Report of the Board of Executive Directors on agenda item 7

Report of the Board of Executive Directors to the General Meeting on April 30, 2009

In respect of Item 7 of the Agenda, the Board of Executive Directors submits in accordance with Article 9 of the Council Regulation on the Statute for a European Company in combination with Section 203 (2), sentence 2, in combination with Section 186 (4), sentence 2, of the German Stock Corporation Act

Report on the exclusion of the subscription right

The General Meeting on April 29, 2004, authorized the Board of Executive Directors to increase, with the consent of the Supervisory Board, until April 30, 2009, the company’s subscribed capital by up to € 500,000,000.00 by issuing new shares against contributions in cash or in kind (authorized capital). The possibility of excluding the shareholders’ statutory subscription right in the case of capital increases from this authorized capital is restricted to four strictly limited cases. The company has not made use of the authorized capital to date. The Board of Executive Directors and the Supervisory Board therefore propose its elimination.

With the authorization applied for in addition to create new authorized capital, the Board of Executive Directors is provided with a flexible instrument for fashioning corporate policy for the next five years as well.

The purpose of the proposed authorized capital is to enable the Board of Executive Directors to continue raising capital at short notice on the capital markets required for the further development of the company by issuing new shares or to take quick advantage of any more favorable market conditions for meeting a future financing requirement. In addition, the Board of Executive Directors is to be further enabled to acquire companies, parts of companies or holdings in other companies from third parties in return for issuing shares without having recourse to the capital markets.

The latter possibility of issuing shares significantly increases the room for maneuver of the Board of Executive Directors in international competition, since particularly in the case of corporate mergers or the acquisition of companies, parts of companies and holdings, the consideration to be paid is frequently paid in the form of the acquirer’s shares. Particularly with the increasingly large corporate units that are involved in such transactions, the considerations can frequently not be met with money without putting undue strain on the company’s liquidity or raising its indebtedness to an undesirable extent. The use of authorized capital for these purposes means that it must be possible to exclude the subscription right. The Board of Executive Directors is therefore to be authorized to exclude the subscription right in these cases.

The exclusion in favor of owners of option certificates and creditors of convertible bonds enables these to participate in the capital increase to the extent to which they would be justified to participate if they had purchased shares by virtue of their option or conversion rights or conversion obligations. This counteracts any dilution as the result of the capital increase.

The Board of Executive Directors is also to be authorized to exclude the subscription right if the capital increase is effected against cash payment, the amount of issue is not substantially below the stock market price and the total number of shares issued under the authorization does not exceed ten percent of the subscribed capital at the time of issue. The arrangement complies with Section 186 (3), sentence 4, of the German Stock Corporation Act. In this way, the Board of Executive Directors will continue to be in a position to meet a future financing requirement at short notice and using any favorable capital market conditions to the advantage of the company and the shareholders. This is only possible to a very limited extent if the subscription right is granted because processing the subscription is very time consuming.

The authorization to exclude the subscription right for residual amounts opens up the possibility of laying down simple and practicable subscription conditions for raising capital. Residual amounts occur if not all shares can be distributed uniformly among the shareholders as the result of the subscription ratio or the amount of the capital increase. The residual amounts are of subordinate importance in relation to the whole capital increase.

The Board of Executive Directors will study on a case-by-case basis whether the use of the authorization for the capital increase and any exclusion of the subscription right are also in the well-understood interests of the company, taking the interests of the previous shareholders into consideration. The Board of Executive Directors will report on each use of the authorized capital at the next General Meetings.