Declaration by Corporate Management Pursuant to Section 289f and 315d of the German Commercial Code

With the Declaration by Corporate Management pursuant to Sections 289f and 315d of the German Commercial Code for Bayer AG and the Bayer Group, the company provides information on the main elements of the Bayer Group’s corporate governance structures, relevant corporate governance practices, the composition and procedures of the Board of Management and the Supervisory Board and its committees, and the objectives and concepts that must be established when composing the Board of Management and the Supervisory Board.

Compensation of the Board of Management: see Chapter “Compensation Report”

Declaration concerning the German Corporate Governance Code pursuant to Section 161 of the German Stock Corporation Act

In May 2018, the Board of Management and the Supervisory Board of Bayer AG published a supplement to the declaration of December 2017, noting two planned deviations from the recommendations of the Corporate Governance Code. Firstly, it was not possible to publish the interim report for the second quarter within the recommended deadline of 45 days due to the closing of the Monsanto transaction, as the necessary activities in connection with the first-time consolidation of this company could not be completed within this period. Secondly and also in connection with the acquisition, the performance targets for the short-term variable compensation of the members of the Board of Management were adjusted during 2018 to enable the continued evaluation of the Board of Management in accordance with proper and demanding criteria following the completion of the acquisition.

The declaration issued in December 2018 concerning the German Corporate Governance Code is published on the Bayer website along with previous declarations: www.bayer.com/en/corporate-governance.aspx

In December 2018, the Board of Management and Supervisory Board of Bayer AG once again issued the annual declaration concerning the German Corporate Governance Code. As stated in this declaration, Bayer AG complied with the recommendations of the German Corporate Governance Code in the past with the two aforementioned exceptions, and intends to fully comply with them once again in the future.

Information on corporate governance practices

Bayer AG is subject to German stock corporation law and therefore has a dual governance system consisting of the Board of Management and the Supervisory Board, which manage the company based on a transparent strategy that is geared toward the long-term success of the company and complies with applicable law and ethical standards.

Corporate governance practices that go beyond the legal requirements are derived from our vision and our common values, which form the basis of the respectful working relationship between our employees and with our external partners. Compliance with responsible practices at every stage of the value chain is crucial in corporate governance. The main guidelines are summarized primarily in our corporate policies on compliance, human rights, and fairness and respect at work, as well as our Supplier Code of Conduct. The organization and oversight obligations of the Board of Management and the Supervisory Board are mainly ensured by compliance management and risk management systems.

Board of Management

Composition and objectives (diversity concept)

The Board of Management of Bayer AG is comprised of seven members and runs the company on its own responsibility with the goal of sustainably increasing the company’s enterprise value and achieving defined corporate objectives.

Members of the Board of Management and offices they hold: see Chapter “Supervisory Board”

In the composition of the Board of Management, the Supervisory Board mainly takes into account specialist expertise and personal aptitude, as well as aspects such as age, gender, education and professional background. With regard to the proportion of women on the company’s Board of Management, the Supervisory Board aims to ensure that there is at least one woman serving on the Board of Management. This corresponds to a share of around 14% of the seven-member Board of Management.

Another aspect relating to the composition of the Board of Management that the Supervisory Board has resolved to pursue is diversity. Without basing selection decisions on this aspect in individual cases, the Supervisory Board aims to ensure that different age groups are adequately represented on the Board of Management, while also taking into account the experience required for a position on the Board of Management. Irrespective of this, members of the Board of Management should generally step down from that office when they turn 62. The composition of the Board of Management should adequately reflect the company’s international operations. The Supervisory Board therefore endeavors to include on the Board of Management several members of different nationalities or with an international background (e.g. several years of career experience outside Germany or the oversight of foreign business activities). The Supervisory Board also strives to ensure diversity with regard to the educational and professional background of the members of the Board of Management. In addition to the requisite specific professional expertise, management and leadership experience for the given task, members of the Board of Management should cover the broadest possible spectrum of knowledge, experience, and educational and professional backgrounds.

These objectives are taken into account in the selection of candidates to fill open positions on the Board of Management. With this concept for the composition of the Board of Management, the Supervisory Board pursues the goal of ensuring not just the greatest possible individual suitability of its various members, but also that as many different perspectives as possible are represented in the leadership of the company through a balanced and diverse Board of Management structure and that the candidate selection pool is as large as possible.

In accordance with statutory requirements, furthermore, there are also targets pertaining to the proportion of women at the first and second management levels below the Board of Management of Bayer AG. The Board of Management has set objectives of 20% women on the first management level of Bayer AG and 25% women on the second management level. These objectives are to be attained by June 30, 2022.

Implementation status of the objectives

Since the departure of Erica Mann on March 31, 2018, there has not been a woman on the Board of Management. We will continue to intensively pursue our target of having one woman on the Board of Management by June 30, 2022, or beforehand if at all possible. The goal of adequate representation of different age groups, while also taking into account the experience required for Board of Management positions, was achieved. The ages of the members of the Board of Management were relatively evenly spread across a range of 49 to 62 years as of December 31, 2018. Three of the seven members of the Board of Management are citizens of a country other than Germany. All members of the Board of Management have amassed many years of career experience outside Germany. The members of the Board of Management also have diverse educational and professional backgrounds: Some have completed various business-related courses of study or training, while others have studied in various scientific fields including medicine.

The Board of Management should in the future return to having at least one female member.

Procedure and committees

The Board of Management performs its tasks according to the law, the Articles of Incorporation and the Board’s rules of procedure, and works with the company’s other governance bodies in a spirit of trust.

For more information on the procedure and committees of the Board of Management see www.bayer.com/corporate-governance.aspx

Supervisory Board

Composition and objectives (diversity concept and expertise profile)

Under the German Codetermination Act, half of the Supervisory Board’s 20 members are elected by the stockholders, and half by the company’s employees.

Members of the Supervisory Board and offices of the members of the Supervisory Board: see Chapter “Supervisory Board”

Compensation of the members of the Supervisory Board: see Chapter “Disclosures pursuant to HGB”

The Supervisory Board endeavors to ensure that its members together possess the necessary expertise, skills and professional experience to properly perform their duties. It strives particularly to ensure that the members of the Supervisory Board possess expertise, skills and professional experience in the following areas: management and leadership of international companies, a business understanding with regard to the company’s main areas of activity, research and development, finance, controlling / risk management, human resources and governance / compliance.

The Supervisory Board has also resolved to pursue diversity in its composition, for instance with regard to age, gender, education and professional background. With respect to the international business alignment of Bayer AG, the Supervisory Board strives to ensure at all times that several of its members have international business experience or an international background in other respects. Further objectives concerning the composition of the Supervisory Board are that different age groups be suitably represented on the Supervisory Board and that, absent special circumstances, a member should not hold office beyond the end of the next Annual Stockholders’ Meeting following his or her 72nd birthday. With a view to avoiding potential conflicts of interest and taking into account the ownership structure of the company and the number of independent Supervisory Board members, the Supervisory Board has set itself the goal that more than half of the stockholder representatives be independent. In addition, the Supervisory Board aims for at least three quarters of its total membership (stockholder and employee representatives) to be independent. The Supervisory Board assesses the independence of its members according to the recommendation contained in Section 5.4.2 of the German Corporate Governance Code. In assessing independence, the Supervisory Board also considers the criteria given in the recommendation of the European Commission of February 15, 2005.6 Finally, the Supervisory Board has set a standard limit on the duration of any person’s membership of the Supervisory Board in line with the recommendation in Section 5.4.1, Paragraph 2 of the Code. Absent special circumstances, no person should remain a member of the Supervisory Board for more than three full terms of office. For members of the Supervisory Board serving at the time the standard limit was introduced (September 2015) who have already exceeded this limit or will exceed it by the end of their current term of office, the limit will be applied with effect from the conclusion of their current term of office.

6 Annex 2 to the recommendation of the European Commission of February 15, 2005, on the role of nonexecutive or supervisory directors of listed companies and on the committees of the (supervisory) board (2005/162/EC)

The Nominations Committee and the full Supervisory Board take these objectives into consideration when selecting candidates to fill open positions on the Supervisory Board. The stated objectives refer to the Supervisory Board as a whole unless otherwise determined. However, since the Supervisory Board can only nominate candidates for election as stockholder representatives, it can only take the objectives into account in these nominations. One objective for Supervisory Board elections is that neither women nor men account for less than 30% of the membership.

The Supervisory Board aims to achieve a balanced and diverse composition, to the extent that it can influence this. The aim is to ensure that as many different perspectives as possible are represented in the leadership of the company and that the candidate selection pool is as large as possible.

Implementation status of the objectives

The Supervisory Board has several members with international business experience or an international background. The ages of the members of the Supervisory Board were relatively evenly spread across a range of 48 to 72 years as of December 31, 2018. The objective that a member should step down from the Supervisory Board at the Annual Stockholders’ Meeting following their 72nd birthday – absent special circumstances – is being met. Two members of the Supervisory Board were previously members of the company’s Board of Management: Werner Wenning was Chairman of the Board of Management until 2010, and Prof. Dr. Wolfgang Plischke was a member of the Board of Management until 2014. One member of the Supervisory Board, Dr. Paul Achleitner, has been a member of the Supervisory Board for more than three terms of office. However, neither Werner Wenning nor Prof. Dr. Wolfgang Plischke nor Dr. Paul Achleitner has any personal or business relationship with the company or a governance body of the company that in the opinion of the Supervisory Board gives rise to a material conflict of interest of a more than temporary nature.

There are no indications of any possible lack of independence in the case of the other Supervisory Board members. Thus the Supervisory Board considers all of its members to be independent. The proportion of women on the Supervisory Board is currently 30% for the full Supervisory Board and 30% for both the employee and the stockholder representatives. Five members of the Supervisory Board are citizens of a country other than Germany. Numerous other members have many years of international business experience. The members of the Supervisory Board have also completed various different vocational training and study courses.

Procedure and committees

The role of the Supervisory Board is to oversee and advise the Board of Management. The Supervisory Board is directly involved in decisions on matters of fundamental importance to the company, regularly conferring with the Board of Management on the company’s strategic alignment and the implementation status of the business strategy. The Report of the Supervisory Board in this Annual Report provides details about the work of the Supervisory Board and its committees.

See Chapter “Responsibility Statement” for information on the committees’ responsibilities

Further information

Securities transactions by members of governance bodies

Members of the Board of Management or Supervisory Board and persons with whom they have close relationships are legally obligated to report own-account transactions in shares or debt securities of Bayer AG, associated derivatives or other associated financial instruments to Bayer AG and the German Federal Financial Supervisory Authority (BaFin) as soon as the total volume of transactions made by a member of the Board of Management or Supervisory Board, or a person with whom they have a close relationship, within a calendar year has reached the €5,000 threshold. The transactions reported to Bayer AG in 2018 were duly published and can be viewed on the company’s website.

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