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CORPORATE GOVERNANCE REPORT

The Executive Board – also on behalf of the Supervisory Board – reports in the following on corporate governance at ThyssenKrupp in accordance with section 3.10 of the German Corporate Governance Code:

ThyssenKrupp has always been guided by internationally and nationally recognized standards of good and responsible corporate management. We regard corporate governance as a central issue which embraces all areas of the Group. Our aim is to constantly justify and reinforce the trust placed in us by investors, financial markets, business partners, employees and the general public.

Detailed information on corporate governance at ThyssenKrupp is also available on our website.

Unqualified Declaration of Conformity again

On October 01, 2006 the Executive Board and Supervisory Board issued the statutory Declaration of Conformity in accordance with Art. 161 of the Stock Corporation Act (AktG), stating that ThyssenKrupp complies with all the recommendations of the German Corporate Governance Code as amended on June 12, 2006.

Beyond this, ThyssenKrupp also complies with the suggestions of the Code – with one exception: there are no plans at present to introduce staggered periods of office for the stockholder representatives on the Supervisory Board. We consider it expedient to stick to a common period of office.

At our exchange-listed subsidiary Eisen- und Hüttenwerke AG, the German Corporate Governance Code is implemented taking into account the particularities of its membership in the Group. Variances are set out in the Company's Declaration of Conformity of September 13, 2006.

Services and internet information for our stockholders

Our stockholders are kept regularly informed about important dates by a financial calendar, which is published in the Annual Report, the quarterly reports and on the Company's website. As part of our investor relations activities, we hold regular meetings with analysts and institutional investors. In addition to an annual analysts' conference, conference calls for analysts are organized in particular to coincide with the publication of the quarterly figures.

For years the Annual General Meeting of ThyssenKrupp has been organized and conducted in such a way as to ensure all stockholders receive all the information they need quickly and efficiently before and during the meeting and to help them exercise their rights. We therefore switched and thus simplified the registration and authorization process for the Annual General Meeting to the so-called "record date" system in common international use. The deadline for the authorization and registration of stockholders is thus 21 days before the Annual General Meeting. This increases the incentive, particularly for our foreign stockholders, to take part in the Annual General Meeting and exercise their voting rights.

Ahead of the Annual General Meeting, stockholders receive detailed information on the past fiscal year and the individual agenda items for the meeting in the Annual Report and the invitation to the meeting. All documents and information on the Annual General Meeting as well as the Annual Report are also available on our website. Other information is made available on our website seven days before and during the Annual General Meeting. This promotes and simplifies the exchange of information between us and our stockholders on all matters relating to the Annual General Meeting.

Stockholders unable to attend the Annual General Meeting can view it on the internet in full. Stockholders can exercise their voting rights in person or by proxy, for which they can authorize the representative of their choice or a company-nominated proxy acting on their instructions. Proxy voting instructions for the Annual General Meeting on January 27, 2006 could also be issued in advance and during the meeting up to the end of the general debate by electronic media. This service will also be available to the stockholders for the next Annual General Meeting on January 19, 2007.

Close cooperation between Executive Board and Supervisory Board

The Executive Board and Supervisory Board work closely together in the interest of the Company; their joint goal is to increase the value of the enterprise on a sustainable basis. The Executive Board provides the Supervisory Board with regular detailed updates on all relevant issues related to corporate planning and strategic development, on business transactions and the situation of the Group including an overview of risks. Under the Articles of Association, important business transactions are subject to Supervisory Board approval. For more details, please turn to the Report by the Supervisory Board.

The Company has taken out directors and officers (D&O) liability insurance with an appropriate deductible for the members of ThyssenKrupp AG's Executive and Supervisory Boards.

Again this year, the only case of a consultancy or other service contract between members of the Supervisory Board and the Company related to Dr. v. Schenck, who is both a member of our Company's Supervisory Board and a partner in the international law firm Clifford Chance. Insofar as this law firm acted in a legal advisory capacity for the Company during the reporting period, the engagement was approved by the Supervisory Board Personnel Committee. Conflicts of interest of Executive or Supervisory Board members, which must be disclosed immediately to the Supervisory Board, did not occur.

The period of office of the stockholder representatives on the Supervisory Board ends at the close of the Annual General Meeting which resolves on discharging the Supervisory Board from responsibility for fiscal 2008/2009. The period of office of the employee representatives ends at the close of the Annual General Meeting which resolves on discharging the Supervisory Board from responsibility for fiscal 2007/2008.

The German Corporate Governance Code recommends that the chairman of the audit committee should have specialist knowledge and experience in the application of accounting principles and internal control processes. ThyssenKrupp follows this recommendation. Dr. Kohlhaussen, Chairman of the Audit Committee since January 2005, was a member of the board of managing directors of Commerzbank AG for almost 20 years, for ten of which he was chairman of the board. He has been chairman of the supervisory board of Commerzbank AG since 2001. Dr. Kohlhaussen also chairs the audit committee of another DAX-30 company. Furthermore, in his everyday work he has gained extensive knowledge and experience in dealing with internal control processes.

Responsible risk management

Good corporate governance also involves dealing responsibly with risks. The systematic risk management activities performed as part of our value-based Group management approach identify and assess risks at an early stage and optimize risk exposure. The risk management system at ThyssenKrupp AG is examined by the auditors in Germany and abroad. It is continuously evolved and adapted to the changing conditions. For more details, please turn to the section on Risk Management.

In the past fiscal year, the systematic implementation of the Group's compliance program again formed a key area of risk management. Various compliance measures were aimed at preventing antitrust violations and corruption in the Company. For example, special training schemes were developed to explain the applicable laws and the potential risks of violating these laws to employees of ThyssenKrupp AG and the segments whose work brings them into contact with these risk areas. The General Equal Treatment Act which came into force in August 2006 gave rise to new compliance requirements. An information sheet was issued to all employees of the German Group subsidiaries to explain the content of this law and the associated code of conduct for employees and companies. At the same time, the complaints offices required under the Act were installed. Compliance measures were also carried out in the area of capital market law. The Group has a long-established clearing office for ad hoc disclosures in which representatives of various specialist departments carry out assessments to identify any matters subject to ad hoc reporting requirements, with a view to ensuring potential inside information is handled in compliance with the law. In addition, all relevant persons who work for the Group and have authorized access to inside information are entered in an insider register and informed about obligations arising out of insider law.

A further key area of risk management in the past fiscal year was the introduction of a new Groupwide reporting system to maintain a central record of economically damaging acts.

Active, open and transparent communications

To maximize transparency, the aim of our corporate communications is to ensure that all target groups receive the same information at the same time. Private investors also have access to the latest news and developments at the Group on our website. All press and stock exchange (ad hoc) announcements made by ThyssenKrupp AG are published online. The Company's Articles of Association and the Rules of Procedure for the Executive Board, Supervisory Board and Audit Committee can also be viewed on our website, as can details of how ThyssenKrupp is implementing the recommendations and suggestions of the German Corporate Governance Code. All stockholders and interested readers can subscribe to an electronic newsletter which reports news from the Group.

According to Art. 15a of the Securities Trading Law (WpHG) the members of the Executive Board and Supervisory Board of ThyssenKrupp AG as well as other employees in a management role and parties closely related to them are obligated to disclose the purchase and sale of ThyssenKrupp shares and related financial instruments. At September 30, 2006 no such disclosures had been made to ThyssenKrupp AG in the reporting year. Similarly, there were no cases of share ownership subject to disclosure under section 6.6 of the German Corporate Governance Code at September 30, 2006. To supplement Art. 15a WpHG, ThyssenKrupp has issued an insider policy which sets out rules for trading with the Company's securities for board members and employees and ensures the requisite transparency.

The other directorships held by Executive and Supervisory Board members are listed in the sections Executive Board members and Supervisory Board members. Details of related party transactions are given in the Notes to the Consolidated Financial Statements.

KPMG again responsible for auditing

For the first time, accounting at ThyssenKrupp was based on the International Financial Reporting Standards (IFRS) in fiscal 2005/2006. We agreed with the auditors KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Berlin and Frankfurt am Main that the Chairman of the Audit Committee would be informed immediately of any possible grounds for exclusion or bias arising during the audit insofar as they are not immediately eliminated, and that the auditors would report immediately on any findings and occurrences during the audit which have a significant bearing on the duties of the Supervisory Board. It was also agreed that the auditors would inform the Supervisory Board or make a note in the audit report of any facts ascertained during their examination which are inconsistent with the Declaration of Conformity issued under Art. 161 Stock Corporation Act (AktG) by the Executive Board and Supervisory Board.

Focus on good corporate governance to continue in future

The work of the Executive Board and Supervisory Board will continue to focus on good corporate governance in the current 2006/2007 fiscal year. We will continue to be guided by the recommendations of the German Corporate Governance Code and will implement the Code accordingly. In line with this we will offer our stockholders the usual facilities for authorizing proxies and issuing proxy voting instructions for the Annual General Meeting on January 19, 2007, and the meeting will be transmitted live on the internet. The Executive Board and Supervisory Board will continue their close cooperation based on trust in the current year and will jointly address all major business transactions. In the ongoing further development of the risk management system, we will expand our compliance program on anti-corruption policy and competition law to include an e-learning program. This instrument will help us train as large a number of employees as possible in key compliance areas. In the following Compensation Report you will find information on our plans to adjust the compensation paid to the Supervisory Board which will be presented to the Annual General Meeting on January 19, 2007 for resolution.

COMPENSATION REPORT

Performance-based compensation for Executive Board

The overall compensation paid to Executive Board members consists of a number of compensation components. These are fixed compensation, a bonus, a long-term incentive component as well as additional benefits and pension plans.

The structure of the compensation system for the Executive Board is discussed and regularly reviewed by the Supervisory Board at the proposal of the Personnel Committee. Determining the compensation of individual Executive Board members is the duty of the Personnel Committee, which decides on appropriate compensation.

Compensation is based in particular on the duties of the individual Executive Board member, his/her personal performance and that of the Executive Board as well as on the business situation, success and prospects of the Company relative to its competitive environment.

Compensation for Executive Board members comprises non-performance-related and performance-related components. The non-performance-related components are the fixed compensation, additional benefits and pension plans, while the performance-related components are the bonus and the long-term incentive components.

The basic non-performance-related fixed compensation is paid out as a monthly salary. It is reviewed every three years among other things on the basis of the general salary trend in the Group. Effective October 01, 2005 the fixed compensation was increased by 3% p.a. against the last increment of April 01, 2002, i.e. for the 3.5 year period by a total of 10.5%. The Executive Board members also receive additional benefits in the form of non-cash benefits mainly comprising the tax value of real property, related incidental costs, insurance premiums and the use of Company cars. The Executive Board members are responsible for paying tax on these additional benefits as compensation components. In principle they are available in the same way to all Executive Board members; they vary in amount according to the personal situation of the individual member. No loans or advance payments were granted to members of the Executive Board in the year under review.

The first component of performance-related compensation is the bonus. The bonus amount is based equally on the development of EBT (earnings before taxes) and roce (return on capital employed). This means that the bonus as a performance incentive is linked to the performance indicators used in the Group. In addition to their bonus, Executive Board members receive a variable compensation component with a long-term incentive effect under the Mid Term Incentive plan (MTI); the Company's Long Term Management Incentive plan (LTMI) expired with the payment of the 5th installment at the beginning of 2006. Details of this can be found in the Notes to the Consolidated Financial Statements. The bonus system and MTI plan are based on a policy issued by the Supervisory Board Personnel Committee in 2002.

Overall compensation to active members of the Executive Board for their work in fiscal 2005/2006 was €23.1 million.

The compensation includes the stock appreciation rights granted to the Executive Board members under the 4th installment of the MTI at the beginning of January 2006. In line with the Management Compensation Disclosure Act (VorstOG), the number of stock rights is disclosed together with their value at grant date, calculated in accordance with the requirements for international accounting. The number of stock rights issued under the MTI is adjusted at the end of a three-year performance period on the basis of a comparison of the average ThyssenKrupp Value Added (TKVA) over the three-year performance period – starting from October 01 of the fiscal year in which the stock rights were awarded – with the average TKVA of the previous three fiscal years. For every €50 million change in TKVA, the number of stock rights changes by 10%. More information on TKVA can be found here. At the end of a performance period the stock rights awarded are paid out on the basis of the average price of ThyssenKrupp shares based on the performance of the stock in the first three months after the end of the performance period.

The following table shows the breakdown of compensation for the individual Executive Board members:

Table: Executive Board compensation 2005/2006

The above table also provides details of the Executive Board members' pensions. Pensions are paid to former Executive Board members who have either reached the normal age limit of currently 60 years, become permanently incapacitated for work or whose employment contract taking into account other income has been prematurely terminated or not renewed. The pension of an Executive Board member is based on a percentage of the final fixed salary component he/she received prior to termination of his/her employment contract. This percentage increases with the duration of the Executive Board member's appointment. In general this is 30% from the start of the first five-year period of appointment, 50% from the start of the second and 60% from the start of the third. The pension of the Executive Board Chairman is 65%. Under a no longer valid agreement, two Executive Board members continue to receive a chauffeur-driven car and specific insurance benefits for a period of five years after entering into retirement on account of their having served on the Executive Board for over 10 years. Current pensions are adjusted annually in line with the consumer price index. For these future entitlements of the Executive Board members, the Company recognizes pension accruals on the basis of IFRS. In the reporting year the allocation to pension accruals for active Executive Board members totaled €3,755,000. This amount comprises service costs and interest costs.

No further payments have been promised to any Executive Board members in the event that they leave their post. No members of the Executive Board received payments or corresponding promises from third parties in connection with their Executive Board positions in the past fiscal year. The Executive Board members who have now left the Executive Board – Mr. Elliott (appointment ended September 30, 2006) and Dr. Kirsten (appointment ended November 30, 2006) will receive their contractually agreed payments up to the end of their respective employment contracts, i.e. Mr. Elliott until July 08, 2007 and Dr. Kirsten until July 31, 2007.

In June 2003 stock appreciation rights under the now expired LTMI (5th installment) were awarded to Executive Board members for the final time. Under this installment in February 2006 Dr. Schulz received €691,000, Dr. Middelmann €523,000, Dr. Berlien, Mr. Eichler, Dr. Kirsten and Mr. Labonte €419,000 each, Mr. Elliott and Dr. Köhler €251,000 each, Mr. Fechter €209,000 and Dr. Mörsdorf €168,000.

These figures reflect the significant improvement in the Company's performance indicators and the performance of ThyssenKrupp stock in recent fiscal years. EBT rose from €764 million (on US GAAP basis) in fiscal 2001/2002 to €1,677 million (on IFRS basis) in fiscal 2004/2005 and to €2,623 million (on IFRS basis) in fiscal 2005/2006, representing an increase of 56% against the prior year and 243% against 2001/2002. In the same period roce climbed from 7.0% in fiscal 2001/2002 to 17.9% today, an increase of 156%. TKVA took a similar course: the negative TKVA of fiscal 2001/2002 of -€414 million grew to €1,510 million in the reporting year. The ThyssenKrupp share price rose from €11.30 on September 28, 2001 to €26.57 on September 29, 2006, an increase of 135%. On account of the initially very low performance indicators, the 1st and 2nd installments of the LTMI, which was first launched in 1999, in fiscal years 2001/2002 and 2002/2003 were without value and therefore triggered no payouts. The 3rd installment in fiscal 2003/2004 and the 4th installment in 2004/2005 together resulted in a payout amount of €113,000 for an ordinary Executive Board member. On average over the past five years since these long-term payment components were introduced an ordinary Executive Board member received €106,000 p.a. from the five installments of the LTMI.

The LTMI was replaced by the Mid Term Incentive plan (MTI), the 1st installment of which was issued in February 2003. The value of the 1st installment of the MTI was based on the increase in the average TKVA in the three fiscal years 1999/2000-2001/2002 against the average TKVA of the three-year performance period 2002/2003-2004/2005. On the basis of the significant increase in average TKVA from -€99 million to +€436 million in the performance period as described above, the Executive Board members received the following payments under the 1st installment of the MTI in December 2005: Dr. Schulz €817,000, Dr. Middelmann €619,000, and Dr. Berlien, Mr. Eichler, Dr. Kirsten and Mr. Labonte €495,000 each. Under the 2nd and 3rd installments of the MTI the Executive Board members also have a total of 191,545 stock appreciation rights which have been awarded but are not yet payable.

Total compensation paid to former members of the Executive Board and their surviving dependants amounted to €15.5 million (prior year: €13.3 million). In accordance with IFRS an amount of €157.8 million (prior year: €159.1 million) was accrued for pension obligations benefiting former Executive Board members and their surviving dependants.

Supervisory Board compensation regulated in the Articles of Association

The compensation of the Supervisory Board is determined by the Annual General Meeting and is regulated in Art. 14 of the Articles of Association. It is based on the duties and responsibilities of the Supervisory Board members and on the performance of the Group.

In addition to reimbursement of their expenses and a meeting attendance fee of €500, Supervisory Board members receive compensation comprising the following elements: a fixed component of €16,000 and a bonus of €800 for each €0.01 by which the dividend paid out to stockholders for the past fiscal year exceeds €0.10. On top of this, there is an annual compensation, based on the long-term performance of the Company, of €2,000 for each €100,000,000 by which average earnings before taxes and minority interest (EBT) in the last three fiscal years exceeds €500,000,000.

The Chairman receives three times the above fixed compensation, bonus and long-term performance-based component, and the Vice Chairman double these amounts. In accordance with the German Corporate Governance Code, chairmanship and membership of Supervisory Board committees are compensated separately. Supervisory Board members who only serve on the Supervisory Board for part of the fiscal year receive a proportionally reduced compensation amount.

It is planned to propose to the Annual General Meeting on January 19, 2007 that Supervisory Board compensation be amended in the form of an amendment to Art. 14 of the Articles of Association. The new system will maintain the current compensation structure but shift the focus toward the fixed compensation component. This is to take into account the increased oversight activity of the Supervisory Board, and the link between compensation and the business performance of the Group will be partly removed. At the same time the variable compensation components will be reduced in order to keep the overall level of compensation roughly stable in a multi-year comparison.

In anticipation of this planned new system of Supervisory Board compensation, all Supervisory Board members have agreed to limit their compensation for fiscal 2005/2006 to the amount that they would receive assuming the new arrangements already applied. In the individual breakdown of Supervisory Board compensation, this limitation is taken into consideration in the bonus.

On this basis, the Supervisory Board members will receive total compensation, including meeting attendance fees, of €2.7 million (prior year: €2.3 million). Without the limitation, compensation would have totaled €3.3 million. The individual Supervisory Board members will receive the amounts listed in the following table.

Supervisory Board compensation 2005/2006 in €
* taking into consideration the limitation in anticipation of the planned new system of Supervisory Board compensation
			Fixed compensation		Bonus*		Long-term compensation component		Compensation for committee work		Meeting attendance fees		Total
Dr. Gerhard Cromme, Chairman			48,000		153,000		90,780		97,260		7,000		396,040
Bertin Eichler, Vice Chairman			32,000		102,000		54,226		70,584		5,000		263,810
Markus Bistram			16,000		51,000		14,219		-		2,000		83,219
Wolfgang Boczek (until November 30, 2005)			2,674		8,523		21,867		8,266		1,000		42,330
Heinrich Hentschel			16,000		51,000		27,113		-		2,000		96,113
Prof. Jürgen Hubbert			16,000		51,000		17,063		-		2,000		86,063
Klaus Ix			16,000		51,000		30,260		24,315		4,000		125,575
Hüseyin Kavvesoglu			16,000		51,000		27,113		23,528		4,000		121,641
Dr. Martin Kohlhaussen			14,667		46,750		27,738		44,578		3,000		136,733
Dr. Heinz Kriwet			16,000		51,000		30,260		24,315		3,000		124,575
Dr.-Ing. Klaus T. Müller			16,000		51,000		27,113		-		2,000		96,113
Prof. Dr. Bernhard Pellens			16,000		51,000		17,063		21,016		4,000		109,079
Dr. Heinrich v. Pierer			16,000		51,000		17,063		21,016		3,000		108,079
Dr. Kersten v. Schenck			16,000		51,000		25,207		23,052		3,000		118,259
Peter Scherrer			16,000		51,000		30,260		20,263		2,500		120,023
Thomas Schlenz			16,000		51,000		30,260		72,945		6,000		176,205
Dr. Henning Schulte-Noelle			14,667		46,750		27,738		44,578		3,000		136,733
Wilhelm Segerath			16,000		51,000		30,260		24,315		3,000		124,575
Christian Streiff			16,000		51,000		17,063		-		2,000		86,063
Gerold Vogel (from January 03, 2006)			11,879		37,866		7,482		13,040		2,000		72,267
Prof. Dr. Gang Wan			16,000		51,000		17,063		-		2,000		86,063
Total			363,887		1,159,889		587,211		533,071		65,500		2,709,558

Members of the Supervisory Board of ThyssenKrupp AG will receive compensation of €152,691 (prior year: €168,466) for supervisory board directorships at Group subsidiaries in fiscal 2005/2006.

The individual members of the Supervisory Board will receive the amounts shown in the following table.

Compensation from supervisory board directorships within the Group in €
Markus Bistram			25,000
Wolfgang Boczek			4,178
Klaus Ix			31,486
Hüseyin Kavvesoglu			34,000
Thomas Schlenz			30,000
Wilhelm Segerath			5,753
Gerold Vogel			22,274
Total			152,691

Beyond this, with one exception, Supervisory Board members received no further compensation or benefits in the reporting year for personal services rendered, in particular advisory and mediatory services. The international law firm Clifford Chance, one of whose partners is Supervisory Board member Dr. v. Schenck, received a total of €32,676 for consultancy services for subsidiaries of ThyssenKrupp in the past fiscal year. No loans or advance payments were granted to members of the Supervisory Board in the year under review.

Former Supervisory Board members who left the Supervisory Board prior to October 01, 2005, receive a proportional payment from the long-term compensation component in the total amount of €97,793 for the time they served on the Supervisory Board. The breakdown is shown in the following table:

Long-term compensation component  for former Supervisory Board members who resigned before October 01, 2005, in €
Dieter Schulte, Vice Chairman (until January 23, 2004)			6,350
Dr. Karl-Hermann Baumann (until January 21, 2005)			13,225
Carl-L. von Boehm-Benzing (until January 21, 2005)			13,225
Udo Externbrink (until January 23, 2004)			3,175
Herbert Funk (until January 23, 2004)			3,175
Dr. Klaus Götte (until March 31, 2004)			5,053
Reinhard Kuhlmann (until January 21, 2005)			13,225
Dr. Mohamad-Mehdi Navab-Motlagh (until January 21, 2005)			13,225
Dr. Friedel Neuber (died October 23, 2004)			10,740
Ernst-Otto Tetau (until January 23, 2004)			3,175
Bernhard Walter (until January 21, 2005)			13,225
Total			97,793