Invitation. by SKW Stahl-Metallurgie Holding AG. German Securities Code (WKN) SKWM01 ISIN DE000SKWM013

Transcription

1 Invitation by SKW Stahl-Metallurgie Holding AG German Securities Code (WKN) SKWM01 ISIN DE000SKWM013 The Executive Board of SKW Stahl-Metallurgie Holding AG, Unterneukirchen (Germany) herewith invites its shareholders to its Annual General Meeting on Wednesday, June 9, 2010, at am (CET DST) in the Haus der Bayerischen Wirtschaft Max-Joseph-Str Muenchen Germany I. The General Meeting has the following agenda: 1. Presentation of the adopted and audited annual financial statements, the approved and audited consolidated financial statements and the combined management report, the report of SKW Stahl-Metallurgie Holding AG's Supervisory Board and the Executive Board s explanatory report on disclosures per Section 289 (4) and (5), Section 315 (4) of the Handelsgesetzbuch (HGB - German Commercial Code) for business year These documents together with Executive Board s recommendation for the appropriation of profits are available for viewing during business hours at SKW Stahl-Metallurgie Holding AG s registered office located at Fabrikstraße 6, Unterneukirchen, Germany. Copies of these documents will be sent to shareholders free of charge and without delay upon request. They are also available for viewing during the General Meeting. The documents are also available at the company s Web site at 2. Resolution on the appropriation of net retained profits The Executive and Supervisory Boards propose utilizing the net retained profits of SKW Stahl- Metallurgie Holding AG of EUR 2,198, for business year 2009 as follows: The distributable profit of EUR 2,198, will be carried forward to new account. 3. Resolution to ratify the members of the Executive Board for business year 2009 The Executive and Supervisory Boards propose to ratify the members of the Executive Board for business year It is intended that the resolutions on this agenda item will be passed separately for each individual member. 4. Resolution to ratify the members of the Supervisory Board for business year 2009 HV_2010_Einl_EN_changesCS_clean.DOCPage 1

2 The Managing and Supervisory Boards propose to ratify the members of the Supervisory Board for business year It is intended that the resolutions on this agenda item will be passed separately for each individual member. 5. Appointment of the auditor for the consolidated financial statements for business year 2010 The Supervisory Board proposes Deloitte&Touche GmbH Wirtschaftspruefungsgesellschaft, Rosenheimer Platz 4, Muenchen, Germany to be appointed as auditor and group auditor for the business year Resolution on the suspension of Authorized Capital 2007/I pursuant to Section 4 (4) of the Articles of Incorporation, on the creation of a new Authorized Capital 2010 with the possibility of excluding subscription rights and to make the relevant amendments to the Articles of Incorporation. The Authorized Capital resolved by the General Meeting on June 18, 2007 in accordance with Article 4 (4) of the Articles of Incorporation still amounts to EUR 77,320.00, having partially been used. It should be suspended and replaced with new authorized capital to enable the Executive Board to continue to use authorized capital to strengthen the company s equity. The Executive and Supervisory Boards propose the following: 1. Article 4 (4) of the Articles of Incorporation (Authorized Capital 2007/I) and the authorization of the Executive Board contained therein, with the approval of the Supervisory Board to increase the company's share capital through the issuance of new no-par value bearer shares against cash or no-cash contributions up to a total of EUR 77, on one or several occasions, is to be cancelled under clause 2 to 4 as from the moment the authorization set out below comes into effect. 2. The Executive Board is authorized to increase the share capital against cash and/or noncash contributions with the approval of the Supervisory Board in the period until May 30, 2015 on one or several occasions by up to EUR 3,272, by issuing new no-par value bearer shares (Authorized Capital 2010). The shareholders must be granted subscription rights. 3. The Executive Board is authorized, with the approval of the Supervisory Board, to decide on the contents of the share rights and the conditions of issue and to determine details of implementing the capital increase. 4. The Executive Board is authorized, with the approval of the Supervisory Board, to remove the statutory subscription rights of the shareholders in the following cases: a. If the capital increase against cash contributions occurs and the issue price of the new shares is not significantly lower than the stock market price, and the issued shares with subscription rights excluded do not exceed a total of 10% of the share capital either on the date on which the authorization becomes effective or on the date on which such authorization is exercised. The upper threshold of 10% of the share capital includes shares issued or to be issued by applying Section 186 (3) Sentence 4 of the AktG directly or mutatis mutandis during the term of this authorization to the date they are issued or sold. b. If the capital increase is made against non-cash contributions for the purpose of acquiring companies, parts of companies or participating interests in companies or any other assets including rights and receivables, or may be used as part of business combinations or mergers. c. for fractional amounts. Page 2

3 5. Article 4 (4) of the Articles of Incorporation is worded as follows: The Executive Board is authorized to increase the share capital in the period through to May 30, 2015, with the approval of the Supervisory Board, on one or several occasions, by a total of up to EUR 3,272, by issuing new, no-par value bearer shares against cash and/or non-cash contributions (Authorized Capital 2010). The shareholders must be granted subscription rights. The Executive Board is authorized, with the approval of the Supervisory Board, to decide on the contents of the share rights and the conditions of issue and to determine details of implementing the capital increase. The Executive Board is authorized, with the approval of the Supervisory Board, to remove shareholders statutory subscription rights in the following cases: a. If the capital increase against cash contributions is performed and the issue price of the new shares is not significantly lower than the stock market price, and the issued shares with subscription rights excluded do not exceed a total of 10% of the share capital either on the date on which the authorization becomes effective or on the date on which such authorization is exercised. The upper threshold of 10% of the share capital includes shares issued or to be issued by applying Section 186 (3) Sentence 4 of the Aktiengesetz (AktG German Joint Stock Companies Act) directly or mutatis mutandis during the term of this authorization to the date they are issued or sold. b. If the capital increase is made against non-cash contributions for the purpose of acquiring companies, parts of companies or participating interests in companies or any other assets including rights and receivables, or may be used as part of business combinations or mergers. c. for fractional amounts. 7. Resolution on the authorization to buy back shares and utilize treasury stock excluding shareholders' subscription rights The authorization to buy back shares and utilize treasury stock resolved by the Annual General Meeting on June 4, 2009 is to be replaced with new authorization. No use had been made of the existing authorization through to the date that this invitation was published. The Executive and Supervisory Boards thus propose the following resolution: a. The existing authorization to buy back shares and utilize treasury shares resolved by the General Meeting on June 4, 2009 and valid until December 2010 is to be rescinded as of the date on which the authorization outlined below comes into effect. b. Subject to Supervisory Board approval, for the period until June 8, 2015 the Executive Board shall be authorized in accordance with Section 71 (1) No. 8 of the AktG to acquire treasury shares amounting to no more than 10% of share capital as of the resolution date or if this figure is lower of the share capital existing at the time this authorization is exercised for purposes other than securities trading The authorization may be exercised in full or in part on one or several occasions. Together with any other own shares which the company may hold or which are allocated to the company within the meaning of Sections 71a et seq. of the AktG, the acquired shares may not at any time constitute more than 10% of the share capital. Page 3

4 c. Acquisition shall be via the stock exchange or a public purchase offer addressed to all shareholders.the acquisition price (without incidental acquisition costs) may not deviate by more than 10% from the arithmetic mean of the closing bidding price on the XETRA trading system on the Frankfurt Stock Exchange (or a comparable successor system) of the five trading days prior to acquisition. d. Shares acquired under this authorization can also be sold in cash without selling them on the stock exchange, subject to approval by the Supervisory Board. With the approval of the Supervisory Board, the Executive Board is authorized to use the own shares thus acquired as a result of this authorization on one or several occasions, in full or in part, in particular as follows: (i) (ii) (iii) (iv) The shares can be sold at a price which is not significantly below the quoted market price for the same class of company shares with identical rights at the time of the sale. In this case, the number of shares to be sold together with new shares issued on the basis of an authorization to increase capital while excluding subscription rights in accordance with Section 186 (3) Sentence 4 of the AktG may not, altogether, exceed 10% of the share capital. The subscription rights of shareholders from these treasury shares shall be excluded in this respect. The shares assigned wholly or in installments as consideration in business combinations (directly or indirectly) or the acquisition of companies, or for participating interests in companies, operating assets, or industrial property rights/license rights. Shareholders subscription rights from these treasury shares shall be excluded in this respect. The shares can be used to avoid fractional share entitlements. The subscription rights of shareholders from these treasury shares shall be excluded in this respect. The shares may be issued to employees of the Company or its group companies. The subscription rights of shareholders from these treasury shares shall be excluded in this respect. e. The Executive Board is also authorized to withdraw shares without any further resolution by the General Meeting being required, subject to Supervisory Board approval. The authorization may be exercised in full or in part i.e., several times. 8. Resolution to approve the remuneration system of Executive Board members in accordance with Section 120 (4) of the AktG The Gesetz zur Angemessenheit der Vorstandsvergütung (VorstAG German Act on the Appropriateness of Executive Board Compensation) dated July 31, 2009 allows the Annual General Meeting to approve the Executive Board s remuneration system (Section 120 (4) of the AktG). The resolution does not give rise to any rights or responsibilities. In fact it does not affect the responsibilities of the Supervisory Board to decide on monetary compensation for the members of the Executive Board. The Company wants to give its shareholders the opportunity to vote on the remuneration system of Executive Board members. The resolution on this agenda item is based on the remuneration system for Executive Board members resolved by the Supervisory Board on April 13, 2010 and which applies from This is explained in greater detail under Item II.3 of this invitation. The System is also described on the Internet under Investor Relations - Annual General Meeting 2010 at and is available for viewing during the General Meeting. The Supervisory Board and Executive Board propose the following resolution: Page 4

5 The General Meeting approves the new remuneration system for Executive Board members passed by the Supervisory Board on April 13, Resolution on an amendment to the Articles of Incorporation with regard to the Act Implementing the Shareholder Rights Directive (ARUG) The Act Implementing the Shareholder Rights Directive (ARUG) of July 30, 2009 allows for changes to periods for convening the General Meeting and attendance requirements as well as formal requirements for proxies. The company s Articles of Incorporation are to be adjusted to these statutory changes. The Supervisory Board and Executive Board move the following: 9.1 Article 13 of the Articles of Incorporation will be worded as follows: Article 13 Location, convening, deadlines 1. The General Meeting is held in the county ( Landkreis ) of the Company's registered office or, as determined by the convening party, in the city of the registered office of a German stock exchange or in a German city with at least 200,000 inhabitants. The location is determined when the meeting is convened. 2. The General Meeting is convened by the Executive Board or, in specific cases as provided by law, by the Supervisory Board or by minority shareholders. 3. The General Meeting is convened with at least 30 days' prior notice. The convening period is extended by the registration deadline pursuant to Article 14 (1). 9.2 Article 14 of the Articles of Incorporation will be worded as follows: 14 Participation in the General Meeting 1. Those shareholders, who participate in the shareholder s meeting or, who wish to exercise voting rights must register for the meeting and prove their shareholding. The registration and proof of shareholding must reach the Company at the address provided in the invitation at least six days before the General Meeting (registration deadline). The Executive Board is authorized to determine, in the invitation, shorter deadlines, in terms of the number of days, until registration and proof of shareholding is provided. 2. Written registration in German or English pursuant to Section 126b of the Bürgerliches Gesetzbuch (BGB German Civil Code) as well as written proof of share ownership in German or English from the custodian bank satisfies the requirements needed to attend the General Meeting and exercise voting rights. Evidence of the shareholding must relate to the start of the 21 st day prior to the General Meeting. 9.3 A new Article 15 is inserted after Article 14 in the Articles of Incorporation to read as follows: 15 Voting rights and proxy 1. As a rule, all shareholders are authorized to participate in the General Meeting and to exercise their voting rights. Each share entitles its holder to one vote. 2. Shareholders can arrange to be represented in the General Meeting. Voting rights can be exercised by proxy. If the proxy is neither a bank or a shareholders' association nor an individual equivalent to a bank or shareholders' association in accordance with Section 135 of the AktG, granting of power of attorney, withdrawal and proof of authorization must be provided to the company in written form (Section 126b of the BGB). The Company offers at least one means of electronic communication for Page 5

6 providing evidence of the shareholding. Details are provided in the invitation, which can also include an easier option. 3. If the shareholder appoints more than one proxy, the company can reject one or more of these. 9.4 The previous Articles 15 to 18 of the Article of Incorporation will be Articles 16 to 19. II. Reports 1. Executive Board s report on agenda item 6 for the General Meeting on June 9, 2010 in accordance with Section 203 (2) of the AktG in conjunction with Section 186 (4) Sentence 2 of the AktG (resolution to suspend Authorized Capital 2007/I and to create Authorized Capital 2010) The Executive Board makes the following written report to the Company s General Meeting called for June 9, 2010 on the authorization proposed in agenda Item 6 for the proposed suspension of existing Authorized Capital and the creation of new Authorized Capital in accordance with Section 203 (2) of the AktG. The Authorized Capital resolved by the General Meeting on June 18, 2007 in accordance with Article 4 (4) of the Articles of Incorporation still amounts to EUR 77,320.00, having partially been used. The authorization expires on June 30, The Authorized Capital should be suspended and replaced with new Authorized Capital to enable the Executive Board to continue also be able to use authorized capital to strengthen the company s equity in future. The new Authorized Capital, which is to replace the current Authorized Capital is to be granted for cash and non-cash capital increases. It amounts to EUR 3,272, and is equivalent 50% of the current share capital. In the case of utilization of authorized capital through cash capital increases, the shareholders generally have a statutory subscription rights. The proposed authorization allows for the Executive Board to exclude the shareholders' subscription rights, with the consent of the Supervisory Board, when the no-par value bearer shares are issued at a price that is not significantly lower than the stock market price. This authorization will enable the company to cover any capital needs at very short notice and to take swift and flexible advantage of market opportunities. The exclusion of subscription rights enables the Company to act quickly and place the shares at a price close to the stock market price, without the discount usual in rights issues. Therefore this form of capital increase is also in the interest of the shareholders. The shareholders will be protected against dilution of their interests by the fact that the no-par value bearer shares may only be sold at a price that is not substantially lower than the applicable market price. The Executive Board will endeavor to keep any discount to the market price as small as possible, taking into account current market conditions. The shareholders are protected by the fact that the discount on the market price at the time of the disposal may never exceed 5% of the market price. Furthermore, the shareholders can maintain their interests in the Company s share capital at any time by purchasing shares on the stock exchange. The cash capital increase excluding the shareholders' subscription rights pursuant to Section 186 (3) Sentence 4 of the AktG may not exceed a total of 10% of the share capital either on the date on which the authorization becomes effective or on the date on which such authorization is exercised. Any such shares, which are issued or disposed of during the term of this authorization are counted toward this upper limit of 10% of the share capital by applying the provisions of Section186 (3) Sentence 4 AktG directly or mutatis mutandis. There should also be the opportunity to exclude shareholders' subscription rights insofar as the capital increase is performed against non-cash contributions for the purpose of financing Page 6

7 possible acquisitions of companies, parts of companies, participations or any other assets including rights and receivables or in relation to business combinations. This will allow the Company the necessary room for maneuver to be able to respond quickly, flexibly and cashefficiently to attractive opportunities for acquiring other companies, participating interests in companies or parts of companies and to acquire other assets such as rights or receivables that would allow the Company to improve its competitive position. The owners of attractive companies or other attractive acquisition opportunities often demand shares of the purchaser with voting rights as compensation. To enable the company to acquire such enterprises or other acquisition opportunities, it must be able to offer shares as compensation. As such acquisitions generally occur at short notice; it cannot as a rule be resolved at the General Meeting, held once per year. This requires the creation of authorized capital, which the Executive Board, with the consent of the Supervisory Board can access quickly. In these cases, the Executive Board will ensure the interests of the shareholders are appropriately considered in determining the valuation ratios. The Executive Board thereby considers the stock market price of the Company's shares. The Executive Board will only use this authorization if the exclusion of subscription rights is in the Company s best interests. The proposed authorization also provides that the Executive Board can exclude shareholders' subscription rights for fractional amounts, with the consent of the Supervisory Board. This is to facilitate the handling of issues with fundamental subscription rights for shareholders. Such fractional amounts may result from the volume of the respective issue and make it necessary to fix a technically feasible subscription ratio. As a general rule, the value of such fractional amounts for the individual shareholder is small. The potential dilution due to the restriction of fractional amounts is also negligible. In contrast, the expenditure for an issue without such exclusion rights would be markedly higher, resulting in additional costs. The new no-par value bearer shares with subscription rights excluded resulting from fractional amounts will be used in the best possible interests of the company. The Executive Board will carefully examine in each case named in this authorization whether excluding of shareholders subscription rights is in the interests of the Company and thus also of the shareholders. If the aforementioned authorization is used, the Executive Board will report on it at the next General Meeting. 2. Executive Board s report on agenda item 7 of the General Meeting on June 9, 2010 on the exclusion of subscription rights when using treasury shares within the meaning of Section 71 (1) No 8, 186 (4) Sentence 2 of the AktG. The Executive Board makes the following written report to the Company s General Meeting called for June 9, 2010 on the authorization proposed in agenda Item 7 for the proposed exclusion of subscription rights in accordance with Section 71 (1) No. 8 of the AktG in connection with Section 186 (4) Sentence 2 of the AktG. The authorization to buy back and use own shares, adopted by the Annual General Meeting on June 4, 2009, expires on December 4, It should be suspended and replaced with a new authorization to buy back and use own shares. No use had been made of the existing authorization through to the date that this invitation was published. In accordance with the amended Section 71 (1) No. 8 of the AktG due to the Gesetz zur Umsetzung der Aktionärsrichtlinie (ARUG - Act Implementing the Shareholder Rights Directive) from July 30, 2009, authorization to buy back own shares can now be granted for a period of up to five years. The authorization valid for full years makes it possible to avoid having this expire between two General Meetings in future. As a rule we will grant our shareholders subscription rights if own shares are used for purposes other than being withdrawn. The authorization also provides for the possibility of using own shares under the exclusion of shareholders subscription rights Page 7

8 With the proposed exclusion of subscription rights in the event of own shares being sold for not more than ten percent of the company's share capital or to the extent less of the share capital existing at the time this authorization is exercised, the company should be given the possibility of quickly and flexibly placing share packages, in particular, with institutional and strategic investors. As a result, the management expects, in particular, a contribution to stable share price performance and stronger equity. The opportunity to exclude subscription rights allows the management to use favorable stock market prices quickly, and to achieve the highest possible amount by setting prices close to the market, and thus to strengthen the equity to the greatest extent possible. Experience shows that selling own shares while excluding subscription rights leads to a higher inflow of funds than a comparable capital increase with shareholders subscription rights as it is possible to act quickly. As a result of this and the fact that the extent to which subscription rights can be excluded is low at a maximum of 10% of the share capital, shareholders voting rights and interests in the assets are granted to a reasonable extent. The wording of the authorization is clear that exceeding the 10% limit by a cumulated execution of several corporate actions, each of them under the exclusion of shareholders subscription rights (successive capitalization activities or sales of treasury shares), is inadmissible. The proposed exclusion of subscription rights in the event of the use of own shares as compensation in connection with business combinations or for (including indirect) acquisitions of companies, participating interests in companies, operating assets, industrial property rights or licenses from third parties allows the management to react quickly and flexibly to opportunities that present themselves in order to be able to acquire companies, parts of companies, participating interests in companies or assets against own shares and to be able to offer an attractive means of payment. In individual cases, the authorization allows balanced financing of the acquisition or merger against own shares. Acquiring companies, parts of companies, participating interests in companies and any other assets in exchange for the issue of shares is standard market practice. The owners of attractive acquisition prospects are often interested in obtaining shares with voting rights in the acquiring company as compensation for a sale for tax or other reasons. In addition, the company is interested in the possibility of offering the owners of possible acquisitions shares of the company. Offering shares in the company is an interesting instrument for structuring the transaction and offers a major incentive. The opportunity of being able to also offer shares as part of a corporate acquisition or merger as an alternative to or in addition to cash, thus also increases the company s latitude and strengthens its negotiating position. The authorization to exclude subscription rights for fractions serves to allow a practical subscription ratio to be created in each case based on the number of own shares designated for sale. This would otherwise make it more difficult to technically execute the use of own shares and to exercise subscription rights. The proposed exclusion of subscription rights in the event that shares are granted to employees of the company or its group companies aims to enable the management to fulfill claims connected with the variable remuneration model at the company and its group companies. This will thus enable the company to fulfill its employees' remuneration claims while preserving the company s liquidity to the greatest possible extent. Section 71 (2) of the AktG allows offering own shares to employees without a specific resolution by the Annual General Meeting. However, buying back shares based on Section 71 (1) No. 2 of the AktG is not subject to the safe harbor privilege which excludes insider trading violations and market manipulation according to the provisions of EU Regulation No. 2273/2003 issued by the European Commission on December 22, 2003 to implement Directive 2003/6/EC of the European Parliament and Council as regards exemptions for buy-back programs and stabilization of financial instruments (Official Journal L 336, 23/12/2003 P ). Corresponding authorization is thus required from the General Meeting in order to be able to acquire and grant shares to grant employee shares using this safe-harbor privilege. Page 8

9 In each individual case, the management will review whether it should use the authorization it has been issued if there are concrete opportunities for subscription rights to be excluded. It will only exclude subscription rights if this is in line with the projects that have been abstractly described to the General Meeting in this report, and if this use is in the company s best interests. The Executive Board will report on the details of this use in the General Meeting following the use of this authorization. 3. Structure of the remuneration system of Executive Board members as information base for agenda item 8: the resolution to approve the remuneration system of Executive Board members in accordance with Section 120 (4) of the AktG. Due to the changes to AktG resulting from the introduction of the Gesetz zur Angemessenheit der Vorstandsvergütung (VorstAG - Act on the Appropriateness of Executive Board Remuneration), the Supervisory Board resolved in April 2010 to have the appropriateness of the Executive Board s current remuneration system tested and reformed and to ensure that the reformed new remuneration system complies with the VorstAG and the appropriateness criteria. Determining the Executive Board remuneration is, in accordance with the VorstAG, which came into force in August 2009, the responsibility of the Supervisory Board. The Remuneration Committee, to which the Chairman of the Supervisory Board Titus Weinheimer and Supervisory Board members Armin Bruch and Dr. Dirk Markus belong, drew up proposals, arranged for the new system to be examined to ensure compliance with the VorstAG and prepared the resolution by the Supervisory Board. The compensation of the members of the Executive Board is intended to reflect the tasks and the individual contribution of the respective Board member to the overall success of the Group. Further criteria considered are the company s size and its activities, its economic and financial condition as well as the level and structure of the compensation paid to Executive Boards of peer companies. The remuneration system also aims, with regard to the Executive Board remuneration, to ensure SKW Metallurgie Group s competitive position on the market for highly qualified executives and to create incentives for performance-orientated and sustainable successful work. Remuneration of the Executive Board comprises the following components: (i) fixed basic salary (ii) variable remuneration (iii) company pension scheme and (iv) health insurance. In detail the remuneration components of the new remuneration system are structured as follows: The Executive Board is granted cash remuneration consisting of 3 components: basic salary, short-term variable remuneration and long-term variable remuneration. Short-term and longterm variable remuneration components can, in a year, reach a maximum of the value of a basic salary. However, they are structured that, in the case of non-achievement, minimum objectives may be completely dropped. (i) Basic salary The basic salary is paid in 12 monthly installments. The amount of the basic salary is determined based on the review of the appropriateness of the Executive Board's remuneration based on remuneration practices in the SDAX, the stock market segment which is relevant for SKW Stahl-Metallurgie Holding AG, taking market capitalization, size and global activities into account. The remuneration is defined individually in line with respective tasks, performance and responsibilities of the members of the Executive Board (ii) Variable remuneration Page 9

10 Short-term and long-term components of the variable remuneration of the Executive Board are each dependent on the amount of the respective basic salary, whereby those that are based on achieving financial indicators are based on the annual budget approved by the Supervisory Board. Short-term bonus: The short-term variable remuneration is granted once a year. It is subdivided into three components, for which annual collective and individual targets are agreed. Depending on the degree of target attainment, an amount between 0% and 100% of the annual variable component may be paid out. The collective targets, which amount to 70% of the shortterm bonus, are the same for both members of the Executive Board. They are based on the annual target values from the SKW Metallurgie Group budget plan approved by the Supervisory Board. They are based on forecast EBT and the cash flow. The remaining 30% of the short-term variable remuneration is granted depending on the individual performance of the respective member of the Executive Board. Long-term bonus: The Phantom Stock Plan will, according to current contracts of the Executive Board be replaced with a long-term bonus from The Phantom Stock Plan will not be reissued after expiration. Instead an annual rolling bonus system will be introduced. This concerns a cash-based plan where the amount paid out is linked to the goal achievement of the budgeted return on capital employed (ROCE) over a 3-year period. The target ROCE is determined by the Supervisory Board based on the planned budget for the coming year and the following two years in each case. A transitional arrangement is provided for the system changeover. The long-term bonus is limited to the amount of the individual target amount with a target achievement of 100%. A portion of this long-term bonus thus obtained may be invested in shares in SKW Stahl-Metallurgie Holding AG, which must be kept for a further two years. (iii) Company pension scheme From 2010 both members of the Executive Board will receive uniform benefit commitments, based on their period of service. The amount of the benefit commitment depends on the individual basic salary as well as period of service as an Executive Board member. (iv) Non-cash benefits in kind (company car), health and nursing care insurance (subsidy), etc. As part of the of the restructuring of the Executive Board remuneration, no changes will be made to the status quo regarding benefits of kind, with the exception of the D&O insurance. The other remuneration granted to the Executive Board include, in particular, non-cash benefits such as the provision of a company car as well as subsidies for health and nursing care insurance. Furthermore, additional social insurance and benefits, e.g., accident insurance, are paid in small amounts. The Executive Board members are provided with D&O insurance cover, which includes an excess from (v) Other The contracts of the Executive Board contain a restriction of any compensation in the event of premature termination of an Executive Board member's contract. III. Information on the total number of shares and voting rights on the date this Annual General Meeting is convened (Section 30b (1) No. 1 of the WpHG) The company s share capital of EUR 6,544, comprises 6,544,930 shares on the date this General Meeting is convened. Each share grants one vote. However, the company has no voting rights from treasury shares. The Company did not hold any treasury shares on the date this General Meeting is convened. Of the total 6,544,930 shares of the Company, 6,544,930 thus carry voting rights. IV. Participation in the General Meeting with registration and proof of share ownership Page 10

11 In accordance with Section 123 of the AktG and Article 14 of the Articles of Incorporation of the Company, only those shareholders are allowed to participate in the General Meeting and to exercise their voting right that have registered with the company and transferred a certificate issued by their custodian bank indicating share ownership to the following address. Registration and certification must be provided in text form in English or in German (Section 126b of the BGB). SKW Stahl-Metallurgie Holding AG c/o Commerzbank AG WASHV dwpbank AG Wildunger Straße Frankfurt am Main Germany Fax: +49 (0)69 / hv-eintrittskarten@dwpbank.de The proof of share ownership must relate to the start of May 19, 2010 (0:00 a.m. CET DST, so called proof of ownership deadline). Registration and certification must be received by the company under the above address by the end of June 2, 2010 (midnight, CET DST) at the latest. In terms of the relationship to the company, only shareholders who produce proof of share ownership are authorized to attend the General Meeting and to exercise their voting rights. The right to attend the General Meeting and the scope of voting rights is measured exclusively according to the share ownership of the shareholder on the proof of ownership deadline. There is no ban on sale or acquisition of shares linked to the proof of ownership deadline. However, a sale or acquisition of shares after the proof of ownership deadline will not influence the right to attend or the scope of voting rights. The proof of ownership deadline has no significance to dividend entitlement. After the receipt of registration and the proof of their share ownership, eligible shareholders will be sent their entry tickets for the General Meeting, on which the number of votes due to the bearer is listed. In order to ensure that entry tickets are received in good time, we ask shareholders to ensure that they register early and to ensure that they transfer their proof of shareholding to the company. V. Proxy voting Voting rights can be exercised by appointed proxies, such as banks or shareholder associations. In theses cases too, registration and transfer of proof of share ownership in the form described above is also required. In view of the issue of proxy, Article 14 (5) of the Articles of Incorporation stipulates that the form prescribed by the law applies and also that the power of attorney which the shareholder sends to the company or a proxy appointed by the company may also be issued by fax or another electronic form to be more precisely defined in the General Meeting. Text form is legally required (Section 126b BGB). Sending powers of attorney by is herewith designated as another electronic form. The must be addressed to ir@skw-steel.com and include the power of attorney as a scanned pdf file. Banks, shareholders associations and other entities within the meaning of Section 135 (8) and Section 135 (10) in conjunction with Section 125 (5) of the AktG can prescribe other regulations for their powers of attorney. Our company wants to facility proxy voting for our shareholders. That is why the company has appointed representatives bound to vote in accordance with shareholder voting instructions. All shareholders not attending the General Meeting may use this option in lieu of appointing their custodian bank or another third party as a proxy. These proxy voting representatives undertake to vote in line with their instructions. Proxy appointments are not valid without instructions. Please note that proxy voting representatives are not allowed to participate verbally or to Page 11

12 submit questions. Shareholders who would like to appoint one of the company's proxies to exercise their voting rights require an admission ticket to attend the General Meeting for this purpose. This ticket includes a corresponding proxy authorization form. Detailed instructions regarding proxy authorization and voting instructions for company appointed proxy voting representatives are sent to shareholders together with the admission ticket to the General Meeting. This information can be found on the company s Web site under Investor Relations Annual General Meeting VI. Shareholders rights Additional motions in accordance with Section 122 (2) of the AktG Within the meaning of Section 122 (2) of the AktG, shareholders whose shares together comprise 5% of the share capital or the proportionate amount of EUR 500, of the share capital, can demand that items are placed on the agenda and announced.each new item must be accompanied with reasons or a motion. The shareholders must provide proof with regard to the amount of shareholding at least 30 days prior to the General Meeting. This request in writing must reach the Management Board by the end of May 9, 2010 (midnight, CET DST) at the following address: SKW Stahl-Metallurgie Holding AG Investor Relations General Meeting Fabrikstraße Unterneukirchen Germany Counter proposals and proposed ballots from shareholders in accordance with Section 126 (1), 127 of the AktG Furthermore, shareholders have the right to move countermotions to the motions passed by the Executive Board and/or Supervisory Board on certain agenda items. Such countermotions must be sent, stating the shareholder s name and reason to the following address: By post: SKW Stahl-Metallurgie Holding AG Investor Relations General Meeting Fabrikstraße Unterneukirchen Germany or By Fax: +49 (0)8634 / ir@skw-steel.com Countermotions from shareholders, which include reasons, that have been received at this address at the latest by May 25, 2010 (midnight CEST) will be immediately made available online at under Investor Relations Annual General Meeting 2010, provided other conditions for obligation to publish have been met in accordance with Section126 of the AktG. Countermotions from shareholders addressed in any other way will not be considered. In the event of a shareholder s proposed ballot of the auditor and the group auditor, the above provisions of Section 126 (1) of the AktG (including the address given) shall apply on the condition that the proposed ballot does not have to be explained. The Executive Board requires proposed ballots from shareholders except in cases of Section 126 (2) of the AktG, which are not made available when they do not contain data in accordance with Section 124 (3) of the AktG (Name, occupation held, residence of the nominated auditor) Page 12

13 Right of Information within the meaning of Section 131 (1) of the AktG Every shareholder at the General Meeting may, in accordance with Section 131 (1) of the AktG demand information about the affairs of the company to the extent that this information is required to properly assess the agenda items. Duty of disclosure extends to the legal and business relations of the company to a related enterprise and to the condition of the Group and of the companies included in the consolidated financial statements, From answering individual questions, the Executive Board can, for reasons stated in Section 131 (3) of the AktG, foresee that granting information would, in accordance with a reasonable commercial judgment inflict a not inconsiderable disadvantage on the company or a related enterprise. Pursuant to Article 15 (2) of the company s Articles of Incorporation, the chairman of the meeting is authorized to restrict the shareholders' question and answer to an appropriate level. Details on the Company s Web site Additional explanations of shareholders rights in accordance with Sections 122 (2), 126 (1), 127 and 131 (1) of the AktG can be found at under Investor Relations Annual General Meeting 2010 VII. Publications provided on the Company's Web site The Information is made available to shareholders in accordance with Section 124a of the AktG on the Internet home page of SKW Stahl-Metallurgie Holding AG at under Investor Relations Annual General Meeting Unterneukirchen (Germany), April 2010 SKW Stahl-Metallurgie Holding AG The Executive Board Page 13