Statement on corporate governance in accordance with Section 289a of the German Commercial Code (HGB)

The Corporate Governance Declaration in accordance with Section 289a German Commercial Code (HGB) contains the Declaration of Compliance in accordance with Section 161 German Stock Corporation Act (AktG). In addition, the declaration contains all relevant information about the corporate governance practices applied by Demag Cranes AG beyond the requirements under national law together with a description of the procedures of the Management and Supervisory Boards and of the composition of their committees and their committee procedures.

1. Compliance statement in accordance with Section 161 of the German Stock Corporation Act (AktG)

The German Corporate Governance Code summarises the regulations for successful corporate governance and thus for good and responsible management. The Government Commission on the German Corporate Governance Code appointed by the Federal Ministry of Justice adopted the Code on 26 February 2002 and reviews it at least once a year to see whether any amendments are required. The German Corporate Governance Code was last revised on 26 May 2010.

Under Section 161 of the German Stock Corporation Act (AktG), the Management Board and Supervisory Board of listed German stock corporations are required to declare each year that the recommendations of the Government Commission on the German Corporate Governance Code published by the Federal Ministry of Justice in the official section of the electronic Federal Gazette (Bundesanzeiger) have been and will be complied with or, if not, which recommendations have not been or will not be applied, and why.

The Management Board and Supervisory Board of Demag Cranes AG last issued the following Compliance Statement in accordance with Section 161 of the German Stock Corporation Act (AktG) on 30 November 2011:

Demag Cranes AG can confirm that since issuing the last declaration of conformity on 7 December 2010 in accordance with the Code in force on 26 May 2010, the recommendations published by the Federal Ministry of Justice in the official section of the electronic Federal Gazette with regard to the Government Commission on the German Corporate Governance Code have been complied with in full, with the following exceptions:

a)     Clause 3.8 provides for the agreement of a deductible if the Company takes out a D&O policy on behalf of the Management and Supervisory Boards. Demag Cranes AG’s D&O insurance policy does not include a deductible for the Supervisory Board, since the Management Board and Supervisory Board do not deem this to be either necessary or suitable for controlling the behaviour of the board members.

b)     In accordance with Clause 5.4.1 (2), the Supervisory Board must specify concrete objectives regarding its composition and, in particular, provide for an appropriate degree of female representation. The Supervisory Board recognised the importance of diversity with the objectives regarding its composition adopted on 3 September 2010. It aims to achieve an appropriate degree of female representation and is therefore to include women as soon as possible. The Supervisory Board did not specify a precise number or proportion of female members, deeming such targets to be inappropriate, since the search for suitable candidates should focus on the specific situation of Demag Cranes AG and the resulting requirements. This should ensure that the composition of the Supervisory Board is determined in the best interests of the Company based on the qualifications and suitability of candidates. These objectives were also taken into account in the context of the appointment of Supervisory Board members by court order in September 2011 and in the nominations for election to the Supervisory Board to be submitted to the Annual General Meeting to be held in February 2012.

c)     In accordance with Clause 5.4.6, the members of the Supervisory Board should be paid performance-related remuneration in addition to their fixed basic remuneration. The Articles of Association of Demag Cranes AG do not include a performance-related component for members of the Supervisory Board, so that the Supervisory Board can preserve the independence it must have to be able to carry out its monitoring function. The performance of this function should not be tied to any monetary incentives.

d)     In accordance with Clause 5.4.5, Supervisory Board members who are members of the management board of a listed company may not accept more than a total of three supervisory board mandates in non-group listed companies or in supervisory bodies of companies with similar requirements. Robert J. Koehler, who has laid down his office as member of the Supervisory Board with effect from 23 September 2011, was chairman of the management board of SGL CARBON AG, Wiesbaden, during his term of office and had a total of four supervisory board mandates in non-group listed companies, including his position as member of the Supervisory Board of Demag Cranes AG; he had no mandates in supervisory bodies of companies with similar requirements. This did not affect his monitoring duties as a member of the Supervisory Board of Demag Cranes AG. Mr. Koehler had sufficient time to perform his mandate at Demag Cranes AG.

e)     In accordance with Clause 5.4.3, an application for the judicial appointment of a Supervisory Board member should be limited in time up to the next general meeting. On some occasions, an opinion has been expressed that the recommendation also applies to the judicial appointment of employee representatives to the Supervisory Board. As a matter of precaution, the Management Board and Supervisory Board are declaring that this recommendation was not implemented in having employee representatives appointed by court to the Supervisory Board of Demag Cranes AG. As employee representatives on the Supervisory Board are not elected by the general meeting, the Management Board and Supervisory Board believe it is inappropriate to limit their judicial appointment in time up to the next general meeting.

Aside from the above exceptions relating to Clause 3.8, Clause 5.4.1 (2), Clause 5.4.6 and Clause 5.4.3 of the German Corporate Governance Code, the recommendations of the Government Commission on the German Corporate Governance Code in force on 26 May 2010 are fully complied with.

2. Guiding Principles

Corporate governance is a fundamental element of our working relationship with shareholders, employees and business partners and as such is accorded great importance at Demag Cranes AG. Through responsible management, the Management Board and Supervisory Board ensure the Company’s ability to continue as a going concern and to generate sustainable value.

Guiding Principles and Code of Conduct

As part of its Guiding Principles, the Demag Cranes Group has defined five values that describe the self-image of the Company and form the basis of our corporate activities.

Innovative strength

We always seek to improve ourselves and excel through quality, motivation and innovative strength.

Motivation

Our employees are our most valuable asset. We invest in their professional and personal development and motivate them to use their skills and creativity to achieve success together.

Sustainability

Our conduct is ethically responsible and conforms to the principles of sustainable corporate governance.

Responsibility

We treat all the resources at our disposal carefully, sparingly and responsibly.

Openness

We show respect towards the wide range of international cultures and beliefs and are open to the ideas, opinions and desires of others.

As an international company, it goes without saying that Demag Cranes complies with high worldwide standards applicable to conduct in relationships with customers, partners and employees. For this reason, Demag Cranes has introduced a Code of Conduct as a supplement to its Guiding Principles that meets the criteria set out in the German Corporate Governance Code. The Code of Conduct is binding for all employees across the globe and is an integral part of the corporate culture. Observance of and compliance with applicable law, fair competition, transparent communication and personal integrity are cornerstones of this conduct.

The Code of Conduct is supplemented by policies on specific issues, including anti-corruption policies, and is available on the Internet at www.demagcranes-ag.com/code_of_conduct. The Guiding Principles are available at www.demagcranes-ag.com/guiding_principles.

Adequate control and risk management

Good corporate governance includes responsible management of risks by the Company. The Management Board ensures adequate risk management and risk control in the Company. For this purpose, Demag Cranes AG has set up systematic risk management to ensure that risks are identified and assessed at an early stage and existing risk exposure is optimised. Risk management and risk control are continually refined and adapted to changing circumstances. The key features of Demag Cranes AG’s control and risk management system are set out on page 95 et seqq. of the Annual Report 2010/2011, available on the Company website at www.demagcranes-ag.com/financialreport2010/2011.

Compliance

Demag Cranes AG has a comprehensive compliance management system, which the Management Board and the Company’s Compliance Officers continuously refine and adapt to changing requirements.

The aim of the compliance management system is to prevent employees from violating and to help them properly comply with the law and corporate policies. Key instruments of the system include the compliance policies and the Code of Conduct, which lay down minimum standards of conduct for all Group employees.

Group-wide compliance activities focus on antitrust law and combating corruption. Other issues addressed by the Company’s compliance efforts include preventing infringement of insider trading rules, occupational health and safety, corporate security and IT security. Company employees receive regular training on individual compliance policies.

The Management Board of Demag Cranes AG, in consultation with the Supervisory Board, commissioned a consulting firm specialised in compliance in financial year 2010/2011 to conduct a comprehensive review of Demag Cranes AG’s compliance management system. As of 1 May 2011, the review date, the consulting firm assessed the design, appropriateness, implementation and effectiveness of and any scope for improvement in the Company’s compliance management system.

The overall assessment finding was that the compliance management system complied with the relevant requirements under the law, the Company’s Articles of Association and the German Corporate Governance Code. The consultant also noted that any need for further development or scope for improvement in the compliance management system at Demag Cranes AG did not call into question the overall finding.

The review findings and the scope for improvement identified were presented to and discussed with the Management Board and the Audit Committee of the Demag Cranes AG Supervisory Board. The compliance management system is being further developed on a continuous basis following the recommendations made.

The recommendations for further development mainly relate to the areas of compliance risk management, further development of compliance policies and the training programme, as well as record keeping.

Transparency

Shareholders, capital market participants, analysts, shareholders’ associations and the media are all furnished with regular and timely information about the Company’s situation and any significant changes. To ensure that all parties are informed consistently and on a timely basis, Demag Cranes AG primarily publishes information on its website. This includes annual and quarterly reports, invitations to and information on Annual General Meetings, press releases, ad hoc announcements and the Company’s financial calendar. Information on the tender offer from Terex Industrial Holding AG is likewise provided on the website. Demag Cranes AG also maintains close relations with shareholders through active investor relations work.

3. Description of the procedures of the Management and Supervisory Boards and of the composition of their committees and their committee procedures

The Management Board is responsible for managing the Company. The Supervisory Board monitors and regularly advises the Management Board in its management of the business. The two boards work closely together in the interests of the Company.

Management Board

The Management Board is the Company’s executive body and in financial year 2010/2011 had three members: Aloysius Rauen as Chief Executive Officer (CEO), Rainer Beaujean and Thomas H. Hagen. In light of the tender offer from Terex Industrial Holding AG consummated on 16 August 2011 and the resulting change of control, Rainer Beaujean exercised his special right of termination with effect from 30 November 2011. Thomas H. Hagen likewise exercised his special right of termination with effect from 30 November 2011; by mutual agreement with the Supervisory Board, he subsequently laid down his office on the Management Board with effect from 30 September 2011. More information on the individual members of the Management Board can be found online at www.demagcranes-ag.com/managementboard.

The Management Board develops the Company’s strategic orientation, agrees the strategy with the Supervisory Board and ensures its implementation. The Management Board provides the Supervisory Board with regular, full and timely information about all issues important to the Company with regard to planning, business development, the risk situation, risk management and compliance. It also reports to the Supervisory Board at least once annually on proposed business policies, the budget for the financial year ahead and medium-term planning for subsequent years.

The work of the Management Board – and in particular the responsibilities of individual members, matters reserved for the Management Board as a whole and the majority required for Management Board resolutions – is governed by the Rules of Procedure for the Management Board issued by the Supervisory Board. The Rules of Procedure also define key measures for which the Management Board must obtain approval from the Supervisory Board. The Management Board normally makes decisions by resolution passed with a simple majority.

Management Board members are required to disclose any conflicts of interest to the Supervisory Board without delay and to notify the remaining members of the Management Board. No conflicts of interest arose during the reporting period. Similarly, no transactions were entered into during the reporting period between the Company and members of the Management Board or individuals or companies with whom they have a close personal association.

Demag Cranes attaches great importance to international scope and diversity. This is underpinned by the human resources strategy. International recruitment and appointment policies allow Demag Cranes to foster intercultural skills among the workforce, reap synergies, promote best practices and support cultural diversity across the Group. Demag Cranes is also working to increase the proportion of women in the workforce. Diversity is likewise a guiding principle in appointments to management bodies within Demag Cranes AG. In keeping with this principle, Demag Cranes plans to link up, on the corporate website, the job search databases of all country-level subsidiaries in the Group.

Supervisory Board

The Supervisory Board of Demag Cranes AG consists of twelve members. In accordance with the law governing listed companies and co-determination, six members are shareholders and six are employee representatives. Further information on the composition of the Supervisory Board is provided online at www.demagcranes-ag.com/supervisoryboard. The Report of the Supervisory Board beginning on page 6 et seqq. of the Annual Report 2010/2011, available online at www.demagcranes-ag.com/financialreport2010/2011, provides details on the activities of the Supervisory Board and its committees during the reporting period.

The Supervisory Board has adopted specific objectives regarding its composition that take into account the business situation while making provision for the Company’s international activities, potential conflicts of interest, an age limit for Supervisory Board members, and diversity. Supplementary to stipulations in its Rules of Procedure, the Supervisory Board has laid down the following specific objectives for its future composition:

• International scope
  As a global player, Demag Cranes manufactures in 16 countries on five continents and operates a worldwide sales and service network with a presence in over 60 countries through subsidiaries, representative offices and a joint venture. The Supervisory Board reflects these international activities in its composition.
  
  The Supervisory Board should therefore continue to include at least two members with several years’ international expertise.
• Potential conflicts of interest
  Provision is also made in the composition of the Supervisory Board for potential conflicts of interest involving Supervisory Board members. Accordingly, members of the Supervisory Board each pledge for the duration of their term of office to comply with the German Corporate Governance Code’s recommendations and suggestions on conflicts of interest. Additionally, before submission of the annual Compliance Statement, members of the Supervisory Board are each required to declare to the Chairman of the Supervisory Board that no conflicts of interest involving them have arisen in the past year.
• Stipulated Age Limit
  The composition of the Supervisory Board reflects the stipulated age limit. The rule is that Supervisory Board members are not normally allowed to remain in office beyond the close of the Annual General Meeting following their 70th birthday. Reasons must be given for any Supervisory Board nomination for election in departure from the stipulated age limit.
• Diversity
  The composition of the Supervisory Board takes account first and foremost of appropriate qualification and diversity and seeks to ensure the appropriate representation of women. The Supervisory Board is therefore to include suitably qualified woman members in the near future. The Supervisory Board will take this aim into account in nominations of shareholder representatives for Supervisory Board election. The same applies in the event of judicial appointment.

The Supervisory Board currently includes a number of members whose careers have given them several years’ international expertise. There are no women on the Supervisory Board at the present time.

Conflicts of interest involving Supervisory Board members must be disclosed to the Chairman of the Supervisory Board. There were no such conflicts of interest in the reporting period. The members of the Supervisory Board each declared on adoption of this year’s Compliance Statement that no conflicts of interest involving them had arisen in the past year.

It is noted for the record that Supervisory Board member Jens Tischendorf, who stepped down from the Supervisory Board with effect from 23 September 2011, was simultaneously a Partner at Cevian Capital. Through investment vehicles, Cevian Capital had an approximate 10.07% shareholding in Demag Cranes AG. This fact was known to all members of the Supervisory Board. Kevin A. Barr and Brian J. Henry, Senior Vice Presidents of Terex Corporation, and Oren G. Shaffer, member of the Board of Directors of Terex Corporation, were appointed as members of the Supervisory Board by court order with effect from 24 September 2011. Following consummation of the tender offer from Terex Industrial Holding AG, Terex Corporation has an approximate 81.87% (notification dated 16 August 2011) indirect shareholding in Demag Cranes AG. This fact is likewise known to all members of the Supervisory Board. In the opinion of the Supervisory Board, however, association with a major shareholder does not necessarily constitute a conflict of interest. Similarly, no conflict of interest was found to have arisen for Jens Tischendorf in the Supervisory Board’s consultations on the tender offer from Terex Industrial Holding AG or in particular in the adoption of the Supervisory Board resolution on the statements on the tender offer required to be submitted under Section 27 of the German Securities Acquisition and Takeover Act (WpÜG). Cevian Capital was affected by the tender offer in the same way as other shareholders. Jens Tischendorf therefore took part in the Supervisory Board meetings and resolutions on the tender offer from Terex Industrial Holding AG.

The Supervisory Board regularly discusses business performance and plans together with strategy and its implementation with the Management Board. The Supervisory Board and the Management Board likewise discuss interim financial reports prior to their publication. The Supervisory Board must be involved in decisions of fundamental importance to the Company. The Supervisory Board has issued Rules of Procedure governing its own work.

No former members of the Management Board of Demag AG are members of the Supervisory Board. There were no contracts for consulting work or other services between the Company and members of the Supervisory Board during the reporting period. Members of the Supervisory Board take care to ensure that they have sufficient time to perform their mandate. No member of the Supervisory Board holds a directorship or similar position with or performs consulting work for any major competitor.

Members of the Supervisory Board receive appropriate support from Demag Cranes AG in undertaking the training and development activities required to perform their duties.

Supervisory Board committees

The Supervisory Board is supported in its work by committees. In accordance with the Rules of Procedure for the Supervisory Board, the Supervisory Board has formed a General Committee, an Audit Committee, a Nominations Committee and a Mediation Committee in accordance with Section 27 (3) of the German Co-determination Act (MitbestG).

The General Committee, the Audit Committee and the Mediation Committee each have four members, of which two are shareholder representatives and two are employee representatives. The Nominations Committee comprises all shareholder representatives on the Supervisory Board.

The Chairman of the Supervisory Board also chairs the General Committee and the Mediation Committee. The Supervisory Board elects a chairman of the Audit Committee and the Nominations Committee elects its chairman from among the shareholder representatives. The Chairman of the Nominations Committee was Burkhard Schuchmann until 23 September 2011. At its meeting of 29 November 2011, the Nominations Committee elected Dr. Michael W. Ernestus as its new Chairman. The Chairman of the Audit Committee was Prof. Dr. h. c. Karlheinz Hornung until 23 September 2011. Oren G. Shaffer has been Chairman of the Audit Committee since 29 September 2011. The former and the new Chairmen of the Audit Committee have at no time been members of the Company’s Management Board, are independent and, as a result of their education and professional experience, have appropriate accounting and auditing expertise.

The detailed composition of the Supervisory Board committees is presented beginning on page 196 et seq. of the Annual Report 2010/2011.

The Audit Committee has four regular meetings each calendar year and the General Committee two, although four meetings of the General Committee took place in the past financial year. The Nominations and Mediation Committees meet as required. The Nominations and Mediation Committees did not meet during the past year.

The responsibilities of the General Committee include preparing the Supervisory Board’s personnel decisions. To the extent permitted by law, it also governs legal relations between the Company and the members of the Management Board. Certain functions relating to M&A transactions are delegated to the General Committee.

The Audit Committee is primarily responsible for questions of financial reporting, the internal control system and risk management as well as for ensuring the required auditor independence. The Audit Committee also supports the Supervisory Board in supervising the Management Board in its management of the Company, focusing in particular in this regard on risk management and compliance issues.

The Nominations Committee proposes suitable candidates to the Supervisory Board for the latter’s nominations for election at the Annual General Meeting. The Mediation Committee has the responsibilities laid down in Sections 27 and 31, MitbestG.

Further information on the work of the committees can be found in the Report of the Supervisory Board, which is included in the Annual Report 2010/2011, available online at www.demagcranes-ag.com/financialreport2010/2011.

Düsseldorf, 30 November 2011

Demag Cranes AG

Board of Management and Supervisory Board