German Corporate Governance Code

Report of the Executive Board and Supervisory Board of euromicron AG for 2009

The Executive Board and Supervisory Board of euromicron AG expressly approve the recommendations in the German Corporate Governance Code for transparent management and monitoring of companies.

Cooperation of the Executive Board and Supervisory Board

The Executive Board and Supervisory Board of euromicron AG work closely together for the benefit of the company and to ensure its existence and that it creates sustained value added. The Supervisory Board is involved in all significant business transactions as a control and advisory instance. The Executive Board requires the Supervisory Board’s consent to fundamental decisions. The Supervisory Board has also defined the duties of the Executive Board to provide information and report to it, as well as the responsibilities of the Executive Board’s members, in rules of internal procedure.

Declaration on conformity (Section 161 AktG (German Stock Corporation Law))

The Executive Board and Supervisory Board of listed stock corporations are obligated under Section 161 of the German Stock Corporation Law to declare once a year that their company has complied and will continue to comply with the recommendations of the government commission on the “German Corporate Governance Code” or which recommendations it has not applied or will not apply. In the latter case, reasons must be given why the company did not or will not comply with the recommendation in question.

The Executive Board and the Supervisory Board of euromicron AG adopted this declaration on conformance at the meeting of the Supervisory Board on December 8, 2009. It relates for the period from December 19, 2008, to August 4, 2009, to the recommendations of the code in its version dated June 6, 2008, as published on August 8, 2008, in the electronic Federal Official Gazette (“2008 version”). The following declaration relates for the period from August 5, 2009, to the recommendations of the code in its version dated June 18, 2009, as published on August 5, 2009, in the electronic Federal Official Gazette (“2009 version”).

This having been stated, the Executive Board and the Supervisory Board of euromicron AG declare in accordance with Section 161 of the German Stock Corporation Law:

euromicron AG complied and complies with the recommendations of the government commission on the “German Corporate Governance Code”, with the following exceptions:

Re Section 3.8 of the code:
“If the company takes out a D&O (directors’ and officers’ liability insurance) policy for the Management Board and Supervisory Board, a suitable deductible shall be agreed.”

Section 3.8 (2) and 3 (2009 version)
“If the company takes out a D&O (directors’ and officers’ liability insurance) policy for the Management Board, a deductible of at least 10% of the loss up to at least the amount of one and a half times the fixed annual compensation of the Management Board member must be agreed upon. A similar deductible must be agreed upon in any D&O policy for the Supervisory Board.”

Reason:
In principle, euromicron AG does not believe that the commitment and responsibility with which the members of the Executive Board and the Supervisory Board discharge their duties will be improved by agreeing a deductible. Contrary to section 3.8 of the code in its 2008 version and, where it affects the Supervisory Board, also contrary to Section 3.8 of the 2009 version, the existing D&O insurance for members of the Executive Board and Supervisory Board of euromicron AG does not therefore envisage any deductible.

The D&O insurance for the Executive Board and the Supervisory Board will be modified by July 1, 2010, so that it comprises a deductible in compliance with statutory regulations and also complies in future with the recommendation in Section 3.8 of the code (2009 version).

Re Section 5.3 of the code:
“Formation of Committees” (2008 and 2009 versions)

Reason:
The Supervisory Board of euromicron AG has not formed any committees in the past and will also not do so in future. Since the General Meeting on June 24, 2004, the Supervisory Board of euromicron AG consists only of three persons in accordance with the Articles of Association. The formation of committee would not make the work of the three-member Supervisory Board easier, since the committees (which adopt decisions) must also have at least three members of the Supervisory Board on them.

Re Section 5.4.6 of the code:
“The compensation of the members of the Supervisory Board shall be reported individually in the Corporate Governance Report, subdivided according to components.” (2008 and 2009 versions)

Reason:
euromicron AG refrains from reporting the compensation of the Supervisory Board members individually in the Corporate Governance Report. In accordance with Section 13 of the Articles of Association, the members of the Supervisory Board receive compensation that consists of a fixed and a variable component. The variable part of their compensation is geared to the company’s profitability and is calculated on the basis of the dividend adopted at the General Meeting. In addition, the overall compensation is published in the Annual Report, with the result that the individual compensation of the members of the Supervisory Board is not difficult to deduce. By dispensing with separate disclosure of information that is not difficult to discover, the company also pursues the goal of reducing the size of the Annual Report, which has increased over the past years, and so of making it clearer.

Re Section 7.1.4 of the code:
“The company shall publish a list of third party companies in which it has a shareholding that is not of minor importance for the enterprise. … The following shall be provided: name and headquarters of the company, the amount of the shareholding, the amount of equity and the operating result of the past financial year.” (2008 and 2009 versions)

Reason:
euromicron AG follows the recommendation of the code insofar that it presents a list of holdings in the form of clear charts of the company structure. In addition, extensive details of the purpose and role in the Group of the companies that are not of minor importance to the existence and development of euromicron AG and the Group are given. More detailed publication is dispensed with in order to avoid competitive disadvantages as a result of disclosure of details on valuations and the earnings power of individual holdings.

Apart from this, the Company now already complies in many parts with the additional suggestions of the German Corporate Governance Code.

Stock option program

The General Meeting on June 23, 2006, adopted a resolution to authorize the Executive Board of euromicron AG, with the consent of the Supervisory Board, to issue up to 466,000 stock options with a subscription right to shares in euromicron AG as part of the 2006 stock option program by December 31, 2009. The stock options are intended solely for subscription by members of the Executive Board of euromicron AG, members of the management bodies of subordinate affiliated companies of euromicron AG and selected executive employees of euromicron AG (including assistants to the Executive Board members).

No stock options were issued in fiscal year 2009.

Securities transactions requiring disclosure

The members of the Executive Board and Supervisory Board do not hold more than 1% of the shares issued by euromicron AG directly or indirectly.

Compensation report

Executive Board
The General Meeting of euromicron AG decided on June 23, 2006, with a three-quarter majority, that the details demanded in Section 285 Sentence 1 No. 9 lit. a) Sentences 5 to 9 and Section 314 (1) Sentence 1 No. 6 lit. a) Sentences 5 to 8 of the German Commercial Code (HGB) and relating to individualized disclosure of the remuneration of the Executive Board do not have to be provided for a period of five years. In the view of the company, individualization and a breakdown of the details does not provide investors with any substantial information due to the existing remuneration structure.

The compensation system for members of the Executive Board is defined by the Supervisory Board. The Executive Board’s compensation consists of a non-performance-related component (fixed salary) and a performance-related component (earnings-related bonus). The variable components of the remuneration of Executive Board members are calculated on the basis of the euromicron Group’s result from ordinary activities. A cap has been agreed to limit their total compensation.

There are no commitments to provide benefits that have been granted to a member of the Executive Board if he ends his work as a member of the Executive Board prematurely or at the normal time or that have been changed during the fiscal year.

Supervisory Board
The company acquisitions entailed consulting services, mainly relating to three due diligence processes, which were conducted by the auditing firm of a member of the Supervisory Board. A total fee of €123 thousand was paid for this.

Frankfurt/Main, December 22, 2009

For the Supervisory Board:
Dr. Franz-Stephan von Gronau
Chairman of the Supervisory Board

For the Executive Board:
Dr. Willibald Späth
Chairman of the Executive Board