The RWE Group primarily uses the recommendations of the German Corporate Governance Code (the Code) as the yardstick for responsible corporate governance. The Code aims to strengthen the confidence placed by domestic and international investors, customers, employees and the public in German listed companies. It is prepared by the German Corporate Governance Code Government Commission, which submitted the first version of the Code in February 2002. Since then, the Commission has reviewed the Code every year against the backdrop of domestic and international developments and adapted it whenever necessary.

The current version of the Code is dated June 6, 2008. It contains several new provisions compared with the preceding version. For instance, the Government Commission included the suggestion to limit Executive Board severance approved in 2007 in the list of recommendations, thus strengthening its binding force. In addition, the accountability and responsibility of the Supervisory Board as a whole concerning compensation issues was strengthened. The Code now recommends that the Supervisory Board’s plenum decide on and review the Executive Board’s compensation system and material contractual provisions. Another new element is the recommendation for the Supervisory Board or its Audit Committee to discuss the half-year and quarterly financial reports with the Executive Board prior to publication.

RWE has accepted and implemented all of the new elements. The provisions governing severance caps, which have been upgraded to recommendations, were taken into account when concluding Executive Board member contracts in the year under review. In its meeting on December 11, 2008, on suggestion from the Personnel Affairs Committee, the Supervisory Board confirmed the Executive Board compensation system and the material contractual elements by a resolution. It will regularly review the compensation from now on. Furthermore, our Audit Committee will discuss the half-year and quarterly financial reports with the Executive Board prior to publication, in accordance with the Code’s recommendations. The scheduled review of the efficiency of the Supervisory Board’s work was initiated. It deals with the cooperation of the Supervisory Board and its committees with the Executive Board as well as the work done in its meetings.

We therefore continue to comply with all of the recommendations of the current version of the Code and–with just a few exceptions–consider the suggestions included therein. In February 2009, RWE issued an unqualified statement of compliance for the seventh time in a row.

Our listed Group company, Lechwerke AG, is also putting the German Corporate Governance Code into practice, taking account of the specifics of its inclusion in the Group. Deviations from the Code’s recommendations have been disclosed in Lechwerke AG’s statement of compliance.