Dr. Simone Bagel-Trah, Vorsitzende des Gesellschafterausschusses und des Aufsichtsrats

Dear Shareholders and Friends of the Company,

2011 was again a successful year for Henkel. We were able to significantly increase both sales and profits in all our business units while further strengthening our position in many markets. This was an excellent achievement, particularly in view of the difficult business environment. The natural disasters in Japan and Thailand, and political unrest in the Middle East and North Africa coincided with major challenges and uncertainties in our markets arising from the debt crisis. We also had to deal with significantly rising raw material prices and persistently intense competition. Despite these challenges, our company performed very well in fiscal 2011.

On behalf of the Supervisory Board, I thank all employees for their hard work and commitment. Without their contribution this outcome would not have been possible. I would also like to thank the members of the Management Board for their successful and effective leadership of the company through this difficult period, and the employee representatives and Works Councils for their constructive support in Henkel’s development. In particular, I would like to extend our gratitude to you, our shareholders, for the confidence you continue to show in our company, its management, its employees, and its products and services.

Ongoing dialogue with the Management Board

Again in fiscal 2011, we as the Supervisory Board diligently discharged our duties in accordance with the legal statutes, Articles of Association and rules of procedure governing our actions. We carefully and regularly monitored the work of the Management Board, advising and supporting it in its stewardship, in the strategic further development of the company and in decisions relating to matters of major importance.

Cooperation between the Management Board and the Supervisory Board takes place through extensive dialogue based on mutual trust and confidence. Throughout fiscal 2011, the Management Board kept us fully informed of all major issues affecting the company and its Group companies with prompt, detailed written and oral reports. Specifically, the Management Board provided explanations of the business situation, operational development, business policy, profitability issues, and our short-term and long-term corporate, financial and personnel planning, as well as capital expenditures and organizational measures. In the course of preparing the quarterly reports, moreover, details were given of the sales and profits of the Henkel Group as a whole, with further analysis by business sector and region.

Outside Supervisory Board meetings, I as Chairwoman remained in regular contact with the Chairman of the Management Board; this ensured that the Supervisory Board was constantly kept informed of current business developments and major occurrences.

The Supervisory Board and the Audit Committee each held four regular meetings in 2011. Attendance of the Supervisory Board meetings during the year averaged 94 percent. No member of the Supervisory Board participated in fewer than half the meetings. All Audit Committee meetings were fully attended apart from one.

There were no conflicts of interest involving Management Board or Supervisory Board members which had to be disclosed to the Supervisory Board and reported to the Annual General Meeting.

Major issues discussed at Supervisory Board meetings

In all our meetings, we discussed the reports provided by the Management Board, consulting with its members on the development of the corporation and strategic issues. We also discussed the overall economic situation and Henkel’s business development.

The main items on the agenda for our meeting of February 22, 2011 were approval of the annual and consolidated financial statements for 2010, including the risk report and the corporate governance report, the 2011 Declaration of Compliance, and our proposed resolutions for the Annual General Meeting, relevant details of which were published in our last Annual Report. During the same meeting, we further dealt with specifics relating to Henkel’s market appearance and questions pertaining to the presentation of Henkel as an attractive employer.

At our meeting of April 11, 2011, which was held straight after the Annual General Meeting, the main topics discussed – aside from the general performance of the individual business sectors – centered on current developments in Japan, Egypt and Tunisia. We also consulted on the effects of the increases in raw material prices, discussed in detail the importance of the North American market for Henkel’s branded consumer goods business and our development in general, and issues relating to the implementation of our new vision and values.

In addition to operational developments in the first eight months of the financial year, our meeting held on September 27, 2011 also focused on strategic issues. We consulted on the further development of our sustainability strategy, formulated under the heading “Achieving more with less.” We considered the status and structure of our shared service centers, and also the efficiency improvements accompanying the further standardization of our processes and the associated transfer of duties and responsibilities. We likewise consulted on the future strategic direction of Henkel and on our information technology strategy and its alignment to our future requirements.

At our meeting of December 13, 2011, we extensively discussed – on the basis of comprehensive documentation – our assets and financial planning, including our statement of income and the detailed budgets of our business sectors.

In our meetings, we also discussed compliance issues, focusing particularly on antitrust infringements and the related decisions both of the EU Commission dated April 13, 2011, and of the French antitrust authority dated December 8, 2011.

Supervisory Board committees

In order to efficiently comply with the duties incumbent upon us according to legal statute and our Articles of Association, we assign certain activities to two separate committees: an Audit Committee and a Nominations Committee. For more details on the responsibilities and composition of these committees, please refer to our Corporate governance/Corporate management report and the membership lists inObjectives regarding Supervisory Board compositionSubcommittees of the Supervisory Board .

Committee activities

The Audit Committee met four times in the year under review. The meetings and resolutions were prepared through the provision of reports and other information by the Management Board. The Chair of the Committee reported promptly and in full to the plenary Supervisory Board on the content and results of each of the Committee meetings.

The focus at all the Audit Committee meetings was on the company and consolidated Group accounts, including the interim financial reports, with all matters being duly discussed with the Management Board. The three meetings at which we discussed and approved the interim financial reports were attended by the auditor. The latter reported on the results of the respective reviews and on all the main issues and occurrences relevant to the work of the Audit Committee. There were no objections raised in response to these reports.

The Audit Committee also scrutinized the accounting process and the efficacy and further development of the internal Group-wide control and risk management system. The Committee received the status reports of the Chief Compliance Officer and the Head of Internal Audit, and approved the audit plan put forward by Internal Audit, which extends to examining the functional efficiency and efficacy of the Internal Control System and our compliance organization.

The Audit Committee mandated the external auditor, pursuant to the latter’s appointment by the 2011 Annual General Meeting, to audit the annual financial statements and the consolidated financial statements for fiscal 2011, and also to review the interim financial reports for fiscal 2011. The audit fee was also established. The Audit Committee obtained the necessary validation of auditor independence for the performance of these tasks. The auditor has informed the Audit Committee that there are no circumstances that might give rise to a conflict of interest in the execution of its duties.

At its meeting of March 5, 2012, attended by the auditor, the Audit Committee discussed the annual and consolidated financial statements for fiscal 2011, including the audit reports, the associated proposal for the appropriation of profits, and the risk report, and submitted to the Supervisory Board corresponding proposals for resolution by the Annual General Meeting. The Committee further made its recommendation to the Supervisory Board regarding the latter’s proposal for resolution to be presented before the Annual General Meeting relating to the appointment of the external auditor for fiscal 2012.

A declaration from the auditor asserting its independence was again duly received, accompanied by details pertaining to non-audit services rendered in fiscal 2011 and those envisaged for fiscal 2012. There was no evidence of any bias or partiality on the part of the auditor. Other members of the Supervisory Board also took part as guests in this specifically audit-related meeting of the Audit Committee.

On the basis of the objectives agreed within the Supervisory Board with respect to its future composition, the members of the Nominations Committee made appropriate recommendations in preparation for the resolutions to be formulated by the Supervisory Board and placed before the 2012 Annual General Meeting with respect to the upcoming election of shareholder-representative members.

Efficiency audit

The Supervisory Board and the Audit Committee regularly examine the efficiency with which they perform their duties. This is done through discussion in the Supervisory Board plenary meetings and within the Audit Committee, based on a comprehensive, company-specific checklist. This deals with relevant major aspects such as preparation and conduct of meetings, scope and content of documentation and information ( particularly with respect to financial reporting and auditing tasks), performance management and cost control, and risk management. Questions relating to corporate governance and possible improvements are also dealt with.

The results of these self-assessment audits were discussed in detail at the meeting of the Audit Committee on March 5, 2012, and that of the Supervisory Board on March 6, 2012. The efficiency of the Audit Committee and the Supervisory Board, and also the requisite independence of their members, were duly confirmed.

Corporate governance and declaration of compliance

Again in 2011, we consulted on issues relating to corporate governance, details of which are available in the Corporate governance report, with which we fully acquiesce.

At the meeting of March 6, 2012, we discussed and approved the joint Declaration of Compliance of the Management Board, the Shareholders’ Committee and the Supervisory Board with respect to the German Corporate Governance Code (Kodex) for 2012. The full wording of the current and previous declarations of compliance can be found on the company website.

Annual and consolidated financial statements/Audit

The annual financial statements of Henkel AG & Co. KGaA and the management report have been prepared by the Management Board in accordance with the provisions of the German Commercial Code [HGB]. The consolidated financial statements and the Group management report have been prepared by the Management Board in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union, and in accordance with the supplementary German statutory provisions pursuant to Section 315a (1) HGB. The consolidated financial statements in their present form exempt us from the requirement to prepare consolidated financial statements in accordance with German law.

The auditor appointed for 2011 by the last Annual General Meeting – KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG) – has examined the 2011 annual financial statements of Henkel AG & Co. KGaA and the 2011 consolidated financial statements, including the management reports. The annual financial statements and the consolidated financial statements have been issued with an unqualified opinion.

KPMG reports that the annual financial statements give a true and fair view of the net assets, financial position and results of operations of Henkel AG & Co. KGaA in accordance with German generally accepted accounting principles, and that the consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group in compliance with International Financial Reporting Standards and the supplementary German statutes pursuant to Section 315a (1) HGB.

The annual financial statements and management report, consolidated financial statements and Group management report, the audit reports of KPMG and the recommendations by the Management Board for the appropriation of the profit made by Henkel AG & Co. KGaA were duly laid before all members of the Supervisory Board. We examined these documents and discussed them at our meeting of March 6, 2012. This was attended by the auditor, which reported on its main audit findings. We received the audit reports and voiced our acquiescence therewith.The Chair of the Audit Committee provided the plenary session of the Supervisory Board with a detailed account of the treatment of the annual and the consolidated financial statements by the Audit Committee. Having received the final results of the review conducted by the Audit Committee and concluded our own examination, we see no reason for objection to the aforementioned documents. The assessment by the Management Board of the position of the company and the Group coincides with our own appraisal. At our meeting of March 6, 2012, we concurred with the recommendations of the Audit Committee and therefore approved the annual financial statements, the consolidated financial statements and the management reports as prepared by the Management Board.

We also discussed and approved the proposal by the Management Board to pay out of the unappropriated profit of Henkel AG & Co. KGaA a dividend of 0.78 euros per ordinary share and of 0.80 euros per preferred share, and to carry the amount attributable to the treasury shares held by the company at the time of the Annual General Meeting forward to the following year. This proposal takes into account the financial and earnings position of the corporation, its medium-term financial and investment planning, and the interests of our shareholders. We consider the proposed dividends to be reasonable and appropriate. Also at this meeting, we ratified our proposal for resolution to be presented before the Annual General Meeting relating to the appointment of the external auditor for the next financial year, based on the recommendations of the Audit Committee.

Risk management

Risk management issues were examined not only by the Audit Committee but also the plenary Supervisory Board. The emphasis was on the risk management system in place at Henkel and any major individual risks of which we needed to be notified. There were no identifiable risks that might jeopardize the continued existence of the corporation as a going concern. The structure and function of the risk management system were also integral to the audit performed by KPMG, which found no cause for reservation. It is our considered opinion that the risk management system corresponds to the statutory requirements and is fit for the purpose of early identification of developments that could endanger the continuation of the corporation as a going concern.

Changes in the Supervisory Board and Management Board

Mr. Ulf Wentzien, Senior Staff Representative on the Supervisory Board, resigned his seat as of December 31, 2011, and we would like to extend to him our sincere thanks for his service and contribution. Dr. Martina Seiler was appointed by the District Court to take his place.

The Management Board underwent a number of changes in the course of the year, some of which were already reported last year. Effective January 1, 2011, Mr. Jan-Dirk Auris joined the Management Board as Executive Vice President for Adhesive Technologies. Mr. Bruno Piacenza assumed responsibility for the Laundry & Home Care business sector on March 1, 2011. He takes over from Dr. Friedrich Stara who has retired and to whom we extend our sincere thanks for his many years of successful service. On October 1, 2011, Mrs. Kathrin Menges was appointed to the Management Board as a new member and Executive Vice President Human Resources, and we wish her every success in this role. After more than thirty years with Henkel, Dr. Lothar Steinebach will be retiring at the end of June 2012; his successor will be Mr. Carsten Knobel, due to take up his new duties as of July 2012. We are particularly pleased that we have been able to fill all these positions on the Management Board by promoting senior managers with long-standing experience within Henkel.

As in the previous year, fiscal 2012 is expected to bring major challenges for our company, its employees and its management. Many of the issues and changes that characterized 2011 will remain with us in 2012. Building on the significant progress that our company has made in recent years, we are convinced that Henkel is in excellent shape and we look forward with confidence to the further development of our company.

We thank you for your ongoing trust and support.

Düsseldorf, March 6, 2012

On behalf of the Supervisory Board

Dr. Simone Bagel-Trah
(Chairwoman)

Dr. Simone Bagel-Trah
Chairwoman of the Shareholders’ Committee and the Supervisory Board, pictured here in Henkel’s “Forscherwelt”,
a research center created especially for children.

Further Links

www.henkel-forscherwelt.de (German)

“We look forward with confidence to the further development of our company.”