Corporate Governance Report

Since 1 October 2002, the Austrian Code of Corporate Governance has given Austrian companies a framework for the management and supervision of a company. The Corporate Governance Code advocates a system of management and supervision of companies aimed at achieving accountability and creating long-term, sustainable value. This is intended to provide a company’s stakeholders with a high degree of transparency and to serve as an important guide for national and international investors. The Code is based on Austrian stock corporation law, stock exchange and capital market regulations, important EU recommendations, and its principles follow the OECD’s guidelines for Corporate Governance.

RHI supports the Code’s objectives to strengthen the confidence of domestic and foreign investors in the Austrian capital market by providing more transparency and uniform standards. In addition, RHI advocates the statutory provisions to prevent insider trading and has implemented the Securities Issuer Compliance Regulation which is currently in force in the company.

RHI’s Boards meet regularly to discuss the Corporate Governance Code as amended. The Code’s regulations and recommendations are met to a very great extent by RHI. RHI ensures transparency as required by Figure 60 of the Code by adding a statement to the annual report and by publishing it on the company’s website.

The Austrian Code of Corporate Governance is available on the Internet at www.corporate-governance.at

Report of RHI AG on the Corporate Governance Code
for the financial year 2008

RHI respects the Austrian Code of Corporate Governance and undertakes to comply with the provisions documented therein. The code comprises the following rule categories:

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.

Information to be disclosed in accordance with the Austrian Corporate Governance Code:
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, with the one-off exception of the termination of a function.

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Figure 39 Corporate Governance Code (Comply or Explain):

The committees established at RHI AG exercise the activities stipulated by the Austrian Corporate Governance Code and the relevant legal requirements.

Appointment to committees, number of meetings in the financial year 2008.

Audit committee (4 meetings):
G. Peskes (finance expert)
M. Gröller
S. Prinz zu Sayn Wittgenstein-Berleburg
L. Miedl

Nomination committee (2 meetings):
M. Gröller
H. Cordt
H. Draxler
G. Peskes

Compensation committee (2 meetings):
M. Gröller
H. Cordt
H. Draxler
G. Peskes

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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.

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Figures 53, 54 + 58 Corporate Governance Codex
(Comply or Explain):
Supervisory Board members, period in 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), 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.

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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). In the following item RHI deviates from the recommendation so the Corporate Governance Code:

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

Figure 31 Corporate Governance Codex (Recommendation):

Compensation of the Management Board

Remuneration is not published in the annual report as the decision to publish individual remuneration lies with each individual member of the Management Board.

RHI AG, Management Board
Vienna, 11 March 2009

*) Note to figures 53, 54, 58: Mr. Draxler is NOT an independent member of the Supervisory Board pursuant to the criteria for independent Supervisory Board members as published on the company's website, because he was Chairman of the Management Board from 2002 to 2007.