Report by the Supervisory Board

In this report the Supervisory Board gives an account of its activities in the 2007/2008 fiscal year. It focuses in particular on its ongoing dialogue with the Executive Board, the main subjects of discussions at the full Supervisory Board meetings and in the committees, and the audit of the financial statements.

Dr. Gerhard Cromme
Chairman of the Supervisory Board

In the 2007/2008 fiscal year, the Supervisory Board continued to perform the functions for which it is responsible according to statutory provisions and the Articles of Association with the utmost care. We regularly advised the Executive Board on the management of the Company and supervised the conduct of business. We were directly involved from an early stage in all decisions of fundamental significance for the Company. In written and verbal reports, the Executive Board furnished us with regular, up-to-date and comprehensive information on the state of the Company, above all on the development of the business and financial situation, the personnel situation, investment projects and fundamental issues of corporate planning and strategy. We paid particular attention to the risk situation, risk management, the legally compliant management of the Company and the compliance program. Where the actual course of business deviated from plans and targets, this was explained in detail and examined by us on the basis of the documents presented. The Executive Board agreed the Company's strategic alignment with us. All events of importance to the Company were discussed in detail by the Supervisory Board Executive Committee (Praesidium) and the full Supervisory Board on the basis of reports by the Executive Board.

Where required by statutory provisions and the Articles of Association, the Supervisory Board voted on the reports and resolution proposals of the Executive Board after detailed examination and discussion. In addition to the intensive work carried out by the Supervisory Board and the committees, I and other Supervisory Board members were personally in regular contact with the Executive Board outside the meetings, were kept informed about the current business situation and key business transactions, and supported the Executive Board in an advisory capacity. In separate meetings I discussed the perspectives and future strategic focus of the individual Group segments with the Executive Board.

At four meetings in fiscal year 2007/2008, the Supervisory Board dealt at length with the business situation and the operational and strategic development of the Company and its business areas. Between meetings, the Executive Board informed the Supervisory Board immediately and in detail by means of written reports about particular transactions of importance for assessing the current situation and further developments as well as for the management of the Company. The Executive Board submitted matters requiring approval in good time for resolution. In urgent cases resolutions were passed by written vote in consultation with the Supervisory Board Chairman. Conflicts of interest of Executive Board and Supervisory Board members, which must be disclosed to the Supervisory Board immediately and reported to the Annual General Meeting, did not occur in the year under review.

Efficient work in the Supervisory Board committees

To enhance the efficiency of its work, The Supervisory Board has set up a total of six committees which prepare the resolutions of the Supervisory Board as well as the issues to be dealt with at the full meetings. Where legally permissible, in individual cases we delegated decision-making powers of the Supervisory Board to committees. This approach has proven successful. All committees are chaired by the Supervisory Board Chairman, with the exception of the Audit Committee. The chairmen of the committees reported regularly and in detail on the meetings and the work of the committees in the full-session meetings. The compositions of the individual committees are shown under "Supervisory Board Committees".

The Executive Committee (Praesidium) met four times in the reporting period. Between meetings, I discussed projects of particular importance to the Group with the members of the Executive Committee. In addition to preparing the meetings of the full Supervisory Board, the main subjects of discussion were the progress reports on the steel mill project in Brazil and on the new joint plant complex being built by the Steel and Stainless segments in Alabama/USA. We also dealt with the compliance program, the implementation of the new recommendations and suggestions of the German Corporate Governance Code, and preparations for the efficiency review of the Supervisory Board.

At the end of January and in mid-July 2008, the Executive Committee gave its approval by written procedure for the Executive Board to acquire shares in the Company on the basis of the authorization granted by the Annual General Meeting. After the close of the fiscal year, the Executive Committee held an extraordinary meeting on October 28, 2008, attended by the Executive Board Chairman and Chief Financial Officer of ThyssenKrupp AG, to discuss the impact of the financial crisis on the Group.

The Personnel Committee, which is responsible for the employment contracts and compensation of the Executive Board members and for other Executive Board matters, also met four times. Key subjects discussed included the proposals to extend the appointments as Executive Board member of Mr. Fechter and Dr. Köhler from October 01, 2008 for five years and of Dr. Schulz as Chairman of the Executive Board from January 24, 2009 to the close of the Annual General Meeting resolving on the annual financial statements for fiscal 2009/2010 (January 21, 2011). In addition, the bonuses and payments from the MTI for the fiscal year were determined, and at the end of the regular three-year cycle the fixed salaries of the Executive Board members were raised at October 01, 2008 in line with the increase in fixed compensation for executives in the Group. The Personnel Committee also approved the acceptance of external directorships by individual Executive Board members and the retention of the law firm Clifford Chance, to which Supervisory Board member Dr. v. Schenck belongs.

Once again in the past fiscal year it was not necessary to convene the Mediation Committee in accordance with Art. 27 par. 3 German Codetermination Act (MitbestG).

The Audit Committee likewise met four times. In the presence of the financial-statement auditors, the Chairman of the Executive Board and the Chief Financial Officer, it mainly dealt with the parentcompany and consolidated financial statements, the quarterly financial statements, the audit reports as well as the development of the risk management system and the compliance program. The Audit Committee also discussed the interim reports to be published. In its meeting in May 2008 it was informed in detailed about the Group's compliance activities. The auditors reported in detail on all findings and occurrences in the course of the audit of the annual financial statements and the audit review of the quarterly financial statements which were of significance to the work of the Supervisory Board.

The Audit Committee also discussed the proposal for the appointment of the financial-statement auditors for fiscal year 2007/2008. It awarded the engagement for the audit of the parent-company and consolidated financial statements of ThyssenKrupp AG and the audit review of the quarterly financial statements and resolved the auditors' fee. Furthermore, it obtained the statement of independence from the auditors required under Section 7.2.1 of the German Corporate Governance Code and monitored the auditors' independence. Further areas dealt with included the award of contracts for non-audit services to the financial-statement auditors. The committee also examined the results of internal examinations performed by Corporate Internal Auditing and reports on legal risks. The Audit Committee was kept regularly informed about the status of the new steel mill for the Steel segment in Brazil and the new carbon and stainless steel processing plant for the Steel and Stainless segments in the USA. In February 2008, a meeting of the Audit Committee was held in Brazil. This gave the members of the committee the opportunity to obtain a first-hand picture of the project.

The Strategy, Finance and Investment Committee met twice and dealt with the international focus and strategic development of the Group and its segments. It also discussed the corporate and investment planning and prepared the relevant resolutions of the Supervisory Board. Questions relating in particular to the construction of the new plants by the Steel and Stainless segments in Brazil and the USA were addressed in detail. Discussions further covered the EX East and TechCenter Middle East projects launched by the Elevator/Services and Technologies segments respectively to strengthen their market positions in Asia and the Middle East.

The Nomination Committee, which was formed in September 2007 and tasked with proposing suitable candidates to act as stockholder representatives when new Supervisory Board elections are due, did not meet in the reporting period.

Wide spectrum of topics discussed in the full Supervisory Board meetings

The development of sales, earnings and employment in the Group and its segments, the financial situation and all major investment and disposal projects were the subject of regular deliberations at the full-session meetings. The steel mill project in Brazil and the new joint plant complex being built by the Steel and Stainless segments in Alabama/USA were discussed at several meetings.

In the meeting on November 30, 2007 we focused on the parent-company and consolidated financial statements for the year ended September 30, 2007, the Executive Board's proposal for the appropriation of net income and the corporate plan for fiscal 2007/2008. On the basis of a detailed report by the Executive Board we discussed the strategic development of the Group, focusing in particular on the aforementioned projects in Brazil and the USA as well as the EX East project. The development of raw material prices and their impact on earnings was also addressed. In view of the major investment projects, we also dealt in detail with the financial latitude available, the Group's rating situation and the safeguarding of dividend continuity. In this context we also discussed the impact of the financial crisis on ThyssenKrupp. Another subject covered in this meeting was the compliance program, which the Executive Board continuously developed in the reporting year. In addition, The Executive Board provided details on research and development expenditure and on Group initiatives and measures to improve productivity and efficiency. The Supervisory Board agrees that the ThyssenKrupp best program is a key element in this.

In the meeting on November 30, 2007 we discussed Executive Board compensation. Details of the amount and structure of Executive Board and Supervisory Board compensation are provided in the Corporate Governance report on pages 30–36. The Supervisory Board also approved the acquisition of Apollo Metals, which will strengthen the position of ThyssenKrupp Services as a supplier to the aerospace sector. We further approved a strategic investment plan to improve the market position of Rothe Erde. In the absence of the Executive Board, the Supervisory Board dealt with the efficiency review of the Supervisory Board which had previously been prepared by the Executive Committee. As part of this self-assessment of our work, we discussed the implementation of the measures resolved in the previous year to enhance the efficiency of the Supervisory Board's work and considered further possibilities for advancing these measures.

In the meeting on January 18, 2008 – immediately before the Annual General Meeting – the Executive Board reported on the current situation of the Group. The meeting also served to prepare for the ensuing stockholders' meeting. As part of the portfolio optimization program, the Supervisory Board also approved the disposal of the precision forging operations of ThyssenKrupp Technologies.

The Executive Board presented its deliberations regarding the acquisition of the National Wheel-O-Vator Company, an American manufacturer of stair lifts and elevators. On conclusion of the negotiations, we approved this acquisition by written procedure in April 2008 on the basis of detailed documentation. Having discussed the extension of Dr. Schulz's appointment as member and Chairman of the Executive Board of ThyssenKrupp AG at the January meeting, the corresponding resolution was passed by written procedure in February.

We used the meeting on May 14, 2008 to discuss the Group's strategic development with the Executive Board. On the basis of detailed documents providing an overview of current developments on the investment projects in Brazil and the USA, we discussed the opportunities and risks presented by these projects with the Executive Board. This was also the case with the EX East and TechCenter Middle East projects. In the May meeting we adopted the investment plan for the 2008/2009 fiscal year and the financing thereof and approved the purchase of treasury stock carried out by the Executive Board. A detailed presentation of the ThyssenKrupp compliance program was followed by a discussion with the Executive Board in which we gained a clear picture of the structure and organization of compliance measures throughout the Group. In summary, the Supervisory Board determined that the Group's compliance activities have achieved a very high level, as has also been confirmed by renowned external auditors. In this meeting we also approved the sale of the Nobiskrug shipyard to Eagle River Capital Ltd. and the acquisition of a 60% interest in Lamincer, a Spanish cold-rolled strip producer and steel service center.

Items on the agenda for the Supervisory Board meeting on September 05, 2008 included the report by the Executive Board on the situation of the Group and progress reports on the construction of the new steelmaking and processing plants in Brazil and the USA. We also approved the acquisition of further treasury stock in this meeting. Following a detailed presentation, we discussed the planned strategic realignment of the Services segment with the Executive Board. Other subjects included the growth options for the Technologies segment and a progress report on the construction of the new ThyssenKrupp Quarter in Essen. Following the Supervisory Board meeting we paid a visit to the site of the Quarter.

High corporate governance standards maintained

The Supervisory Board continuously monitored the further development of corporate governance standards. The Executive Board – also on behalf of the Supervisory Board – reports on corporate governance at ThyssenKrupp in the corporate governance report on pages 24–36 in accordance with Section 3.10 of the German Corporate Governance Code. In the Supervisory Board meeting on September 05, 2008 we discussed the implementation of the Code at ThyssenKrupp in depth with the Executive Board. We focused in particular on the amendments to the Code introduced by the Government Commission on the German Corporate Governance Code in its meeting on June 06, 2008. In line with the new Code recommendation we discussed the compensation arrangements for the Executive Board in the absence of the Executive Board and approved the compensation system and key contractual elements.

On October 01, 2008 the Executive Board and Supervisory Board issued an updated Declaration of Conformity in accordance with Art. 161 of the Stock Corporation Act (AktG) and made it permanently available to stockholders on the Company website. ThyssenKrupp AG complies with all recommendations of the Code as amended on June 06, 2008, published by the Federal Ministry of Justice in the official section of the electronic Federal Gazette (Bundesanzeiger) on August 08, 2008.

Detailed discussion of the audit of the parent-company and consolidated financial statements

The parent-company financial statements for the period October 01, 2007 to September 30, 2008, prepared by the Executive Board in accordance with HGB (German GAAP) rules, and the management report of ThyssenKrupp AG were audited by KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (formerly KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Berlin). The audit contract had been awarded by the Audit Committee of the Supervisory Board in accordance with the resolution of the Annual General Meeting on January 18, 2008. The auditors issued an unqualified audit opinion. In accordance with Art. 315a HGB, the consolidated financial statements of ThyssenKrupp AG were prepared on the basis of IFRS, the accounting standards applied in the European Union. The consolidated financial statements and the management report on the Group were also given an unqualified audit opinion.

The Audit Committee had selected the following three key audit areas for the reporting period: examination of the transfer of data from the ERP systems to the financial reporting systems, examination of selected major orders awarded to ThyssenKrupp companies in respect of sales corruption and adherence to the corresponding compliance rules, as well as assessment of the planning processes and content with regard to their appropriateness for the conduct of an impairment test under IAS 36. The reports on this as well as the other audit reports and financial statement documentation were sent to all Supervisory Board members in good time. They were discussed at length in the Audit Committee meeting and in the Supervisory Board meeting on November 27, 2008. Both meetings were also attended by the auditors, who reported on the main results of the audits and were available to answer questions and provide supplementary information. The Chairman of the Audit Committee reported in detail at the Supervisory Board meeting on the discussion of the parent-company and consolidated financial statements in the Audit Committee. Following our own examination of the parent-company financial statements, the consolidated financial statements, the management report and the management report on the Group, we approved the result of the audit and, in the meeting on November 27, 2008, on the recommendation of the Audit Committee approved the parent-company and consolidated financial statements. The parent-company financial statements are thus adopted. Following our own examination, we concurred with the proposal of the Executive Board for the appropriation of net income. The Supervisory Board regards the proposal for the appropriation of net income as appropriate.

Changes in the composition of the Supervisory Board and Executive Board

Prof. Dr. Gang Wan stepped down from the Supervisory Board at the close of the Annual General Meeting on January 18, 2008. As his replacement, the Alfried Krupp von Bohlen und Halbach Foundation designated Prof. Dr. Ulrich Lehner to the Supervisory Board effective January 18, 2008. At the close of November 15, 2008, Dr. Heinrich v. Pierer resigned his seat on the Supervisory Board. In his place the Alfried Krupp von Bohlen und Halbach Foundation designated Mr. Jürgen Thumann to the Supervisory Board with effect from November 16, 2008. The Supervisory Board thanks Prof. Dr. Wan and Dr. v. Pierer for their constructive and expert contributions and for the good and trustful cooperation.

In its meeting in November 2007, the Supervisory Board extended the appointments of Mr. Jürgen Fechter und Dr. Karl-Ulrich Köhler as members of the Executive Board of ThyssenKrupp AG until September 30, 2013. In February 2008, the extension of Dr. Ekkehard Schulz's appointment as member and Chairman of the Executive Board until the close of the Annual General Meeting in 2011 was resolved by written procedure.

The Supervisory Board thanks the executive and management boards, the employees and employee representatives of all Group subsidiaries and expresses its appreciation for their work. Their joint efforts once again enabled us to achieve outstanding earnings in the past fiscal year.

The Supervisory Board

Dr. Gerhard Cromme
Chairman
Düsseldorf, November 27, 2008