Report of the Supervisory Board

Following the transformation into a pure wholesaler, a new phase of the company began for METRO in financial year 2020/21. This turning point also brought a change in METRO’s management. Effective 1 May 2021, Dr Steffen Greubel succeeded Olaf Koch, who left our company after 9 years as CEO and was given a farewell with great thanks for his work. In Dr Steffen Greubel, the Supervisory Board believes it has found the right person to streamline the development of METRO with a focus on growth.

Financial year 2020/21 was again dominated by the Covid-19 pandemic. Our HoReCa customers in particular once again had to cope with considerable cutbacks, including the complete closure of their business. METRO actively supported them in this very difficult phase. For the company, too, the pandemic again had a significant impact on results. The fact that METRO was nevertheless able to achieve satisfactory results overall was only possible thanks to the enormous contribution of our employees, who worked under pandemic-related restrictions in our stores and all other areas of our company. As the Supervisory Board, we would like to express our special thanks to the entire team and the Management Board for their unwavering commitment.

Jürgen Steinemann

Chairman of the Supervisory Board

Profile

Jürgen Steinemann was born in 1958 in Damme, Germany. He graduated with a degree in business administration from the European Business School in Wiesbaden, London and Paris in 1985 and initially held different management positions at Eridania Béghin-Say, Unilever and Nutreco. Jürgen Steinemann was CEO of Barry Callebaut AG from 2009 to 2015. He is currently the CEO of JBS Holding GmbH. From 2015 to the demerger of the former METRO GROUP in July 2017, Jürgen Steinemann was a member of the Supervisory Board of the former METRO AG (now: CECONOMY AG) and Chairman of the Supervisory Board since February 2016. Jürgen Steinemann has been Chairman of the Supervisory Board of the current METRO AG since 2017.

• More information about the other members of the Supervisory Board can be found on the website www.metroag.de/en in the section Company – Supervisory Board.

It is our hope that we can now all soon return to a near-normality situation, and that we can also all return to our workplaces to support METRO with all our strength in its growth ambition. Besides the right strategy, this requires more customer focus throughout the company and better, faster and simpler implementation of ideas, and thus more entrepreneurial daring overall. I look forward to tackling these issues with your support in the future.

Advice and supervision in consultation with the Management Board

In financial year 2020/21, the Supervisory Board performed the duties imposed on it by law, the Articles of Association and the Code of Procedure. We advised the Management Board in relation to the management of METRO AG and the Group and supervised its activities. The Management Board furnished us with detailed written and verbal information on all significant matters within METRO at the Supervisory Board meetings and on other occasions in a timely manner and in accordance with the statutory requirements. Its reporting in particular included information on current business developments on the intended business policies and other fundamental concerns relating to corporate planning as well as information about the situation of the company and the Group (including the risk position, risk management and compliance). The Management Board provided explanations for any deviations from planned business performance. We have given our approval for individual business transactions, if it was required by law, the Articles of Association or internal regulations. Since no matters requiring clarification arose, we did not make use of the Supervisory Board’s rights of inspection and audit pursuant to § 111 Section 2 Sentences 1 and 2 of the German Stock Corporation Act (AktG). Managers from the relevant departments of METRO attended meetings to address particular agenda items.

As the Chairman of the Supervisory Board, I also worked closely with the Chief Executive Officer and the Chief Financial Officer outside of meetings and regularly exchanged information and ideas with regard to key issues and pending decisions. During the interim period between the departure of Olaf Koch and the arrival of Dr Steffen Greubel, I also had frequent discussions with Christian Baier and Rafael Gasset in their function as Co-CEOs. I was also in contact with the members of the Supervisory Board outside of meetings. In our capacity as committee chairmen, Prof. Dr Edgar Ernst and I also reported on the work and recommendations of the respective committees at the subsequent Supervisory Board meeting.

The Supervisory Board held a total of 9 meetings in financial year 2020/21, with 2 meetings convened as extraordinary meetings. The average attendance rate at meetings of the Supervisory Board and its committees in financial year 2020/21 was 92%. An individualised overview of the participation of each member of the Supervisory Board in office in financial year 2020/21 in the meetings of the Supervisory Board and its committees is contained in the section ‘Individual attendance at meetings’ of this report. Moreover, 2 resolutions were passed in a written procedure outside a Supervisory Board meeting. In so-called closed sessions, the members of the Supervisory Board regularly exchanged views without the participation of the members of the Management Board. As was customary in the past, both the shareholder and employee representatives on the Supervisory Board of METRO AG discussed relevant agenda items in separate pre-meetings.

Changes in the composition of the Supervisory Board and the Management Board

At the end of the Annual General Meeting of METRO AG on 19 February 2021, the terms of office for Herbert Bolliger, Peter Küpfer and myself officially ended. By election of the Annual General Meeting, I entered a new term of office on the same day. Subsequent to the Annual General Meeting, the members of the Supervisory Board of METRO AG re-elected me as Chairman of the Board. Roman Šilha and Stefan Tieben succeeded Herbert Bolliger and Peter Küpfer as new members of the Supervisory Board by appointment by the Annual General Meeting.

Olaf Koch left the Management Board of METRO AG with effect from 31 December 2020. After an interim phase managed by the Co-CEOs, Dr. Steffen Greubel succeeded Olaf Koch as CEO on 1 May 2021.

Key issues covered by Supervisory Board meetings

October 2020 – In an extraordinary meeting, the Supervisory Board passed a resolution on the submission and publication of a joint reasoned statement by the Management Board and the Supervisory Board pursuant to § 27 of the German Securities Acquisition and Takeover Act (WpÜG) on the voluntary public takeover offer of EP Global Commerce GmbH dated 1 October 2020. After a thorough review, the Supervisory Board and the Management Board jointly recommended to the METRO shareholders not to accept the takeover offer of EP Global Commerce, as both boards were of the opinion that the proposed consideration significantly undervalues METRO AG.

November 2020 – At the November meeting, the members of the Supervisory Board first received an update on the takeover process. The Management Board presented information on the current business development and provided updates on the status of the 2 major transformation and efficiency programmes at METRO LOGISTICS Germany GmbH and METRO-NOM GmbH/METRO DIGITAL GmbH. It was followed by information from Andrea Euenheim about changes in top management and her report on the human resources strategy, in which she presented the development and promotion concepts at METRO, among other things. Furthermore, information on the sustainability initiatives at METRO was provided. The Supervisory Board also dealt with Management Board remuneration and passed a resolution on the individual performance factors of the Short-Term Incentive (STI) 2019/20 and on the amount of the variable remuneration components to be granted for financial year 2019/20. Another resolution was passed on the declaration on corporate management 2019/20. The Supervisory Board also dealt with the governance functions in the group (internal control systems, risk management system, internal audit and compliance). Finally, we dealt with the status of the search for a successor to Olaf Koch and discussed possible interim solutions until the appointment of a new CEO. Subsequent to the meeting, by way of a resolution adopted outside of a meeting, we appointed board members Christian Baier and Rafael Gasset jointly as Co-Chairmen of the Management Board for the period from 1 January 2021 until the appointment of a successor to Olaf Koch in the CEO position takes effect.

December 2020 – The focus of the balance sheet meeting was on the review of the annual financial statements, the consolidated financial statements and the combined management report for 2019/20. Those documents included the reporting on the non-financial statement for METRO AG and the group, the associated audit reports and the proposal for the appropriation of profits. Moreover, it involved a resolution on the approving acknowledgement or approval of the annual financial statement documents and audit reports and the proposal for the appropriation of profits. The Supervisory Board also dealt with personnel matters of the Management Board, focusing in particular on the CEO search, and adopted the Management Board’s schedule of responsibilities with effect from 1 January 2021. Other topics included updates on the transformation programmes and information on a project, which aims to partially renew and standardise the financial reporting system. It was followed by resolutions on the report of Supervisory Board 2019/20 and on the proposed resolutions for the Annual General Meeting of METRO AG on 19 February 2021.

February 2021 – In an extraordinary meeting, the Supervisory Board appointed Dr Steffen Greubel as a member of the Management Board and as Chairman of the Management Board of METRO AG with effect from 1 May 2021 for a period of 3 years. The Supervisory Board also approved the conclusion of his employment contract. In our ordinary February meeting, we passed resolutions on early and long-term lease extensions for 6 store locations operated by METRO Germany. In addition, we approved investments for the implementation of technical standards and the conclusion of a service contract with an implementation partner.

Subject to the election of the auditor by the Annual General Meeting 2021, we resolved on the audit assignments for the annual and consolidated financial statements for 2020/21 as well as the audit review of the condensed financial statements and interim management report of the first half of financial year 2020/21. Furthermore, as a precautionary measure, we passed a resolution to authorise a law firm, in particular with regard to potential actions for rescission or nullity against resolutions of the 2021 Annual General Meeting.

The terms of office of Herbert Bolliger, Peter Küpfer and myself ended with the conclusion of the virtually conducted Annual General Meeting 2021. At the Annual General Meeting, I was re-elected and Roman Šilha and Stefan Tieben were appointed new members of the Supervisory Board. After the Annual General Meeting 2021, the members of the Supervisory Board – in this composition – re-elected me as their Chairman in a written procedure and decided on changes in the composition of the committees.

May 2021 – Besides reporting on the current business development, we discussed an overview of the development of the Food Service Distribution (FSD) business and with the global management of the FSD activities. We received information on the planned development of the METRO Campus in Düsseldorf. The development at the Campus is potentially not intended as a purely residential location, but rather as a lively neighbourhood development, for which an urban planning competition is being conducted in close coordination with the City of Düsseldorf. We passed a resolution on adapting the schedule of responsibilities for the Management Board as of May 2021. Furthermore, we made decisions on remuneration-related topics for the members of the Management Board, including an adjustment of the financial performance targets for the STI 2020/21. This was done in light of the fact that the sales and earnings development was significantly more impaired by the restrictions caused by the Covid-19 pandemic than initially assumed in the budget planning. As a result of this adjustment, we also decided to update the declaration of conformity of the Management Board and the Supervisory Board with the recommendations of the German Corporate Governance Code in accordance with § 161 of the German Stock Corporation Act (AktG). Next we received an update on the topic of leadership at METRO, which also included succession planning for the respective executive responsibilities.

June 2021 – The strategy process was first initiated by a survey addressed to the members of the Supervisory Board, which allowed us to assess the priorities of the issues important to us. Based on this, the strategy meeting was prepared through workshops of the shareholder and employee benches. In the meeting on 29 June 2021, the Management Board and the Supervisory Board then focused their discussion on the basic strategic direction. They also consulted on key topics of strategic development and identified important growth levers for METRO.

July 2021 – As part of reporting on the current business development, we received an update on the strategy process, focusing on the next steps to validate the growth levers, reinforce them with initiatives, and develop a roll-out programme. We made decisions on lease agreement extensions of 43 store locations in France and approved the acquisition of an Austrian wholesale company. The agreement concluded by METRO in this context at the beginning of September included, inter alia subject to merger control clearance in Austria, the acquisition of C&C Abholgroßmärkte GmbH (AGM) with 9 selected AGM stores and, in some cases, associated properties, the AGM head office as well as the associated employees. This transaction shall enforce the competence and positioning of METRO Austria in the hospitality wholesale sector. Furthermore, the Management Board informed us about the consideration of a possible market exit in Japan. As a result, we approved the disposal of the Japanese properties linked to a potential discontinuation of METRO Cash & Carry Japan K.K.’s business activities, thus paving the way for the Management Board to conduct a fundamental analysis of alternative options. Subsequently, the Management Board resolved, that as a result of the ongoing review of the national subsidiary portfolio, it intends to start the market exit process in Japan and terminate business operations in Japan with all 10 stores and the delivery business by the end of October 2021. The meeting was followed by a regulatory briefing with particular focus on the implications of the Financial Market Integrity Strengthening Act (FISG) on auditing and corporate governance. Building on this information, we decided as part of a principle decision that participation of members of the Management Board of METRO AG within the setting of the Supervisory Board meetings is also required for agenda items for which the auditor is called in as an expert. Following the meeting, there was an opportunity for the Supervisory Board members to participate in an internal training programme featuring a presentation by the CEO of MAKRO Poland, Dominik Branny, on insights into the country, the current business and the potential for the future.

September 2021 – The focus of this meeting was to continue the work on the strategy process as well as the approval of the budget planning for 2021/22 and subsequent years. We received information on the METRO own-brand portfolio. Andrea Euenheim provided information on HR initiatives. We passed resolutions on Management Board remuneration matters. We reviewed the company’s corporate governance by adopting resolutions on the confirmation or adjustment of the diversity concept for the Management Board and the Supervisory Board and on the declaration of conformity in accordance with § 161 of the German Stock Corporation Act (AktG). We also approved a potential full or partial disposal of the minority stake in METRO China held by METRO and had the possible options explained to us. Based on the recommendation of the Audit Committee, we awarded another contract to auditing firm KPMG, which included the audit of the dependent company report 2020/21. Moreover, we were informed about tax aspects relating to Supervisory Board remuneration.

Work in the committees

For the purpose of effectively performing its duties, the Supervisory Board has 4 permanent committees: the Presidential Committee, the Audit Committee, the Nomination Committee and the Mediation Committee pursuant to § 27 Section 3 of the German Co-determination Act (MitbestG). The committees prepare the consultations and resolutions in the Supervisory Board meetings. In addition, also decision-making responsibilities were transferred to the committees within the legally allowed parameters. The respective chairmen of the committees report to the Supervisory Board regularly and comprehensively with regard to the work in the committees. Guests such as managers from the responsible departments of METRO or the auditors were invited to the committee meetings to discuss specific topics.

Presidential Committee – The Presidential Committee is mainly concerned with the personnel and remuneration issues of the members of the Management Board and monitors compliance with legal regulations and the application of the German Corporate Governance Code. In addition, the Presidential Committee is responsible for urgent resolutions and issues that the Supervisory Board has delegated to it for resolution. The Presidential Committee held 5 meetings in financial year 2020/21; 2 meetings were convened as an extraordinary meeting. In February 2021, the Presidential Committee was expanded and since then has consisted of the following 6 members (as of 30 September 2021): Jürgen Steinemann (Chairman), Xaver Schiller (Vice Chairman), Thomas Dommel, Prof. Dr Edgar Ernst, Roman Šilha, Manuela Wetzko.

The subjects of discussion and resolutions of the Presidential Committee in financial year 2020/21 were issues relating to the remuneration and contractual matters of the members of the Management Board. In addition, the Presidential Committee dealt with the search for a successor to the position of Chairman of the Management Board, which was ultimately finalised with the resolution to appoint Dr Steffen Greubel. Further issues addressed by the Presidential Committee included corporate governance at METRO, especially the preparation of the declaration of conformity in accordance with § 161 of the German Stock Corporation Act (AktG). As regular topics of discussion in the committee, long-term succession planning and the continuous development of talent management were discussed.

Audit Committee – The Audit Committee is in particular responsible for supervising the company’s accounting, accounting processes, the effectiveness and development of the internal control systems, the risk management system, the internal audit system, the audit of the annual financial statements (in particular relating to the selection and independence of the auditor, the quality of the audit and any additional services provided by the auditor) as well as compliance. Details of the Audit Committee’s deliberations and resolutions can be found in the separate Report of the Audit Committee.

The Audit Committee consists of the following members (as of 30 September 2021): Prof. Dr Edgar Ernst (Chairman), Xaver Schiller (Vice Chairman), Marco Arcelli, Stefanie Blaser, Michael Heider and Dr Fredy Raas.

Nomination Committee – The Nomination Committee prepares for the election of shareholder representatives to the Supervisory Board and proposes suitable candidates to the Supervisory Board for recommendation to the Annual General Meeting. In financial year 2020/21, a total of 3 committee meetings were held, with 1 meeting convened as an extraordinary meeting, for the purpose of preparing election proposals to the Annual General Meeting for 2021 and 2022. The following members are part of the Nomination Committee (as of 30 September 2021): Jürgen Steinemann (Chairman), Gwyn Burr, Roman Šilha.

Mediation Committee – In financial year 2020/21, the Mediation Committee established in accordance with § 27 Section 3 of the German Co-determination Act (MitbestG) did not have to be convened. The Mediation Committee consists of the following members (as of 30 September 2021): Jürgen Steinemann (Chairman), Xaver Schiller (Vice Chairman), Thomas Dommel, Prof. Dr Edgar Ernst.

Takeover Committee – In connection with the voluntary takeover offer by EP Global Commerce GmbH, which was announced on 13 September 2020 and published on 1 October 2020, the Supervisory Board also established a Takeover Committee with equal representation. The task of the Takeover Committee was to continuously deal with the takeover process and prepare all requisite or expedient tasks and decisions of the Supervisory Board. During the reporting period, the Takeover Committee convened 4 times, primarily to prepare the review of the voluntary takeover offer and the reasoned statement pursuant to § 27 of the German Securities Acquisition and Takeover Act (WpÜG). The members of the Takeover Committee were Jürgen Steinemann (Chairman), Stefanie Blaser, Prof. Dr Edgar Ernst, Michael Heider, Xaver Schiller and Alexandra Soto.

Individual attendance at meetings

In light of the Covid-19 pandemic, the option of participating via telephone or video conference in Supervisory Board and committee meetings was used more often. However, as the Supervisory Board, we see great added value in face-to-face communication, especially since it stimulates discussion. Therefore, as soon as the public constraints to contain the pandemic allowed it again, we initially held hybrid meetings, followed by in-person meetings in July and September 2021. Attendance of members of the Supervisory Board in office in financial year 2020/21 at meetings is disclosed in the following. Only those meetings that took place during the respective membership of the Supervisory Board or committee are listed.

Corporate governance

The Management Board and the Supervisory Board of METRO AG attach high priority to the principles of good corporate governance. Against this background, the Management Board and the Supervisory Board base their actions on the recommendations of the German Corporate Governance Code and, in September 2021, issued their annual declaration of conformity with regard to the recommendations of the Government Commission on the German Corporate Governance Code pursuant to § 161 of the German Stock Corporation Act (AktG) and published the declaration of conformity on the website www.metroag.de/en in the section Company – Corporate Governance. Reporting on METRO’s corporate governance can be reviewed in the declaration on corporate management. This document has also been published on the website www.metroag.de/en in the section Company – Corporate Governance. During the reporting period, the 2019/20 declaration of conformity was also updated in May 2021.

Due to the ongoing Covid-19 pandemic, the training and development programme for the members of the Supervisory Board had to be significantly reduced. New members of the Supervisory Board had the option to be comprehensively introduced to the company’s business activities as part of a virtual onboarding programme.

The members of the Supervisory Board are required to disclose any conflicts of interest without delay. Member of the Supervisory Board Marco Arcelli did not participate in the deliberations in October and November 2020 or resolutions of the Supervisory Board of METRO AG in connection with the voluntary takeover offer of EP Global Commerce GmbH announced on 13 September 2020 and published on 1 October 2020, or in the associated flow of information. The background here is that Marco Arcelli is simultaneously holding the position as CEO of EP Global Commerce a.s., the parent company of EP Global Commerce GmbH, and thus a person acting jointly with the latter as defined in § 2 Section 5 of the German Securities Acquisition and Takeover Act (WpÜG).

No further conflicts of interest arose in financial year 2020/21.

Annual and consolidated financial statements, report on relationships with affiliated companies 2020/21

The auditor KPMG AG Wirtschaftsprüfungsgesellschaft has reviewed the annual financial statements prepared by the Management Board in accordance with the German Commercial Code (HGB) and the consolidated financial statements prepared by METRO AG based on the International Financial Reporting Standards (IFRS). It also reviewed the combined management report for METRO AG and the group for financial year 2020/21 and issued an unqualified audit certificate. The auditor also issued an unqualified certificate about the combined non-financial statement contained in the combined management report as a result of his audit to provide limited assurance. The auditor provided a written report on these audits.

In accordance with § 312 of the German Stock Corporation Act (AktG), the Management Board of METRO AG has prepared a report on the company’s relationships with affiliated companies for financial year 2020/21. The auditor has also audited this report, reported the result of the audit in writing and issued the following opinion:

‘Following our audit and review in accordance with professional standards, we confirm that

1. the factual disclosures in the report are correct,

2. the consideration paid by the company for the legal transactions listed in the report was not unreasonably high nor have disadvantages been offset,

3. there are no circumstances that would support a materially different assessment of the measures listed in the report than that of the Management Board.’

This report, the documents for the financial statements, including the combined non-financial statement, as well as the audit reports were discussed and reviewed in great detail during the meeting of the Audit Committee on 13 December 2021 and in the Supervisory Board meeting on 14 December 2021 in the presence of the auditor. The required documents were distributed to all members of the Audit Committee as well as the Supervisory Board in due time prior to these meetings. In both meetings, the auditor reported about the key findings of his audits and was at the Supervisory Board’s disposal to answer questions and provide additional information also in the absence of the Management Board.

The auditor also provided information on services rendered in addition to auditing services. No issues resulting in a disqualification due to bias arose.

Based on our own review of the annual financial statements, the consolidated financial statements and the combined management report, including the combined non-financial statement, as well as the report of the Management Board on relationships with affiliated companies for financial year 2020/21, we had no objections and the Supervisory Board approved the result of the audit. As recommended by the Audit Committee, we approved the annual financial statements and the consolidated financial statements submitted by the Management Board. The Annual Financial Statements of METRO AG are thus adopted. As a result, we have also determined that there are no objections to be raised against the declaration of the Management Board at the end of the report on relationships with affiliated companies 2020/21. Following a careful own review and consideration of the interests involved, we approved the Management Board’s proposal to the Annual General Meeting 2022 for the appropriation of the balance sheet profit.

Düsseldorf, 14. December 2021

The Supervisory Board

Jürgen Steinemann
Chairman of the Supervisory Board

• Information about the members of the Supervisory Board can be found on the website www.metroag.de/en in the section Company – Supervisory Board.