oerlikon

Georg Stumpf
Has been Chairman of the Board of Directors of OC Oerlikon Corporation AG, Pfäffikon since February 2006, after having been elected to the Board in 2005. The Millennium Privatstiftung, Vienna, which was founded by Georg Stumpf, owns 50 percent of Victory Industriebeteiligung AG, the largest shareholder in Oerlikon. Georg Stumpf has been successfully managing investment projects in Europe since 1995 via his own company, Stumpf AG, which has offices in Vienna, London and Budapest. Prior to that he was Managing Director of the Stumpf family business, which for the past 50 years has owned an array of financial interests in industrial companies and in the field of commercial real estate development. Georg Stumpf graduated summa cum laude from the Vienna University of Economics and Business Administration and has an educational background in structural and civil engineering.

Thomas Limberger
Has been a member of the Board of Directors of OC Oerlikon Corporation AG, Pfäffikon since 2004 and is Vice Chairman since February 2006. He has headed Oerlikon since August 1, 2005 as Chief Executive Officer. Prior to that, Thomas Limberger was CEO of General Electric Germany, Austria and Switzerland, and in this position was responsible for 11 000 employees and an annual sales of over EUR 6 billion. From 1996 to 2002 he held various management positions with healthcare company Fresenius and Fresenius Medical Care. Thomas Limberger is a Board member of the American Chamber of Commerce in Germany and the Central Association of the Electrical Engineering and Electronics Industry Germany. He holds a Master of Business Administration degree (MBA) in Finance & Strategic Management.

Günther Robol
Has been a member of the Board of Directors of OC Oerlikon Corporation AG, Pfäffikon since 2005. He is an independent management consultant who specializes in auditing, corporate financial examination and insolvency law. Prior to that, Günther Robol headed the Austrian affiliate of Price Waterhouse as the President of its management committee. From 1965 to 1991 he worked for a number of auditing firms. Günther Robol is a director of several other companies and a lecturer at the Innsbruck University of Applied Sciences. He has also been Vice President of the Austrian Institute of Auditors and a member of various professional associations. Günther Robol completed his studies in economics and sociology in Vienna with a degree in business management.

Christian Schmidt
Has been a member of the Board of Directors of OC Oerlikon Corporation AG, Pfäffikon since 2005. He is co-owner and Executive Board member of a number of industrial companies and holds various directorships in Switzerland and elsewhere: he is chairman of Board of Von Roll Inova Holding AG, Zurich. Christian Schmidt completed studies in the field of geotechnics and water resource planning at the University of Natural Resources and Applied Life Sciences in Vienna, as well as in technical management sciences at the Swiss Federal Institute of Technology (ETH) in Zurich.

Mirko Kovats
(not pictured) held the post of Chairman of the Board of OC Oerlikon Corporation AG, Pfäffikon from June 2005 to January 2006. Until January 2006 he was co-owner of Victory Industriebeteiligung AG. Mirko Kovats is the largest shareholder of A-Tec Industries AG and Chairman of the Board of ATB Austria Antriebstechnik AG. He studied commercial sciences at the Vienna School of Economics.

Board of Directors

In this financial year, the Board of Directors of OC Oerlikon Corporation AG, Pfäffikon was composed of Mirko Kovats (Chairman up to January 31, 2006), Georg Stumpf (Vice Chairman), Thomas Limberger, Günther Robol and Christian Schmidt. Mirko Kovats stepped down from the Board of Directors as of January 31, 2006. Effective from February 1, 2006, Georg Stumpf was elected Chairman of the Board and Thomas Limberger Vice Chairman.

In the three financial years up to the reporting period, the non-executive members of the Board of Directors were not involved in the upper management of OC Oerlikon Corporation AG, Pfäffikon or any other Group company. They do not have any material business dealings with the Oerlikon Group.

Composition of the Board of Directors

Name (Nationality)	Residency	Position	Age	Elected	Term expires	Executive/ Non-executive
Georg Stumpf (A)	A	Chairman since 1.2.2006 Vice Chairman until 31.1.2006	34	2006	2008	Non-executive
Thomas Limberger (D)	CH	Vice Chairman since 1.2.2006	39	2004	2007	Executive since 1.8.2005
Günther Robol (A)	CH	Member	66	2005	2008	Non-executive
Christian Schmidt (A)	CH	Member	49	2005	2008	Non-executive
Mirko Kovats (A)	A	Member and Chairman until 31.1.2006	58	2005	-	Non-executive

Other activities and vested interests

See above.

Cross-involvement

There are no cross-involvements.

Elections and terms of office

Board members are elected by the General Meeting of shareholders for a term of three years. They may be re-elected for a new three-year term of office prior to the expiration of their current term. The schedule of elections is where possible set in such a way that the term of office of about one-third of the members expires each year. Pursuant to the Rules of Organization, the mandate of Board members expires - the current term of office notwithstanding - at the next Ordinary General Meeting of shareholders after a given Board member reaches the age of 70.

Interne Organisation

Internal organizational structure

Allocation of tasks within the Board of Directors: The Board of Directors is the ultimate management body of the Group. It is empowered to rule on all matters not by law, statutes or regulations reserved for, or otherwise delegated to, some other corporate body (see also page 70, Definition of Areas of Responsibility). Implementation of the Board's resolutions is the responsibility of the Executive Board.

The Chairman of the Board of Directors presides over the Board and is the immediate superior of the Chief Executive Officer (CEO) and the other members of the Executive Board. The Chairman convokes, prepares and chairs meetings of the Board. He also represents the corporation vis-à-vis shareholders, chairs the General Meeting of the shareholders and supervises the internal audit in conjunction with the Audit Committee. If the Chairman is pre ented from performing his duties due to illness, accident or extended absence, those duties are assumed by the Vice Chairman of the Board for the duration of any such absence or, should he also be unavailable, by some other member to be designated by the Board.

Committees of the Board of Directors: two permanent committees exist to assist the Board of Directors or prepare for important decisions:

Audit Committee (AC) and Human Resources Committee (HRC).

Membership of these committees in 2006 was as follows:

Composition of committees of the Board of Directors

Name	Audit Committee (AC)	Human Resources Committee (HRC)
Georg Stumpf	Member	Chairman from 1.2.2006
Thomas Limberger	Member	Member
Günther Robol	Chairman	-
Christian Schmidt	-	Member
Mirko Kovats	-	Chairman until 31.1.2006

Mirko Kovats stepped down from the Board of Directors as of 31 January 2006; since that time the Human Resources Committee has been chaired by Georg Stumpf.

Audit Committee (AC)

The responsibilities of the former Audit and Finance Committee were reduced during the reporting year - as was the norm internationally - to just audit-related matters, and the name of the committee therefore changed to Audit Committee. Finance matters are now dealt with directly by the full Board. The AC comprises at least three and a maximum of six preferably non-executive, independant members of the Board of Directors. The majority of its members, including its Chairman, must be experienced in the fields of finance and accounting. At least one member should have experience of financial reporting. The AC advises and supports the Board of Directors primarily in the areas of accounting and financial reporting, internal and external audit, internal control systems, corporate governance and compliance.

Its responsibilities include:

• examining and reviewing financial reporting, in particular the individual financial statements of the holding and consolidated financial statements and the publication of certain intermediate financial reports,
• deciding wether the individual financial statements of the holding and the consolidated financial statements be recommended to the Board of Directors for presentation to the General Meeting,
• examining and approving instruments, entities and processes for monitoring and managing risks in the corporation, i.e. business risk management, external and internal audit,
• examining and approving the work, compensation and independence of external auditors,
• examining and approving the effectiveness of the monitoring system to ensure compliance with legal and regulatory provisions.

Human Resources Committee (HRC)

The HRC comprises at least three individuals, the majority of whom are non-executive, independent members of the Board of Directors. It primarily advises the Board in the following areas:

• composition of the Board of Directors, Executive Board and other key corporate positions,
• compensation of Board members, the Executive Board and other key corporate positions,
• planning for successors to the members of the Board of Directors, the Executive Board, heads of segments and business units and other important corporate positions,
• introduction of employee stock ownership programs, management development measures.

The HRC has decision-making powers concerning the introduction of and changes to compensation schemes for the Executive Board and senior management.

Work methods of the Board of Directors and its committees

The Board of Directors meets at the invitation of its Chairman as often as business matters require, or at the request of one of its members. In 2006, seven Board meetings were held, two of them in the form of telephone conferences. Meetings lasted on average around two hours. Additionally, many decisions were taken by circular.

The members of the committees, as well as their respective chairmen, are elected by the Board of Directors at the proposal of the Chairman of the Board. Their respective terms of office correspond to their term of office as a Director. Those Board members who are not members of the committees are entitled to take part in committee meetings in an advisory capacity. As a general rule, members of the Executive Board and, as required, individual experts also take part in such meetings in an advisory capacity. Where necessary, representatives of auditors or external consultants take part in committee meetings. Minutes are kept of the meetings. The committees meet at the invitation of their respective chairmen as often as business matters require, but at least four times (AC) or three times (HRC) annually.

In 2006 there were four meetings of the AC, lasting between one and four hours. In addition to the official meetings of the AC, there were frequent information meetings between the Chairman of the AC and the CFO as well as representatives of the corporate areas concerned (in particular Corporate Accounting and Internal Audit). The Chairman of the AC also met regularly with representatives of KPMG (External audit) and Ernst & Young (Internal audit). As three out of four members of the Board of Directors are also members of the HRC (and the Chairman of the Board is also Chairman of the HRC), that committee's responsibilities in this reporting period were undertaken directly by the full Board of Directors.

Definition of areas of responsibility

Pursuant to Art. 17 Para. 3 of the Articles of Association, the Board of Directors has essentially delegated the business management of OC Oerlikon Corporation AG, Pfäffikon and the Group as a whole to the Executive Board. The scope of tasks for which the Board bears responsibility essentially encompasses those inalienable and non-delegable tasks defined by law. These include the overall management of OC Oerlikon Corporation AG, Pfäffikon and the Group as a whole, the determination of the company's strategic orientation, the appointment and dismissal of the CEO and other members of the Executive Board and heads of the business units, as well as the overall supervision of those individuals entrusted with managing and representing the company.

Information and control instruments vis-à-vis senior management

The Board of Directors has a wide array of instruments that enable it to perform the tasks of monitoring strategic and operational progress as well as risk developments. The instruments at its disposal include the following elements:

The Board of Directors' right of access to and the Executive Board's duty of information: The CEO must keep the Chairman constantly informed and the Board of Directors periodically informed about the current course of the business. He must also bring any extraordinary incidents which could have considerable impact to the immediate attention of the Board. The Board of Directors also has comprehensive right of access to the CEO and the other members of the Executive Board.

The Board of Directors and its committees regularly take advice from members of the Executive Board in order to ensure that the most comprehensive and up-to-date information on the state of the corporation and all relevant elements are included in its decision-making. Additionally, heads of business units and specialist areas or other members of the Group may be consulted on a case-by-case basis in order to gain detailed and comprehensive information on complex matters.

Controlling: With regard to strategic controlling, the key instruments are strategic analyses prepared by the Group's individual business units, as well as an annually revised strategic plan. In terms of operational controlling, the Board of Directors receives the annual financial plan (budget) along with monthly controlling reports with budgeted/actual analyses to assist in the assessment of the Group's operations.

Business risk management: A key component of business risk management (BRM) is the generation of a risk matrix for the company as a whole, as well as for its individual business units. This overview, which is closely scrutinized at least once a year, enables monitoring of ongoing risks and developments and constitutes the basis for measures aimed at managing those risks. BRM is integrated into the strategic planning and budgeting processes.

Internal Audit: Oerlikon Group has had an internal audit function since 2003, originally outsourced to Ernst & Young, but since 2006 co-sourced by an internal department. With the focus on the primary risks identified by the company's Business Risk Management, past experience and current group requirements, the internal audit department checks critical processes with a view to improving security and efficiency. Compliance issues are also audited. The audit plan for the coming year addresses Oerlikon's strategic goals of the next years and has been defined in agreement with the external auditors. The internal audit plan for the year 2007 was approved by the Audit Committee in November 2006.

External Audit: The external auditor reports primarily to the Audit Committee, then to the Board of Directors, and lastly to the shareholders. Since 2003 external audit has been carried out by KPMG AG. The external auditor's plans are coordinated with those of internal audit. On completion of the audit, the Group auditor reports his findings in detail to the Audit Committee.

The continued independence of the Group auditors is ensured by written representations provided by the auditors and also by monitoring of audit fees in relation to total fees for all services paid by Oerlikon to the audit firm.