Report by the Supervisory Board

In fiscal year 2019 / 2020 the Supervisory Board regularly advised the Executive Board on the management of the company and continuously supervised its conduct of business. We satisfied ourselves that the Executive Board’s work complied with all legal and regulatory requirements at all times. The Executive Board fulfilled its duty to inform. It furnished us with regular written and verbal reports containing up-to-date and comprehensive information on all issues of relevance to the company and the group relating to strategy, planning, business performance, the risk situation and compliance. This also included information on variances between actual performance and previ-ously reported targets as well as on budget variances (follow-up reporting). In the committees and in full Supervisory Board meetings, the members of the Supervisory Board had ample opportunity to critically examine the reports and resolution proposals submitted by the Executive Board and contribute suggestions. In particular, we discussed intensively and examined the plausibility of all transactions of importance to the company on the basis of written and verbal reports by the Execu-tive Board. On several occasions the Supervisory Board dealt at length with the company’s targets, the risk situation, the liquidity planning and the equity situation. Based on the analysis of the value potential of the group’s businesses and the opportunities and risks of strategic steps, critical oper-ating issues were presented to the Supervisory Board for discussion. Where required by law, the Articles of Association or the rules of procedure for the Executive Board, the Supervisory Board provided its approval of individual business transactions.

In view of the current situation the Supervisory Board and Executive Board continued the signifi-cantly intensified collaboration and information exchange begun in the 2018/2019 fiscal year and in particular discussed the framework for the transformation of thyssenkrupp as well as the impacts of and reactions to the coronavirus pandemic in bi-weekly meetings of the Executive Committee attended by Executive Board members and external advisors.

In addition, in the periods between meetings the chairmen of the Supervisory Board and its commit-tees engaged in a close and regular exchange of views and information with the Executive Board and were informed about major developments. Important facts were reported immediately to the subse-quent Supervisory Board or committee meetings. Before the Supervisory Board meetings the share-holder and the employee representatives each held separate meetings to discuss the agenda items. Conflicts of interest of Executive Board and Supervisory Board members, which must be disclosed to the Supervisory Board immediately, did not occur in the past fiscal year.

The average attendance rate at the meetings of the Supervisory Board and its committees was 98.15%. The attendance rate was 99.5% at the meetings of the Supervisory Board and 97.0% at the meetings of the committees.

The members of the Executive Board took part in Supervisory Board and committee meetings; however the Supervisory Board also met regularly without the Executive Board.

Supervisory Board meetings

Ten Supervisory Board meetings were held in the reporting year. The range of topics that the Su-pervisory Board dealt with included the current business and earnings situation and the parent-company and consolidated financial statements for the year ended September 30, 2019. On the recommendation of the Audit Committee and after discussion with the auditors Pricewaterhouse-Coopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) the Supervisory Board approved the parent-company and consolidated financial statements for the 2018 / 2019 fiscal year and thus estab-lished the parent-company financial statements. After the end of the reporting year the Supervisory Board also discussed and approved the parent-company and consolidated financial statements for the year ended September 30, 2020 and thus established the parent-company financial state-ments. Further topics discussed by the Supervisory Board included the corporate and investment planning for fiscal year 2019 / 2020, the preparation of the Annual General Meeting on Janu-ary 31, 2020, and questions of Executive Board compensation. The draft Executive Board compen-sation system developed and approved by the Supervisory Board is to be presented to the 2021 Annual General Meeting for approval. The system takes into account the new requirements of the Shareholder Rights Directive II (SRD II) and the new version of the German Corporate Governance Code. In addition, the current system of Supervisory Board compensation was assessed and con-firmed. The Supervisory Board regularly received reports from the committees. In addition the focus was on corporate governance, the thyssenkrupp Internal Control System (ICS), the subject of compliance and the 2019 EMIR compliance audit pursuant to § 32 WpHG.

In connection with the report on the state of the thyssenkrupp group and the implementation of the transformation process, a large part of the discussions focused on the strategic realignment of the company and the medium-term earnings targets of this realignment. The Supervisory Board regu-larly discussed the key elements of the strategic realignment – portfolio, performance and organi-zation. Portfolio issues discussed intensively in this context were the sale of the elevator business to the bidding consortium of Advent International, Cinven and the RAG Foundation, the options for the consolidation of the steel business, and the approach to the businesses combined in the Multi Tracks business unit, for which the company is primarily seeking new owners in the future. On the topic of performance, the target returns for the various business units derived from competitor benchmarking, the respective action plans for achieving them and the consequences of the plans for the financing of the group were discussed.

In fiscal year 2019 / 2020 the Supervisory Board, after considering the recommendations and suggestions of the German Corporate Governance Code (GCGC) as amended on Decem-ber 16, 2019, decided to issue and publish a total of three declarations of conformity – also during the year. The current declaration of conformity, issued at October 1, 2020, is available on the thyssenkrupp website. In addition, the Executive Board and Supervisory Board report on corporate governance at thyssenkrupp in the corporate governance statement.

Due to new requirements under stock corporation law regarding approval requirements for the Supervisory Board in the case of related party transactions, the Supervisory Board and also the Executive Board adopted an internal procedure for complying with the approval requirements. There were no transactions requiring approval or disclosure in the reporting year.

Also of particular importance was the self-assessment of the Supervisory Board, launched in the reporting year and overseen by external experts. The self-assessment was based on comprehen-sive questionnaires and interviews with all members of the Supervisory Board to deepen and dis-cuss the observations. The assessment focused in particular on the composition of the Supervisory Board, its organization and working methods and the supply of information to the Supervisory Board. In addition to the work of the full Supervisory Board, the assessment also covered in depth the work of the Executive Committee, the SFI Committee and the Audit Committee and the interfac-es between the full Supervisory Board and the committees in general. This year, the self-assessment was also widened to include the Executive Board’s perspective on the work of the Supervisory Board. In November this year the results of the assessment were presented in detail both to the full Supervisory Board and the committees, and in particular the recommendations for action and ideas for their implementation were discussed. Special attention was paid to various criteria for sustainable and progressive Supervisory Board work.

The primary task of the Supervisory Board’s six committees is to prepare decisions and topics for discussion at the full meetings. The Supervisory Board has delegated individual decision-making powers to the committees where this is legally permissible. The powers of the committees and the requirements on committee members are set out in the rules of procedure for the respective com-mittees. The chairs of the committees provided the Supervisory Board with regular detailed reports on the work of the committees in the reporting year. The compositions of the six committees as at September 30, 2020 are shown in the section “Supervisory Board”. The chairs of the committees were also in close contact with the other members of their committees outside the regular meetings to exchange views on particularly important projects.

The Executive Committee (Präsidium) met 25 times in the past fiscal year, holding meetings every two weeks owing to the current situation and the preparations for the seminal meetings of the Supervisory Board. In addition to preparing the full Supervisory Board meetings, the work of this committee focused on the financial position and earnings performance of the group, topics in connection with the transformation of thyssenkrupp as well as appropriate reactions to the effects of the coronavirus pandemic.

The Personnel Committee held 11 meetings in the 2019 / 2020 fiscal year to prepare personnel matters concerning the Executive Board of thyssenkrupp AG and former Executive Board members for the Supervisory Board. Where required, resolutions were passed or recommendations for reso-lutions were made to the Supervisory Board. The meetings addressed in particular the reorganiza-tion of the Executive Board, the planning and implementation of changes to the composition of the Executive Board, the planning and implementation of the reorganization of the Executive Board, the new system of Executive Board compensation and the associated measures for establishing the performance bonus and additional bonus. Details of Executive Board compensation are presented in the compensation report. In addition, general Executive Board matters were dealt with, partly also in the context of benefits for former Executive Board members.

The Audit Committee met five times in the 2019 / 2020 fiscal year. Alongside Executive Board members, the meetings were also attended by representatives of the auditors PwC, who were elected by the 2020 Annual General Meeting and subsequently appointed by the Audit Committee. The auditors declared to the Audit Committee that no circumstances exist that could lead to the assumption of prejudice on their part. The Audit Committee obtained the required auditors’ statement of independence, reviewed their qualification, and concluded a fee agreement with the audi-tors. In addition a groupwide survey of auditing quality was carried out; the results of this as well as the additional services provided by PwC alongside the audit of the financial statements were discussed in the Audit Committee. Both Prof. Dr. Bernhard Pellens, who was chairman of the Audit Committee until January 31, 2020, and his successor as chairman of the Audit Committee Dr. Bernhard Günther were also in regular contact with the auditors between meetings. The heads of relevant corporate functions were also available to provide reports and take questions in the committee meetings.

In the reporting year the committee’s work focused on examining the 2019 / 2020 parent-company and consolidated financial statements along with the combined management report including the fully integrated non-financial statement, the combined corporate governance statement of the Executive Board and Supervisory Board regarding the statements issued by the Executive Board and the auditors’ reports, and preparing the Supervisory Board resolution on these items. In addi-tion, the interim financial reports (half-year and quarterly reports) were also discussed in detail and adopted, taking into account the auditors’ review report. With regard to PwC the catalogue of non-audit services by the financial statement auditor requiring approval was established, and the budget for the performance of non-audit services for the 2019 / 2020 fiscal year was set. The Audit Com-mittee also decided to put audit services out to tender from fiscal year 2022 / 2023 in accordance with statutory requirements. A corresponding tender process was initiated.

In several meetings the Audit Committee monitored the accounting process and discussed the effectiveness of the internal control system and optimizations made to it, the effectiveness of the risk management system and the internal auditing system. It also dealt in detail with the main legal disputes and compliance in the company and discussed at length the development of strategic compliance measures at thyssenkrupp.

The Audit Committee defined the following mandate as the focus of the audit: “Development of action recommendations for the further development of the ICS with greater decentralization of the group”. The auditors reported the results of their audit to the Audit Committee at its meeting on November 16, 2020. The action recommendations proposed in the areas of control environment, organizational structure, processes and tools are to be implemented promptly in the 2020 / 2021 fiscal year after evaluation by the Executive Board and the specialist departments.

In addition, in the presence of the head of Corporate Internal Auditing the committee discussed the internal audit results, the audit processes and the audit planning of the internal auditing team for the 2019 / 2020 fiscal year. Further main topics were the CSR report, the equity capital and rating situation, the EMIR compliance audit for the 2018 / 2019 fiscal year in accordance with § 32 WpHG, and the performance of the business areas.

The Strategy, Finance and Investment Committee held four meetings in the 2019 / 2020 fiscal year. Discussions focused on preparing decision recommendations in its area of responsibility for the Supervisory Board. The main topics discussed included the strategic realignment of thyssenkrupp, the options for the Elevator Technology business area, financing and liquidity planning, corporate and investment planning as well as the review of the profitability of individual completed investment projects. In November 2020, the committee dealt intensively with the group’s business and investment plans for the 2020 / 2021 fiscal year and their financing. In the current fiscal year the Supervisory Board is scheduled to deal with updated business and investment plans. The committee also dealt extensively with the key topics of the transformation in the reporting year.

The members of the Audit Committee and the Strategy, Finance and Investment Committee also convened for a joint meeting in the reporting year to discuss issues relevant to both committees, such as liquidity and financing questions.

The members of the Nomination Committee convened for five meetings in the past fiscal year. Discussions focused on drawing up election proposals for the 2020 Annual General Meeting, preparing the composition of the committees after the 2020 Annual General Meeting, preparing the appointment of a successor on the shareholder side, and – taking into account the recommendations of the German Corporate Governance Code – succession planning for the shareholder side of the Supervisory Board.

There was once again no cause to convene the Mediation Committee under § 27 (3) Codetermination Act in the reporting year.

Elected by the Annual General Meeting on January 31, 2020 to audit the financial statements for the 2019 / 2020 fiscal year, PwC audited the parent-company financial statements for the fiscal year October 1, 2019 to September 30, 2020 prepared by the Executive Board in accordance with HGB (German GAAP) rules, and the management report on thyssenkrupp AG, which is combined with the management report on the thyssenkrupp group. The auditors issued an unqualified audit opinion. In accordance with § 315e HGB, the consolidated financial statements of thyssenkrupp AG for the fiscal year from October 1, 2019 to September 30, 2020, and the management report on the thyssenkrupp group, which is combined with the management report on the company, were prepared on the basis of International Financial Reporting Standards (IFRS) as applicable in the European Union. The consolidated financial statements and the combined management report were also given an unqualified audit opinion by PwC. The auditors also confirmed that the Executive Board has installed an appropriate reporting and monitoring system which is suitable in its design and handling to identify at an early stage developments which could place the continued existence of the company at risk.

The financial statement documents and audit reports for the 2019 / 2020 fiscal year were discussed in detail in the meetings of the Audit Committee on November 16, 2020 and the Supervisory Board on November 18, 2020. The auditors reported on the main findings of their audit. They also outlined their findings on the internal control system in relation to the accounting process as well as the risk early detection system, and were available to answer questions and provide additional information. The Chairman of the Audit Committee reported in depth at the full Supervisory Board meeting on the Audit Committee’s examination of the parent-company and consolidated financial statements. Following examination and detailed discussion of the parent-company financial statements, the consolidated financial statements, and the combined management report by the Supervisory Board no objections were raised. In line with the recommendation by the Audit Committee, the Supervisory Board then approved the result of the audit by the financial statement auditors. Following completion of our examination we came to the conclusion that no objections were to be raised and we established the financial statements of thyssenkrupp AG and approved the consolidated financial statements. The same applies to the CSR report fully integrated in the management report.

A resolution on the appropriation of net income was not necessary. Due to the unappropriated loss shown in the parent-company financial statements of thyssenkrupp AG for the 2019 / 2020 fiscal year, there will not be a dividend payment.

There were nine personnel changes on the Supervisory Board of thyssenkrupp AG in the reporting year, seven on the shareholder representative side and two on the employee representative side.

On the employee representative side, Markus Grolms resigned his seat on the Supervisory Board of thyssenkrupp AG at the close of the Annual General Meeting on January 31, 2020. By court appointment effective at the close of the Annual General Meeting, Jürgen Kerner was appointed as a member of the Supervisory Board. At the meeting of the Supervisory Board held directly after the Annual General Meeting on January 31, 2020, he was also elected as the new Vice Chairman of the Supervisory Board.

On July 31, 2020, concurrently with the closing of the Elevator transaction, Susanne Herberger, Chairwoman of the General Works Council of thyssenkrupp Elevator Technology AG, also resigned from the Supervisory Board. Tekin Nasikkol, Chairman of the General Works Council of thyssenkrupp Steel Europe AG, was court-appointed as a new member of the Supervisory Board effective August 4, 2020.

On the shareholder representative side, Angelika Gifford and Dr. Ingo Luge were appointed as members of the Supervisory Board by Duisburg Local Court with effect from November 12, 2019. Prof. Dr. Bernhard Pellens, Carola von Schmettow, and Jens Tischendorf left the Supervisory Board at the close of the Annual General Meeting on January 31, 2020 after many years of service. In the course of the election of eight new shareholder representatives at this Annual General Meeting, Birgit A. Behrendt, Dr. Bernhard Günther and Friederike Helfer were newly elected in addition to the reelection of the remaining shareholder representatives. In addition, Dr. Ingo Luge, who was elected as a substitute member by the Annual General Meeting on January 31, 2020, was court-appointed as a member of the Supervisory Board effective February 11, 2020 to replace Martina Merz, who was delegated to the Executive Board as its Chairwoman at that time. Also, Dr. Verena Volpert was appointed as a member of the Supervisory Board with effect from October 1, 2020. She succeeds Dr. Ingrid Hengster, who left the Supervisory Board on September 30, 2020.

The members of the Supervisory Board thanked the departing members for their good and constructive work over many years. In its meeting on March 20, 2020, the Supervisory Board resolved to appoint Martina Merz, who had been delegated from the Supervisory Board to the Executive Board, as Chairwoman of the Executive Board until March 31, 2023. Accordingly, Ms. Merz resigned her seat on the Supervisory Board with effect from the close of March 31, 2020. The Supervisory Board is convinced that together with her Executive Board colleagues she will continue to vigorously implement the transformation of thyssenkrupp around the strategic action areas of performance, portfolio and organization. In addition, Johannes Dietsch resigned from the Executive Board of thyssenkrupp AG effective March 31, 2020. He played a decisive role in the successful disposal process of the elevator business and thus made an important contribution to the transformation of thyssenkrupp. The members of the Supervisory Board thank him warmly for this. With effect from April 1, 2020 Dr. Klaus Keysberg additionally assumed the role of Chief Financial Officer. The Supervisory Board has appointed him until July 31, 2024.

The Supervisory Board thanks the Executive Board members, all employees of the group worldwide and the employee representatives of all group companies for their efforts and achievements in the 2019 / 2020 fiscal year.

The Supervisory Board
Prof. Dr.-Ing. Siegfried Russwurm
Chairman

Essen, November 18, 2020