Report of the Supervisory Board

During the year under review, the Supervisory Board performed the duties incumbent upon it in accordance with the law and the Articles of Incorporation and continually advised and monitored the Executive Board. The Supervisory Board was regularly kept informed about business developments and the situation of the Company. It supervised the management of the Company by the Executive Board in particular on the basis of written and verbal reports. The benchmarks for the supervision were the legality, correctness, suitability and profitability of the Group-wide management of the business by the Executive Board. Executive Board reporting fulfilled the requirements set by the law, by good corporate governance and the Supervisory Board in terms of both their subject matter and their scope. As well as the reports, the Supervisory Board also received additional information from the Executive Board. The reports and information issued by the Executive Board were examined in terms of its plausibility and was critically acknowledged and questioned by the Supervisory Board. A catalogue created by the Supervisory Board and constantly checked for necessary adjustments lists the kinds of business transactions for which the Executive Board requires the approval of the Supervisory Board. Business transactions requiring Supervisory Board approval were examined and discussed with the Executive Board. The Supervisory Board gave its approval for, among other things, the acquisition and sale of shareholdings, for the submission of bids for major projects and for the investment budget.

In face-to-face discussions outside the Supervisory Board meetings and its committees, the Chairman of the Supervisory Board and the Chairman of the Executive Board examined the situation of the Company, its further development and issues above and beyond that.

With the conclusion of the Annual General Meeting on May 21, 2008, the period in office of all sitting members of the Supervisory Board ended. Because more than 20,000 people are regularly employed in Germany and in accordance with Article 7, Paragraph 1, No. 3 of the German Co-determination act, the number of Supervisory Board members increased to 20, of which 10 are shareholder representatives and 10 employee representatives. Following the new election, Dr. John Feldmann, Rudolf Rupprecht and Bernhard Schreier joined the Supervisory Board for the first time as representatives of the shareholders elected by the Annual General Meeting. From the employees, Britta Ehrbrecht, Stephan Brückner, Volker Böhme, Andreas Harnack, Reinhard Heller, Dietmar Schäfers and Rainer Schilling were newly elected to the Supervisory Board. Those leaving the Supervisory Board were, as shareholder representative, Dr. Jürgen Hambrecht and as employee representative Maria Schmitt, Wolfgang Erdner, Reiner Jager, Friedrich Rosner and Rolf Steinmann. The Supervisory Board would like to thank those members who left for their commitment and cooperation.