GROUP MANAGEMENT REPORT

Events After the Balance Sheet Date

There have been no events between the conclusion of the 2008/2009 financial year and this annual report going to print which could be of material significance for the assessment of the net asset, financial or earnings position of HORNBACH HOLDING AG or of the HORNBACH HOLDING AG Group.

Dependent Company Report

A report has been compiled for the 2008/2009 financial year pursuant to Section 312 of the German Stock Corporation Act (AktG) in respect of relationships to associated companies. With regard to those transactions requiring report, the report states: “Our company has received adequate counterperformance for all legal transactions executed with associate companies in accordance with the circumstances known to us at the time at which the legal transactions were performed and has not been disadvantaged by such transactions. No measures requiring report arose during the financial year.”

Compensation Report

The compensation report presents the basic features and structure of the compensation of the Board of Management and the Supervisory Board. It forms a constituent component of the group management report and, with the exception of the disclosure of individual compensation, is based on the requirements of the German Corporate Governance Code.

Compensation of the Board of Management
The level and structure of the compensation of the Board of Management are based on the size of the company, its economic and financial situation and the performance of the company within its competitive environment. Moreover, the overall compensation and individual components of such compensation should stand in an appropriate relationship to the responsibilities of the respective member of the Board of Management, his or her personal performance and the performance of the Board of Management as a whole.

The compensation of the Board of Management consists of fixed and variable components. The compensation system comprises an agreed fixed annual salary, which is paid in equal monthly installments. Furthermore, the members of the Board of Management receive an annual bonus which is paid upon the consolidated financial statements being approved by the Supervisory Board. The level of the annual bonus is based on the consolidated net income.

Within the framework of the 2001 share option plan, the members of the Board of Management were allocated share options as components of a long-term incentive nature. The share option program is based on the achievement of ambitious target prices for the share of HORNBACH-Baumarkt-AG. In the 2008/2009 financial year, all tranches had exceeded their respective exercise hurdles. Details of the share option plan have been provided under Note 34 of the notes to the consolidated financial statements.

The total compensation paid to the Board of Management of HORNBACH HOLDING AG for the performance of its duties for the Group in the 2008/2009 financial year amounted to € 2,353k (2007/2008: € 2,029k). Of this total, € 658k (2007/2008: € 728k) constituted fixed compensation and € 1,695k (2007/2008: € 1,301k) involved performance-related components. As of the reporting date on February 28, 2009, the members of the Board of Management held a combined total of 158,334 ordinary shares (2007/2008: 158,334) and 3,405 publicly listed preference shares (2007/2008: 3,405) in HORNBACH HOLDING AG. Given the size and market position of the company, we believe that the total compensation of the Board of Management is appropriate. At the 2006 Annual General Meeting, shareholders voted with a three-quarters majority to forego the disclosure of the compensation of members of the Board of Management on an individual basis up to and including the 2010/2011 financial year (opting-out clause).

Former members of the Board of Management were granted compensation of € 2,090k in the 2008/2009 financial year in connection with the conclusion of their activities for the company (2007/2008: € 0k).

The employment contracts of members of the Board of Management do not include any pension commitments or any severance pay clauses.

Compensation of the Supervisory Board
The compensation of the Supervisory Board is governed by Section 16 of the Articles of Association of HORNBACH HOLDING AG.

In line with the Articles of Association, the compensation of the members of the Supervisory Board consists of a fixed component and a variable component based on the dividend. In addition to the reimbursement of his or her expenses, each member of the Supervisory Board receives annual fixed compensation of € 6,000 payable upon the conclusion of the Annual General Meeting and a performance-related component depending on the resolution adopted by the Annual General Meeting in respect of the appropriation of profits and thus on the dividend distribution.

The Chairman receives three times and the Deputy Chairman twice the fixed and performance-related compensation. Members of the Supervisory Board who also sit on the Audit Committee receive an additional sum of € 3,000. Members of the Supervisory Board who sit on another committee or on several other committees of the Supervisory Board receive an additional sum of € 1,500 per committee. Members of the Supervisory Board acting as the chairman of a Supervisory Board committee receive three times the respective committee remuneration. Members of the Supervisory Board who are only members of the Supervisory Board for part of the financial year receive proportionately lower compensation.

The compensation of the Supervisory Board for the 2008/2009 financial year amounted to € 213k (2007/2008: € 182k). Of this total, € 134k (2007/2008: € 114k) constituted fixed compensation and € 79k (2007/2008: € 68k) involved performance-related components. The members of the Supervisory Board did not hold any ordinary shares or any preference shares at the reporting date on February 28, 2009. Former members of the Supervisory Board who retired from their positions during the 2008/2009 financial year did not hold any ordinary shares (2007/2008: 158,333) or, as in the previous year, any publicly listed preference shares in HORNBACH HOLDING AG at the reporting date.

The compensation of the individual members of the Supervisory Board can be derived from the Articles of Association and from the disclosures made in the notes to the consolidated financial statements and has therefore not been reported separately.