie Osterried T +49 201 184 65 38

Manager Corporate Finance [email protected]

23

Financial calendar & important links

Financial calendar

March 14, 2018 Annual Report 2017

May 8, 2018 Interim Report I: January – March 2018

May 9, 2018 2018 Annual Shareholders Meeting

August 8, 2018 Interim Report II: January – June 2018

November 14, 2018 Interim Report III: January – September 2018

Important links

Presentations https://www.eon.com/en/investor-relations/presentations.html

Annual Reports https://www.eon.com/en/investor-relations/financial-publications/annual-report.html

Interim Reports https://www.eon.com/en/investor-relations/financial-publications/interim-report.html

Shareholders Meeting https://www.eon.com/en/investor-relations/shareholders-meeting.html

Bonds / Creditor Relations https://www.eon.com/en/investor-relations/bonds.html

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This document is being presented solely for informational purposes. It should not be treated as giving investment advice, nor is it intended to provide the basis for any evaluation or any securities and should not be considered as a recommendation that any person should purchase, hold or dispose of any shares or other securities.

This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON management and other information currently available to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. E.ON does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.

Neither E.ON nor any respective agents of E.ON undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any information or to correct any inaccuracies in any such information.

Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercial standards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this presentation may not correspond in all cases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the respective tables and charts.

Disclaimer

25

Documents

Corporate Governance Roadshow November/December 2017 · E.ON‘s corporate governance structure provides an efficient framework to support and control management in times of significant