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Henkel April 08th, 2019

General: Supervisory Board member Prof. Dr. Theo Siegert is a member of the Adivsory Committee of DSW, the local partner of ECGS. This report has been prepared using standard ECGS guidelines.

Item 1: Unlike at German stock corporations, shareholders of a KGaA are legally required to vote on the annual accounts.

Item 5: In financial year 2018, the Supervisory Board of Henkel Management AG, in line with recommendations of the Shareholders' Committee's Human Resources Subcommittee, decided to adopt various changes to the Management Board members' remuneration system, applicable as of financial year 2019. ECGS would have expected the amended remuneration system being submitted to shareholder approval at this year's AGM. In line with our guidelines we would in principle recommend opposing the discharge of the Chairwoman of the Shareholders' Committee's Human Resources Subcommittee, Dr. Simone Bagel-Trah. However, as the discharge is proposed in a bundled resolution we recommend shareholders to oppose the discharge of the Shareholders' Committee as a whole.

Item 6: KPMG, Berlin, is proposed as auditor for the current financial year. We have no concerns over the ratio of non-audit/audit fees. However, we note that KPMG has audited the Company since the financial year 1932 which significantly exceeds our maximum acceptable term of office. We therefore recommend opposing the re-election of KPMG as auditor.

Item 10: Authorisation for a period of five years until 7 April 2024 to increase the share capital by up to EUR 43,795,875 (10% of the share capital) by issuing non-voting preference shares against contribution in cash and/or in kind. Although the potential dilution level is in line with our guidelines we are concerned that the Company proposes to issue only non-voting preference shares. We consider this as a measure to secure the influence of the Company's major shareholder, the Henkel family, which holds a total of 61.20% of the Company's ordinary shares under a share-pooling agreement.  Furthermore, we consider that the issuance of non-voting preference shares is detrimental to the "one share, one vote" principle. Consequently, we recommend shareholders to oppose this resolution both at the meeting of ordinary shareholders and at the special meeting of preference shareholders (Item 2).

Henkel KGaA Pfd.

Henkel business comprised of Laundry & Home Care, Beauty Care, and Adhesive Technologies. Co.'s Laundry & Home Care business unit include laundry and home care Branded Consumer Goods business. The Laundry Care business includes heavy-duty and specialty detergents, fabric softeners, laundry performance enhancers, and other fabric care products. Co.'s Beauty Care business unit is active in the Branded Consumer Goods business with Hair Cosmetics, Body Care, Skin Care, Oral Care, and professional Hair Salon business. Co.'s Adhesive Technologies business unit provides solutions with adhesives, sealants and functional coatings in two business areas: Industry; and Consumer, Craftsmen and Building.


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