The Supervisory Board comprises 20 members in accordance with the articles of incorporation. In accordance with the German Codetermination Act it is made up of equal numbers of shareholders and employees’ representatives. Whereas the shareholders’ representatives are elected by the Annual General Meeting, the employees’ representatives are appointed in accordance with the German Codetermination Act. Seven employees’ representatives are employees of the Group, a further three are union representatives. The present Supervisory Board’s period of office lasts until the end of the Annual General Meeting which decides on approval of the Management Board’s acts for the 2007 financial year (April 23, 2008). The introduction of different periods of office for shareholders’ representatives on the Supervisory Board, as recommended in the code, is not envisaged at present. Instead, to encourage efficient Supervisory Board activity, we think it sensible to keep a uniform period of office.

Following the examination of the efficiency of the Supervisory Board conducted by external consultants, the Supervisory Board implemented a self-evaluation in the form of a questionnaire-based efficiency examination in 2007. According to the result of this examination the expectations were fulfilled.

Under the Supervisory Board’s rules of procedure every member of the Supervisory Board is subject to the principle of independence. Some representatives of the shareholders on the Supervisory Board occupy or occupied a senior position with other companies during the past year. Transactions conducted by Arcandor AG with these companies are conducted on the same terms and conditions as with third-party companies. In our judgment these transactions do not affect the independence of the members of our Supervisory Board associated with these companies.

Committees on the Supervisory Board

Under its rules of procedure the Supervisory Board forms several committees.

The Standing Committee is made up of the Chairman of the Supervisory Board, his representative and at least three further members to be chosen from amongst the Supervisory Board. At present the Standing Committee consists of six members. The standing committee is responsible for the regulation of matters between Management Board members and the corporation. In urgent matters the standing committee may further, if a resolution of the Supervisory Board cannot be passed in due time at a meeting, in its stead decide on Management Board business requiring approval.

The Audit Committee is made up of the Chairman of the Supervisory Board, two representatives of the shareholders and two representatives of the employees. Dr. Diethart Breipohl, Chairman of the Audit Committee until December 14, 2007 and Prof. Dr. h. c. Karlheinz Hornung, Chairman since December 14, 2007, have special knowledge of and experience in the application of accounting principles and internal control procedures. As required, the Audit Committee prepared the Supervisory Board’s decision about the approval of the financial statements and the approval of the consolidated financial statements for the period to September 30, 2007, and in particular a preliminary examination of the financial statements, the consolidated financial statements and the summarized management report and the proposal for appropriation of the profit. This meeting of the Audit Committee was attended by the auditor. Finally, the Audit Committee implemented the agreement to be reached annually with the auditor.

The duties of the Arbitration Committee, which is made up of two shareholder and two employee representatives, are determined in Section 27, Paragraph 3 of the German Codetermination Act. In accordance with it the Arbitration Committee submits proposals to the Supervisory Board for the appointment of Management Board members, if the necessary majority of two thirds of the votes of the Supervisory Board members is not achieved in the first ballot.

As the fourth committee of the Supervisory Board, the Nomination Committee was established in December 2007. This thus implements a new recommendation in the German Corporate Governance Code. The task of this committee is the preparation of election proposals to the Annual General Meeting for candidates to the Supervisory Board. The final decision for the election proposal remains with the entire Supervisory Board. The Nomination Committee is made up of four shareholder representatives.

The Management Board of Arcandor AG consists of six members. Following the retirement of Harald Pinger, with effect from January 15, 2007, Dr. Peter Diesch was appointed new Management Board member responsible mainly for the tax, controlling, accounting and finance sectors. In line with the recommendation in the German Corporate Governance Code the rules of procedure for the Management Board regulate its work, particularly the responsibilities of the individual Management Board members, the matters which are the responsibility of the whole Management Board and the necessary majorities for Management Board resolutions.

Remuneration of Management Board and Supervisory Board

The remuneration of the Mangement Board and the Supervisory Board is described in detail in the remuneration report. The complete report is shown in the Group's annual report 2007, p. 41 et seq.

Shareholdings and share transactions of Management Board and Supervisory Board

The holding of securities of Arcandor AG by members of the Management Board and Supervisory Board of the corporation must be disclosed in accordance with the German Corporate Governance Code, if it directly or indirectly exceeds 1 % of the shares issued by the corporation. If the total of shares held by all Management Board and Supervisory Board members exceeds 1 % of the shares issued by the corporation, the totals of shares held by Management Board and Supervisory Board must be disclosed separately.

As of September 30, 2007, the members of the Supervisory Board together are allocated 46.64 % of the shares issued by the company. Of these 46.64 % (103,052,336 shares) are allocated to Leo Herl. The members of the Management Board do not hold any shares in the company. 

Members of the Management Board and Supervisory Board are required under section 15a German Securities Trading Law (WpHG) to disclose the acquisition or disposal of securities of Arcandor AG, if the value of transactions conducted by the member or his associates within one calendar year amounts to or exceeds EUR 5,000. Arcandor AG was not notified of any such transactions in the past financial year.

The members of the executive bodies are, in so far as the law permits, released by Arcandor AG from claims by third parties. To this end, Arcandor AG maintains group asset liability insurance (D & O insurance) for the members of its executive bodies.