Corporate Governance Report

Since 1 October 2002, a Corporate Governance Code, which meets the international standards for responsible corporate governance, has been in force in Austria. RHI supports the Corporate Governance objective to strengthen the confidence of domestic and foreign investors in Austria’s capital market on the basis of increased transparency and uniform principles of good corporate governance.

RHI respects the Austrian Corporate Governance Code and is committed to compliance with the regulations documented in it. The Code comprises the following categories of regulations:

1. Legal Requirement (L): This rule refers to mandatory legal requirement
2. Comply or Explain (C): This rule is to be followed; any deviation must be explained and the reasons stated in order to be in compliance with the Code
3. Recommendation (R): This rule has recommendation character. Non-compliance with this rule requires neither disclosure nor explanation.

RHI AG already complies with the vast majority of the rules and recommendations contained in the Code as a member of the ATX and the Prime Market of Vienna Stock Exchange and has practised accountable corporate governance for a long time.

The Code comprises the following rule categories:
Figure 30 Corporate Governance Code (Comply or Explain):
Information regarding the principles of remuneration of the Management Board

>> Principles for granting performance-linked payments to the Management Board and performance criteria:
The variable portion is linked to the targets of EBIT and cash flow from results.

>> Relationship of fixed to performance-linked components of total compensation: Up to two thirds of total compensation is variable.

>> Principles of the company retirement plan:
Principle of deferred compensation, no defined benefit plan.

>> Principles of eligibility and claims in the event of termination of the function:
No claims beyond the Management Board contract.

Figure 39 Corporate Governance Code (Comply or Explain):
Appointment to committees

Figure 51 Corporate Governance Code (Comply or Explain):
Remuneration of the Supervisory Board

In accordance with § 15 of the articles of association of RHI AG, the Supervisory Board members (capital representatives) receive a remuneration payable at the end of a financial year, the amount of which is determined by the Annual General Meeting. The distribution of the remuneration determined by the AGM is effected in such a way that the Chairman of the Supervisory Board receives the 2.5-fold amount of an ordinary Supervisory Board Member, and the Deputy Chairman of the Supervisory Board receives the 1.75-fold amount, on a pro-rata-temporis basis.

Figures 53, 54 + 58 Corporate Governance Codex
(Comply or Explain):
Independent Supervisory Board members, period of office

Independent RHI AG Supervisory Board members in accordance with the criteria established by the Supervisory Board, to be found on the company’s website
(www.rhi-ag.com > Corporate Governance > CG Information) are:

In accordance with Figure 54 Corporate Governance Code, the members of the Supervisory Board shall, in the case of companies with a free float of more than 50%, include at least two independent members who are not shareholders with a stake of more than 10% or who represent such a shareholder’s interests. RHI AG has declarations by Mr. Gröller and Mr. Peskes stating that they meet these criteria.

Figure 58 Corporate Governance Code (Comply or Explain):
Disclosure of other supervisory board mandates for other listed companies

This information is available on the company’s website
(www.rhi-ag.com > Corporate Governance > CG Information).

RHI deviates from the recommendations of the Corporate Governance Code in the following point:

Figure 31 Corporate Governance Codex (Recommendation):
Wording of the Code: The compensation of the Management Board is to be reported separately.
RHI’s comment: The decision to publish personal remuneration lies with each individual member of the Management Board, remuneration is therefore not published in the annual report.

*) Note to figures 53, 54 + 58: Mr. Draxler is NOT an independent member of the Supervisory Board.

RHI AG, Management Board
Vienna, 12 March 2008