Metro : Declaration on Corporate Management | Corporate Governance Report - December 2019

DECLARATION ON CORPORATE MANAGEMENT | CORPORATE GOVERNANCE REPORT

The declaration on corporate management pursuant to §§ 289f and 315d of the German Commercial Code (HGB) is combined for METRO AG and the group on the one hand and with the corporate governance report of Management Board and Supervisory Board of METRO AG pursuant to Clause 3.10 of the German Corporate Governance Code on the other. The contents are not subject to the statutory audit of the annual and consolidated financial statements by the auditor.

Declaration of conformity pursuant to § 161 of the German Stock Corporation Act (AktG)

During financial year 2018/19, the Management Board and the Supervisory Board of METRO AG discussed the implementation of the recommendations of the German Corporate Governance Code in detail and jointly issued the following declaration pursuant to § 161 of the German Stock Corporation Act (AktG) on 20 September 2019:

'Management Board and Supervisory Board of METRO AG declare that the recommendations of the "Government Commission German Corporate Governance Code", published by the Federal Ministry of Justice in the official section of the Federal Gazette in the version of 7 February 2017 since the last declaration of conformity in September 2018 have been complied with without exception.

Management Board and Supervisory Board intend to comply with the recommendations of the Government Commission in the version of 7 February 2017 with the following exceptions:

Clause 4.2.3 sec. 2 sentence 2 German Corporate Governance

Code

Mr Heiko Hutmacher, who is leaving the Management Board of METRO AG as to the end of 31 December 2019, will not receive a variable remuneration for his activity as Management Board Member from 1 October until 31 December 2019. This results from the fact that in the course of the mutual termination of his appointment as member of the Management Board and Labour Director, a termination agreement has been concluded with Mr Hutmacher which stipulates that the variable components of his remuneration (short-term incentive and long-term incentive) for the financial year 2019/20 are settled in the framework of the agreed severance pay. Therefore, the recommendation pursuant to Clause 4.2.3 sec. 2 sentence 2 of the German Corporate Governance Code is not complied with in the time period

1 October to 31 December 2019. According to this recommendation the monetary remuneration components of

the Management Board remuneration shall comprise fixed and

variable components.

Clause 4.2.3 sec. 2 sentence 8 German Corporate Governance

Code

With the beginning of the financial year 2019/20 METRO AG will for the first time and with a full retroactive approach implement the accounting standard IFRS 16 for the financial reporting. The budget for the financial year 2019/20 was approved on the basis of the figures before the implementation of IFRS 16, the key financial figures, however, will be transferred into an IFRS 16- compliant view after the finalization of the restatement of the financial year 2018/19. This transition will have effect on the components "exchange-rate adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA)" as well as "exchange-rate adjusted return on capital employed (RoCE)" of the short-term incentive of the members of the Management Board of METRO AG for the financial year 2019/20. The targets of these components will still be taken from the budget for the financial year 2019/20 which was approved by the Supervisory Board in September 2019, but then in this regard transferred into an IFRS 16-compliant view. In addition, the implementation of IFRS 16 affects the earnings per share (EPS) component of the long-term incentive of the members of the Management Board of METRO AG. With regard to the relevant tranches, a transition of the respective EPS resp. EPS target into an IFRS 16-compliant view will have to be made. Therefore, the recommendation pursuant to Clause 4.2.3 sec. 2 sentence 8 GCGC is not complied with. According to this recommendation a subsequent change of the performance targets or the comparison parameters of the variable parts of the Management Board remuneration should be excluded.

• METRO AG has made this declaration of conformity pursuant to § 161 of the German Stock Corporation Act (AktG) permanently accessible on the website www.metroag.de, section Company - Corporate Governance.

2	Corpo rate governance	Declaration on corporate m anagem ent | Corporate Governance Report

Relevant disclosures on corporate management practices

The Management Board and the Supervisory Board of METRO AG are firmly committed to the principles of transparent, responsible and value-based management and supervision.

German Corporate Governance Code

The standards of good corporate governance are afforded a high priority. With that in mind, the Management Board and the Supervisory Board of METRO AG base their actions on the relevant valid recommendations of the German Corporate Governance Code and only deviate from the code's recommendations in well-founded exceptional cases. This was also documented accordingly in the Code of Procedure of the Management Board and Supervisory Board of METRO AG. Since the submission of the declaration of conformity in September 2018, the recommendations of the German Corporate Governance Code in the version dated 7 February 2017 have been complied with without exception. The Management Board and Supervisory Board intend to continue to comply with these recommendations with the exceptions stated and substantiated in the declaration of conformity dated 20 September 2019.

Besides recommendations, the German Corporate Governance Code also contains suggestions. METRO AG follows these suggestions of the German Corporate Governance Code as amended on 7 February 2017, with the exception of the suggestion offered in Clause 2.3.3, which proposes to enable shareholders to follow the Annual General Meeting via contemporary communication media, such as the internet. In financial year 2018/19, METRO AG decided to only broadcast the speech by the Chairman of the Management Board via the internet. This practice will be continued in the future.

• For additional information on corporate governance, refer to the website www.metroag.de, section Company - Corporate Governance.

Compliance

METRO employs a group-wide compliance management system to ensure compliance with laws and a self-imposed code of conduct in the areas of antitrust law, prevention of corruption and money laundering, conflicts of interest, fraud/embezzlement as well as the regulation of subsequent benefits in purchasing.

The aim of the compliance management system is to systematically and sustainably prevent, detect and sanction regulatory infringements within the stated areas of the company. METRO does so by regularly identifying conduct-related compliance risks, adjusting the necessary organisational structures as required and consistently monitoring and controlling risks. In its group-wide systematic reporting, key compliance risks and measures are transparently communicated and documented. The need for further development of the compliance management system is ascertained from the results of regular employee surveys, internal reviews and audits. An IT- based whistle-blower system provides employees and external third parties with an opportunity to provide information on regulatory infringements within the company, under the protection of anonymity. All reported information, irrespective of whether the measures for ensuring compliance with these rules fall within the area of responsibility of the compliance

organisation, is in the framework of the compliance management system investigated and, if necessary, sanctioned systematically by the compliance incident handling system. The respective departments are responsible for regulatory compliance measures that fall outside of the area of responsibility of the compliance organisation, with the exception of compliance incident handling. For example, measures to ensure compliance with regulation on fair working conditions are the responsibility of the Human Resources department.

Compliance representatives are available for all METRO holding companies and country organisations as well as all major service companies of the group. They serve as a port of call in compliance matters and provide advice to the responsible managements and employees. The Chief Compliance Officer of METRO AG reports directly to the Chief Executive Officer of

METRO AG.

To maintain consistent control over conduct-related risks, METRO AG has assigned clear responsibilities for risk areas and communicated an unambiguous code of conduct in addition to developing and employing risk management and control processes. These efforts are complemented by compulsory compliance trainings, systematic and target group-oriented communication measures and the consistent, disciplined handling of compliance incidents and relevant follow-up measures.

The METRO Business Principles are at the heart of our

compliance initiatives and are firmly anchored throughout the group particularly by ongoing training measures. Other essential components of our compliance programme are the group-wide code of conduct and guidelines on antitrust law as well as the anti-corruption policy. METRO's compliance initiatives are facilitated by audience-specific training programmes for executives and employees, which are delivered online and in attendance, and by designing and reviewing internal controls in our operational business processes. The verification of the efficacy of our internal compliance controls is regularly assessed by our Internal Audit unit.

• Further information on compliance can be found on the website www.metroag.de, section Company - Compliance Programme. The Business Principles for employees of METRO AG can also be downloaded from this website.

Corporate governance	Declaration on corporate m anagement | Corporate Governance Report	3

Risk and opportunity management

METRO's risk management forms another integral component of our value-based management. This takes the form of a systematic, group-wide process that assists the management team in identifying, assessing and managing risks and opportunities. As such, risk and opportunity management form a unity. Risk management identifies unfavourable developments and events at an early stage, makes them transparent and analyses their implications. This allows the company to put the necessary countermeasures in place as early as possible and at the same time make efficient use of arising opportunities. The risk and opportunity management system and the compliance management system are continually refined.

• Further information on the risk and opportunity management system can be found in the METRO Annual Report. The report is available on the website www.metroag.de. section Investors - Publications. The annual report for the financial year ending 30 September is published inmid-December of each year.

Responsibility/sustainability

As a company it is METRO's responsibility to make retail more sustainable along the value chain in its work with small and medium-sized independent suppliers and customers and in contact with consumers. By aligning its goals with the needs of nature, people and future generations, METRO can act responsibly, be successful in the long term and overcome the conventional limitations of growth. Sustainability is the key that allows METRO to convert economic, environmental, social and cultural challenges into opportunities.

METRO's sustainability management serves the purpose of systematically and organisationally anchoring the notion of sustainability in our core business operations and to consider the interdependencies between economic, environmental and social aspects in an efficient, solution-driven manner. The sustainability management is closely tied to METRO's risk and opportunity management via the formalised reporting and evaluation of sustainability-related risks and opportunities,, which are assessed on the basis of materiality aspects, This enables the Management Board to systematically identify, evaluate and control deviations from the sustainability goals and the ensuing risks and opportunities.

To ensure that METRO's sustainability approach addresses the aspects and issues that most affect its business and that it can leverage through its business activities, METRO conducted a materiality analysis in the course of financial year 2017/18 in accordance with the requirements of the CSR Directive Implementation Act. The results of this materiality analysis were confirmed in financial year 2018/19 by a customer survey conducted in 23 countries and in a sustainability strategy workshop attended by the Management Board of METRO AG as well as high-ranking managers and other experts from the entire METRO group. Beyond that, METRO gears its action to the agenda for meeting the UN Sustainable Development Goals (SDGs). These goals also form the global action framework for the entire corporate strategy, which is shaped by the principle of sustainability. METRO supports the SDGs with the following 3 key topics:

• METRO wants to make its range of products and services more sustainable by positively influencing the availability, quality and health as well as the social and environmental safety of food.
• METRO promotes more conscious consumption, especially through the use of alternative proteins.
• METRO bundles strengths based on partnership and combats food waste.

Important issues, such as the protection of human rights, the use of more sustainable packaging instead of conventional plastic, actions to improve climate protection and responsible procurement as well as the pursuit of diversity and inclusion naturally remain within METRO's responsibility.

METRO has integrated the concept of sustainability in its sales lines' strategy process, which has resulted in additional specific focal areas at the operating level.

The METRO Sustainability Committee establishes the strategic framework and sets goals that are applicable throughout the entire group. To adequately respond to the specific market and customer requirements, the METRO companies manage the operational implementation of the sustainability notion within this framework. They are responsible for working on the relevant sustainability issues, for defining specific targets and measures and for monitoring their success. The companies report to the Sustainability Committee about the progress made by them. Ad hoc expert groups prepare specific issues on the operational level and then present them to the Sustainability Committee for decision. Depending on the issue, participants include experts from international METRO subsidiaries and METRO AG.

Ongoing exchange between sustainability experts within the company and 1-to-1 responsibilities of the sustainability colleagues of METRO AG for all METRO subsidiaries with individual country support form additional interfaces between the strategic and operational levels of sustainability. Along with ad hoc expert groups on specific topics, the activities support the implementation of the decisions of the Sustainability Committee.

METRO's stakeholders (for example suppliers, employees

and investors) use ratings to evaluate the sustainability measures carried out by METRO. These evaluations provide important motivation to METRO and serve as a management tool by demonstrating the progress made and the potentials for improvement.

Oekom Research (now called ISS-oekom) awarded the prime status C+ (on a scale from D- to A+) to METRO in August 2018. In financial year 2018/19, METRO took second place in the internationally important Dow Jones Sustainability Index World, after METRO had topped the leader board in the industry in each of the previous 4 years. In the Dow Jones Sustainability Index Europe, METRO was ranked best in the industry for the fifth consecutive year. METRO is also listed in the FTSE4Good index. METRO has been issuing public statements on climate protection and water for many years as part of its involvement in the independent international investor initiative CDP. METRO achieved a rating of A- and B- (on a scale from F to A) respectively for both subject areas in the reporting period. METRO participated in CDP Forest for the first time. The results were not yet available at the time of publication of this report.

4	Corpo rate governance	Declaration on corporate m anagem ent | Corporate Governance Report

• Further information on corporate responsibility can be found on the website www.metroag.de, section Company - Responsibility. The Corporate Responsibility Report can also be downloaded from this website.

Transparent corporate management

Transparency is an essential element of good corporate governance. The website www.metroag.de is an important source of information for the shareholders of METRO AG, the capital market and the general public. Aside from a host of information on METRO, the website contains the financial reports of METRO AG, investor news, ad hoc statements and other legal notices. METRO AG publishes the dates for the most important recurring publications and events (announcements of sales results, annual reports, quarterly statements, half-year financial reports, annual press conferences and Annual General Meetings) in a financial calendar on its website. The timing of the publication allows for a reasonable lead time. The website also offers information published at the occasion of current events, such as the annual press conference, roadshows, investor conferences and information events.

Board. The members of the Management Board are jointly responsible for all aspects associated with the management of the company. They cooperate constructively and keep one another informed on important measures and occurrences in their business segments. Without prejudice to the Management Board's collective responsibility, each individual member of the Management Board heads the business segments assigned to him or her in the schedule of responsibilities. The Management Board of METRO AG has not formed any board committees. The matters requiring a resolution by all members of the Management Board are set out in the Code of Procedure of the Management Board. They include all fundamental organisational questions, issues relating to business policy as well as METRO's investment and financial planning. The Chief Executive Officer is responsible for coordinating all business segments and representing the company to the shareholders and the general public. He is also the first contact for the Chairman of the Supervisory Board.

In accordance with its Code of Procedure, the Management Board passes most resolutions in meetings, which take place at least twice in each month. The Code of Procedure also stipulates requirements for convening meetings and their conduct and provide for the necessary majority required for the adoption of resolutions by the Management Board.

Information on the procedures of the Management Board and the Supervisory Board, as well as on the composition and functions of the Supervisory Board committees

The clear division between corporate management and corporate supervision is a key element of corporate governance for German stock corporations. Duties and areas of responsibility are clearly divided between the Management Board and the Supervisory Board.

The Management Board

In financial year 2018/19, the Management Board of METRO AG consisted of 4 members. For a transitional period from 1 November 2019 to 31 December 2019, the Management Board consists of 5 members.

• For information about the members of the Management Board, see the notes to the consolidated financial statements of METRO AG in no. 56 - Boards of METRO AG and their mandates as well as the website www.metroag.de, section Company - Management Board.

• The Code of Procedure of the Management Board of METRO AG can be found on the website www.metroag.de, section Company - Corporate Governance.

The Supervisory Board

In accordance with the stipulations of the German Co- determination Act, the German Stock Corporation Act and the company's Articles of Association, the Supervisory Board of METRO AG is composed of 10 shareholder representatives and 10 employee representatives. In addition, women and men each hold at least 30% of the seats on the Supervisory Board.

• For information about the members of the Supervisory Board, see the notes to the consolidated financial statements of METRO AG in no. 56 - Boards of METRO AG and their mandates as well as the website www.metroag.de, section Company - Supervisory Board.

RESPONSIBILITIES OF THE SUPERVISORY BOARD

RESPONSIBILITIES OF THE MANAGEMENT BOARD

The Management Board is responsible for managing METRO AG and the group. The essential management duties of the Management Board of METRO AG include the definition of corporate objectives, determination of the strategic direction for the group, management and supervision of the group, as well as corporate planning. In addition, the Management Board of METRO AG ensures the availability of investment funds, decides on their allocation within the group and is responsible for attracting and supporting highly qualified managers.

Fundamental rules on cooperation within the Management Board are set out in the Code of Procedure, which is stipulated by the Management Board and approved by the Supervisory

The Supervisory Board of METRO AG appoints the members of the Management Board, provides advice to the Management Board and continuously monitors its corporate management, including with regard to the attainment of long-term corporate objectives. The Management Board involves the Supervisory Board in its plans for the future development of METRO and in decisions concerning important measures. In addition to its statutory approval obligations, the Supervisory Board has determined its own approval requirements for certain actions and business dealings.

The Supervisory Board of METRO AG holds at least 6 ordinary meetings in each financial year. Requirements for the convening of meetings and adoption of resolutions are set out in the Code of Procedure of the Supervisory Board.

Corporate governance	Declaration on corporate m anagement | Corporate Governance Report	5

• The Code of Procedure of the Supervisory Board of METRO AG can be found on the website www.metroag.de in the section Company - Corporate Governance.

Detailed information on the meetings of the Management Board and the Supervisory Board of METRO AG in financial year 2018/19 and their cooperation can be found in the report of the Supervisory Board.

• The report of the Supervisory Board is included in the Annual Report and can be found at www.metroag.de,section Company - Supervisory Board.

THE SUPERVISORY BOARD COMMITTEES

The work of the Supervisory Board is supported by 4 permanent committees formed from amongst its members. Specifically, these are the Presidential Committee, the Audit Committee, the Nomination Committee and the Mediation Committee pursuant to § 27 Section 3 of the German Co-determination Act (MitbestG). The duties of the permanent committees and their composition are defined in §§ 5 ff.of the Code of Procedure of the Supervisory Board and, for the Audit Committee, in §§ 1 and 2 of the Code of Procedure of the Audit Committee.

• The Code of Procedure of the Audit Committee of the METRO AG Supervisory Board can be found on the website www.metroag.de, section Company - Corporate Governance.
• For information about the composition of the permanent committees of the Supervisory Board, see the notes to the consolidated financial statements of METRO AG in no. 56 - Boards of METRO AG and their mandates as well as the website www.metroag.de, section Company - Supervisory Board.

In connection with the voluntary takeover bid by EP Global Commerce VI GmbH, the Supervisory Board also formed a Takeover Committee with equal representation for the duration of the takeover procedure. The Takeover Committee continuously dealt with the takeover process and prepared all necessary or expedient tasks and decisions of the Supervisory Board, in particular the review of the voluntary takeover bid and the reasoned statement pursuant to §27 of the German Securities Acquisition and Takeover Act (WpÜG).

The members of the Takeover Committee were Jürgen Steinemann (Chairman), Thomas Dommel, Prof. Dr Edgar Ernst, Werner Klockhaus, Xaver Schiller and Alexandra Soto.

INFORMATION OF THE SUPERVISORY BOARD BY

COMMITTEES AND THE MANAGEMENT BOARD

The respective committee chairperson informs the Supervisory Board about resolutions and essential aspects of the committee's consultations in due course, usually verbally in the next meeting of the Supervisory Board.

The Management Board informs the Supervisory Board in accordance with the statutory requirements, the provisions of the German Corporate Governance Code, the provisions of the Code of Procedure of the Management Board, the Supervisory

Board and the Audit Committee as well as in response to other specific requests for information from the Supervisory Board. The Supervisory Board and its committees substantiate the information and reporting procedures in a plan for meetings and fixed agenda items. This plan sets out a schedule for the regular agenda items to be discussed by the committees and also forms part of the Code of Procedure of the Supervisory Board.

EFFICIENCY REVIEWS BY THE SUPERVISORY BOARD

The Supervisory Board and the Audit Committee of the Supervisory Board of METRO AG regularly review the efficiency of their activities. The most recent review was carried out at the end of financial year 2017/18.

Determinations pursuant to § 76 Section 4 and § 111 Section 5 of the German Stock Corporation Act (AktG)

Pursuant to §§ 76 Section 4 and 111 Section 5 of the German Stock Corporation Act (AktG), the Supervisory Board and the Management Board of METRO AG have passed a resolution stipulating the targets for the proportion of females in management positions and the dates for the attainments of these targets.

With regard to the target and implementation date for the proportion of female members of the Management Board, the Supervisory Board of METRO AG resolved for at least one of the members of the Management Board of METRO AG to be a female office holder by 30 June 2022.

The Management Board of METRO AG has adopted the target of 20% for the proportion of female executives on the first management level below the Management Board and the target of 35% for the proportion of female executives on the second level below the Management Board to be attained by 30 June 2022.

Disclosures concerning the minimum proportion of female and

male members of the Supervisory Board

In the case of companies with equal shareholder and employee representation such as METRO AG, § 96 Section 2 of the German Stock Corporation Act (AktG) requires the Supervisory Board to be composed of at least 30% female office holders and at least 30% male office holders. The Supervisory Board of METRO AG is currently (as of: 3 December 2019) composed of 9 female (45%) and 11 male (55%) office holders. On the part of the employee representatives, the Supervisory Board is composed of 5 female (50%) and 5 male (50%) office holders, while the shareholder representatives account for a ratio of 4 female (40%) and 6 male (60%) members. The composition of the Supervisory Board therefore complies with the statutory gender quota.

6	Corpo rate governance	Declaration on corporate m anagem ent | Corporate Governance Report

Diversity concept for the Management Board

The Supervisory Board has postulated the following objectives for the composition of the Management Board:

DESCRIPTION

• All members of the Management Board must not only have solid general qualifications, but must also be individuals capable of helping the company address its current situation and future challenges.
• The members of the Management Board should come from different educational and/or professional backgrounds.
• The members of the Management Board should complement each other with regard to their expertise and knowledge. All members of the Management Board should have expertise and experience in retail, food, supply chain, sustainability and digitalisation.
• The composition of the Management Board should adequately represent the internationality of METRO AG.
• All members of the Management Board should have long- standing management experience.
• The Management Board should have a mixed age structure.
• The ordinary office term of a member of the Management Board should not extend past the member reaching the age of 65.
• The company intends to appoint at least one female member to the Management Board by 30 June 2022.

OBJECTIVES

The objective of this diversity concept is to achieve a composition of the Management Board that ensures that its members have the necessary knowledge, expertise and professional experience that allow the entire Management Board to manage and steer the company in the best possible way.

IMPLEMENTATION

The Supervisory Board and its Presidential Committee ensure that the appointment of members to the Management Board gives adequate consideration to the postulated diversity concept. Decisions on the size of the Management Board, the appointment of members to the Management Board, as well as the identification of suitable candidates are based on diligent analysis of existing and future commercial challenges and targets. The diversity concept for the Management Board also serves as the foundation for long-term succession planning.

The Supervisory Board further adheres to the German Corporate Governance Code and applicable laws, for example the law on the equal participation of women and men in executive positions.

RESULTS ACHIEVED IN FINANCIAL YEAR 2018/19

In addition to being individually qualified for performing their respective responsibilities, the members of the Management Board also come from different educational and/or professional backgrounds. The necessary expertise and experience in the areas of relevance for METRO is assured. There are in particular no gaps in the members' skills, but rather overlapping skills, which sustainably promotes the performance of the Management Board as a team. All members of the Management Board have long-standing management experience. The fact that 2 of the 4 members of the Management Board in office in

financial year 2018/19 previously held high-ranking management positions in other countries over substantial periods also adequately represents the internationality of METRO. The age of the members of the Management Board in financial year 2018/19 ranged from 42 to 61 years; no office extends past the age of 65. In financial year 2018/19, no woman was yet a member of the Management Board; taking this aspect into account, the diversity concept is fulfilled. With the appointment of Ms Andrea Euenheim, the Management Board is now also represented by a woman.

Diversity concept for the Supervisory Board

The Supervisory Board has adopted objectives for its composition and a competence profile for the entire corporate body, which include various diversity requirements.

DESCRIPTION

Objectives for the composition of the Supervisory Board are defined as follows:

• The members of the Supervisory Board should complement each other with regard to their age, (educational and professional) background, experience and skills in such a way that the overall corporate body will benefit from the largest possible pool of experience and the broadest possible spectrum of expertise.
• An adequate number of the members of the Supervisory Board should have international experience or expertise.
• The statutory gender quota of 30% is proposed to be met by both shareholder representatives and employee representatives. It follows that at least 3 of the members of the Supervisory Board on each side should be female.
• In accordance with Clause 5.4.2 of the German Corporate Governance Code, at least 12 of the Supervisory Board's 20 members must be independent office holders, with at least 6 of them being shareholder representatives.
• At least one member of the Supervisory Board must meet the requirements for being appointed chairperson of the Audit Committee. Pursuant to the Code of Procedure of the Audit Committee, the committee chairperson must be independent and possess professional expertise in the areas of accounting and auditing of annual financial statements, as well as internal control measures (financial expert). The other committee members should possess adequate professional expertise and experience in these areas. Ideally, one member of the Audit Committee should have special expertise in the field of compliance.
• To prevent potential conflicts of interest, members of the Supervisory Board are prohibited from assuming board functions, advisory functions or accept an appointment to the supervisory board of a significant domestic or foreign direct competitor.
• The ordinary maximum office term for members of the Supervisory Board is 10 years. The ordinary office term for shareholder representatives appointed to the Supervisory Board is 3 years. The Supervisory Board determines exceptions from the ordinary criteria at its own dutiful discretion on acase-by-case basis.
• As a general rule, only candidates who are not older than 65 years at the time of their initial election should be proposed for their first election to the Supervisory Board. As a general

Corporate governance	Declaration on corporate m anagement | Corporate Governance Report	7

rule, only candidates who are not older than 71 years at the time of their election should be proposed for being elected a member of the Supervisory Board. The Supervisory Board determines exceptions from the ordinary criteria at its own dutiful discretion on a case-by-case basis.

According to the competence profile, the entire corporate body should possess the following competences:

• Commercial expertise
• Expertise/experience in accounting, auditing of annual financial statements, internal control processes
• Expertise in the area of compliance
• Expertise in the area of business combinations and takeovers (mergers and acquisitions)
• Expertise in the area of digitalisation/technology
• International experience/expertise, particularly in Eastern Europe and Asia
• Expertise in the area of sustainability
• Expertise in logistics, in particular in the field of supply chain logistics
• Marketing expertise
• Human resources expertise
• Experience in managing a company

OBJECTIVES

The composition of the Supervisory Board should ensure that its members have the necessary knowledge, expertise and professional experience required for the entire Supervisory Board to properly perform its duties.

IMPLEMENTATION

The Supervisory Board presents its proposals for the election of members to the Supervisory Board to the shareholders at the occasion of the Annual General Meeting. In deciding about the candidates proposed for election, the Supervisory Board gives consideration to statutory requirements, the Articles of Association, as well as the objectives set out above for its composition and the overall profile of expertise for the entire corporate body. The same applies for the Nomination Committee, which supports the Supervisory Board in the identification of suitable candidates to represent the shareholders on the Supervisory Board.

RESULTS ACHIEVED IN FINANCIAL YEAR 2018/19

All members of the Supervisory Board contribute their manifold specific expertise to the work in the committees. They complement each other with regard to their age, educational and professional backgrounds, experience and skills. Several members of the Supervisory Board have international expertise and/or experience. The Supervisory Board includes 5 female employee representatives and 4 female shareholder representatives. The composition of the Supervisory Board satisfies the objective in terms of the number of independent members of the Supervisory Board and shareholder representatives. The objectives in terms of the chairperson and the members of the Audit Committee have also been satisfied. This committee's independent Chairman is Prof. Dr Edgar Ernst. None of the members of the Supervisory Board of METRO AG holds an office in a corporate body of or an advisory function for a substantial direct competitor, neither is any of them a member of such a company's supervisory board. The ordinary maximum

term, the ordinary term of office for shareholder representatives and the ordinary retirement age are stipulated in the Code of Procedure of the Supervisory Board. Due to the transition of the remaining office terms at the former METRO AG (now: CECONOMY AG), 3 shareholder representatives have been appointed for more than 3 years. No member of the Supervisory Board has reached the ordinary maximum office term. One member of the Supervisory Board, who was a member of the Supervisory Board of the former METRO AG, was older than 65 years of age, namely 71 years of age, at the time of his (initial) election to the Supervisory Board of the new METRO AG. The Supervisory Board also completes the competence profile for the entire corporate body. In financial year 2018/19, the members of the Supervisory Board thus represented a balanced composition of the Supervisory Board with regard to the postulated diversity concept.

Independence of shareholder representatives appointed to the Supervisory Board

As stipulated in Clause 5.4.1 of the German Corporate Governance Code as amended on 7 February 2017, the corporate governance report should also set out the Supervisory Board's opinion concerning a reasonable number of independent members on the part of the shareholders and disclose the names of these members. The Supervisory Board holds its objective of requiring at least 6 members of the Supervisory Board to be independent shareholder representatives to be a reasonable arrangement. As of the date of this report, 9 out of the 10 shareholder representatives are independent in the meaning of Clause 5.4.2 of the German Corporate Governance Code. The members are: Jürgen Steinemann, Herbert Bolliger, Gwyn Burr, Prof. Dr Edgar Ernst, Dr Florian Funck, Dr Fredy Raas, Eva-Lotta Sjöstedt, Dr Liliana Solomon and Alexandra Soto.

Transactions by executives for own account

Pursuant to Article 19 of the Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation), members of the Management Board and the Supervisory Board of METRO AG, in their capacity as persons discharging managerial responsibilities, must inform METRO AG of any transactions involving their own METRO shares, METRO bonds or related financial instruments. This notification requirement also applies to persons closely associated with members of these corporate bodies.

• Notifications concerning transactions by executives for own account during financial year 2018/19 have been published on the website www.metroag.de, section Investors- Legal Announcements.

8	Corpo rate governance	Declaration on corporate m anagem ent | Corporate Governance Report

Annual General Meeting

The shareholders of METRO AG exercise their rights and potential voting rights at the Annual General Meeting. To help shareholders exercise their individual rights at the Annual General Meeting, METRO AG makes the meeting agenda as well as other documents and information for each Annual General Meeting available for download at www.metroag.de. Shareholders may elect to exercise their voting rights at the Annual General Meeting in person or alternatively appoint a proxy of their choosing or a proxy of the company who is bound by instructions (proxy voting). In the interest of shareholders, the chairperson of the Annual General Meeting, in most cases the chairperson of the Supervisory Board, ensures that the Annual General Meeting is conducted efficiently and effectively. The objective is to conclude a regular METRO AG Annual General Meeting after no more than 4 to 6 hours.

Audits 2018/19

On 15 February 2019, the Annual General Meeting of METRO AG elected KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG) as auditors for the financial statements and consolidated financial statements for financial year 2018/19. The Supervisory Board's instructions to perform an audit of the annual financial statements consider the recommendations contained in Clause

7.2 of the German Corporate Governance Code as amended on 7 February 2017. Dr Thorsten Hain is the auditor for the financial statements and consolidated financial statements and the combined management report of METRO AG in 2018/19.

• Comprehensive details concerning the deliberations in the Audit Committee and the Supervisory Board with regard to certain aspects of the audit can be found in the report of the Supervisory Board.

Düsseldorf, 3 December 2019

METRO AG

THE MANAGEMENT BOARD

THE SUPERVISORY BOARD