The effects of the global financial and economic crisis dominated the financial year 2009. The Supervisory Board of METRO AG has responded to the crisis by intensifying its consultations with the Management Board. As early as December 2008, both Boards decided to allow for more flexible planning for the financial year 2009. On this basis, the latest insights into the effects of the crisis could be reviewed, discussed and, where necessary, reflected in adjusted planning during the reporting year. Together, we have managed to successfully steer METRO Group ¹ through an exceptionally challenging financial year. cbi:///cms/90532

Irrespective of the global crisis, the Management Board, with the support of the Supervisory Board, initiated the efficiency and value-enhancing programme Shape 2012. Shape 2012 is designed to render METRO Group even more transparent and customer-centric, less complex and more efficiently manageable. The Supervisory Board has discussed the strategic and structural measures associated with this project several times. The programme's progress will continue to feature regularly on the agenda of Super visory Board meetings in future. cbi:///cms/90533

Both the impact of the financial and economic crisis and Shape 2012 have required hard work and dedication on the part of METRO Group employees. On behalf of the Supervisory Board of METRO AG, I would like to thank them for their willingness to embrace change and their entrepreneurial energy. cbi:///cms/90534

The Supervisory Board carried out the consultation and monitoring duties set forth by law and the Company's Articles of Association. It thoroughly advised the Management Board on the management of METRO AG and METRO Group and constantly supervised the management. The Supervisory Board was involved in all decisions that were of material importance to METRO AG or METRO Group. cbi:///cms/90537

The work of the Supervisory Board was based on the oral and written reports pursuant to § 90 of the German Stock Corporation Act, which the Management Board provided both during and outside meetings held by the Supervisory Board and its committees. The Management Board provided the Supervisory Board with detailed and timely reports about all developments of material importance to METRO Group. The reports covered, in particular, proposed business policies and fundamental questions about company planning. Other report topics included profitability, current business developments, including the position of METRO Group, risk management, in-house monitoring systems, compliance, operations of material importance for the profitability and liquidity of METRO Group, as well as important investment and divestment decisions. The reports were provided regularly pursuant to § 90 Section 2 of the German Stock Corporation Act. Any deviations in business developments from set plans and objectives and announced the applicable countermeasures. cbi:///cms/90538

The Supervisory Board approved all matters that were submitted to it by the Management Board pursuant to the by-laws of the Supervisory Board and Management Board as a subject for authorisation. These matters included the sale of the Adler fashion stores and of a real estate portfolio, resolutions on the implementation of Shape 2012, Media Markt's expansion into China as well as transactions concerning individual Metro Cash & Carry national subsidiaries. The Supervisory Board also endorsed changes in the organisational structures of the Management Board including the business division plan as well as the annual budget for the financial years 2009 and 2010. In these and other instances, the Supervisory Board regularly received written documentation for preparing the decision. No use was made of the rights of inspection and audit granted under § 111 Section 2 Sentence 1 and 2 of the German Stock Corporation Act because no matters requiring clarification arose. cbi:///cms/90539

The Chairman of the Supervisory Board was in regular contact with the Chairman of the Management Board. The Chairman of the Supervisory Board was kept abreast of important business developments and pending decisions by the Chairman of the Management Board during regular face-to-face meetings. cbi:///cms/90540

The Supervisory Board thoroughly discussed and reviewed all reports and documents that were submitted to it. Further details will be provided in the following sections. No objections about the Management Board's activities were raised. cbi:///cms/90541

No conflicts of interest among members of the Management and Supervisory Boards that must be disclosed to the Supervisory Board arose in the financial year 2009. cbi:///cms/90544

In 2009, the Management Board asked the Supervisory Board to extend rental contracts of individual Metro Cash & Carry locations in Germany. Indirect shareholders of the lessor are the three major METRO AG shareholders Haniel, Schmidt-Ruthenbeck and Beisheim. Although no conflict of interest existed in terms of legal-formal criteria, the members of the Supervisory Board associated with the major shareholders, Franz M. Haniel, Prof. Dr Dr h. c. mult. Erich Greipl and Peter Küpfer, explained the background to the Supervisory Board and refrained from participating in the relevant Supervisory Board vote. cbi:///cms/90545

Another vote of the Supervisory Board during the reporting year concerned the sale of the Adler fashion stores. In the run-up to this vote, it was clear that the member of the Supervisory Board Ms Angelika Zinner could have a conflict of interest in her role as Chairwoman of the General Works Council of the Adler fashion stores. However, there were no concrete indications of any actual personal conflict of interest between Ms Zinner's interests or the interests of companies close to her, on the one hand, and METRO Group, on the other. As a result, Ms Zinner participated in the Supervisory Board vote. cbi:///cms/90546

In the financial year 2009, the Supervisory Board met seven times. cbi:///cms/90549

The German Corporate Governance Code recommends that a note be included in this report if a member of the Supervisory Board attended fewer than half of all Supervisory Board meetings in any one financial year. In the financial year 2009, a member of the Supervisory Board left the Board at the beginning of March 2009 and could therefore not attend at least half of the Board meetings. cbi:///cms/90550

During each regular meeting, the Supervisory Board held in-depth discussions about METRO Group business developments. In addition, the Chairmen of the Supervisory Board committees gave regular reports about topics and results of previous Supervisory Board meetings. cbi:///cms/90551

January 2009 - In an extraordinary meeting, the Supervisory Board renewed Zygmunt Mierdorf's appointment as Executive Vice-President Human Resources of METRO AG again and through 31 December 2013. cbi:///cms/90554

February 2009 - Following the completion of a bidding process initiated by the Management Board, the Supervisory Board endorsed the sale of the Adler fashion stores in an extraordinary meeting. cbi:///cms/90555

March 2009 - The Supervisory Board's audit meeting focused on the annual and consolidated financial results for the financial year 2008, the management report of METRO AG for 2008, the Group management report for 2008, the Management Board's proposal for the appropriation of the balance sheet profit at the Annual General Meeting 2009 as well as the Management Board's report about relations with associated companies in 2008. The auditors attended this meeting and gave a report about the key findings of their review. Other items of the agenda of this meeting were the continued development of the remuneration system for members of the Management Board and preparations for the Annual General Meeting 2009, including the report of the Supervisory Board and the corporate governance report. Subject to the election of the auditors by the Annual General Meeting in 2009, the audit assignments for the annual and consolidated financial statements for 2009 and the abbreviated half-year financial statements and interim management report 2009 were also adopted. Together with the Management Board, the Supervisory Board also used the March meeting to review and newly endorse the annual budget for 2009, which was approved in December 2008, with a view to current assessments of the impact of the financial and economic crisis. cbi:///cms/90556

May 2009 - At a meeting immediately prior to the start of the Annual General Meeting, the Management Board reported about current business developments. cbi:///cms/90557

July 2009 - Effective 1 August 2009, the Supervisory Board appointed Mr Thomas Unger, METRO AG Chief Financial Officer since 2002, as Vice-Chairman of the Management Board. In this function, Mr Unger is the Board member responsible for Media Markt and Saturn, Galeria Kaufhof, Real Estate, Internal Audit and the Programme Office Shape 2012. The Supervisory Board appointed Mr Olaf Koch as new Chief Financial Officer. Another item on the agenda of this meeting was the consultation with the Management Board regarding the strategic development of Metro Cash & Carry Germany. The Supervisory Board visited two stores of the sales division in Brussels, where the meeting was held, in order to obtain practical insights into the challenges and development potential of the cash & carry business model. Other focal topics included the Management Board's reports on the status of Real's restructuring programme and Media Markt's planned market entry in China as well as a Supervisory Board resolution on the implementation of the efficiency and value-enhancing programme Shape 2012. cbi:///cms/90558

October 2009 - The Management Board informed the Supervisory Board about current business developments and progress made in the implementation of Shape 2012 as well as restructuring measures initiated at Metro Cash & Carry Germany. Other items on the agenda of the October meeting included the Company's risk position, the continued development of the risk management and compliance system as well as executive development within METRO Group. In addition, the Supervisory Board intensely considered altered legal parameters and new corporate governance standards on management remuneration. A Supervisory Board resolution concerned the continued development of Metro Cash & Carry Romania. The meeting concluded with the regular efficiency review of the Supervisory Board that had been prepared in advance using a questionnaire. cbi:///cms/90559

December 2009 - The Management Board reported about business policy plans and fundamental corporate planning issues. The report covered the sales, earnings, financial, investment and personnel planning for 2010 as well as the Company's medium-term plans. The Supervisory Board adopted the annual Group budget for the financial year 2010. Additional information of the Management Board concerned the areas of corporate social responsibility and advancing preparations for Media Markt's Chinese market entry. At the December meeting, the Supervisory Board adopted the annual budget for 2010 as well as the sale of a real estate portfolio and the conclusion of rental contracts for Metro Cash & Carry locations. In addition, it approved its resolution on the declaration of compliance with the recommendations of the German Corporate Governance Code pursuant to § 161 of the German Stock Corporation Act as well as new by-laws of the Supervisory Board, the Accounting and Audit Committee and the Management Board. The results of the efficiency review of the Supervisory Board conducted in October were given particular consideration here. cbi:///cms/90560

Accounting and Audit Committee - The Accounting and Audit Committee primarily handles accounting and auditing issues as well as risk management and compliance. In the financial year 2009, the committee met five times. Regular meetings were held in March, May, July, October and December, whereby the Accounting and Audit Committee met together with the Presidential Committee on one occasion. cbi:///cms/90564

The March 2009 meeting (held together with the Presidential Committee) essentially served to prepare the Supervisory Board's balance sheet meeting. The Accounting and Audit Committee reviewed the annual and consolidated financial statements for 2008, the management reports as well as the report of the Management Board on relations with associated companies. The results of the audit were discussed in the presence of the auditors. The Accounting and Audit Committee made concrete recommendations on the Supervisory Board's resolutions in the audit meeting. These included the recommendation that the Supervisory Board approve the Management Board's proposal on the appropriation of the balance sheet profit. In addition, the Accounting and Audit Committee prepared the assignment of the auditing mandates for the annual and Group financial statements 2009 as well as for the Group's half-year report 2009 by the Supervisory Board. cbi:///cms/90565

The other meetings of the Accounting and Audit Committee focused on the quarterly reports and the half-year report of METRO AG prior to their publication. Other significant topics of discussion included the Company's internal monitoring systems and anti-fraud measures, the audit report and the Management Board's risk report. The status and development of the Compliance, Risk Management and Internal Auditing functions were discussed in great detail. The relevant concepts presented by the Management Board met with the full support of the Accounting and Audit Committee. The committee's other topics of discussion in the financial year 2009 included METRO Group's corporate governance, dependency issues and corporate tax planning. cbi:///cms/90566

Personnel Committee - The Personnel Committee deals primarily with personnel issues concerning the Management Board. In the financial year 2009, five committee meetings were held: two scheduled meetings in March and October (held jointly with the Presidential Committee) and three extraordinary meetings in January and July. cbi:///cms/90567

The work of the Personnel Committee was dominated by preparations for the resolutions of the Supervisory Board regarding the planned changes in the Management Board. In addition, the committee discussed the remuneration and the remuneration system for members of the Management Board in great detail. In March 2009, the system of performance-orientated Management Board compensation was changed with the consent of the Supervisory Board. In October 2009, the Personnel Committee thoroughly discussed the German Act on the Appropriateness of Management Board Compensation, which took effect in summer 2009 and has created new legal parameters for the determination of Management Board compensation. The committee identified no need for short-term changes to the Company's Management Board remuneration system. cbi:///cms/90568

Presidential Committee - The Presidential Committee deals with the corporate and regional strategy, the monitoring of compliance with legal regulations and the application of the German Corporate Governance Code. In consideration of § 107 Section 3 Sentence 3 of the German Stock Corporation Act, the Presidential Committee makes decisions about urgent matters and matters submitted to it by the Supervisory Board. cbi:///cms/90569

During the reporting year, the Presidential Committee met three times, including one joint meeting with the Accounting and Audit Committee (March 2009) and two joint meetings with the Personnel Committee (March and October 2009). cbi:///cms/90570

Nominations Committee, Mediation Committee - The Nominations Committee has the responsibility of proposing suitable candidates for the Supervisory Board's election proposals to the Annual General Meeting. In the financial year 2009, no Supervisory Board elections took place at the Annual General Meeting of METRO AG, so that the Nominations Committee did not have to convene. cbi:///cms/90571

The Mediation Committee formulates proposals for the appointment and dismissal of members of the Management Board in cases pursuant to § 31 of the German Co-determination Act. The Mediation Committee did not have to meet in the financial year 2009. cbi:///cms/90572

The Management Board and the Supervisory Board report on METRO Group's corporate governance in the corporate governance report for 2009. cbi:///cms/90575

In December 2009, the Management Board and the Supervisory Board of METRO AG issued their latest declaration of compliance with regard to the recommendations of the Government Commission on the German Corporate Governance Code pursuant to § 161 of the German Stock Corporation Act and made it permanently available to shareholders on the Internet site of METRO Group. The full declaration of compliance appears in the corporate governance report 2009. cbi:///cms/90576

Before the Supervisory Board's meeting in March 2009, the auditor issued a declaration of autonomy, required under Subsection 7.2.1 of the German Corporate Governance Code. The requirements of Subsection 7.2 of the German Corporate Governance Code governing the contractual relationship between the Company and its auditors have thus been fulfilled. Among other things, it was agreed that the auditors would promptly inform the Chairman of the Supervisory Board about any disqualification or bias issues that might arise during the audit. Until the conclusion of the audit on 1 March 2010, the auditor never reported any disqualification or bias issues to the Supervisory Board. Furthermore, the Supervisory Board never had any reason to believe that there were ever any disqualification or bias issues. cbi:///cms/90577

The annual financial statements of METRO AG, in consideration of accounting, for the financial year 2009 that were submitted by the Management Board pursuant to regulations laid down in the German Commercial Code, the METRO AG management report for 2009, the consolidated financial statements 2009 compiled by METRO AG according to International Financial Reporting Standards (IFRS) and the Group's management report 2009 were reviewed by KPMG AG Wirtschaftsprüfungsgesellschaft and were given unqualified approval. The auditor provided a written report on the findings. cbi:///cms/90580

The Supervisory Board reviewed the annual financial statements of METRO AG and the consolidated financial statements for the financial year 2009, the management report of METRO AG and the Group's management report for the financial year 2009 as well as the Management Board's proposal to the Annual General Meeting 2010 on the appropriation of the balance sheet profit. For this purpose, these documents and the reports of the auditor were provided in a timely manner to the Supervisory Board, and were discussed and reviewed in detail during the Supervisory Board's annual accounts meeting held in March 2010. The auditor attended this meeting, reported the key findings of the reviews, and was at the Supervisory Board's disposal to answer questions and to provide additional information - even in the absence of the Management Board. The auditor did not report any material weaknesses of the internal monitoring and risk management system with regard to the accounting process. The auditor also provided information on services rendered in addition to auditing services. According to the information provided, no disqualification or bias issues arose. The Supervisory Board concurred with the findings of the auditor's review. In a concluding finding of its own review, the Supervisory Board determined that no objections were necessary. The Supervisory Board, in particular, supports the conclusions reached by the Management Board in the management report of METRO AG and the Group's management report. The Supervisory Board has endorsed the annual financial statements made by the Management Board. As a result, the annual financial statements of METRO AG 2009 have been adopted. The Supervisory Board also supports the Management Board's proposed appropriation of the balance sheet profit after considering shareholders' interest in a disbursement and the Company's interests in further retained earnings. cbi:///cms/90581

Pursuant to § 312 of the German Stock Corporation Act, the Management Board of METRO AG prepared a report about relations with associated companies for the financial year 2009. The auditor reviewed this report, issued a written statement about the findings of the review and issued the following opinion: cbi:///cms/90582

"After our due audit and assessment, we confirm that cbi:///cms/90583

This report was submitted to the Supervisory Board together with the audit report in a timely manner, and was discussed and reviewed particularly in terms of thoroughness and accuracy during the annual accounts meeting that the Supervisory Board held in March 2010. The auditor attended this meeting, reported the key findings of the review, and was at the Supervisory Board's disposal to answer questions and to provide information - even in the absence of the Management Board. The Supervisory Board concurred with the findings of the auditor's review. In a concluding finding of its own review, the Supervisory Board determined that no objections have to be made with respect to the statement of the Management Board at the conclusion of the report. cbi:///cms/90585

The aforementioned reviews by the Supervisory Board of the 2009 annual and consolidated financial statements, the 2009 management reports, the proposed appropriation of the balance sheet profit, and the Management Board's 2009 report about relations with associated companies were prepared during a joint meeting by the Presidential Committee and the Accounting and Audit Committee in March 2010. During this meeting, the committees thoroughly reviewed and discussed the annual and consolidated financial statements, the management reports, the auditor's auditing reports, the proposal on the appropriation of the balance sheet profit, the Management Board's report on relations with associated companies and the associated auditing review in the presence of the auditor. The Accounting and Audit Committee recommended that the Supervisory Board approve the prepared financial statements and endorse the Management Board's recommendation for appropriation of the balance sheet profit. cbi:///cms/90586