How the Executive Board and
Supervisory Board operate

The Executive Board has sole responsibility for running the company and directs the company's business. It decides on a business strategy for the company, agrees this with the Supervisory Board and then implements it as effectively as possible with the objective in mind. When making decisions, the Executive Board takes into consideration the interests of the shareholders, its employees and other stakeholders associated with the company.

The Supervisory Board has issued a catalogue of transactions of the Executive Board that require approval by the Supervisory Board (in addition to Section 7 para. 1 of the articles of association). When particular transactions require the approval of the Supervisory Board, it must be sought.

The R. STAHL AG Executive Board consists of Dr Mathias Hallmann. The Executive Board keeps the Supervisory Board up to date on business policy and provides detailed information regularly and promptly on this and other important issues pertaining to strategy and business planning. In addition, the Executive Board must report to the Supervisory Board on the company's current performance and its risk position.

The chairman of the Supervisory Board decides whether the Executive Board should participate in the Supervisory Board meetings. Each Supervisory Board meeting includes a slot intended for topics to be discussed without the Executive Board being present. In 2018, the Executive Board participated in six of the seven regular Supervisory Board meetings (including the constituting meeting) and in one of the four extraordinary meetings reporting on the individual agenda items and draft resolutions both in written and verbal communication, and answering the questions posed by individual Supervisory Board members.

R. STAHL AG's Supervisory Board is formed in accordance with Germany's One-Third Participation Act (DrittelbG) and consists of nine members. Three of these members are employee representatives, and the other six are shareholder representatives. Three of the six shareholder representatives come from the family that founded the company.

The role of the Supervisory Board at R. STAHL AG is to appoint the company's Executive Board, monitor it as it conducts the company's business and advise it as needed.

The Supervisory Board meets at least five times a year to discuss current position, generally on the basis of reports drawn up by the Executive Board and preparatory documentation received before the meeting. It then passes the necessary resolutions. If necessary, the Supervisory Board holds additional or extraordinary meetings. Resolutions are passed by written consent in lieu of a meeting relatively rarely, and only in particularly urgent cases. Minutes are recorded for each meeting. These are distributed to all the members of the Supervisory Board, as well as the company's Executive Board.

Alongside ongoing discussion of strategic matters, the Supervisory Board decides whether to approve the annual accounts and checks the plan for the next three years submitted to it by the Executive Board. Additionally, the Supervisory Board analyses the R. STAHL Group's operational performance, as well as attending to risk management and compliance issues.

Through face-to-face meetings and oral and written communication, the Executive Board regularly informs the chairman of the Supervisory Board of the company's performance and discusses any current position with the chairman. Where necessary, at the committee meeting, the chairman of the Supervisory Board reports the results of the discussions between the Executive Board and themselves.

Every year, the chairman of the Supervisory Board must explain the role and activities of the Supervisory Board and its committees in his report to the shareholders, which is included in the annual report. In addition, it must be available for inspection at the AGM and will be read aloud on request.

In fiscal year 2017, the Supervisory Board continued to refer to the recommendations set out in the German Corporate Governance Code (DCGK) and complied with these where this seemed expedient for a company of R. STAHL AG's size for the purpose of good corporate governance. The declaration of compliance issued in December 2017 is available to shareholders on the R. STAHL AG website and in the annual report. The Supervisory Board comprises what it considers to be a sufficient number of independent members.

The Supervisory Board has set up three committees: The Audit Committee, Management Committee and Strategy Committee.

Since 30 August 2018, the Audit Committee consists of Chairwoman Dr. Renate Neumann-Schäfer, her deputy Peter Leischner, and members Heinz Grund and Andreas Müller (previously: Chairwoman Waltraud Hertreiter, deputy Peter Leischner, members Heinz Grund and Heiko Stallbörger). In accordance with the procedural rules, the Audit Committee is tasked with and has authorisation for dealing with matters concerning, in particular, accounting, risk management, compliance, the requirement for the auditor to be independent, commissioning an auditor for the audit, establishing focal points for the audit and agreeing a fee. It prepares decisions on these issues on behalf of the Supervisory Board and provides recommendations for consideration when resolutions are being passed. Finally, in behalf of the Supervisory Board, it is within the Audit Committee's responsibility to approve the assignment of counseling services of the auditor that was elected by the AGM (transactions of the Executive Board requiring approval). The chairwoman of the Audit Committee presides over Audit Committee meetings. If an issue is put to the vote and the result is a tied vote, the chairwoman has the deciding vote. The Audit Committee met four times in 2017.

Since August 30 2018,the Management Committee consists of Chairman Peter Leischner, his deputy Heike Dannenbauer, and members Klaus Erker and Rudolf Meier (previously: Chairman Heiko Stallbörger, deputy Heike Dannenbauer, members Klaus Erker and Rudolf Meier). In accordance with the procedural rules, the Management Committee provides recommendations for initial or renewed appointments as well as dismissals of members of the Executive Board and the Chairman of the Executive Board to the Supervisory Board plenary session. In addition, it prepares the decisions with regard to remuneration for the Supervisory Board plenary session and proposes remuneration packages for each of the members of the Executive Board. In line with the resolutions passed by the Supervisory Board plenary session, the Committee also negotiates and decides on all contractual matters of the members of the Executive Board and signs contracts with them on behalf of the Supervisory Board. Finally, and on behalf of the Supervisory Board, the Management Committee is responsible for the approval of transactions with members of the Executive Board and the Supervisory Board and their related individuals if the transaction value exceeds EUR 5,000 (transaction of the Executive Board requiring approval). The Chairman of the Management Committee presides over the Management Committee meetings. If an issue is put to vote and the result is a tied vote, the Chairman has the deciding vote. In 2017, the Management Committee held four meetings (one of them being held as a conference call) and additionally met two times to arrange the succession of the Executive Board.

Until 30 August 2018, the Strategy Committee consisted of Chairman Heiko Stallbörger, his deputy Peter Leischner, and members Heike Dannenbauer and Heinz Grund. In accordance with the procedural rules, it attends to matters delegated to it by the Supervisory Board and measures concerning the company's strategic and fundamental approach and their implementation. Following the approval of the Supervisory Board at the end of 2016, the Strategy Committee concluded that all delegated tasks have been accomplished. The Strategy Committee has thus ceased its activities until it is recommissioned. At the beginning of 2017, all members of the Strategy Committee waived their separate Committee remuneration until they are commissioned again. This also has been approved by the Supervisory Board.