Linde AG, which has its registered office in Munich, is governed by the provisions of the German Stock Corporation Law (AktG) and the German Codetermination Law (MitbestG), capital market regulations and the rules set out in its articles of association. The Executive Board and Supervisory Board are responsible for the management and supervision functions allocated to them. They must act in the interests of the shareholders and for the benefit of the company.

Executive Board

The Executive Board of Linde AG manages the company and conducts its business. The current four-member Executive Board reflects the global nature of The Linde Group in its international composition. The Executive Board must consider the interests of the company and seek to achieve a sustainable increase in corporate value. It decides on the strategic direction of the company, obtains the Supervisory Board’s approval of this, and ensures that the overall strategy is implemented. It is also responsible for annual and multi-year corporate budgets and for the preparation of the quarterly, half-yearly, annual and Group financial statements. It also ensures that appropriate risk management and risk control systems are in place and provides regular up-to-date detailed reports to the Supervisory Board on all the strategic issues affecting the Group, medium-term corporate plans, business trends, the risk situation, risk management and the compliance of Group companies with legal regulations and Group guidelines. Actions and transactions of the Executive Board which are of fundamental importance require the approval of the Supervisory Board. These include, in particular, the annual capital expenditure programme, major acquisitions, divestments and financial measures. While in office, members of the Executive Board are bound by a detailed restraint clause. Any conflicts of interest must be disclosed immediately to the Supervisory Board, as well as to their fellow board members. The procedural rules of the Executive Board govern the work it performs, the departmental responsibilities of each member of the Executive Board, the issues which must be dealt with by the full Executive Board and the majority required for resolutions to be passed by the Executive Board.

Supervisory Board

Equal numbers of shareholder representatives and employee representatives sit on the Supervisory Board of Linde AG, which comprises, in accordance with the company’s articles of association, that number of members which is specified as the minimum number in the relevant regulations. Currently, the minimum number of Supervisory Board members specified is twelve. The appointment of the members of the Supervisory Board is also governed by the relevant legal regulations. The current term of office of the members of the Supervisory Board ends with the completion of the Annual General Meeting in 2013. No former members of the Executive Board are currently members of the Supervisory Board.

The Supervisory Board appoints the Executive Board, advises it on the running of the company and monitors its executive management.

The procedural rules of the Supervisory Board include provisions regarding its independence. Some of the members of the Supervisory Board have in the past financial year been and are currently on the Executive Boards of companies with which Linde has business relationships. Transactions with these companies take place under the same conditions as for non-related third parties. These transactions do not affect the independence of the Supervisory Board members concerned. The Supervisory Board has a sufficient number of members with an adequate level of independence.

The members of the Supervisory Board disclose any conflicts of interest arising as a result of consultancy work performed for other companies or memberships of the executive bodies of other companies to the Supervisory Board. Any significant conflicts of interest arising which are not temporary will lead to the removal of the member from the Supervisory Board. The Supervisory Board informs shareholders in its report at the Annual General Meeting of any conflicts of interest which have arisen and the measures which have been taken as a result.

No conflicts of interest on the Executive Board or the Supervisory Board

During the reporting period, there were no consultancy contracts or other service or company agreements between members of the Supervisory Board and the company. No conflicts of interest arose for the members of the Executive Board or Supervisory Board. Where such conflicts of interest do occur, they must be disclosed immediately to the Supervisory Board.

Supervisory Board committees

The Supervisory Board has four committees:

The Standing Committee, which comprises three shareholder representatives and two employee representatives, advises the Supervisory Board in particular on the appointment and removal of members of the Executive Board and on decisions regarding the remuneration system for the Executive Board including the main contractual elements. It makes decisions based on resolutions passed at meetings of the full Supervisory Board about employment contracts and pension and other arrangements with members of the Executive Board. It also provides advice about long-term succession planning for the Executive Board and reviews the effectiveness of the work of the full Supervisory Board.

The Audit Committee also comprises three shareholder representatives and two employee representatives. It does the groundwork for the decisions of the Supervisory Board regarding the adoption of the annual financial statements and the approval of the Group financial statements and makes arrangements with the auditors. In addition, it deals with risk management and compliance issues. Finally, it discusses the interim reports and quarterly and half-yearly financial statements with the Executive Board prior to their publication. The Chairman of the audit committee, Dr Clemens Börsig, has expert knowledge of the application of accounting principles and internal control systems and many years of experience in the field.

The Nomination Committee comprises the Chairman of the Supervisory Board, the Second Deputy Chairman of the Supervisory Board and one other shareholder representative. It makes a recommendation to the shareholder representatives on the Supervisory Board on proposed candidates for the election of shareholder representatives at the Annual General Meeting.

The Mediation Committee, formed under the provisions of the German Codetermination Law (MitbestG), comprises the Chairman of the Supervisory Board, the Deputy Chairman of the Supervisory Board, one shareholder representative and one employee representative. It makes suggestions to the Supervisory Board regarding the appointment of members of the Executive Board, if the required majority of two-thirds of the votes of the members of the Supervisory Board is not obtained in the first ballot.

Information about the activities of the Supervisory Board and its committees and about the work it has done with the Executive Board in the 2008 financial year is given in the Report of the Supervisory Board.

Consequential loss and liability insurance

The company has taken out consequential loss and liability insurance (D&O insurance) for the members of the Executive Board and Supervisory Board with an appropriate retention.

Directors’ dealings

Linde AG publishes without delay those transactions required to be notified under § 15a of the German Securities Trading Law (WpHG) which have been effected by the persons named therein, in particular officers of the company and related parties, in shares of the company or related financial instruments, in accordance with the provisions of the law. The notifications also appear on the Linde website.

In the course of the year, members of the Executive Board informed BaFin (the German Federal Financial Supervisory Authority) about one notifiable purchase transaction and three notifiable sale transactions involving between 2,500 and 30,000 Linde shares. The sale transactions were in connection with the exercise of share options under the Linde Management Incentive Programme 2002. The price per share of the notifiable transactions was between EUR 83.00 and EUR 91.50 and the size of the individual transactions between EUR 207,500 and EUR 2,745,060. In the case of sales of shares which members of the Executive Board subscribed for by exercising share options under the Linde Management Incentive Programme, the subscription rights were included at their value on the grant date in the disclosure of the remuneration of the Executive Board in the relevant financial year. Members of the Supervisory Board did not enter into any notifiable transactions in the 2008 financial year.

Interests in share capital

The total holdings of all the members of the Executive and Supervisory Boards in Linde AG shares or related financial instruments during the financial year did not exceed 1 percent of the issued share capital. Therefore, there were no interests required to be disclosed under section 6.6 of the German Corporate Governance Code.

Remuneration of the Executive Board and Supervisory Board

The remuneration report, which also includes information about the share option schemes, forms part of the Group management report.