Report of the Supervisory Board

In financial year 2022/23, our focus remained on the implementation of the sCore corporate strategy, which was rolled out in the previous year. This paid off in the form of further growth. METRO was thus able to increase sales figures in all segments (except Russia) as well as all sales channels, thereby achieving total sales of €30.6 billion, which corresponds to sales growth of 8.8%¹. Adjusted EBITDA² was €1,174 million, approximately 12.8% below the previous year. The business environment was influenced by persisting high inflation which nevertheless was in continuous decline. The positive sales development was offset on the earnings side in particular by the effects of general inflation, the impact of the cyberattack, the expiration of post-transaction effects and declining development in Russia.

In this financial year, the main drivers of business performance were the delivery (FSD) and online business and the optimisation of our product range, with the consistent expansion of the volume-based ‘buy more, pay less’ tiered pricing model.

With the approval of the Supervisory Board, METRO acquired Johan i Hallen & Bergfalk (JHB) – an FSD business in Scandinavia – in May 2023 as part of aligning its portfolio with the sCore strategy. This move was a complement to the existing FSD portfolio and opened up access to one of Europe’s largest food service markets. Another portfolio adjustment realised by METRO, also with the approval of the Supervisory Board, was the sale of METRO India to Reliance Retail Ventures Ltd. Due to the accelerated transformation of the industry and the increasing competition, the business in India would not have been in line with the sCore growth strategy going forward.

By extending the contract of our CEO Dr Steffen Greubel prior to its expiration, we have made a statement for the long-term and continuous strategic direction of the company as a pure food wholesaler. Our former CFO Christian Baier, who resigned from the company by mutual agreement, will be succeeded by Mr Eric Riegger. His office term is scheduled to begin on 1 February 2024 and, thanks to his previous professional experience, he is well qualified to support METRO in the implementation of sCore.

The Supervisory Board would like to take this opportunity to thank our Management Board and all employees for their hard work. Our sCore objectives can only be achieved through the shared dedication to our goals and a passion for our business. Last but not least, we also wish to thank you, our shareholders, for accompanying us on our journey to becoming a multichannel wholesaler.

We are headed in the right direction!

Jürgen Steinemann

Chairman of the Supervisory Board

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

Advice and supervision in consultation with the Management Board

In financial year 2022/23, 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 has provided 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 or subsidiaries of METRO attended meetings to address particular agenda items.

As the Chairman of the Supervisory Board, I also worked especially closely with the Chief Executive Officer, Dr Steffen Greubel, but also the other members of the Management Board, outside of meetings and regularly exchanged information and ideas with regard to key issues and pending decisions. I was 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 7 meetings in financial year 2022/23. The average attendance rate at meetings of the Supervisory Board and its committees in financial year 2022/23 was 88%. An individualised overview of the participation of each member of the Supervisory Board in office in financial year 2022/23 is contained in the section ‘Meeting format and individual attendance at meetings’ of this report. Moreover, 1 resolution was 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 24 February 2023, the terms of office for shareholder representatives Marco Arcelli, Gwyn Burr, Prof. Dr Edgar Ernst, Dr Fredy Raas and Dr Liliana Solomon as members of the Supervisory Board ended, as well as those of all employee representatives. By election of the Annual General Meeting, Marco Arcelli, Gwyn Burr and Prof. Dr Edgar Ernst started another term of office. Dr Fredy Raas and Dr Liliana Solomon were not available for another office term. By appointment by the Annual General Meeting, they were succeeded by Jana Cejpková and Georg Vomhof as new shareholder representatives on the Supervisory Board. The new employee representatives were appointed by the assembly of delegates. Michael Heider, Udo Höfer, Xaver Schiller, Manfred Wirsch and Silke Zimmer were reappointed to the Supervisory Board as employee representatives; Sabine Gatz, Arlind Idrizi, Paul Loyo, Heidi Müllenberg and Klaus Pollmann were newly appointed. At the conclusion of Annual General Meeting 2023, Stefanie Blaser, Friedhelm Bongard, Thomas Dommel, Manuela Wetzko and Angelika Will resigned from the Supervisory Board of METRO AG.

In June 2023, we extended the employment contract of CEO Dr Steffen Greubel on the Management Board for another 5 years, thereby reappointing him as Chief Executive Officer of METRO AG until 30 April 2029. By best mutual agreement, the Supervisory Board reached an understanding with Christian Baier on his resignation from the company effective on 30 September 2023. We thank him for his intensive and successful work over the last 12 years.

Main topics of the Supervisory Board meetings and resolutions

In every meeting, the Supervisory Board generally receives a detailed status update on the current business developments in the group, in particular on financial reporting during the year. As part of this, we are informed about the progress of implementation of the sCore corporate strategy. Moreover, the Management Board regularly reports on changes in top management. In addition to these regular topics, the Supervisory Board dealt with the following topics in the past financial year: 

November 2022 – At this meeting, we were informed about the status of the cyberattack on METRO in October 2022 and the resulting measures and consequences for the group. We received an update on sustainability, discussed the annual report on governance functions in the group and determined the effectiveness of the internal control system, the risk management system and the internal audit system as outlined in § 107 Section 3 of the German Stock Corporation Act (AktG). We also discussed the fulfilment of the requirements to be made by the compliance function. We approved the sale of METRO Cash & Carry India to Reliance Retail Ventures Limited. Due to the accelerated transformation of the industry and the increasing level of competition, the Indian business would have been dropped form the sCore growth strategy. It was therefore the right time to seize the momentum and lead METRO India into the future at the side of a strong partner in this market environment. The sale was completed in May 2023. With regard to Management Board remuneration, we passed a resolution on the individual performance factors of the short-term incentive for financial year 2021/22 for the individual members of the Management Board as well as the amount of the variable remuneration components to be granted for financial year 2021/22. Furthermore, we passed resolutions on the declaration on corporate management and the 2021/22 report of the Supervisory Board.

December 2022 – At the beginning of the meeting, Jana Cejpková and Georg Vomhof – the 2 candidates recommended by the Nomination Committee for initial appointment to the Supervisory Board – introduced themselves. As part of the update on current business developments, one focal point was a report on the 2nd wave of the cyberattack and the countermeasures derived from it. Afterwards, the annual financial statements – which were completed on schedule in spite of the cyberattack – were reviewed and discussed. A resolution was passed on the acknowledgement or approval of the annual financial statements, the consolidated financial statements, the combined management report for METRO AG and the group, including the non-financial statement, the report of the Management Board on the company’s relationships with affiliated companies (dependency report) and the corresponding audit reports of the auditor. For the first time, the remuneration report under stock corporation law was created together by the Management Board and the Supervisory Board. It was presented for approval to the Annual General Meeting in February 2023. Furthermore, we passed resolutions on the proposed resolutions for the Annual General Meeting of METRO AG on 24 February 2023. As a precautionary measure, we also passed a resolution to authorise a law firm, in particular with regard to potential legal challenges and/or actions for nullity against resolutions of the Annual General Meeting.

February 2023 – In the meeting the day before the Annual General Meeting, the Supervisory Board received an additional update on the cybersecurity situation. In addition, the new human resources strategy ‘People & Culture Agenda’ was presented to us, which is aligned with the sCore corporate strategy. Subject to the election of the auditor by Annual General Meeting 2023, the Supervisory Board passed a resolution on the audit assignments of the auditor for financial year 2022/23.

Another meeting of the Supervisory Board in its new composition took place immediately following the Annual General Meeting. The Supervisory Board once again elected Xaver Schiller as the Vice Chairman of the Supervisory Board and passed a resolution on the composition of the committees. The members of the Audit Committee once again elected Prof. Dr Edgar Ernst as the Chairman and Xaver Schiller as the Vice Chairman. In addition, the shareholder representatives on the Supervisory Board passed a resolution on the assessment of the independence of its members. The Supervisory Board then passed a resolution on the issue of the tranche 2022/23 of the long-term incentive and approved changes to the schedule of responsibilities of the Management Board.

May 2023 – In a written procedure, the Supervisory Board approved the acquisition of 100% of shares in the Swedish company JOHBECO AB, a specialist in meat and fish delivery and the market leader in fresh premium proteins in Sweden. In conjunction with a training event of the Supervisory Board in April, the Management Board had explained the transaction to us which it would submit for approval. With this acquisition, METRO is expanding its FSD portfolio and entering the food services market in Sweden and Finland. This is expected to further accelerate the achievement of METRO’s sCore FSD sales ambitions.

June 2023 – The focus of the 2-day strategy meeting in Sofia was the confirmation of the sCore growth strategy, with a focus on the status of the transformation and the support from the Supervisory Board with regard to the short- and long-term financial effects. The management of METRO Bulgaria presented their transformation with a clear emphasis on Trader and HoReCa customers. We passed a resolution on the reappointment of Dr Steffen Greubel as a member of the Management Board and Chief Executive Officer, the cancellation of the appointment of Christian Baier and the resulting changes to the schedule of responsibilities of the Management Board. Furthermore, we received another update on the status of the cybersecurity situation and were informed about the current corporate projects, in particular with an update on the IT transformation project. In addition to receiving information about the annual review of the OTC derivatives and details about potential lease extensions of METRO Deutschland locations, we passed a resolution on the engagement of a consultant for the executive search for suitable candidates to succeed the CFO as well as the Chairman of the Audit Committee, who will be resigning next year.

August 2023 – National subsidiary management informed us on the course of business and the general situation in Russia. The Management Board then gave an update on its assessment of the options for the business there, which it reviews and evaluates on an ongoing basis. Furthermore, we reviewed the financial development of all investment projects in the field of delivery from recent years.

September 2023 – The scheduled topic of the meeting was the approval of the budget and medium-term planning. After determining the respective individual total target remuneration of the members of the Management Board for financial year 2023/24, we passed a resolution on the financial STI and LTI performance targets and discussed the strategic STI targets for financial year 2023/24. We then dealt with corporate governance topics: we passed a resolution on an adjustment of the diversity concepts for the Management Board and the Supervisory Board as well as a resulting change to the Code of Procedure of the Supervisory Board. In addition, we passed a resolution on the annual declaration of conformity pursuant to § 161 of the German Stock Corporation Act (AktG) and approved an update of the schedule of responsibilities of the Management Board. In conclusion, we discussed the results of the self-assessment of the Supervisory Board, which we carried out in August in accordance with the recommendation of the German Corporate Governance Code.

Work in the committees

For the purpose of effectively performing its duties, the Supervisory Board relies on the work of 4 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 with regard to the work in the committees. Guests such as managers from the responsible departments and subsidiaries 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 6 meetings in financial year 2022/23; 2 of the meetings were convened as an extraordinary meeting.

The subjects of discussion and resolutions of the Presidential Committee in financial year 2022/23 were issues relating to the remuneration and contractual matters of the members of the Management Board as well as the preparation of the remuneration report. In addition, the Presidential Committee dealt with the contract extension of Dr Steffen Greubel as Chief Executive Officer, the cancellation by mutual agreement of the appointment of Christian Baier and the search for a successor for the position of Chief Financial Officer. 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). Long-term succession planning was one of the regular topics of discussion in the committee.

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 audit strategy and planning, the quality of the audit and any additional services provided by the auditor) and the financing strategy as well as compliance. In this financial year, there was also a focus on dealing with the impact of the cyberattack and the resulting consequences. In financial year 2022/23, the Audit Committee convened 6 meetings. Details of the Audit Committee’s deliberations and resolutions can be found in the separate report of the Audit Committee.

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 2022/23, a total of 3 committee meetings were held for the purpose of preparing election proposals to the Annual General Meeting for 2023 and 2024.

Mediation Committee – In financial year 2022/23, the Mediation Committee established in accordance with § 27 Section 3 of the German Co-determination Act (MitbestG) did not have to be convened.

Meeting format and individual attendance at meetings

In financial year 2022/23, all meetings of the Supervisory Board, the Presidential Committee and the Audit Committee were convened as face-to-face meetings. We also generally offer the option of virtual participation via telephone or video conference if physical participation is not possible for any of the members. Of the 3 Nomination Committee meetings in financial year 2022/23, 1 was held as a virtual meeting. Attendance of members of the Supervisory Board in office in financial year 2022/23 at meetings is disclosed in the following. Only those meetings that took place during the respective membership on the Supervisory Board or committee are listed.

Corporate governance

In September 2023, the Management Board and the Supervisory Board of METRO AG 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). The declaration of conformity is permanently published on the website www.metroag.de/en in the section About us – Corporate Governance. Further information on METRO’s corporate governance can be found in the declaration on corporate management, which has also been published on the website www.metroag.de/en in the section About us – Corporate Governance.

In financial year 2022/23, 3 training events were held for the entire Supervisory Board: in December 2022 on the topic of food service distribution, in April 2023 on the sCore corporate strategy with various theoretical and practical focus topics and in August 2023 on the digital tools of DISH Digital Solutions (formerly Hospitality Digital). In March 2023, 1 training event was held following the election of the employee representatives for the employee representatives on the Supervisory Board on questions of corporate governance as well as stock cooperation law, co-determination law and insider law. In addition, there were individual onboarding events for newly appointed members of the Supervisory Board, both with the Chairman of the Supervisory Board as well as with members of the Management Board and managers from departments relevant for the Supervisory Board.

The members of the Supervisory Board are required to disclose any conflicts of interest without delay. No such conflicts of interest arose in financial year 2022/23.

Annual and consolidated financial statements, report on relationships with affiliated companies 2022/23

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 2022/23 as well as the remuneration report prepared by the Management Board and the Supervisory Board pursuant to § 162 of the German Stock Corporation Act (AktG) 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 relations to affiliated companies for financial year 2022/23. The auditor has also audited this report, reported the result of the audit in writing and issued the following opinion:

‘Based on our statutory audit and assessment, we confirm that

1. the factual statements in the report are correct,
2. the Company´s consideration with respect to the legal transactions listed in the report was not inappropriately high.’

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 11 December 2023 and in the Supervisory Board meeting on 12 December 2023 in the presence of the auditor. The remuneration report was reviewed in a separate Presidential Committee meeting on 11 December 2023. The required documents were distributed to all members of the Audit Committee and the Presidential Committee as well as the Supervisory Board in due time prior to these meetings. In all mentioned 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, even 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 2022/23, 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. After our own careful review and in consideration of the interests to be taken into account, we agree to the Management Board’s proposal to Annual General Meeting 2024 on the appropriation of the balance sheet profit. 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 2022/23.

Düsseldorf, 12 December 2023

The Supervisory Board

Jürgen Steinemann
Chairman