HOCHTIEF Annual report 2008 - Information for our Shareholders

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Once again, the Supervisory Board devoted close attention to the Europe division and in particular the position of the German building construction business; it kept a close watch on the restructuring measures that were being taken and received regular progress reports, also from the management of HOCHTIEF Construction itself. The focus here was on making capacity and staff adjustments and on defining the final target structures in close cooperation with the employee representatives. Importantly, legacy projects that had been running at a loss due to price increases and problems with subcontractors were completed and processes closely supported by risk management and control systems.

As in previous years, the Supervisory Board examined the European construction markets from a competitive and comparative perspective and was briefed on the expansion of direct business in the Gulf region.

In the newly formed Services division combining HOCHTIEF Facility Management and HOCHTIEF Energy Management, the Supervisory Board dealt in detail with the division's service range, key financial data and strategic projects. HOCHTIEF Services is the first port of call for companies faced with complex outsourcing decisions. Further topics of discussion included the process of consolidation and pressure on margins in a market that is becoming an oligopoly, resulting in the need to use technical building management as a differentiator, and the expansion of the international business.

In addition, the Supervisory Board received regular updates on the development of claims and variation orders within the Group, the compliance structure and audit activities. Other topics included the sufficient amount of management capacity despite the Group's strong growth and, in the same context, the working group concerned with international recruiting.

The Supervisory Board regularly turned its attention to the development of corporate governance at HOCHTIEF. In accordance with Point 3.10 of the German Corporate Governance Code, the Executive Board provides a joint Executive Board and Supervisory Board report on corporate

governance in the next section of this report. The codes of procedure for the Supervisory Board and Audit Committee were amended when the Code was revised.

The Supervisory Board has formed five committees, whose members are listed in the Boards section. The Audit Committee met three times in 2008. It looked in detail at the quarterly results and annual financial statements and also devoted considerable attention to Internal Auditing's audit findings and the audit plan for 2009. In addition, the Audit Committee discussed compliance organization within the HOCHTIEF Group, the individual divisions' business models, aspects of the internal control system, the motion for the General Shareholders' Meeting regarding the nomination for external auditor, priority areas for auditing and the fee agreement with the external auditor.

The Human Resources Committee met three times. It dealt mainly with the Executive Board compensation system and the amount of Executive Board compensation. It also prepared the Supervisory Board's personnel-related decisions and passed the necessary resolutions regarding the Executive Board members' employment contracts.

The Nomination Committee met twice during the year under review and proposed suitable candidates for the Supervisory Board to include in the nominations it presented to the General Shareholders' Meeting in May 2008.

The Ad hoc Committee that was established for a period of one year did not meet before reaching the end of its term on February 26, 2008.

Once again, there was no reason to convene a meeting of the Mediation Committee pursuant to Section 27 (3) of the Codetermination Act (MitbestG) in fiscal year 2008.

At the meetings of the full Supervisory Board, the committee chairmen reported regularly and in depth on the subject matter and outcome of the committee meetings.

The annual Financial Statements prepared for HOCHTIEF Aktiengesellschaft by the Executive Board in accordance with the German Commercial Code (HGB), the Consolidated