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Annual Report 2008 - AMG Advanced Metallurgical Group NV

Annual Report 2008 - AMG Advanced Metallurgical Group NV

Powers of the

Powers of the Supervisory Board The Supervisory Board oversees both the policies pursued by the Management Board and the general course of AMG’s business. It also provides advice to the Management Board. In performing its duties, the Supervisory Board is required to act in the interests of the AMG Group and their businesses as a whole. It has assigned certain of its tasks to three committees: the Audit Committee, the Selection and Appointment Committee and the Remuneration Committee each of which reports on a regular basis to the Supervisory Board. The separate reports of each of these Committees are published below. The Supervisory Board further supervises the systems and management of the internal business controls and financial reporting processes and it determines the remuneration of the individual members of the Management Board within the remuneration policy adopted by the General Meeting of Shareholders. Composition of the Supervisory Board The Supervisory Board was first established on June 6, 2007 and consists of six members. Messrs. Pedro Pablo Kuczynski (Chairman), Jack Messman (Vice Chairman), Guy de Selliers, Norbert Quinkert, General Wesley Clark and Dr. Andrei Bougrov were appointed to the Supervisory Board on that date by the General Meeting. Dr. Bougrov has resigned from the Supervisory Board as of August 1, 2008. The Supervisory Board will propose to the 2009 General Meeting of Shareholders to appoint Dr. Martin Hoyos (Austrian, age 61, former chief executive of KPMG Europe, Middle East and Africa) as member of the Supervisory Board as of May 13, 2009. The Supervisory Board aims for an appropriate level of experience in technological, manufacturing, economic and financial aspects of international business and public administration. The composition of the Supervisory Board must be such that the combined experience, expertise and independence of its members enables the Supervisory Board to carry out its duties. There are currently no Supervisory Board members who qualify as ‘non-independent’ as defined in best practice provision III.2.2 of the Dutch Corporate Governance Code. Accordingly, AMG is in compliance with best practice provision III.2.1. The Resignation Schedule of the Supervisory Board is: Pedro Pablo Kuczynski 2011 Wesley Clark 2009 Jack Messman 2009 Norbert Quinkert 2010 Guy de Selliers 2010 Mr. Messman and General Clark will resign by rotation from the Supervisory Board at the Annual General Meeting of Shareholders on May 13, 2009. Both Mr. Messman and General Clark are eligible for immediate reappointment for a period of four years. The Supervisory Board proposes the reappointment of Mr. Messman and General Clark. A nomination for their appointment will be submitted to the 2009 Annual General Meeting of Shareholders. Supervisory Board Meetings The Supervisory Board held six meetings in the course of 2008 including meetings by telephone conference. Almost all meetings were attended by all members. None of the members of the Supervisory Board was frequently absent from Supervisory Board meetings. The items discussed in the meetings included recurring subjects, such as AMG’s financial position and results, strategy, potential acquisitions, business plans, capital expenditure programs, operations review as well as regular review of the strategic initiatives of the Company. Financial metrics presented to the Supervisory Board to measure the performance of AMG include net income, earnings per share, EBITDA, financial leverage (net debt to EBITDA), debt to equity, return on shareholders’ equity and return on capital employed. Furthermore, the Supervisory Board discussed the risks of AMG’s business and the assessment by the Management Board of the structure of the internal risk management and control systems, as well as any significant changes thereto. The regularly scheduled Supervisory 44 Report of the Supervisory Board

Board meetings also included presentations by senior managers of the business lines to give Supervisory Board members a more in-depth understanding of the businesses. In addition to the scheduled meetings, the Chairman and other members of the Supervisory Board had regular contacts with the Chief Executive Officer and other members of the Management Board as well as senior executives of the Company throughout the year. On November 12, 2008 the Supervisory Board (without the presence of the Management Board) met and reviewed the performance of the Supervisory Board and its members and the performance of the Management Board and its members. Remuneration The members of the Supervisory Board receive remuneration in the form of a cash component and a share component. No loans, guarantees or the like have been granted to any of the Supervisory Board members. Cash remuneration: The cash remuneration of the Supervisory Board members is determined by the General Meeting of Shareholders. Pursuant to such determination on June 26, 2007, the annual cash remuneration for members of the Supervisory Board was set at $75,000 for the Chairman and $50,000 for the other members. Chairmen of the Remuneration Committee, the Audit Committee and the Selection and Appointment Committee are paid an additional $ 12,500 annually. No changes with regard to the cash compensation structure were made during 2008. A proposal to increase the Supervisory Board remuneration for the year 2009 will be submitted at the 2009 Annual General Meeting of Shareholders for approval. Share remuneration: The members of the Supervisory Board do not participate in any of AMG’s incentive plans. As part of their annual remuneration, on June 26, 2007, the General Meeting of Shareholders determined to issue a number of shares for no cash consideration to each member of the Supervisory Board. No changes with respect to this policy have been made during 2008. The number of shares issued to each member is computed with respect to a specified amount of Euros for each member. During 2008 the specified numbers of Euros were 122,500 for the Chairman, 118,500 for the Vice Chairman and 115,000 for each other member. Shares issued may not be disposed of by the member of the Supervisory Board until the earlier of the third anniversary of the grant or the first anniversary of the date on which he ceases to be a member of the Supervisory Board. The Dutch Corporate Governance Code requires that the remuneration of a Supervisory Board Member not be dependent on the results of the Company. Best practice provision III.7.1 states that a Supervisory Board member may not be granted any shares and/or rights to shares by way of remuneration. AMG does not comply with best practice provision III.7.1 for the reason that its Supervisory Board remuneration largely reflects US market practice, recognizing that the majority of the Supervisory Board members has a US corporate background and that a substantial part of AMG’s operational headquarters is located in the US. Best practice provision III.7.2 states that any shares held by a Supervisory Board member in the company on whose board he sits are longterm investments. AMG does not comply with this best practice provision. AMG requires that the Supervisory Board not transfer or otherwise dispose of shares in AMG’s share capital only until the earlier of the third anniversary of the grant or the first anniversary of the date on which such member ceases to be a member of the Supervisory Board for those shares which are granted as part of the annual remuneration. The table below shows the total remuneration of each member of the Supervisory Board for 2008. One member of the Supervisory Board, Dr. Andrei Bougrov, resigned mid-year and received pro-rata compensation. No share awards were granted to Dr. Bougrov. Report of the Supervisory Board 45

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