As of December 31, 2007, the LANXESS Group had a total of 14,610 employees. This was 1,871 fewer than a year earlier, due primarily to the divestment of the Lustran Polymers business unit and the Borchers activities. The employees of these business units were no longer included as of the reporting date.

As of December 31, 2007, the LANXESS Group employed 2,734 individuals in the EMEA region (not including Germany), compared to 3,083 the year before. The number of employees in Germany was down from 8,263 to 7,847. Staff in the Americas region declined to 2,650 from 3,094 in the previous year. The drop in the number of employees in all regions is mainly due to the divestment of the Lustran Polymers business. The sale of Borchers led to an additional reduction in our headcount in Europe. The increase in the number of employees in the Asia-Pacific region was offset by the divestment measures, resulting in an overall decline from 2,041 to 1,379 employees.

Personnel expenses totaled roughly €1,064 million, or 16.1% of sales, down 6.3% from the previous year. Wages and salaries, at €813 million, accounted for most of these personnel expenses. Social security contributions were €183 million, while pension plan expenses totaled €65 million, and social assistance benefits came to €3 million.

Working conditions

Our success is based on the performance and commitment of our employees. For this reason, the only way to reach our corporate goals and ensure our competitiveness is through focused and sustainable development of our employees. LANXESS has positioned itself favorably in the competition for suitable employees by encouraging an active sense of social responsibility, providing attractive jobs and development opportunities, offering performance-based, market-rate compensation, and promoting a management culture based on open dialogue. LANXESS is an attractive employer, offering the international and intercultural work environment of a global corporation, while at the same time featuring the flat hierarchies and short decision-making paths characteristic of a successful medium-sized enterprise. This standard applies not only in Germany, but in our international operations as well. In Brazil, for example, LANXESS was recognized by the Great Place to Work Institute as one of the best employers in the country in 2007. Receiving this award in a competition in which LANXESS was participating for the first time reflects our strong commitment to our employees. It is an example of how we live up to the standards we set and also indicates that the optimal conditions are in place for the pending integration of the employees of Brazilian company Petroflex S.A.

We strive for a fair compensation system linked to our company's success and the personal performance of our employees. Compensation systems that include variable bonus components in addition to fixed remuneration have been set up for more than 80% of our employees.

LANXESS Stock Plan

The LANXESS Stock Plan was again available to employees in fiscal 2007. From May 7 to 31, 2007, non-managerial and managerial employees in Germany had the opportunity to acquire LANXESS stock at a 50% discount. The share price of €38.52 on April 17, 2007 (lowest price for the day) was used to calculate the purchase price. This resulted in a subscription price of €19.26 per share.

Of the 7,500 employees entitled to participate, 64% (2006: 58%) acquired LANXESS shares. This was the highest participation rate in the LANXESS Stock Plan since its introduction in 2005.

The shares acquired through the LANXESS Stock Plan carry dividend rights and are subject to a three-year lock-up period which began on June 1, 2007 for last year's plan.

LANXESS intends also to offer the LANXESS Stock Plan in fiscal 2008.