Consolidated Corporate Governance Report 2016

CONSOLIDATED CORPORATE GOVERNANCE REPORT

• COMMITMENT TO THE AUSTRIAN CODE OF CORPORATE GOVERNANCE

• REMUNERATION OF MANAGEMENT BOARD RISES ON HIGHER VARIABLE INCOME

• REGULAR EVALUATION OF MANAGEMENT AND SUPERVISORY BOARDS

• CONTINUOUS OPTIMISATION OF LEGAL AND ETHICAL STANDARDS

General principles

CONSOLIDATED REPORT

The present report is a consolidated corporate covers the corporate governance report as governance report as defined by Section 267a defined by Section 243b UGB. UGB (Austrian Commercial Code) which also

COMMITMENT TO THE AUSTRIAN CODE OF CORPORATE GOVERNANCE

The consolidated corporate governance report the Austrian system of corporate governance explains the rules, structures and processes im- and of Austrian business life. plemented by STRABAG SE in the interest of a well-functioning corporate governance system. The Austrian Code of Corporate Governance We are fully and without exception committed to defines three categories of rules: L-rules refer to the Austrian Code of Corporate Governance legal requirements with mandatory compliance (ÖCGK) and its aims and we see compliance on the part of publicly listed companies in Aus- with all the rules contained within the Code as a tria. Deviation from C-rules (comply or explain) top priority. This commitment represents a must be explained and the reasons stated. self-obligation on the part of STRABAG SE with R-rules are recommendations requiring neither the aim to boost shareholder confidence and to disclosure nor explanation. The version of the constantly optimise our high internal legal, be- Code that was valid for the 2016 financial year havioural and ethical standards. We are further is the January 2015 version – it is available obligated to fulfil the standards of the Code due for download from the website of the Austrian to the listing of our shares in the Prime Market Working Group for Corporate Governance segment of the Vienna Stock Exchange. (www.corporate-governance.at) and from STRABAG SE (www.strabag.com > Investor The Austrian Code of Corporate Governance is Relations > Corporate Governance > Formal a set of rules for good corporate governance Obligation and Evaluation). and control systems on the Austrian capital market. It was introduced in 2002 in line with The Management Board and the Super- international standards and has been revised visory Board of STRABAG SE declare that several times since. The aim of the Code is to STRABAG SE has complied with all L-rules of establish a responsible system of management the Austrian Code of Corporate Governance as and supervision of companies that is geared to- well as all C-rules with the exception of those ward creating sustainable, long-term value while rules stated and explained below. The company ensuring a high level of transparency for all furthermore endeavours to abide not only by the stakeholders. Investors and issuers therefore minimum requirements but also by all of the recognise the Code as an indispensable part of Code’s R-rules without exception. mitment, expertiseandexperienceoftherespec- teria inawaythatistransparent andeasilycom Management Board composed offivemembers Boards prehensible. Theremuneration oftheManagement the transparency oftheshareholder structure. the companyanditsshareholders andpromotes improves thecontactandcommunicationbetween tive SupervisoryBoard member. Italsosignificantly which furtherbenefitsespeciallyfr sents asustainableadvantageforSTRABAGSE, inter holders fortheSupervisoryBoard. Thisisinthe availability ofknow-howfrom importantstake mor istered shares bindsignificantshareholder groups member oftheSupervisoryBoard each.Thereg shares withanassociatedrighttonominateone STRABAG SEincludetwospecialregistered the AnnualGeneralMeeting,shares of C-Rule 2:Onthebasisofaresolution passedby members bemadeaccording tomeasurablecri that theremuneration ofthe ManagementBoard forSTRABAGSE C-Rule 27:Itisakeyconcern MANAGEMENT BOARD NON-COMPLIANCE WITH THE AUSTRIAN CODE OF CORPORATE GOVERNANCE Peter Krammer, ThomasBirtel,HannesTruntschnig, ChristianHarder, SiegfriedWanker (from lefttoright) e strongly tothecompanyandguarantee est of good corporate governance andrepreest ofgoodcorporategovernance om thecom

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the individualManagementBoar sponsibilities andthepersonalperformanceof Management Boar culate theremuneration of themembersof was madenottousenon-financialcriteriacal STRABAG SESupervisoryBoard, thedecision debate intheExecutiveCommitteeof ease ofunderstanding.Asaresult ofthorough would betothedetrimentoftransparency and non-financial criteriaforeachbusinesssegment the otherhand,adif cess andeconomicsituationofthecompany. On don’t say very much about the sustainable suc segments. Very generalnon-financialcriteria criteria thatwouldbeapplicableequallytoall ble, however, tomeaningfullydefinenon-financial not exceedafixedmaximum.Itisnearlyimpossi formance criteriaifthesecanbemeasured. Itmay considers sustainable, long-term, multi-year per The variablecomponentoftheremuneration also size andtheeconomicsituationofcompany. achievement ofthecorporategoalsaswell Board isbasedonthescopeofwork,re d. ferentiated definitionof d member, the - - - - -

CORPORATE GOVERNANCE REPORT 3

Supervisory board mandates or similar functions in national or End of current foreign companies not included Year of First period of in the consolidated financial Management and supervisory tasks at Name birth Position held Responsible for appointment office statements important4) subsidiaries Dr. Thomas 1954 CEO Central Staff 1 January 31 December Deutsche Bank AG, Germany Bau Holding Beteiligungs AG, Austria Birtel Divisions and 2006 (Member 2018 (Member of the Advisory Board) (Chairman of the Supervisory Board) Central Divisions of the Zentrale Technik, Management HDI-Global SE, Germany Ed. Züblin AG, Germany (Chairman BMTI and TPA Board) (Member of the Advisory Board) of the Supervisory Board) Group Division 3L 15 June 2013 VHV Allgemeine Versicherung STRABAG AG, Germany (Chairman Russia (CEO) AG, Germany (Member of the of the Supervisory Board) Supervisory Board) STRABAG AG, Austria (Chairman VHV Vereinigte Hannoversche of the Supervisory Board) Versicherung a.G., Germany STRABAG Sp. z o.o., Poland (Chairman of (Member of the Supervisory Board) the Supervisory Board) VHV Holding AG, Germany (Member of the Supervisory Board) Mag. 1968 CFO Central Division 1 January 31 December Syrena Immobilien Holding AG, AKA Alföld Koncessziós Autópálya Christian BRVZ 2013 2018 Austria Zártkörüen Müködö Részvény-társaság, Harder Hungary (Member of the Supervisory Board) Bau Holding Beteiligungs AG, Austria (Member of the Supervisory Board) Ilbau Liegenschaftsverwaltung AG, Germany (Chairman of the Super- visory Board) STRABAG AG, Austria (Vice Chair- man of the Supervisory Board) STRABAG Property & Facility Services GmbH, Germany (Member of the Supervisory Board) Dipl.-Ing. 1966 Member Segment 1 January 31 December None Bau Holding Beteiligungs AG, Austria Dr. Peter of the North + West1) 2010 2018 (Member of the Supervisory Board) Krammer Management Ed. Züblin AG, Germany Board (Member of the Supervisory Board) STRABAG AG, Germany (Member of the Supervisory Board) STRABAG AG, Austria (Member of the Supervisory Board) STRABAG Sp. z o.o., Poland (Member of the Supervisory Board) Mag. Hannes 1956 Member Segment 1 April 1995 31 December Raiffeisen evolution project AKA Alföld Koncessziós Autópálya Truntschnig of the International + 2018 development GmbH, Austria5) (Vice Zártkörüen Müködö Részvény- Management Special Divisions2) Chairman of the Advisory Board társaság, Hungary (Member of the Board until 31 March 2016) Supervisory Board) Syrena Immobilien Holding AG, Bau Holding Beteiligungs AG, Austria Austria (Vice Chairman of the (Member of the Management Board) Supervisory Board) Ilbau Liegenschaftsverwaltung AG, Germany (Vice Chairman of the Supervisory Board) STRABAG AG, Austria (Member of the Supervisory Board) STRABAG Property & Facility Services GmbH, Germany (Chairman of the Supervisory Board) STRABAG Sp. z o.o., Poland (Member of the Supervisory Board Dipl.-Ing. 1968 Member Segment 1 January 31 December None Bau Holding Beteiligungs AG, Austria Siegfried of the South + East3) 2011 2018 (Member of the Management Board) Wanker Management (exept Division Ilbau Liegenschaftsverwaltung AG, Board 3L Russia) Germany (Member of the Super- visory Board) STRABAG AG, Austria (Member of the Supervisory Board) STRABAG Property & Facility Services GmbH, Deutschland (CSTRABAG a.s., Czech Republic (Member of the Supervisory Board)

Dr. Thomas Birtel

Thomas Birtel graduated with a doctorate Group. He joined the STRABAG Group in 1996 degree in economics from Ruhr-University as a member of the Management Board of Bochum in 1982. He began his career in 1983 at STRABAG Hoch- & Ingenieurbau AG, was the former German trading and plant construc- appointed to the Management Board of tion group Klöckner & Co, where he advanced STRABAG AG, Cologne, in 2002 and to the to head of accounting for Klöckner Industrie- Management Board of STRABAG SE in 2006. Anlagen GmbH. In 1989, he moved on to a Thomas Birtel has held the position of CEO of management position at Sweden’s Frigoscandia STRABAG SE since 15 June 2013.

1) North + West: Germany, Poland, Benelux, Scandinavia, Ground Engineering, Waterway Construction 2) International + Special Divisions: Tunnelling, Construction Materials, Services, Real Estate Development, Infrastructure Development, Direct Export 3) South + East: Austria, Switzerland, Hungary, Czech Republic, Slovakia, Adriatic, Rest of Europe, Environmental Technology 4) € 10 million minimum average consolidated output volume over past two years 5) Company fully consolidated after share purchase in December 2016. Board Board andSupervisory between Management close cooperation Open exchangeand leadership experience through various commer STRABAG Group) where heacquired profound Truntschnig in 1981joinedILBAUAG(today’s tion at Karl Franzens University in Graz,Hannes After completingstudiesinbusinessadministra- Mag. HannesTruntschnig Group in2005.Asamember oftheManage- vice providers before rejoining theSTRABAG managing director atseveral engineeringser tween 2001and2004,heheldthepositionof STRABAG Group assite manager in1994.Be- Graz UniversityofTechnology before joiningthe Siegfried Wanker studiedcivilengineeringat Dipl.-Ing. SiegfriedWanker Dipl.-Ing. Dr. PeterKrammer particular, closely togetherwiththeSupervisory Board. In Management Board ofSTRABAG SE works principles. InlinewiththerulesofCode, sion-making chainsare amongthemainguiding stant exchangeofexperienceandshortdeci- STRABAG SE.Collegiality, openness,acon- legal, behaviouralandethicalstandards of and tocontinuallyoptimisethehighinternal the AustrianCodeofCorporateGovernance ligation and task to comply with all the rules of the SupervisoryBoard –seesitasapriorityob- The ManagementBoard ofSTRABAGSE–like Working methodoftheManagementBoard: Openexchangeinmeetingsatleasteverytwoweeks cial managementpositionsatanumberof befor bau AG,STRABAGandSwietelskyBauGesmbH his Civil EngineeringatTUWienin1995.Hegained gree inengineeringsciencesfrom theFacultyof Peter Krammergraduatedwithadoctoratede head of financial accountingand, finally, to 1994. Headvancedtodirector ofaccounting,to through itspredecessor BauHoldingGroup in genfurt before joiningtheSTRABAGGroup business administrationattheUniversityofKla- Christian Harder completedadegree inapplied Mag. ChristianHarder first professional experience at Porr Techno e returning totheAustrianSTRABAGAG

in in - - - -

ment Board ofthegroup since1January2010. Krammer hasbeenamemberoftheManage- mental technologyfortheentire group. Peter Europeengineering inEastern andofenviron- was incharge ofbuildingconstruction and civil pointed authorisedsignatoryforBauHolding different group companies.In1992,hewasap- STRABAG SEeffective on1January2013. director ofBRVZ. HewasappointedCFOof From 2008,heheldthepositionofmanaging Verwaltungszentrum Gesellschaftm.b.H.(BRVZ). Central Division director of Bau-, Rechen- und agement Board since1January 2011. has beenamemberoftheSTRABAGSEMan- structure project development.SiegfriedWanker development andservices,finallyforinfra- ing constructionbusiness,thenforcorporate was initiallyincharge build- oftheinternational ment Board ofthe Austrian STRABAG AG he STRABAG SEsince1April1995. been a member of the Management Board of Aktiengesellschaft. HannesTruntschnig has 2005. AsamemberoftheManagement • • •

rences. formed immediatelyofanyimportant occur tions, particularly acquisitions and disposals; tions, particularlyacquisitions anddisposals; management and important business transac- strategy, the development of the business, risk Chairman oftheSupervisoryBoard concerning ions takesplacebetweentheCEOand the ChairmanofSupervisory Boar a r ny andtheimportantgroup entities; situation andriskmanagementinthecompa- of thecompany’s business,includingtherisk relevant thedevelopment mattersconcerning sively informstheSupervisoryBoard astoall the ManagementBoar egular exchangeofinformationandopin- d regularly andexten- Board, he d isin- - 4

CORPORATE GOVERNANCE REPORT 5

The Management Board of STRABAG SE and Coordination within the Management Board its individual members conduct their business in occurs during regular meetings held approxi- accordance with the prevailing laws and legisla- mately every two weeks as well as in the form of tion, the Articles of Association, and the Man- the daily informal exchange of information. agement Board’s Rules of Procedure as ap- Matters discussed at the Management Board proved by the Supervisory Board. The Rules of meetings include the current operations and the Procedure obligate the Management Board and long-term company strategy. Also coordinated its individual members to provide extensive in- are any current or outstanding management formation and reporting to the Supervisory Board. measures to be implemented by the relevant The Rules of Procedure also define an extensive Management Board members. catalogue of measures and legal transactions requiring approval by the Supervisory Board.

Other supervisory board mandates or Independent Year of First End of current similar functions in national or foreign pursuant to Name birth Citizen of Position held appointment period of office listed companies Rule 53 ÖCGK

Shareholder representatives

Dr. Alfred 1960 Austria Chairman of 18 June ends with 2020 Gabriel Resources Ltd., Canada (Member Yes Gusenbauer the Supervisory 2010 Annual General of the Board of Directors) Board Meeting RHI AG, Austria (Member of the Supervisory Board)

Mag. Erwin 1956 Austria Vice Chairman of 10 indefinite as of AGRANA Beteiligungs-AG, Austria Yes Hameseder the Supervisory September 17 August 2007 (Chairman of the Supervisory Board) Board 1998 Flughafen Wien AG, Austria (1st Vice Chairman of the Supervisory Board )

Raiffeisen Bank International AG, Austria (1st Vice Chairman of the Supervisory Board )

Südzucker AG, Germany (2nd Vice Chairman of the Supervisory Board)

UNIQA Insurance Group AG, Austria (2nd Vice Chairman of the Supervisory Board)

Mag. Hannes 1959 Austria Member of the 14 June ends with 2020 None Yes Bogner Supervisory 2013 Annual General Board Meeting

Mag. Kerstin 1974 Austria Member of the 18 June ends with 2020 Binder+Co AG (Member of the Yes Gelbmann Supervisory 2010 Annual General Supervisory Board since 13 April 2016) Board Meeting SEMPER CONSTANTIA PRIVATBANK AG, Austria

Andrei 1979 Russia Member of the 21 April 2009 – None Yes Elinson Supervisory Board (until 13 January 2016)

Dr. Gulzhan 1966 Russia Member of the 17 August ended on 6 None Yes Moldazhanova Supervisory 2007 to February 2017 Board (since 13 20 April 2009; January 2016) rejoined on 13 January 2016

William R. 1961 USA Member of the 12 June ends with 2020 None Yes Spiegelberger Supervisory 2015 Annual General Board Meeting Kreis Wolfgang Hinterschuster Georg P. Gyulainé Magdolna Cerveny Miroslav Batke Andreas Dipl.-Ing. Delegated bytheworkscouncil Name

97GrayMemberofthe Germany 1957 Memberofthe Hungary 1962 Czech Memberofthe 1959 Germany 1962 98AsraMemberofthe Austria 1968 birth Year of Republic Citizen of Chairman oftheSupervisoryBoard Dr. Alfred Gusenbauer Shareholder representatives Supervisory Board composed ofelevenmembers Spanish ChamberofCommerce. AffairsInstitute forInternational and the Austrian- dent oftheDr. KarlRennerInstitute,theAustrian lumbia University, Alfred GusenbauerisPresi- current activitiesatBrown UniversityandCo- Council from 2007to2008.Inadditionhis public of Austria and member of the European tria, servingasFederalChancelloroftheRe- President oftheSocialDemocraticPartyAus- From 2000 to 2008, Alfred Gusenbauer was ate, twoyearslateramemberofparliament. 1991, hebecameamemberoftheAustriansen- of Vienna, completing his doctorate in1987.In political scienceandeconomyattheUniversity Alfred Gusenbauerstudiedlaw, philosophy, SUPERVISORY BOARD Board Supervisory Board Supervisory Board Supervisory Board Supervisory Member ofthe Board Supervisory Position held 2009 1 October 2009 1 October 2009 1 October 2009 1 October 2014 13 October appointment appointment First indefinite indefinite indefinite indefinite indefinite indefinite indefinite period ofoffice End ofcurrent

the SupervisoryBoard) STRABAG AG,Germany(Memberof None listed companies listed companies similar functionsinnationalorforeign Other supervisoryboard mandatesor None None None WIEN AG)from 2001to2012.From 2007to RAIFFEISENLANDESBANK NIEDERÖSTERREICH- REICH-WIEN reg.Gen.m.b.H (aspin-off eral ofRAIFFEISEN-HOLDING NIEDERÖSTER- Gen.m.b.H. from 1994 to 2001 and director-gen- LANDESBANK NIEDERÖSTERREICH WIENreg. ment. Hewasmanagingdirector ofRAIFFEISEN- management, from 1991asheadofthedepart- to 1994,hewasresponsible forinvestment ÖSTERREICH-WIEN reg.Gen.m.b.H. From 1988 ment ofRAIFFEISENLANDESBANKNIEDER- dier in2006.In1987,hejoinedthelegaldepart- the directorship servicesin2002andofbriga- army, where heachievedtherankofcolonelin 1987, heservedasanofficerintheAustrian gree from theUniversityofVienna. From 1975 to Erwin Hameseder received a master of lawde- Vice ChairmanoftheSupervisory Board Mag. ErwinHameseder 53 ÖCGK 53 ÖCGK pursuant toRule Independent Yes Yes Yes Yes Yes from 6

CORPORATE GOVERNANCE REPORT 7

2012, Erwin Hameseder also assumed the posi- Mag. Kerstin Gelbmann tion of chairman of the Management Board of RAIFFEISENLANDESBANK NIEDERÖSTERREICH- WIEN AG. Since 4 May 2012, he has been chairman of RAIFFEISEN-HOLDING NIEDERÖSTER- REICH WIEN reg.Gen.m.b.H. Erwin Hameseder has been a member of the Supervisory Board since 1998. In 2007, he was delegated to the Supervisory Board of STRABAG SE for an indefinite period of time by the authorised holder of registered share number 1. Annex 1 of the 2015 Austrian Code of Corporate Governance allows periods of office of more than 15 years for Super- visory Board members who are shareholders with a direct investment in the company or who represent the interests of such a shareholder. Kerstin Gelbmann studied trade and commerce in Vienna. After graduating, she began her ca- Mag. Hannes Bogner reer at Auditor Wirtschaftsprüfungs- und Steuer- beratungsgesellschaft mbH. Kerstin Gelbmann has worked for E.F. Grossnigg Finanzberatung und Treuhandelsgesellschaft m.b.H. since 2002, most recently as managing director, and for grosso holding Gesellschaft mbH since 2007. In January 2010, she assumed the additional position of managing director at Austro Holding GmbH.

Dr. Gulzhan Moldazhanova (from 13 January 2016 to 6 February 2017)

Hannes Bogner studied business administration at the University of Innsbruck and qualified as a tax advisor in 1988 and as a statutory auditor in 1993. He worked at THS Treuhand Salzburg Wirtschaftsprüfungsgesellschaft from 1984 to 1988 and at Price Waterhouse from 1988 to 1994. From 1994 to 2016, he worked for UNIQA and its predecessor companie. From 1998 to 1999, he served as deputy member of the Man- agement Board of Bundesländer-Versicherung AG and Austria-Collegialität. In 1999, he was Gulzhan Moldazhanova graduated from Kazakh appointed to the Management Board of UNIQA State University with an honours degree in Versicherungen AG as Chief Financial Officer. physics in 1989. She received a doctorate degree He was CFO at UNIQA Insurance Group AG from Moscow State University in 1994 and sub- from 2011 to 2014 and held the function of Chief sequently graduated from the Russian State Fi- Investment Officer (CIO) from 2015 to 2016. nance Academy. She also holds an EMBA (Exec- utive Master of Business Administration) from the Russian Academy of National Economy and the University of Antwerp, Belgium. Her professional experience includes various positions in the fields of strategy, finance and management at the Russian companies Siberian Aluminium, Basic Element and Rusal. Since July 2012, she has been CEO of Company Bazovy Element LLC. In January 2016, she was again appointed to the Su- pervisory Board of STRABAG SE for an indefinite period of time by the authorised holder of registered share number 2, after having already been a member from 17 August 2007 until 20 April 2009. Government ofthe RussianFederationwitha Government son graduated from the Finance Academy of the a partneratDeloitte&Touche CIS.Andrei Elin- standards. Before joiningBasic Element,hewas and implementationofcorporate governance control,ternal responsible forthedevelopment William R.Spiegelberger 2017. ShewassucceededbyThomasBull. ment’s of STRABAGSE.Previously, hewasBasic Ele until his departure from the Supervisory Board glomerate Basic Elementfrom December2009 Andrei ElinsonwasDeputyCEOofRussiancon- (until 13January2016) Andrei Elinson University). sory CounciloftheHarrimanInstitute(Columbia M.Phil, J.D.) and member of theNational Advi- Columbia University in New York (B.A., M.A., & McCloyLLP. Spiegelberger isagraduateof White & Case LLP and Milbank, Tweed, Hadley lawfirms and Moscowfortheinternational 2007, he worked as a lawyer in New York, Paris monwealth ofIndependentStates.From 1994 to legal risksoftheRUSALGroup outsidetheCom - March 2007, where he is responsible for all major Global ManagementB.V. inMoscowsince PracticeDepartmentatRusal the International William R.Spiegelberger hasbeenDirector of Gulzhan Board of director andin- ofcorporategovernance Moldazhanova lefttheSupervisory STRABAG SEeffective 6February -

Dipl.-Ing. Andreas Batke Delegated bytheworkscouncil tration from theUniversityofDresden. Group. HeholdsaMaster ofBusinessAdminis- Supervisory Board ofengineering companyNGI 2014, ThomasBullhasbeenamemberofthe Construction Projects atOAOSberbank. Since he wasDirector oftheCentral Departmentfor Enel Russia,amongothers.From 2013to2014, management positionsatHochtief,E.ONand University inRussia1987,heheldvarious States. Aftergraduatingfrom Voronezh State Europe,sia, CentralandEastern andtheUnited and corporateinvestmentmanagementinRus- national project management,M&Aprojects man oftheSTRABAGSEworkscouncil. STRABAG AG,Cologne,aswellvicechair and member ofthe Supervisory Board of serves aschairmanofthegroup workscouncil works councilsinceMay1998.Batkecurrently surveyor in 1991. He has been a member of the Andreas Batke joined STRABAG AG as aland Thomas Bullhas25yearsofexperienceininter (since 6February2017) Thomas Bull Dr. GulzhanMoldazhanova. fective 13January2016.Hewassucceededby left theSupervisoryBoard ofSTRABAGSEef- tute ofDirectors (IoD)intheUK.Andrei Elinson Certificate in Company Direction from the Insti- the US,alicensedRussianauditor, andholdsa fied public accountant and fraud examiner in degree inaccountancyandaudit.Heisacerti- - - 8

CORPORATE GOVERNANCE REPORT 9

Miroslav Cerveny Georg Hinterschuster

Miroslav Cerveny has worked for a Czech sub- Georg Hinterschuster completed an appren- sidiary of the STRABAG Group since 1988, hold- ticeship in commercial site management at ing positions in IT administration, accounting, STRABAG Bau GmbH from 1984 to 1987. He and occupational health and safety. then worked as group commercial manager in the engineering ground works business in Magdolna P. Gyulainé St. Valentin, Austria, before taking over a commercial management task for the Transportation Infrastructures and the building construction & civil engineering segments in the Czech Repub- lic from 1997 to 2000. Hinterschuster has been active in the works council since 1991 and has been a full-time employee representative in the group and central works council since 2008.

Wolfgang Kreis

Magdolna P. Gyulainé is chairwoman of the works council of STRABAG Hungary. She joined a predecessor company of STRABAG Hungary as bookkeeper in 1981.

Wolfgang Kreis joined Ed. Züblin AG as a commercial clerk in 1979. In 1987, he was elected to the works council and today is works council chairman for the Karlsruhe subdivision and chairman of the works council at Ed. Züblin AG. He has been vice chairman of the Supervisory Board of Ed. Züblin AG since 2002 and chairman of the works council of STRABAG SE since October 2013. In additional functions, he dedi- cates his time to the issue of occupational safety.

All members independent in accordance with the Austrian Code of Corporate Governance

All members of the Supervisory Board of within the Austrian Code of Corporate Govern- STRABAG SE and its committees are independ- ance (see also www.strabag.com > Investor Re- ent in accordance with the conditions contained lations > Corporate Governance > Supervisory tention istherefore giventoachieving thebroadest functions through thediversityofitsmembers.At strives tofulfilitssupervisory andconsulting positions. Furthermore, theSupervisoryBoard sufficient yearsofexperience inmanagement expertise andpersonalqualifications aswell sory Board ofSTRABAGSEincludetheright Prerequisites foranappointmenttotheSupervi- Diversity withregard toage,sexandnationalorigin cluded bythecompanywithmembersof to approval bytheSupervisory Board were con- In theperiodunderreport, nocontractssubject • • • the AustrianCodeofCorporateGovernance: comply withthefollowingguidelinesadaptedfrom over, themembersofSupervisoryBoard shall could influencethemember’s behaviour. More- constitute amaterialconflictofinterest andthus company or its Management Board which would has nobusinessorpersonalrelations withthe pany shallbedeemedindependentifheorshe A memberoftheSupervisoryBoard ofthecom- Code ofCorporateGovernance ny”) inAccordance withC-Rule53oftheAustrian Board MembersofSTRABAGSE(“thecompa- Guidelines for theIndependence of Supervisory avoidance ofconflictsinterest uponassumption Board receive detailedinformationregarding the NewmembersoftheSupervisory Governance. all conditions of the Austrian Code of Corporate and havedeclared inwritingexplicitlytoadhere to Board >IndependenceoftheSupervisoryBoard)

been auditorofthecompanyorhaveowneda The SupervisoryBoar qualified asnotindependent. 48 does not automatically mean the person is the Supervisory Board according to C-Rule est. The approval of individual transactions by member hasaconsiderableeconomicinter companies inwhichtheSupervisoryBoard This shall also apply to relationships with icance fortheSupervisoryBoard member. one ofitssubsidiariestoanextentsignif- any businessrelations with thecompanyor maintain orhavemaintainedinthepastyear The SupervisoryBoar of itssubsidiariesinthepastfiveyears. Board or as amanager of the company or one have served as amemberof the Management The SupervisoryBoar d membershallnothave d membershallnot d membershallnot - -

on 28April2014): Procedure for following guidelines(excerptfrom theRulesof Supervisory Board membersisdefinedbythe of theiractivities.Theindependencethe and 60yearsof ageonther bers oftheSupervisoryBoard were between42 women andsixnon-Austriannationals. Themem ber 2016,theSupervisoryBoard includedthree both sexesandtheagestructur ism, career background, therepresentation of an aspectofdiversitythatregards- international possible spectrumofskillandexperience Governance (C-Rules39and53). Governance cordance withtheAustrian CodeofCorporate cient numberofindependentmembersinac- whether itanditscommitteescontainasuffi- al Report.TheSupervisoryBoard shalljudge Board membersshallbe published intheAnnu- er’s interests. TheindependenceofSupervisory than 10%orwhorepresents suchasharehold- who isnotashareholder withashare ofmore pendent memberdelegatedbytheshareholders of thecompanyshallincludeatleastoneinde- theSupervisoryBoardCorporate Governance, According toC-Rule54of theAustrianCodeof ence according tothecriteriadefined. the shareholders todeclare hisorherindepend- by theAnnual General Meeting or delegated by the SupervisoryBoard of thecompanyelected It shallbetheresponsibility ofeachmember • Code ofCorporateGovernance). Supervisory Board (C-Rule49oftheAustrian •

sitions. of personsinonetheaforementioned po- nephew) ofaManagementBoard memberor partner, parent, uncle, aunt, sibling, niece, be acloserelative (direct offspring, spouse, The SupervisoryBoar The SupervisoryBoar there asanemployeeinthepastthree years. share intheauditingcompanyorhaveworked sory Board member. Board member of thecompanyisaSupervi- other company, inwhichaManagement a memberoftheManagementBoard ofan- the SupervisoryBoard asamended d membershallnotbe d membershallnot eporting date. eporting date. e. On31Decem through - - 10

CORPORATE GOVERNANCE REPORT 11

Working methods of the Supervisory Board: Six meetings in 2016

Details > Supervisory In the 2016 financial year, the Supervisory Board In accord with its tasks and obligations, the Board Report diligently performed the duties incumbent upon Audit Committee dedicated itself to monitoring it under Austrian law, the Articles of Association, the accounting procedures (including the prepa- the Austrian Code of Corporate Governance ration of the consolidated financial statements), (ÖCGK), and the Rules of Procedure. It met for a the work of the auditor (including the audit of the total of six meetings last year and so complied consolidated financial statements) and the ef- with the Code’s minimum requirement to meet fectiveness of the internal control system, the at least once every three months (C-Rule 36). All risk management system and the audit system. members personally attended at least three The committee also reviewed and monitored the meetings, so no Supervisory Board member qualification and independence of the auditor failed to attend more than half of the meetings (group financial auditor), especially with respect (C-Rule 58). Furthermore, there were three to the additional services provided to the com- meetings of the Audit Committee and one meet- pany being audited. Following a proper assess- ing of the Presidential and Nomination Commit- ment of potential threats to the independence of tee. One meeting of the Audit Committee did the auditor, the Audit Committee decided to al- not have a quorum due to the absence of a low authorised non-audit-related services to be member. Besides these regular meetings, there provided under consideration of legal limitations is a constant open discourse and exchange of on scope of practice. The internal audit depart- opinion among the individual members of the ment informed the Audit Committee of the au- Supervisory Board as well as between the indi- diting plan and of material findings pursuant to vidual members of the Supervisory Board and C-Rule 18 of the Austrian Code of Corporate the Management Board. Governance.

Committees: Executive Committee, Presidential and Nomination Committee, and Audit Committee

Details > Supervisory Committee decisions are made by a simple ma- chair is the deciding vote. The individual com- Board Report jority. In the event of a tie, the vote of the committee mittees have the following composition and tasks:

Committee Members Executive Committee • Dr. Alfred Gusenbauer (Chairman) The Executive Committee deals with all matters affecting • Mag. Erwin Hameseder the relations between the company and the members • Andrei Elinson1)/Dr. Gulzhan Moldazhanova of the Management Board, especially matters relating to the remuneration of Management Board members, but excluding decisions regarding the appointment or removal of a Management Board member or regarding the granting of stock options.

Presidential and Nomination • Dr. Alfred Gusenbauer (Chairman) The Presidential and Nomination Committee submits Committee • Mag. Erwin Hameseder proposals to the Supervisory Board for filling new • Andrei Elinson1)/Dr. Gulzhan Moldazhanova mandates or ones that become free on the Management • Georg Hinterschuster Board, deals with issues relating to successor planning • Wolfgang Kreis and remuneration policy, and makes decisions in urgent cases.

Audit Committee • Dr. Alfred Gusenbauer (Chairman) The Audit Committee is responsible for the audit and • Mag. Erwin Hameseder preparation of the approval of the financial statements, • Mag. Hannes Bogner the proposal for the appropriation of net income and the • Andrei Elinson1)/Dr. Gulzhan Moldazhanova management report, as well as the audit of the • Dipl.-Ing. Andreas Batke consolidated financial statements and the consolidated • Georg Hinterschuster corporate governance report. The committee also deals • Wolfgang Kreis with the management letter written by the financial auditor as well as with the auditor’s report as to the efficiency of the risk management. The Audit Committee makes a proposal for the selection of the auditor and prepares the proposal of the Supervisory Board to the Annual General Meeting for voting. Pursuant to C-Rule 81a of the Code, the Audit Committee must meet with the auditor to define a mode of communication between the auditor and the Audit Committee.

1) Andrei Elinson left the Supervisory Board and all committees of STRABAG SE effective 13 January 2016. He was succeeded by Dr. Gulzhan Moldazhanova. immediately must bereported Conflicts ofinterest sory Board are required todiscloseconflictsof Both theManagementBoard andtheSupervi- the quarterlyreporting ofSTRABAGSE,ongo- tant elementsofthisopencommunicationare is ofgreat importance to STRABAG SE. Impor ployees andtheinterested public,transparency shareholders, creditors, clients,analysts,em- In theinterest ofanopencommunicationwith Transparency through constantcommunication eral Meeting.More informationabouttheAnnual exercise theirrightsbyvoteattheAnnualGen- The shareholders, asownersofthecompany, Total Wanker Truntschnig Krammer Harder Birtel Name T€ Remuneration report Board findshimselfor herself inaconflictof sory Board. IftheChairperson oftheSupervisory disclose this to the Chairperson of the Supervi- selves inaconflictofinterest mustimmediately Supervisory Board members whofindthem- the companiesinvolved. must worktoward afairbalance ofinterests of management positionsatothercompanies Members oftheManagementBoard whohold members oftheManagementBoard ofthis. Furthermore, theymustalsoinform theother nies aswellanyotherconflictsofinterest. transactions of the company and group compa- visory Board anymaterial personalinterests in Board mustimmediately disclose totheSuper interest. Themembers of theManagement ing direct investorandanalystcontacts,the REGULAR INCOME OF THE MANAGEMENT BOARD CONFLICTS OF INTEREST ANNUAL GENERAL MEETING AND SHAREHOLDERS REMUNERATION OF THE MANAGEMENT BOARD 2,591 2016 472 472 472 472 703 Fixed 2,576 2015 469 469 700 469 469 - -

4,170 1,082 “Shares, Bonds&InvestorRelations”. activities inthisregard isavailableinthechapter tails aboutthecompany’s extensiveinformation especially onthecompanywebsite.More de- well aspublicationsanddisclosures onlineand participation inroadshows andconferences, as year underreport. evolution project development GmbHinthe Investor Relations”. is available in the chapter “Shares, Bonds & General Meetingandtheshareholder structure the acquisitionof80%shares ofRaiffeisen and ErwinHamesederabstainedfrom votingon Supervisory Board members HannesBogner To avoidpotentialconflictsofinterest, thetwo siderable economicinterest. member oftheSupervisoryBoard holdsacon- applies tocontractswithcompaniesinwhicha the consentofSupervisoryBoard. Thisalso for aremuneration notof minorvaluerequires subsidiary pursuanttoSection228Para3UGB the SupervisoryBoard for thecompanyora mance of a service outside of their activities on such membersare committed totheperfor with membersoftheSupervisoryBoard inwhich this totheirdeputy. Theconclusionofcontracts interest, heorshemust immediatelydisclose 2016 772 772 772 772 Variable 3,253 2015 605 605 833 605 605 6,761 1,244 1,244 1,785 1,244 1,244 2016 Total 5,829 1,074 1,074 1,533 1,074 1,074 2015 - 12

CORPORATE GOVERNANCE REPORT 13

Management Board The total income of the Management Board covers damage claims resulting from financial remuneration rises on members in the 2016 financial year amounted to losses for third parties or the company as the higher variable income. € 6.76 million (2015: € 5.83 million). The pay- result of neglect of duty on the part of the Man- ments are based on a long-term, multi-year re- agement Board members during their service as muneration plan which, in addition to a fixed officers of the company. The company bears the base salary, foresees a variable portion depend- costs for these insurance policies. The mem- ent on the achievement of specific earnings and bers of the Management Board are subject to a profitability targets for the STRABAG Group cal- competition clause for the period of their ser- culated using cost accounting methodology. vice. If a member of the Management Board is Bonuses are calculated as a fixed percentage dismissed without cause, the fixed base salary on the net income after minorities less minimum is paid for the full term of the contract. The man- earnings of € 100 million. The variable portion of agement contracts of all members of the Man- the income can amount to a maximum of 200 % agement Board expire on 31 December 2018. of the fixed salary. If a minimum yield is sur- passed (earnings under cost accounting versus One Management Board member is entitled to output volume), a defined minimum applies for non-growing pension payments from subsidiar- Long-term, multi-year the variable income portion. Furthermore, on the ies of the company. No other pension agree- remuneration plans basis of sustainable, long-term, multi-year per- ments exist – and no new entitlements may be formance criteria, 25 % of the bonuses are acquired – between the company and the mem- retained and deposited in a personal clearing bers of the Management Board. In the event of account of the members of the Management the termination of service to the company, one Board. Any balance in the personal clearing ac- Management Board member has a right to legal count is paid out following expiration of the and contractual severance pay on the basis of Management Board contract. the stipulations of the Austrian Employee Act (oAngG). All Management Board members per- The members of the Management Board also form their services on the basis of employment have the right to a company car. A private liabil- contracts and are subject to income tax regula- ity policy covers the legal liability of the mem- tions. bers of the Management Board with regard to No stock option third-party personal injury, property damage or STRABAG SE has decided against a stock programme financial losses. Accident insurance provides option programme for Management Board coverage in the event of death or disability. The members. No additional recompense is granted board members are also covered by a legal ex- for internal group mandates or functions. The pense insurance in the event of claims resulting Management Board contracts contain no prior from administrative or criminal violations. The agreements or diverging provisions for the hy- existing directors and officers (D&O) insurance pothetical case of a public takeover offer.

REMUNERATION SYSTEM FOR MANAGEMENT EMPLOYEES

Across the group, the three management levels of sustainable and long-term performance crite- directly below the Management Board are also ria, 25 % of the bonuses are also retained and remunerated with a fixed base salary plus a var- deposited in a personal clearing account that iable income portion. For these management may accrue a maximum of 200 % of the fixed employees, the variable income is also based salary. Any balance in the personal clearing acon the earnings attributable to them as calculated count is paid out upon retirement, at the latest, under cost accounting methods. The variable or when the employee leaves the company at portion of the income can amount to a maxi- the company’s request. mum of 200 % of the fixed salary. On the basis obligation in2016 subject todisclosure No transactions unchanged remuneration Supervisory Board Investor Relations > Corporate Governance > Investor Relations>CorporateGovernance website ofSTRABAGSE(www.strabag.com > as required by law and continually posted on the ees withgroupwide responsibilities are reported bers, andbyothermanagement-levelemploy- maintain a close relationship to the board mem- Haselsteiner Familien-Privatstiftung obligation Person subjecttodisclosure Directors’ Dealings)aswellonthewebsite shares Proprietary transactions withSTRABAGSE General Meeting. require aresolution tobepassedbytheAnnual tion forspecialtasksandobligationsperformed, holders, aswellonanyadditionalremunera - sory Board electedornominated bytheshare- compensation ofthemembersSupervi- poris. Changestotheamountofannual bership on theSupervisory Board pro rata tem- cordance withtheactual periodoftheirmem- during afinancialyearare remunerated inac- Board whoare electedtoorwholeavetheboard the Chairman.MembersofSupervisory € 25,000 for the Vice Chairman and € 50,000 for the regular membersoftheSupervisoryBoard, approved annual compensation of € 15,000 for The AnnualGeneralMeetingof10June2011 € ny’s boards, Dr. HansPeterHaselsteiner Mag. ErwinHameseder Alfred Gusenbauer Erwin Hameseder Kerstin Gelbmann Hannes Bogner Gulzhan Moldazhanova REMUNERATION OF THE SUPERVISORY BOARD SUPERVISORY BOARD REMUNERATION DIRECTORS’ DEALINGS Andrei Elinson William R.Spiegelberger Siegfried Wolf Total

and/or bondsbymembersofthecompa by persons or companies who Mag. ChristianHarder Dr. Alfred Gusenbauer Dr. HansPeterHaselsteiner Board member -

STRABAG SEon31December2016: mentioned group heldshares and/orbondsof people. Thefollowingpersonsfrom theafore- by membersoftheaforementioned group of STRABAG SEshares and/orbonds were made In 2016,noproprietary transactionswith tors’ Dealings). (www.fma.gv.at >CompaniesIssuersDirec - of theAustrianFinancialMarketAuthority with membersoftheSupervisoryBoard. Board. There alsowere noothertransactions was paidtothemembersofSupervisory imum amount.In2016,nootherremuneration directors of the company – up to a certain max- careless neglectofdutyduring theirserviceas Supervisory Board members intheeventof insurance –itcoversthepersonalliabilityof company D&O(directors andofficers)liability the Supervisory Board are furthercovered bya compensation forexpenses.Themembersof Supervisory Board membersalsoreceive cash Additionally totheirannualcompensation,the ubro hrsNumberofbonds Number ofshares 29,017,451 135,000 50,000 25,000 15,000 15,000 14,508 15,000 2016 70,002 492 210 – 135,000 50,000 25,000 15,000 15,000 15,000 8,301 6,699 2015 0 0 0 – 14

CORPORATE GOVERNANCE REPORT 15

Measures for the advancement of women

STRABAG SE is convinced that diversity sus- activities to date to increase the percentage of People & Workplace tainably increases the success of a company. women and to promote the careers of women STRABAG understands diversity to include dif- within the STRABAG Group focus on three are- ferent nationalities and cultures, a balanced age as: Material issue accord- structure and men and women working togeth- ing to GRI: see p. 17 er. Diversity needs fertile ground in which to • Targeted marketing: STRABAG uses both grow – a working environment that is free from the masculine and feminine forms in its texts discrimination, harassment and retaliation. and job announcements in order to target fe- Ombudspersons: STRABAG has in place a system of ombudsper- male students and graduates and so secure a See the “Business sons and actively takes measures to allow di- higher percentage of female applicants espe- Compliance” section versity to thrive, for example with respect to the cially from the technical universities. Student promotion and inclusion of women. surveys testify to the effectiveness of these measures and that women with a technical The construction industry employs predomi- education in particular rank STRABAG high nantly men in the technical professions. Women up in the list of attractive employers – in 2016, are therefore underrepresented at all hierarchy STRABAG rose from 7th to 2nd place in the Uni- levels. The shortage of skilled personnel, how- versum Student Survey among women study- ever, requires the sector to build on female la- ing in the engineering and IT fields. Some of bour in the future more strongly than before. To our activities target potential women emplo- maintain our competitiveness and to benefit yees even earlier on, namely at school age: from the diversity of different points of view, several of the group’s organisational units STRABAG in 2013 set itself the goal to annually in Germany and Austria regularly organise increase the global percentage of women in the events on “Töchtertag” (“Take Your Daughter group. By signing the UN Women’s Empower- to Work Day”) or Girls’ Day. ment Principles, then-CEO of STRABAG SE Hans Peter Haselsteiner demonstrated the company’s • Compatibility of career and family: Espe- commitment to this goal. cially with regard to high potentials and top performers, STRABAG is in competition with In 2016, the number of women as a percentage other construction companies for workers of employees within the entire group amounted that are flexible and as mobile as possible. to 14.9 % after 13.9 % the year before. Women But if you want flexibility, you have to offer make up just 8.4 % (2015: 8.7 %) of the group flexibility. For this reason, STRABAG is also management – i.e. persons with a management working to increase its attractiveness as an position as defined by Section 80 of the Austrian employer through a better compatibility of fa- Stock Corporation Act (AktG). Currently there mily and career. Employees who are sent ab- are no women on the five-member Management road, for example, have the possibility of ta- Board of STRABAG SE. It is noteworthy, however, king their families with them. In 2014, a set of that in 2016 three women sat on the eleven- guidelines was worked out regarding parental member Supervisory Board of the company: leave, part-time work for parents and return Kerstin Gelbmann, Gulzhan Moldazhanova (since management. The corresponding pilot proj- 13 January 2016) and Magdolna P. Gyulainé. ect to put these guidelines into practice was Women thus make up about 27 % of the Super- launched in Austria in 2015 and in Germany in visory Board and account for 20 % of the mem- 2016. Another pilot project for a general fle- bers delegated by the works council. xibilisation of working time was launched in a local organisation in Austria. The measures If we can interest more women for a career in have also borne fruit. In 2016, the two group construction and/or with STRABAG, then we companies STRABAG AG, Cologne, and will have laid the foundation for a higher rep- Ed. Züblin AG were listed among Germany’s resentation of women at the management lev- most family-friendly companies in the cons- els. For this reason, an internal team led by a truction, raw materials, energy and construc- STRABAG SE Management Board member has tion materials production sectors by German been hard at work since 2012 to develop and parent’s magazine ELTERN in cooperation introduce measures in this regard. The team met with the statistics portal Statista. for three meetings in 2016. The STRABAG SE Management Board knows that it must continue • Career opportunities: There are no salary dif- the existing initiatives and remain open to new ferences in the company between men and ones in order to increase the percentage of women who perform equal work and have the women in more highly qualified positions. The same level of education. Based on the results long-term perspective High priority, potential management ofhigh tion ofwomeninthe Adequate considera- tum inthecore business. group thatcouldcreate fresh forward momen- lookout forpioneeringsolutionsoutsideofthe the sametime,companyremains onthe demands anddevelopmentsonthemarket.At constantly realign itsportfolio ofservicestothe allows thegroup toremain competitiveandto ous dialogueactivelyremaining uptodate.This the variousstakeholdersandthrough continu- the increasingly complex wishesandneedsof and theenvironment, systematically registering to theimpactofcore business onsociety bility alsomeansgivingbalancedconsideration values suchaspartnership.Assumingresponsi - sustainably means working withinitsdefined For STRABAG,doing business responsibly and Sustainability employees, thoseonbusinessmanagement Among thetrade-specifictrainingoffers forall one’s owncareer wasreceived verypositively. women; a 2016 workshop on how to plan also offers seminarsdesignedespeciallyfor education. Thegroup academy, forexample, pecially in theircareer planning andinfurther the group supportsitsfemaleemployeeses- bers ofthehigh-potentialmanagementpool, In additiontotheeventsorganised for mem- men andwomenasthemostpromising way. ees, STRABAGSEseesjointmeasures for it comes to developing management employ- regard are constantlybeingevaluated.When Moreover, the results of all measures in this composition ofteamsandworkinggroups. management ofhighpotentialsandinthe adequate representation ofwomenwithinthe education. Attentionistherefore giventothe considering women in promotion and further STRABAG isalsoworkingtowards adequately surveys,workshopsandanalyses, of internal above-stated appliestothegroup asawhole. of womenemployeesisagroup goal,the

As thegoaltoannuallyincrease thepercentage agement Board meetings. incidents are addressed adhocduringtheMan- finally cleared for release. Strategically critical Board before beingreworked ifnecessaryand discussed bytheSTRABAGSEManagement coordination withtheCEO, andsubsequently support from CR organisation the internal and in drawn upbytheresponsible managers,with as wellrelevant indicators andobjectivesare strategy: Proposals for priority strategic issues bility atSTRABAGare integrated intothegroup able managementandentrepreneurial responsi- are seenfrom along-termperspective.Sustain- carried by the top management and that they and corporateresponsibility atSTRABAGare This sendsanimportantsignalthatsustainability been placedwithintheresponsibility oftheCEO. Corporate Responsibility(CR)atSTRABAGhas As networkinghelpsboostcar tion bywomen. and ITregistered anabove-averageparticipa- that willstartinGermany2017. 2016, planningbeganonasimilareventseries shops andgettoknowtheircolleagues.In tion to listen to lectures, take part in work- Austria andSwitzerlandanswered theinvita- female colleagues from technical fields in Engineers DayinVienna in2015.Some70 company alsohelditsfirstSTRABAG Women and tosupportthepersonalnetworking, increase thevisibilityofwomeningroup been usedby280employees(2015:>180).To with eachother–anoffer thathasalready male employeestheopportunitytonetwork ties, a STRABAG intranet platform offers fe- eer opportuni- 16

CORPORATE GOVERNANCE REPORT 17

Corporate governance & business compliance

CONTINUOUS DEVELOPMENT OF THE CORPORATE GOVERNANCE

STRABAG strives to constantly improve its cor- time, however, the board stronger than before porate governance system in the interests of the seized the opportunity to make concrete pro- Self-evaluation of the company and all stakeholders. In the year under posals on how to raise efficiency. In the end, the Supervisory Board review, the Supervisory Board again performed exchange led, among other things, to the intro- a self-evaluation of its activity pursuant to duction of additional standard agenda items C-Rule 36 of the Austrian Code of Corporate with regard to strategy, construction projects of Governance. At its meeting on 12 December great weight on the balance sheet, and the pos- 2016, the Supervisory Board examined in detail sibility of the members of the Supervisory Board the efficiency of its work, especially of its organi- to regularly exchange ideas without the Man- sation and working methods, which were largely agement Board. evaluated as positive as in the years before. This

BUSINESS COMPLIANCE Business Compliance Business compliance system: System is well implemented and developes dynamically

Material issue accord- On the basis of numerous international initia- Various measures to further develop the business ing to GRI: see p. 17 tives to fight bribery and corruption (e.g. United compliance management system, especially Nations Convention against Corruption, OECD regarding targeted certification to current audit Anti-Bribery Convention), the national authori- standards, were elaborated during a status ties in many countries have passed laws and check of the system conducted in 2016 by regulations making it illegal to offer rebates to KPMG. The status check left KPMG with an win new contracts or contract extensions or to overall positive impression of the STRABAG achieve any other improper advantage. In Aus- business compliance management system – tria, the anti-corruption legislation, the Federal with regard to both the system’s organisation Bureau of Anti-Corruption and the special Aus- and structure as well as its processes. On this trian Public Prosecutor’s Office for the Enforce- basis, the following priority issues were identi- ment of Business Crimes and Corruption are fied for the next planning period: clear examples of the anti-corruption efforts being made in both the public and private sectors. • additional staffing in view of the increasing importance of business compliance interna- Corruption is a risk in any business, including tionally the business of construction. For this reason, STRABAG has implemented proven anti- • intensified training through shorter training in- corruption instruments across the group. The tervals STRABAG business compliance model is based on the Code of Conduct, the Business Compli- • formalised business compliance in the opera- ance Guidelines, the Business Compliance ting entities Guidelines for Business Partners, and a corresponding compliance staff structure consisting • installation of a whistle-blowing hotline of a group-wide business compliance coordina- tor, the regional business compliance represen- Corresponding measures will be arranged over tatives, the internal ombudspersons and the the course of 2017. external ombudsman.

E-learning and classroom training to help fight corruption

The e-learning module on the right behaviour in 83 % of all employees in the group. This is close day-to-day business dealings, which was adapt- to the targeted penetration of 90 %. This trained during the last update of the STRABAG busi- ing is generally mandatory for all new employ- ness compliance system, was in use in all rele- ees, with refresher courses required every three vant languages and in all group countries at the years. In cooperation with human resource start of 2016. On 31 December 2016, the per- development, a software tool was completed at centage of persons trained in this area reached the end of October 2016 to make the e-learning management part oftherisk auditas Internal 100 % training penetration: General target for Compliance Business The STRABAGGroup’s auditdepart- internal and assessedusinganactiveriskmanagement ities. Theserisksare systematically identified different risksinthecourseofitsbusinessactiv- The STRABAGGroup issubject toanumberof approach, the useofuniformauditingstandards monitoring processes. Thecomprehensive control andtoevaluatethemanagement the effectiveness of the risk management and auditsservetomonitor systems. Theinternal important elementofthegroup’s control internal auditdepartmentisan competence, theinternal abroad. Givenitstechnicalandcommercial divisions and regions bothnationallyand ent andneutralauditsacross allofthegroup’s risk assessment – conducts process-independ- pendently andmakingcontinualadaptationsto department –afterplanningtheauditinde- audit ble amountofindependence.Theinternal STRABAG SEandsoenjoysthegreatest possi- as astaff unitoftheManagementBoard of nance, auditdepartmentissetup theinternal rules oftheAustrianCodeCorporateGover- the 2016 financial year. In accordance with the audits in all groupinternal divisions worldwide in again conductedapproximately 180(2015:180) ment isaneutralandindependentauthoritywhich Risk managementandaudit training inorder toensure thattrainingiscarried on astrictermonitoringofthecompletion ments. Thefocusinthefuture willtherefore be 2016 wasnotmetduetoseveralnewappoint- least 95 %ofall management employees in part intheinitialtraining.Thegoalofreaching at 31 December2016,81%ofmanagershadtaken isting membersofthemanagement.As has againset group trainingprogramme. For2017STRABAG employees cannowalsobeintegratedintothe administrated viathegroup’s ITplatform.These training availabletoemployeeswhoare not day refresher courseseverythree yearsforex- training sessions for new employees and half- legalexpertsintheformofone-day external of corruptionandcartelviolationsconductedby members ofthemanagementonavoidance The group alsocontinuedclassroom trainingfor tration of90%itsemployees. INTERNAL AUDIT REPORT RISK MANAGEMENT itselfthegoalofatargeted pene-

the management. being continually offered for new members of be regarded ascomplete.Classroom trainingis isting managementoncartelissuescanlargely 2015 (795),theinitialin-depthtrainingofex- group. Includingtheparticipantsfrom theyear 376 oftheapproximately 1,084managersinthe cycle. In 2016, this training was completed by based trainingtoberepeated inathree-year agement Report. policy. More information isavailableintheMan- system and dealt withusing an appropriate risk financial auditors. agement Board, andwere madeavailabletothe the unitanddivisionmanagers, andtotheMan- were senttotheauditedunitsanddivisions, significant results ofitswork.Theaudit reports Supervisory Board regarding theauditplanand to theCEOandAuditCommitteeof audit department reportedThe internal regularly ders oftheyear. as wellthemostimportantcontractsandor audits covered allofthegroup’s sub-divisions ects aswellentire organisational units.The department againauditedbothindividualproj- audit compliance system.In2016,theinternal pliance withthegroup’s valueandbusiness to constantlymonitorproper conductandcom- nise andavoidrisks,toreveal opportunitiesand The routine andspecialaudits servetorecog- the standardisation ofprocesses andstructures. and theneutralreporting furthercontributeto tions, this module is designed as classroom- training on avoiding corruption and cartel viola- management-level employees in 2015.Likethe duction ofmore intensecartellawtrainingforall This measure was complemented by the intro- goal for2017. which iswhySTRABAGwillatleastsetitselfthis tuation, however, aratioof95%isrealistic of themanagementasplanned.Givenfluc- STRABAG basically strives to train all members out inatimelymannerdespitefluctuations. -

CORPORATE GOVERNANCE REPORT 19

FINANCIAL AUDIT

The Annual General Meeting of STRABAG SE, charged a fee of T€ 600 excl. VAT (2015: T€ 594 upon proposal of the Supervisory Board, on excl. VAT) for the auditing of the separate and 10 June 2016 designated KPMG Austria GmbH consolidated financial statements as well as Wirtschaftsprüfungs- und Steuerberatungsgesell- T€ 549 excl. VAT (2015: T€ 544) for the auditing schaft, Linz, as auditor of the financial state- of financial statements at subsidiaries of ments and of the consolidated financial state- STRABAG SE. For additional consulting services, ments for the 2016 financial year. In the 2016 it received a fee of T€ 86 excl. VAT (2015: T€ 116 financial year, KPMG Austria GmbH Wirtschafts- excl. VAT). prüfungs- und Steuerberatungsgesellschaft

EXTERNAL EVALUATION

Details as to the In keeping with C-Rule 62 of the Austrian Code of the Austrian Code of Corporate Governance results of the evaluation of Corporate Governance, STRABAG SE regu- were untrue. The C-Rules and R-Rules of the are available at larly subjects its compliance with the Code to an Code were complied with – inasmuch as www.strabag.com external evaluation every three years. The eval- these were included in the formal obligation of uation performed for the 2016 financial year by STRABAG SE. Some rules did not apply to Fellner Wratzfeld & Partner Rechtsanwälte STRABAG SE during the evaluation period. The GmbH revealed no indications that the declara- next external evaluation will be conducted in tions provided by the Management and Super- 2020 for the 2019 financial year. The complete visory Board members regarding observation of report including the results of the evaluation is and compliance with the C-Rules and R-Rules available at www.strabag.com.

Corporate governance reports of publicly listed subsidiaries

The following publicly listed subsidiaries of the • STRABAG AG, Cologne – available at STRABAG Group were required to create and www.strabag.de > Investor Relations > publish a corporate governance report in 2016: Corporate Governance > Erklärung zur Unter- nehmensführung

• “PUTEVI“ A.D. CACAK, Cacak – available at www.putevicacak.rs

• Vojvodinaput-Pancevo a.d. Pancevo, Pancevo – available at www.vputpa.co.rs The ManagementBoard Villach, 7April2017 Mag. HannesTruntschnig Mag. ChristianHarder Dr. ThomasBirtel Dipl.-Ing. Dr. PeterKrammer Dipl.-Ing. SiegfriedWanker 20

CORPORATE GOVERNANCE REPORT