Report of the Supervisory Board

Dear Shareholders,

The time has come to reflect on the past year, one which was almost entirely dominated by the coronavirus pandemic and its major adverse impact on the global economy. Low oil and gas prices and a significant drop in demand posed enormous challenges for OMV. Nonetheless, we can still call this year a success. Thanks to measures quickly implemented by management and the Group’s integrated business model and diversified portfolio, OMV was able to generate solid earnings despite the difficult market environment.

We are not just looking back on a year of pandemic life, but also a twelve-month period in which we set the course for a new OMV. The acquisition of a majority interest in Borealis was a milestone for OMV in the further development of our Company’s chemical and circular economy activities. By expanding the value chain in this way, OMV is establishing a sustainable business model that will set the direction for the Company’s development for the long term.

Above all, however, we are reflecting on a time in which the importance of the human element was clearly evident – more so than in any other year. Neither our solid earnings nor the implementation of important strategic projects would have been possible without our employees who put enormous effort and a great deal of creativity into making these results a reality under difficult conditions. They are the foundation of and the driving force behind our success.

This performance and OMV’s stable financial position are also reflected in the proposed progressive dividend of  1.85, which allows you as our shareholders to participate in OMV’s success.

In the following, I would like to inform you about the Supervisory Board’s work during the 2020 financial year:

Composition of the Executive Board and Supervisory Board

Elena Skvortsova joined the Executive Board on June 15, 2020, and is now responsible for Marketing & Trading. Ms. Skvortsova is a top executive with many years of international management experience and cross-industry expertise. Since her appointment, she has been working with great enthusiasm and insight into market challenges to ensure that her division is fit for the future. After just a few months, she completed a very important transaction for OMV: the sale of the German filling station network.

On September 9, we resolved to reappoint Reinhard Florey as CFO. He has been able to refine and significantly improve Finance at OMV, both in terms of organization and processes, contributing to our results. This is due not least to efficient cost management and a clear financial strategy focused on cash flow and financial strength. OMV’s attractiveness to investors was underscored in 2020 by the successful issue of bonds totaling EUR 4.5 billion.

In 2020, the composition of the Supervisory Board also changed. Our long-term member Dr. Wolfgang Berndt, who had also been Chairman since May 2019, stepped down after ten years of service on the Supervisory Board with effect from the end of the Annual General Meeting on September 29, 2020. I wish to thank Wolfgang Berndt on behalf of the entire Supervisory Board. During his term of office, he oversaw groundbreaking transactions and investments that contributed substantially to OMV’s current stability and resilience. Under his chairmanship, we completed OMV’s largest transaction to date: the increase in our stake in Borealis to 75%, which will undoubtedly go down in our history for its strategic importance.

I, Mark Garrett, was elected to the Supervisory Board at the 2020 Annual General Meeting and at the subsequent constitutive meeting was voted Chairman of the Supervisory Board and Chairman of the Presidential and Nomination Committee. At that meeting, Thomas Schmid was elected Chairman of the Remuneration Committee. There were changes on the part of the employee representatives in 2020 as well. Christine Asperger stepped down from her positions as of October 1, 2020, and Alfred Redlich left the Supervisory Board as of December 2, 2020.

Mark Garrett, Chairman of the Supervisory Board (photo)

»We are not just looking back on a year of pandemic life, but also a twelve-month period in which we set the course for a new OMV.«

Chairman of the Supervisory Board

Supervisory Board activities

The Supervisory Board carried out its activities during the financial year with great care and in accordance with the law, the Company’s Articles of Association, and the Internal Rules. It oversaw the Executive Board’s governance of OMV and advised it in decision-making processes on the basis of detailed written and verbal reports as well as constructive discussions between the Supervisory Board and the Executive Board.

Early 2020 was almost entirely dominated by the Borealis transaction, which was ultimately approved at the meeting on March 11, 2020. The Annual General Meeting was postponed to autumn 2020 due to COVID-19-related restrictions. The other Supervisory Board meetings and conference calls were also heavily focused on discussions about measures to reduce the pandemic-induced negative impact on many areas of our business, particularly with regard to securing financing for the Borealis transaction.

Building on a survey of the Supervisory Board, a training event was held for the Supervisory Board once again in 2020. We had to cancel a visit to the newly set-up Innovation & Technology Center in Gänserndorf due to COVID-19 restrictions. In 2020, we again conducted a Supervisory Board self-assessment led by an external service provider, which built on the survey-based evaluation of the previous year and was conducted by holding personal interviews. The results were incorporated into our priority-setting and activities for 2021.

In September, the Supervisory Board approved the sale of OMV’s 51% interest in Gas Connect Austria. The sale was the result of OMV’s pursuit of a strategy to exit the regulated gas transportation business. At the same time, we were able to eliminate debt of more than EUR 570 million and take a major step toward improving our gearing.

Our remuneration policy was put to a vote for the first time at the Annual General Meeting in September 2020. We attach great importance to an intensive exchange with investors. For this reason, we discussed the development of our remuneration policy with investors at length.

At the end of the year, we took another major step forward in our divestment program – the sale of the filling station network in Germany. The final investment decision before year-end on the Co-Processing project for the production of biofuels in Schwechat was a key move toward implementing our sustainability strategy.

Activities of Supervisory Board committees

The Presidential and Nomination Committee placed particular focus on the preparation of the decisions regarding the appointment of Elena Skvortsova and the extension of Reinhard Florey’s Executive Board mandate. Furthermore, it focused on the issue of long-term Executive Board succession planning.

In 2020, the Remuneration Committee finalized the remuneration policy for the Executive Board and Supervisory Board based on the new requirements of Austrian Stock Corporation Act in connection with the Shareholder Rights Directive and presented it to the shareholders for a vote for the first time at the Annual General Meeting on September 29, 2020. The measure passed overwhelmingly, receiving more than 99% of the votes cast. In the context of the development of the Executive Board remuneration policy, feedback from investors during the 2019 Corporate Governance Roadshow was specifically considered. Thus, from 2020, the variable remuneration system also incorporates non-financial/ESG targets – specifically, carbon reduction and a diversity target.

The next step is to prepare a remuneration report for the Executive Board and Supervisory Board based on the new provisions of the Austrian Stock Corporation Act. A separate report was drafted for this purpose which presents the Executive Board and Supervisory Board remuneration more transparently than before and includes a direct comparison with the Company’s performance over time and with employee salaries. The remuneration report for the Executive Board and Supervisory Board will be presented to the shareholders for approval for the first time at the Annual General Meeting in 2021.

In 2020, the Audit Committee looked at important topics related to accounting processes, the internal audit program, risk management, and the Group’s internal control system. The current auditor of the OMV Group, Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H., participated in each of the Audit Committee’s meetings, and the Supervisory Board regularly took advantage of the opportunity to discuss matters with the auditor without the presence of the members of the Executive Board. In addition, the Audit Committee completed the selection procedure introduced in 2019 relating to the choice of the auditor for the 2021 financial year.

Meetings of the Portfolio and Project Committee are held regularly prior to the meetings of the Supervisory Board. The committee used its meetings in 2020 to prepare decisions regarding key investment and M&A projects on the basis of extensive information and intensive discussions.

Further details regarding the activities of the Supervisory Board and its committees can be found in the (Consolidated) Corporate Governance Report.

Annual financial statements and dividends

Following a comprehensive audit and discussions with the auditor during meetings of the Audit Committee and the Supervisory Board, the Supervisory Board has approved the Directors’ Report and the Consolidated Annual Report pursuant to section 96(1) of the Austrian Stock Corporation Act as well as the Annual Financial Statements and the 2020 Consolidated Annual Financial Statements pursuant to section 96(4) of the Austrian Stock Corporation Act. Both the Annual Financial Statements and the Consolidated Annual Financial Statements for 2020 received an unqualified opinion from the auditing company Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. The Supervisory Board also approved the (Consolidated) Corporate Governance Report audited by both the Supervisory Board and the Audit Committee as well as the (Consolidated) Report on Payments Made to Governments. The Supervisory Board found no issues during the audits. Following the audit, the Supervisory Board accepted the Executive Board’s suggestion to jointly propose in the Annual General Meeting a dividend of EUR 1.85 per share, which corresponds to an increase of EUR 0.10 over the previous year. The remaining amount of the net profit after the dividend distribution will be carried forward to new account. The Supervisory Board will audit the separate consolidated non-financial report (Sustainability Report) individually, and this report will be published separately and after the Annual Report together with the corresponding Supervisory Board report.

On behalf of the entire Supervisory Board, I would like to thank the Executive Board and all employees for their commitment and successful work in the extraordinarily turbulent and challenging 2020 financial year. I would like to give special thanks to OMV’s shareholders for their continued trust as well as to all of OMV’s customers and partners.

Vienna, March 10, 2021

For the Supervisory Board

Mark Garrett m.p.

European Union