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Corporate governance declaration 2011/2012

The term corporate governance stands for responsible corporate management and control geared to long-term value creation. The Executive Board and Supervisory Board are committed to securing the future of the Company and sustainable value growth through responsible governance geared to the long term.

In addition to the corporate governance declaration below, more information on corporate governance at thyssenkrupp is provided in the Corporate governance report for the 2011/2012 fiscal year.

thyssenkrupp AG has issued the following corporate governance declaration pursuant to § 289a German Commercial Code (HGB) which is part of its management report for the 2011/2012 fiscal year.

How the Executive Board and the Supervisory Board operate

The Executive Board and Supervisory Board work together closely in the interest of the Company. An intensive, continuous dialogue between the two boards is the basis for efficient corporate management. Their common goal is to ensure the continued existence of the Company and the sustainable creation of value. In accordance with the statutory requirements for a German stock corporation, thyssenkrupp AG has a two-tier governance system characterized by a separation of personnel between management and supervisory boards.

Executive Board responsible for management and conduct of business

The Executive Board and Supervisory Board work together closely in the interest of the Company. An intensive, continuous dialogue between the two boards is the basis for efficient corporate management. Their common goal is to ensure the continued existence of the Company and the sustainable creation of value. In accordance with the statutory requirements for a German stock corporation, thyssenkrupp AG has a two-tier governance system characterized by a separation of personnel between management and supervisory boards.

The members of the Executive Board have joint responsibility for overall management. They work together as colleagues and keep each other informed of important measures and events in their departments. Notwithstanding the overall responsibility of all members of the Executive Board, the individual members of the Executive Board manage the departments they have been assigned on their own responsibility within the framework of Executive Board resolutions. The work of the Executive Board is specified in more detail in the rules of procedure for the Executive Board, in which matters reserved for the full Executive Board and other decision-making modalities are also defined in more detail. The allocation of departments to the individual members of the Executive Board is set out in an organization chart forming part of the rules of procedure.

The Executive Board regularly agrees the strategy of the Company with the Supervisory Board, ensures it is implemented and discusses the progress of implementation with the Supervisory Board at regular intervals. The Executive Board provides the Supervisory Board with regular detailed updates on all issues of relevance to the Company related to business performance, financial position and results of operations, planning and target achievement, the risk situation and risk management. Variances between actual performance and defined plans and targets are discussed and explained. In each meeting of the Supervisory Board and the Audit Committee the Executive Board also reports in depth on the subject of compliance, i.e. measures to ensure adherence to statutory requirements and Company policies.

As an integral component of a new and readily understandable strategy for creating a viable and robust structure for the Group, over the past two years the Executive Board has radically revised the strategy and planning processes, reorganized the allocation and content of responsibilities for strategy and controlling at the level below the Executive Board, and is carrying out strategic assessments and potential evaluations based on open and transparent perspectives for markets and competitors and based on an extended and standardized Group system of performance indicators. The results of the strategy process are discussed each year in May in meetings of the Strategy, Finance and Investment Committee and of the full Supervisory Board. The results of operational planning and the budget for the next fiscal year are discussed by these bodies each year in the fall.

In addition, the Executive Board holds monthly business reviews attended by the senior vice presidents and the heads of each business area at which the CEOs and CFOs report in detail on the current business situation.

Certain Executive Board decisions of particular importance are subject to the approval of the Supervisory Board. These have been decided by the Annual General Meeting and are set out in the Articles of Association of thyssenkrupp AG. Under Article 7 of the Articles of Association, for instance, the Supervisory Board's approval is required for fundamental changes to the Group's organizational structure, the Group's annual investment plan and its financing. Also subject to approval are the acquisition and disposal of equity interests in other companies where the value of an individual transaction exceeds €25 million.

The Executive Board passes resolutions in meetings that usually take place at least twice a month and are generally chaired by the chairman of the Executive Board. Each member of the Executive Board may demand the convening of a meeting, giving notice of the subject for discussion; similarly, each member may demand that a subject be included on the agenda of a meeting. Decisions of the full Executive Board are made by simple majority of the members taking part in the resolution.

Information on the composition of the Executive Board and on the individual Executive Board members is provided here.

Supervisory Board responsible for monitoring the management of the Company

The Supervisory Board appoints, monitors and advises the Executive Board and is directly involved in decisions of fundamental importance for the Company.

Pursuant to Article 9 subsection 1 of the Articles of Association, § 96 subsection 1 German Stock Corporation Act (AktG) and § 7 subsection 1 sentence 1 No. 3 German Codetermination Act (MitbestG), the Supervisory Board consists of 20 members, of whom ten are appointed by the shareholders and ten by the employees. Seven shareholder representatives were elected at the Annual General Meeting on January 21, 2010, while three further shareholder representatives were designated by the Alfried Krupp von Bohlen und Halbach Foundation at January 21, 2010, based on the right of designation granted in Article 9 subsection 2 of the Articles of Association. After Prof. Dr. Ekkehard D. Schulz stood down as shareholder representative with effect from December 31, 2011, Gräfin v. Schmettow was court-appointed to the Supervisory Board as his successor effective January 30, 2012 until the close of the Annual General Meeting on January 18, 2013. The Supervisory Board has resolved to propose the appointment of Ms. Carola Gräfin v. Schmettow as shareholder representative on the Supervisory Board to the Annual General Meeting on January 18, 2013. In addition Mr. Peer Steinbrück has resigned his seat on the Supervisory Board at the close of December 31, 2012. To replace him the Alfried Krupp von Bohlen und Halbach Foundation has designated Dr. Ralf Nentwig, member of the Executive Committee of the Alfried Krupp von Bohlen und Halbach Foundation, to the Supervisory Board effective January 1, 2013. The election of the employee representatives took place on December 09, 2008. On the employee representative side, Mr. Thomas Schlenz resigned his seat on the Supervisory Board at the close of July 31, 2012 to assume new duties in the Group. To succeed him Mr. Martin Dreher was court-appointed to the Supervisory Board effective August 10, 2012. The current composition of the Supervisory Board is shown here.

The term of office of the employee representatives ends with the close of the Annual General Meeting in 2014 resolving on ratification of the acts of the boards for fiscal year 2012/2013. The term of office of the Supervisory Board members elected by the Annual General Meeting ends with the close of the Annual General Meeting in 2015 resolving on ratification of the acts of the boards for fiscal year 2013/2014; the term of office of the members currently designated by the Alfried Krupp von Bohlen und Halbach Foundation ends at the same time.

To perform its duties and to support a focused discussion of the issues the Supervisory Board has set up a total of six committees, which support the work of the full Supervisory Board meetings: an executive committee, a mediation committee pursuant to § 27 subsection 3 Codetermination Act, a personnel committee, an audit committee, a strategy, finance and investment committee, and a nomination committee.

The committees prepare the topics and resolutions of the Supervisory Board. In addition, the personnel committee resolves in place of the full Supervisory Board on certain matters defined in the rules of procedure that can by law be transferred to the committee for resolution. The Supervisory Board has set up rules of procedure that also define the responsibilities of the committees. In addition, the audit committee has its own rules of procedure. Details of the composition of the committees are shown here.

With extraordinary meetings – most recently in January 2012 on the disposal of the stainless operations, in November 2012 on the efficiency review, and in December 2012 on the adoption of the annual financial statements – as well as additional committee meetings, the Supervisory Board fulfills its monitoring and advisory function with great intensity. In the periods between meetings, too, the Supervisory Board Chairman and the Chairman of the Audit Committee engage in a close and regular exchange of views and information with the Executive Board. They report on important findings immediately in the following Supervisory Board or Committee meeting

Under § 9 of its rules of procedure, the Supervisory Board carries out an efficiency review once a year. This generally takes the form of a self-assessment based on an evaluation of questionnaires completed by the Supervisory Board members. Key areas of this efficiency review were an assessment of the reporting to the Supervisory Board, the meetings, and the composition and structure of the Supervisory Board. The analysis and discussion in the extraordinary Supervisory Board meeting in November 2012 showed that in the opinion of its members the Supervisory Board met high to very high standards with regard to the efficiency of its work. The Supervisory Board also took up suggestions for further improving its work.

The Supervisory Board regularly evaluates the independence of its members. For this the Supervisory Board applies in particular the criteria of the German Corporate Governance Code for the independence of supervisory board members. On the basis of these criteria the Supervisory Board last established in September 2012 that in its opinion it has an appropriate number of independent members. At the same date the Supervisory Board also established a target number of independent Supervisory Board members as recommended in the Code as amended on May 15, 2012. Based on the assumption that the employee representatives also generally fulfill the independence criteria in the meaning of section 5.4.2 of the Code, a concrete target of at least 15 independent Supervisory Board members was established for the composition of the Supervisory Board as a whole. Otherwise the Supervisory Board set a concrete target of at least five independent Supervisory Board members for the composition of the shareholder side. In accordance with the Code, only one member of the Supervisory Board of thyssenkrupp AG – Dr. Gerhard Cromme – is a former member of the Executive Board.

Under § 8 subsection 2 of the rules of procedure each Supervisory Board member must disclose conflicts of interest to the Supervisory Board without delay. The Supervisory Board reports to the Annual General Meeting on conflicts of interest that have occurred and their treatment.

The Supervisory Board conferred closely with the Executive Board on the development of a new and viable Group strategy. In the course of their work together and as a result of a significantly improved process for analyzing the value potential of the Group's businesses and the opportunities and risks of strategic measures, the Supervisory Board receives clearer and more differentiated information on operational issues, including critical matters.

Declaration of Conformity in accordance with Art. 161 of the Stock Corporation Act (AktG)

Declaration of Conformity as of October 01, 2012
Declaration of Conformity as of October 01, 2012

§ 161 of the Stock Corporation Act (AktG) requires the executive board and supervisory board of a listed German stock corporation to declare at least once a year whether the German Corporate Governance Code has been and is being complied with, or which of the Code's recommendations have not been or are not being applied and why not. On the basis of intensive discussions the Executive Board and Supervisory Board issued the following Declaration of Conformity pursuant to § 161 subsection 1 AktG at October 01, 2012:

Detailed information on this topic is also available in our Corporate Governance Report and in the Corporate Governance section on this website. The current Declaration of Conformity and the declarations of conformity of previous years are also accessible here.

Key corporate governance practices

Compliance: Inform / Identify / Report & Act

Compliance, in the sense of measures to ensure adherence to statutory requirements and internal company policies and observance of these measures by the Group companies, is a key management duty at thyssenkrupp. A compliance program focusing on antitrust law and anti-corruption policies was introduced directly after the merger of predecessor companies Thyssen and Krupp in 1999. Ever since then it has been regularly updated internally and reviewed externally on the basis of the applicable legal requirements as well as by auditors. The appropriateness and effectiveness of the compliance system in the audit period was confirmed most recently in November 2011 by KPMG AG Wirtschaftsprüfungsgesellschaft in connection with certification to the new Auditing Standard 980 of the Institute of Public Auditors in Germany. The report by KPMG AG Wirtschaftsprüfungsgesellschaft is available for downloading on the thyssenkrupp website.

The Executive Board of thyssenkrupp AG has unequivocally expressed its rejection of antitrust violations and corruption in the thyssenkrupp Compliance Commitment. Antitrust violations and corruption are not tolerated in any way and result in sanctions against the employees concerned. To implement the Compliance Commitment a transparent leadership culture based on the new Group mission statement is subject to continuous improvement. Responsibility and personal integrity are the guiding principles and benchmarks of our actions for all our employees.

In view of the fact that thyssenkrupp has been confronted with a number of corruption and cartel cases in recent times, the Supervisory Board in its meeting on November 21, 2012 again emphasized and made clear the corporate responsibility of the Executive Board with regard to compliance. The fundamental principle of compliance is that the management bears corporate responsibility for compliance, going beyond the individual obligations of an Executive Board member. The resolution clearly states that in the event of serious or repeated compliance violations in the area of responsibility of an Executive Board member, action can be taken involving the entire spectrum of personnel measures.

A global compliance organization is in place to develop, manage and implement the program. At the level of thyssenkrupp AG the compliance unit was separated from the former Legal & Compliance area and made into an independent corporate center in June 2012. The full-time compliance officers are spread among the corporate headquarters and selected regions in which a regional compliance organization is currently being established under central management. In addition, compliance managers have been appointed in the operating Group companies who are responsible for the implementation of the program.

A global compliance organization is in place to develop, manage and implement the program. At the level of thyssenkrupp AG the compliance unit was separated from the former Legal & Compliance area and made into an independent corporate center in June 2012. The full-time compliance officers are spread among the corporate headquarters and selected regions in which a regional compliance organization is currently being established under central management. In addition, compliance managers have been appointed in the operating Group companies who are responsible for the implementation of the program.

Further measures relate to capital market law and adherence to the corresponding Group policies. On one hand the statutory provisions prohibiting insider dealing are supplemented by an insider policy, which sets out the conditions for trading in financial instruments of the Company, recommendations for avoiding insider dealing as well as the consequences in the event of violations of the insider dealing prohibition for board members and employees. All employees and other persons who have potential access to inside information in connection with their work for thyssenkrupp AG are recorded in a regularly updated insider register. The disclosure requirements applying to transactions involving financial instruments of the Company, in particular so-called Directors' Dealings, are also set out. On the other hand the communications policy stipulates that all statutory requirements relating to external communications of listed companies must be complied with. The working group Ad-hoc Disclosures/Group Clearing Office examines all matters that may be subject to ad hoc reporting requirements and ensures that any disclosure requirements are fulfilled in compliance with the law.

Group mission statement as framework for sustainable change management

The Group mission statement forms the core of change management in the Group and was developed in 2011 by employees worldwide. The mission statement strengthens employees' identification with the Company and provides orientation. The mission statement sets out what values are shared worldwide and what is the basis for the Group's actions and will be in the future. This includes for example the aim to develop innovative products that create sustainable infrastructures and promote efficient use of resources, but also the fact that employee health and workplace safety have top priority. Sustainability was thus firmly established in the Company's fundamental principles.

Other important corporate principles

The mission statement is not a formalized program, rather it brings together the Company's fundamental principles in a common orientation framework. In addition thyssenkrupp has signed the United Nations Global Compact, the BME Code of Conduct and the Charter of Diversity.

Identification of priority themes and their concrete implementation by measures is carried out by existing programs and management systems. This website provides detailed information on themes such as social responsibility, diversity, corporate citizenship, health & safety and . In addition, the Management Report for fiscal year 2011/2012 provides information on related developments in the fiscal year.

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