Fresenius Medical Care AG 6-K, filed Apr 7, 2021
Fresenius Medical Care AG (FMS)
About this 6-K
Fresenius Medical Care AG filed this 6-K on April 7, 2021.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of April 2021
FRESENIUS MEDICAL CARE AG & Co. KGaA
(Translation of registrant's name into English)
Else-Kröner Strasse 1
61346 Bad Homburg
Germany
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82
On April 7, 2021 the Company published in the German electronic-Bundesanzeiger (Federal Gazette) the agenda and invitation for its 2021 Annual General Meeting (“AGM”) of Shareholders to be held May 20, 2021. A convenience translation of the invitation and agenda for the 2021 AGM has been posted on the Company’s web site, www.freseniusmedicalcare.com/en/agm, and is being furnished as an exhibit to this Report on Form 6-K. The Company has also posted on its web site two other reports referred to in the AGM invitation — the report of the Company’s Supervisory Board and the report of the Company’s general partner pursuant to § 289a para. 1 and § 315a para. 1 of the German Commercial Code. The Company is also furnishing with this Form 6-K report copies of (i) the report of the Company’s Supervisory Board and the report of the Company’s General Partner (together, the “Reports”) referred to in the AGM invitation and (ii) certain additional information (the “Supplemental Information”) that the Company has agreed to make available to its ADR holders pursuant to the Pooling Agreement among the Company, Fresenius Medical Care Management AG, the Company’s general partner, Fresenius SE & Co. KGaA and the Company’s independent directors designated in the Pooling Agreement. The Supplemental Information for ADR holders has also been posted on the Company’s web site, www.freseniusmedicalcare.com/en/agm, and is also being furnished with this Report on Form 6-K.
On or about April 19, 2021, the Depositary for the American Depositary Receipts (“ADRs”) representing the Company’s ordinary shares will distribute to ADR holders (a) a notice informing ADR holders of the electronic availability of the AGM invitation and agenda, and the Reports and other materials referred to in the agenda, and (b) a voting instruction card for ADR holders. The notice to ADR holders will include a URL link to the location on the Company’s web site where the AGM materials have been posted. The notice will also inform ADR holders that copies of the AGM invitation and agenda, the Reports and the Supplemental Information will be provided to any holder of ADRs without charge upon request made to the Depositary. The Company will furnish the notice of availability of the AGM materials and the voting instruction card with a report on Form 6-K when they are distributed to ADR holders by the Depositary.
The Company’s Annual Report on Form 20-F and the Company’s 2020 Annual Report have each been posted on the Company’s web site.
EXHIBITS
The following exhibits are being furnished with this Report:
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DATE: April 7, 2021
| Fresenius Medical Care AG & Co. KGaA, | |||
| a partnership limited by shares, represented by: | |||
| fresenius medical care management ag, its | |||
| General Partner | |||
| By: | /s/ Rice Powell | ||
| Name: | Rice Powell | ||
| Title: | Chief Executive Officer and Chairman of the Management Board of the General Partner | ||
| By: | /s/ Helen Giza | ||
| Name: | Helen Giza | ||
| Title: | Chief Financial Officer and Member of the Management Board of the General Partner | ||
Exhibit 99.1
Invitation to the Annual General Meeting
Fresenius Medical Care AG & Co. KGaA
Hof an der Saale
ISIN: DE0005785802 // Securities Identification No.: 578580
ISIN: DE000A3H23E3// Securities Identification No.: A3H23E
ISIN: US3580291066 // CUSIP: 358029106
We hereby invite our shareholders to the
Annual General Meeting
to be held on Thursday, 20 May 2021, at 10:00 hours Central European Summer Time (CEST).
Against the background of the continuing spread of the coronavirus SARS-CoV-2 and the orders of the competent authorities, the Annual General Meeting will be held as a virtual General Meeting without the physical presence of shareholders or their proxies.
I. AGENDA
| 1. | Presentation of the annual financial statements and consolidated financial statements each approved by the Supervisory Board, the management reports for Fresenius Medical Care AG & Co. KGaA and the group, the explanatory report by the General Partner on the information pursuant to sections 289a, 315a of the German Commercial Code (Handelsgesetzbuch – HGB) and the report by the Supervisory Board of Fresenius Medical Care AG & Co. KGaA for fiscal year 2020; resolution on the approval of the annual financial statements of Fresenius Medical Care AG & Co. KGaA for fiscal year 2020 |
The Supervisory Board approved the annual financial statements and the consolidated financial statements drawn up by the General Partner according to section 171 German Stock Corporation Act (Aktiengesetz – AktG). According to section 286 (1) AktG, the annual financial statements are to be submitted for approval by the General Meeting; otherwise, the aforementioned documents are to be made available to the General Meeting without requiring a further resolution in this regard.
The General Partner and the Supervisory Board propose that the annual financial statements of Fresenius Medical Care AG & Co. KGaA for fiscal year 2020 as presented, showing a profit of EUR 1,327,813,877.14, be approved.
| 2. | Resolution on the allocation of distributable profit |
The General Partner and the Supervisory Board propose to allocate the distributable profit shown in the annual financial statements in the amount of EUR 1,327,813,877.14 for fiscal year 2020 as follows:
| Payment of a dividend of EUR 1.34 for each of the 292,876,570 shares entitled to dividend | EUR | 392,454,603.80 | ||||||
| Profit carried forward to new account | EUR | 935.359.273,34 | ||||||
| Distributable profit | EUR | 1,327,813,877.14 |
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If the number of shares entitled to dividend for fiscal year 2020 changes until the General Meeting, the General Meeting will be presented with a proposal that will be adjusted accordingly, with an unchanged dividend of EUR 1.34 for each share entitled to dividend as well as accordingly amended amounts for the dividend sum and the profit carried forward to new account.
The dividend is due on 26 May 2021.
| 3. | Resolution on the approval of the actions of the General Partner for fiscal year 2020 |
The General Partner and the Supervisory Board propose the approval of the actions of the General Partner of the Company for fiscal year 2020.
| 4. | Resolution on the approval of the actions of the Supervisory Board for fiscal year 2020 |
The General Partner and the Supervisory Board propose the approval of the actions of the members of the Supervisory Board of the Company for fiscal year 2020.
| 5. | Election of the auditor and group auditor for fiscal year 2021 as well as the auditor for the potential review of the half year financial report for fiscal year 2021 and other interim financial information |
The Supervisory Board – based on the recommendation of its Audit and Corporate Governance Committee (Prüfungs- und Corporate-Governance-Ausschuss) – proposes the election of PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt am Main,
| - | as auditor and group auditor for fiscal year 2021, |
| - | as auditor for the potential review of the half year financial report and other interim financial information for fiscal year 2021 prepared after the Annual General Meeting 2021, and |
| - | as auditor for the potential review of interim financial information for fiscal year 2022 prepared prior to the Annual General Meeting 2022. |
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The Audit and Corporate Governance Committee stated that its recommendation is free from undue influence by a third party and that no clause restricting the choice in the meaning of Article 16 (6) of the EU Statutory Audit Regulation (Regulation (EU) No. 537/2014) has been imposed upon it.
| 6. | Elections to the Supervisory Board and to the Joint Committee |
With effect as from the conclusion of the Annual General Meeting on 20 May 2021, the regular term in office of all members of the Supervisory Board ends. Pursuant to the Articles of Association of the Company, also the term of the two members of the Joint Committee who were appointed from the Supervisory Board of the Company to the Joint Committee by the General Meeting ends at the same time. Therefore, new elections of the members of the Supervisory Board and of the members of the Joint Committee of the Company to be elected by the General Meeting are required.
According to sections 278 (3), 96 (1), 101 (1) AktG and Article 8 (1) of the Articles of Association of the Company, the Supervisory Board consists of six members who are elected by the General Meeting in accordance with the German Stock Corporation Act. Pursuant to Article 8 (2) of the Company’s Articles of Association, the Supervisory Board members are, unless expressly otherwise resolved by the General Meeting, elected for the period until the conclusion of the Annual General Meeting which resolves on the approval of the actions (Entlastung) for the fourth fiscal year after the commencement of the term of office. The year in which the term of office commences shall not be counted. Against this backdrop, the Supervisory Board members could be elected for the period until the conclusion of the Annual General Meeting which resolves on the approval of the actions (Entlastung) for fiscal year 2025. With a view to the requirements of investors and proxy advisors, it is, however, proposed to deviate from this in line with the Company’s Articles of Association and to elect the Supervisory Board members only for the period until the conclusion of the Annual General Meeting which resolves on the approval of the actions (Entlastung) for fiscal year 2024.
In line with the recommendation C.15 sentence 1 of the German Corporate Governance Code (Deutscher Corporate Governance Kodex – DCGK), the elections are conducted on an individual basis.
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According to Article 13a of the Company’s Articles of Association, the Company has a Joint Committee consisting of two members of the Supervisory Board of the General Partner delegated by the General Partner and two members of the Supervisory Board of the Company. Pursuant to Article 13b (2) sentence 1 of the Articles of Association of the Company, the two Supervisory Board members of the Company on the Joint Committee are to be appointed by the General Meeting. In order to ensure a concurrent term of membership in the Supervisory Board of the Company and in the Joint Committee, the Supervisory Board members in the Joint Committee, in line with Article 13b (4) and Article 8 (2) of the Company’s Articles of Association, shall also be elected for the period until the conclusion of the Annual General Meeting which resolves on the approval of the actions (Entlastung) for fiscal year 2024.
The Supervisory Board proposes the election of the following persons to the Supervisory Board for the period until the conclusion of the General Meeting which resolves on the approval of the actions (Entlastung) for fiscal year 2024 and, in parallel and for the same period, the election of Mr. Rolf A. Classon and Dr. Dorothea Wenzel to the Joint Committee of the Company in accordance with sections 13a et seqq. of the Articles of Association of the Company:
| a) | Dr. Dieter Schenk, Attorney and Tax Adviser as well as Member of Supervisory Boards, residing in Ottobrunn, Germany, |
| b) | Mr. Rolf A. Classon, Non-executive Director of the Board of Directors of Perrigo Company plc and Non-executive Director of the Board of Directors of Catalent, Inc., residing in Martinsville, New Jersey, U.S., |
| c) | Mr. Gregory Sorensen, MD, Chief Executive Officer of DeepHealth, Inc., and Executive Chairman of the Board of Directors of IMRIS (Deerfield Imaging, Inc.), residing in Belmont, Massachusetts, U.S., |
| d) | Dr. Dorothea Wenzel, Executive Vice President and Head of the Global Business Unit Surface Solutions at Merck KGaA, residing in Darmstadt, Germany, |
| e) | Ms. Pascale Witz, President of PWH Advisors LLC, as well as Non-executive Director of the Board of Directors of Horizon Therapeutics plc and Non-executive Director of the Board of Directors of PerkinElmer, Inc., residing in Paris, France, |
| f) | Professor Dr. Gregor Zünd, President of the Hospital Executive Board (Chief Executive Officer) of the University Hospital Zurich, residing in Herrliberg, Switzerland. |
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Among the candidates in particular Mr. Rolf A. Classon and Ms. Pascale Witz as a result of their broad experience and their longstanding membership in the Audit Committees of listed companies have the required expertise in the fields of accounting respectively auditing within the meaning of section 100 (5) AktG.
It is intended to propose Dr. Schenk for the chair of the Supervisory Board in case of his re-election to the Supervisory Board of the Company.
The following is disclosed as a matter of precaution in view of the recommendation C.13 DCGK: Dr. Schenk is member and Vice Chairman of the Supervisory Board of Fresenius Medical Care Management AG, the general partner of the Company, and member and Vice Chairman of the Supervisory Board of Fresenius Management SE, the general partner of Fresenius SE & Co. KGaA. Fresenius SE & Co. KGaA holds approximately 32.2 % of the shares of the Company. Dr. Schenk is also the Chairman of the foundation board of the Else Kröner-Fresenius-Stiftung, the sole shareholder of Fresenius Management SE; the Else Kröner-Fresenius-Stiftung further holds approximately 26.7 % of the shares of Fresenius SE & Co. KGaA. In addition, he is member and chairman of the economic council of the Else Kröner-Fresenius-Stiftung, which tasks include the administration of the Else Kröner-Fresenius-Stiftung's participation in Fresenius SE & Co. KGaA and the exercise of the voting rights attached thereto. Mr. Classon is a member of the Supervisory Board of Fresenius Medical Care Management AG, i.e. the general partner of the Company. Other than indicated above, it is the Supervisory Board’s assessment that no personal or business relations exist between the candidates proposed for election under this agenda item and the enterprise, the corporate bodies of the Company or a shareholder holding a material interest in the Company which an objective shareholder would consider material for the election decision.
Independent within the meaning of the recommendation C.7 DCGK are, in the view of the Supervisory Board, in any case the candidates Mr. Classon, Mr. Sorensen, MD, Dr. Wenzel, Ms. Witz and Professor Dr. Zünd.
The aforementioned election proposals of the Supervisory Board are based on the recommendations of the Supervisory Board’s Nomination Committee and take into account the diversity concept and the profile of skills and expertise of the Supervisory Board. The Supervisory Board has resolved to propose Mr. Classon for re-election to the Supervisory Board on account of his comprehensive experience and special qualifications, thus making an exception to the existing standard age limit for the Supervisory Board.
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The relevant personal details of the individuals proposed for election under this agenda item as well as further relevant information are listed under Section II. following this agenda. Corresponding information are available on the Company’s website under www.freseniusmedicalcare.com/en/agm/.
| 7. | Resolution on the authorization to purchase and use treasury shares pursuant to section 71 (1) no. 8 AktG and on the exclusion of subscription rights |
The authorization of the Management Board of the General Partner to purchase and use treasury shares for specific purposes as resolved by the Annual General Meeting on 12 May 2016 ends upon the expiration of 11 May 2021. In order to enable the Company to purchase and use treasury shares also in the future, this authorization shall be renewed for a period of five further years in accordance with the well-established practice of large listed companies.
The General Partner and the Supervisory Board therefore propose to resolve:
| a) | The Company is authorized until the expiration of 19 May 2026 to purchase treasury shares up to a maximum amount of 10% of the share capital existing at the time of this resolution. The shares acquired, together with other treasury shares held by the Company or attributable to the Company pursuant to sections 71a et seqq. AktG, must at no time exceed 10% of the share capital. The authorization must not be used for the purpose of trading in treasury shares. |
| b) | Subject to the decision of the General Partner, the purchase will be effected either on the stock exchange or by way of a public tender offer respectively a public invitation to shareholders to submit an offer for sale. |
| aa) | If and to the extent shares are purchased on the stock exchange, the share price paid by the Company (not including incidental acquisition costs) must not exceed or fall short of 10% of the market price for shares of the Company of the same class determined by the opening auction in the Xetra trading system (or a comparable successor system) on the respective stock exchange trading day. |
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| bb) | If shares are acquired by way of a public tender offer or a public invitation to shareholders to submit an offer for sale, the offer price per share paid by the Company (not including incidental acquisition costs) must not exceed or fall short of the 3-day average trading price of shares of the same class determined by the closing auction in the Xetra trading system (or a comparable subsequent system) on the last stock exchange trading day before the publication of the public tender offer or public invitation to shareholders to submit an offer for sale by more than 10%. If, following the announcement of a public tender offer or a public invitation to submit an offer for sale, there are significant changes in the relevant stock price, the offer or the invitation to shareholders to submit an offer for sale may be adjusted. In this case, the 3-day average trading price prior to the public announcement of any such adjustment will be the relevant reference stock price. The public tender offer or the invitation to submit an offer for sale may provide for further conditions. If the total volume of the shares made available following a public tender offer exceeds the envisaged repurchase volume or in case of an invitation to submit an offer for sale not all such offers are accepted, the acquisition then must be effected on a pro rata basis in accordance with the ratio of shares tendered (tender ratio). Preference may be given to accepting small quantities of up to 100 shares per shareholder. |
| c) | The General Partner is authorized to use treasury shares purchased on the basis of this authorization or any other earlier authorization for any purpose legally permissible and in particular for the following purposes: |
| aa) | The shares may be redeemed without the redemption or its execution requiring any further resolution by the General Meeting. They may also be redeemed in a simplified procedure without a capital reduction by way of adjusting the calculated pro rata amount of the Company’s share capital represented by the remaining shares. The redemption may be restricted to a portion of the purchased shares. If the redemption is made by way of the simplified procedure, the General Partner is authorized to modify the number of the shares in the Company’s Articles of Association accordingly. |
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| bb) | The General Partner is authorized to sell treasury shares also in other ways than a sale on the stock exchange or an offer to all shareholders, also by way of an invitation to submit an offer, provided that the shares are sold for cash and at a price that does not significantly fall short of the stock market price of shares of the Company that are subject to the same terms at the time of the sale. In this case, the total number of shares to be sold is limited to 10% of the share capital existing at the time the resolution of the General Meeting on this authorization is passed or – if the corresponding share capital is lower – at the time the authorization is exercised. If, during the term of this authorization until its utilization, other authorizations regarding the issuance or the sale of the Company’s shares or regarding the issuance of rights that allow for or oblige to subscribe the Company’s shares are exercised and thereby subscription rights are excluded in direct or analogous application of section 186 (3) sentence 4 AktG, such exclusion of subscription rights will be taken into account when calculating the aforementioned 10% limit. |
| cc) | The General Partner is furthermore authorized to sell treasury shares to third parties against contributions in kind, in particular in the context of the acquisition of companies, parts of companies or also interests in companies as well as mergers of companies and the acquisition of other assets (including receivables). |
| dd) | The General Partner is also authorized to award treasury shares in lieu of the utilization of a conditional capital of the Company to employees of the Company and companies affiliated with the Company, including members of the management of affiliated companies, and use them to service options or obligations to purchase shares of the Company granted to employees of the Company or companies affiliated with the Company as well as to members of the management of affiliated companies, e.g. in the context of stock option programs or employee benefit schemes. |
| ee) | In addition, the General Partner is authorized to use treasury shares to service bonds carrying warrant and/or conversion rights or conversion obligations that have been or will be issued by the Company or companies affiliated with the Company pursuant to section 17 AktG. |
| d) | The Supervisory Board of the General Partner is authorized to use shares purchased on the basis of this or a prior authorization instead of utilizing a conditional capital of the Company for the servicing of options or obligations to purchase shares which were or will be granted as variable compensation component, in particular in the context of stock option plans, to members of the Management Board of the General Partner. |
| e) | The authorizations under lit. c) and lit. d) also include the use of shares of the Company acquired pursuant to section 71d sentence 5 AktG. |
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| f) | The above authorizations may be exercised once or several times, in full or in part and individually or together, while the authorizations under lit. c) bb) to ee) may also be exercised by dependent companies or companies that are majority owned by the Company, or by third parties acting for their account or for the account of the Company. |
| g) | Shareholders’ subscription rights for these treasury shares are excluded insofar as these shares are used according to the aforementioned authorizations under lit. c) bb) to ee) and lit. d) or as far as this is necessary to exclude fractional amounts in case of a sale of shares to all shareholders. The above authorizations to exclude subscription rights of shareholders may only be exercised to the extent that the pro-rata amount of the overall shares excluded from subscription does not exceed 10% of the share capital at the time of the resolution of the General Meeting or at the time the authorizations are exercised. If, during the term of this authorization to use treasury shares, other authorizations regarding the issuance or the sale of the Company’s shares or regarding the issuance of rights that allow for or oblige to subscribe the Company’s shares are exercised and thereby subscription rights are excluded, such exclusion of subscription rights will be taken into account when calculating the aforementioned limit. Any right of shareholders to tender shares in the event that, in the case of a public tender offer or a public invitation to shareholders to submit an offer for sale, the number of shares tendered or offered exceeds the intended repurchase volume and acceptance takes place on a quota basis, is excluded in accordance with lit. b) bb) with regard to the preferential acceptance of smaller numbers of shares of up to 100 shares per offering shareholder to the extent that this is necessary for technical processing or to avoid uneconomic arithmetical fractional shares. |
In connection with the authorization
to purchase and utilize treasury shares with the possibility to exclude subscription rights proposed under this agenda item 7, the General
Partner submits under Section III. of this convening a written report on the reasons for which it shall be authorized to exclude
shareholders’ subscription rights in certain cases when using treasury shares (section 278 (3) AktG in connection
with section 186 (4) sentence 2, section 71 (1) no. 8 sentence 5 AktG). This report is part of this convening of the Annual
General Meeting and is available on the Company’s website under www.freseniusmedicalcare.com/en/agm/.
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II. Relevant personal details on the candidates proposed under agenda item 6 for election to the Supervisory Board and for election to the Joint Committee of the Company including further information
Dr. Dieter Schenk
Personal data:
| Born: | 1952 | |
| Gender: | Male | |
| Nationality: | German |
| Member since: | 1996 |
| Education: | Law studies Trainee Lawyer |
Professional experience:
| Until present | Attorney and Tax Adviser, Member of Supervisory Boards |
| 1986 – 2017 | Noerr LLP |
| Partner |
| 1980 – 1986 | Noerr LLP |
| Attorney, since 1985 also Tax Adviser |
Member of a domestic Supervisory Board formed by operation of law:
| • | Fresenius Management SE, Vice Chairman* | |
| • | Fresenius Medical Care Management AG, Vice Chairman* | |
| • | HWT invest AG, Chairman | |
| • | Gabor Shoes AG, Chairman | |
| • | TOPTICA Photonics AG, Chairman |
* Fresenius Group mandate
Membership in comparable domestic or foreign controlling bodies of commercial enterprises:
none
11
Rolf A. Classon
Personal data:
| Born: | 1945 | |
| Gender: | Male | |
| Nationality: | U.S.-American and Swedish |
| Member since: | 2011 |
| Education: | Political Sciences studies Gothenburg University, Sweden Chemical Engineering studies Gothenburg School of Engineering, Sweden |
Professional experience:
| 2005 – 2006 | Hillenbrand Industries Inc., Indiana, U.S. Interim Chief Executive Officer (CEO) |
| 2002 – 2004 | Bayer Healthcare AG, Leverkusen, Germany Chairman of the Executive Committee |
| 1995 – 2002 | Bayer Healthcare LLC, Diagnostics Division, New York, U.S. President |
| 1991 – 1995 | Bayer Corp., Diagnostics Division, New York, U.S. Executive Vice President |
| 1969 – 1991 | Pharmacia AB, Uppsala, Sweden Various positions in Sweden and the U.S. |
Member of a domestic Supervisory Board formed by operation of law:
Fresenius Medical Care Management AG*
* Fresenius Group mandate
Membership in comparable domestic or foreign controlling bodies of commercial enterprises:
| • | Catalent, Inc.,
U.S. (publicly listed company) Non-Executive Director | |
| • | Perrigo Company
plc, Ireland (publicly listed company) Non-Executive Director (and Chairman) |
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Gregory Sorensen, MD
Personal data:
| Born: | 1962 | |
| Gender: | Male | |
| Nationality: | U.S.-American |
| Member since: | n.a. (first-time election) |
| Education: | Doctor of Medicine (MD) Harvard Medical School, U.S., and Massachusetts Institute of Technology, U.S. Master of Science (M.S.) in Computer Science Brigham Young University, U.S. Bachelor of Science (B.S.) in Biology California Institute of Technology, U.S. |
Professional experience:
| 2015 – present | Chief Executive Officer of DeepHealth, U.S. Executive Chairman of the Board of Directors of IMRIS (Deerfield Imaging, Inc.), U.S. |
| 2011 – 2015 | Siemens Medical Solutions USA, Inc. President and Chief Executive Officer |
| 1995 – 2011 | Lecturer and Professor at Harvard Medical School, U.S. |
| 1995 – 2011 | Massachusetts General Hospital, U.S. Neuroradiologist |
Member of a domestic Supervisory Board formed by operation of law:
Siemens Healthineers AG
Membership in comparable domestic or foreign controlling bodies of commercial enterprises:
| • | Fusion Healthcare Staffing, LLC, U.S. | |
| • | Invicro, LLC, U.S. | |
| • | DFP Healthcare
Acquisitions Corp., U.S. (publicly listed company) |
13
Dr. Dorothea Wenzel
Personal data:
| Born: | 1969 | |
| Gender: | Female | |
| Nationality: | German |
| Member since: | 2019 |
| Education: | Doctor in Health Economics, Macroeconomics Visiting Student at the Haas School of Business University of California, Berkeley, U.S. Diploma in Business Informatics Technical University of Darmstadt, Germany |
Professional experience:
| 2019 – present | Merck KGaA Executive Vice President and Head of the Global Business Unit Surface Solutions |
| 2018 | Merck KGaA Executive Vice President and Head of Controlling & Strategy Performance Materials |
| 2004 – 2018 | Merck Group Various global leadership positions in the units Franchise Fertility, Healthcare and Finance |
| 2004 | AXA Krankenversicherung AG Head of Cooperations & Strategy |
| 2003 | Member of the Staff of the Committee for the Sustainability of the Financing of the Social Security Systems (Rürup Committee) of the Federal Ministry of Health, responsible for Health Insurance |
| 2000 – 2003 | Medvantis Holding AG Head of Corporate Finance and Business Development |
| 1995 – 2000 | McKinsey & Company Consultant and Engagement Manager |
Member of a domestic Supervisory Board formed by operation of law:
none
Membership in comparable domestic or foreign controlling bodies of commercial enterprises:
H. Lundberg A/S, Denmark (publicly listed company)
14
Pascale Witz
Personal data:
| Born: | 1967 | |
| Gender: | Female | |
| Nationality: | French |
| Member since: | 2016 |
| Education: | Diplome d’Ingenieur in Biochemistry Institut National des Sciences Appliquées (INSA), France M.B.A. in Business Administration INSEAD, France |
Professional experience:
| 2016 – present | PWH Advisors President |
| 2013 – 2016 | Sanofi S.A., Paris, France Executive Vice President |
| 2009 – 2013 | GE Healthcare plc, Medical Diagnostics division, London, United Kingdom President and Chief Executive Officer |
| 2008 – 2009 | GE Healthcare, Milwaukee, U.S. President and
General Manager, Interventional Radiology & |
| 1996 – 2007 | GE Healthcare, Milwaukee, U.S. Various positions in France and the U.S. |
| 1991 – 1996 | Becton Dickinson Corporation, Franklin Lakes, U.S. Marketing Manager, Pharmaceuticals Systems Europe |
Member of a domestic Supervisory Board formed by operation of law:
none
Membership in comparable domestic or foreign controlling bodies of commercial enterprises:
| • | Horizon
Therapeutics plc., Ireland (publicly listed company) Non-Executive Director | |
| • | PerkinElmer, Inc.,
U.S. (publicly listed company) Non-Executive Director | |
| • | Regulus
Therapeutics Inc., U.S. (publicly listed company) Non-Executive Director |
15
Professor Dr. Gregor Zünd
Personal data:
| Born: | 1959 | |
| Gender: | Male | |
| Nationality: | Swiss |
| Member since: | 2018 |
| Education: | Professor University of Zurich Board certification in cardiac and thoracic vascular surgery FMH, Switzerland Habilitation (Privat-Dozent Dr. med.) Clinic for Cardiovascular Surgery University Hospital, Zurich Studies of Medicine (Dr. med.) University of Bern |
Professional experience:
| University Hospital Zurich | ||
| 2016 – present | President of the Hospital Executive Board (Chief Executive Officer) | |
| 2008 – 2016 | Director of Research & Education and Member of the Hospital Executive Board | |
| 2005 – 2016 | Managing Director of the Center for Clinical Research | |
| 2001 – 2016 | Head of Surgical Research, Division of Surgical Research | |
| 1998 – 2001 | Senior staff member, Clinic for Cardio-vascular Surgery | |
| 1996 – 1998 | Resident, Clinic for Cardio-vascular Surgery | |
| 1991 – 1993 | Resident, Clinic for Cardio-vascular Surgery, Clinic for Visceral and Transplant Surgery, Clinic for Traumatology |
| 1994 – 1995 | Harvard Medical School, Boston Research Fellow, Cardio-vascular Research |
| 1990 | Kantonsspital Obwalden Resident, Department of General-Surgery |
| 1989 | Kantonsspital Aarau Resident, Department of Pathology |
| 1988 | Texas Medical Center Houston Research Fellow, Microsurgery Research, Baylor College of Medicine |
Member of a domestic Supervisory Board formed by operation of law:
none
Membership in comparable domestic or foreign controlling bodies of commercial enterprises:
none
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III. Report of the General Partner to the General Meeting on agenda item 7
Hereinafter the General Partner reports on the renewal of the authorization to purchase and use treasury shares with the possibility to exclude subscription rights as proposed under agenda item 7 of this convening:
The General Meeting on 12 May 2016 authorized the Company to acquire and use treasury shares of up to 10% of the share capital. On the basis of this authorization, the General Partner – in each case with the consent of the Supervisory Board – executed share buybacks in several tranches: In the period from 11 December 2017 until and including 21 December 2017, the Company repurchased a total of 660,000 shares with a value of just under EUR 58 million and in the period from 28 May 2018 until and including 8 June 2018 a total of 431,000 shares with a value of around EUR 37 million (each excluding fees). In the period from 12 March 2019 until and including 10 May 2019, the Company repurchased a total of about 3.77 million shares worth about EUR 270 million and in the period from 17 June 2019 until and including 1 April 2020 a total of about 10.8 million shares worth about EUR 659 million (each excluding fees).
Further information on these share buy-backs is published under https://www.freseniusmedicalcare.com/en/investors/shares/share-buy-back/.
The current authorization to purchase and use treasury shares ends upon the expiration of 11 May 2021.
To ensure that the General Partner will be able to purchase and use treasury shares in the interest of the Company and its shareholders also in the future, the General Partner and the Supervisory Board propose to the General Meeting under agenda item 7 to grant a new authorization to purchase and use treasury shares. In order to ensure maximum flexibility in the handling of treasury shares, this authorization shall again be granted for a period of five years, i.e. until 19 May 2026.
The acquisition of treasury shares can be executed by way of a purchase via the stock exchange, by means of a public tender offer by the Company addressed to all its shareholders or an invitation to all shareholders to submit offers for sale. In the event of the last two acquisition scenarios, the shareholders can decide themselves how many shares – and in case a price range is fixed also at what price – they want to offer to the Company. In any case, the General Partner will respect the principle of equal treatment of all shareholders provided for under German stock corporation law in accordance with section 53a AktG when acquiring treasury shares. The proposed acquisition scenarios via the stock exchange, by way of a public tender offer made to all shareholders or by means of an invitation to submit offers for sale all take account of that principle.
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In the event of an acquisition by way of a public tender offer or a public invitation to submit offers for sale, the purchase price offered or the limit values of the purchase price range per share (excluding incidental acquisition expenses (Erwerbsnebenkosten)) must not exceed or fall below the average trading price of shares of the Company in the Xetra trading system (or a comparable successor system) by more than 10% on the three exchange trading days preceding the date of the publication of the offer or public invitation to submit an offer for sale. If significant changes from the relevant price occur after the publication of a tender offer or public invitation to submit an offer for sale, it will be possible to adjust the offer or invitation to submit such an offer, with such adjustment being based on the relevant average price on the three exchange trading days prior to the publication of any such adjustment. The tender offer or invitation to submit such an offer may be subject to further conditions.
If in the event of a public tender offer or an invitation to submit offers for sale the total volume of shares offered or tendered exceeds the volume of shares intended to be bought back, the Company will accept those shares on a pro-rata basis. However, it is possible to provide for a preferential acceptance of smaller numbers of shares of up to 100 shares per offering shareholder. This option is designed on the one hand to avoid having small numbers of residual shares, which tend to be uneconomical and may lead to de facto discrimination against small shareholders. It also helps simplify the technical execution of the purchase process. Finally, provision is to be made in all instances to allow rounding off in accordance with proven commercial practice to avoid arithmetical fractional shares. In this respect, the purchase quota and/or the number of shares to be purchased by the individual shareholder accepting the offer can be rounded off, in accordance with commercial practice, as necessary to represent the purchase of whole shares in the processing system. In the aforementioned cases, it is necessary to exclude any further right to tender shares, and the General Partner is convinced that such exclusion is justified and reasonable vis-à-vis shareholders, for the reasons specified above.
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The shares acquired on the basis of this or a prior authorization may be used for all purposes permitted by law, in particular for the following purposes:
The proposed authorization entitles the General Partner to partially or entirely redeem treasury shares bought back, in accordance with common practice among large, listed German companies, without a further resolution of the General Meeting being required. In this respect, it shall also be possible to redeem the shares without a capital reduction pursuant to section 237 (3) no. 3 AktG (so called simplified procedure). If the shares are redeemed without a capital reduction, the pro-rata amount of the remaining shares in terms of their share in the Company’s share capital increases (section 8 (3) AktG). In this case the General Partner shall be authorized to amend the Company’s Articles of Association to account for the modified number of non-par value shares.
Furthermore, it is intended to enable the General Partner by way of the authorization to sell treasury shares of the Company also in ways other than via the stock exchange or by means of an offer made to all shareholders, against payment in cash and with the exclusion of subscription rights. Thus, the Company will be enabled to react swiftly and flexibly to favorable market situations. Moreover, it will be possible to attract additional domestic and foreign investors by selling shares, for example to institutional investors. To account for the protection of the shareholders from dilution, the aforementioned use pursuant to section 186 (3) sentence 4 AktG is subject to the condition that treasury shares may only be sold at a price which is not significantly lower than the relevant stock exchange price at the time when the shares are sold; in this respect, the price of sale will be finally determined immediately prior to the disposal itself. Additionally, the permitted sales volume in this case is limited to 10% of the Company’s share capital at the effective date of the authorization or – if the share capital is lower – at the time when the authorization is exercised. The shareholders in principle have the opportunity to maintain their shareholding quota by way of a parallel acquisition of shares in the Company via the stock exchange at comparable conditions. For the purpose of dilution protection, this authorized volume shall be reduced insofar as, during the term of this authorization, other authorizations regarding the issuance or the sale of the Company’s shares or regarding the issuance of rights that allow for or oblige to subscribe the Company’s shares are exercised and thereby subscription rights are excluded in direct or analogous application of section 186 (3) sentence 4 AktG.
Furthermore, it will also be possible to use treasury shares as a contribution in kind in the context of mergers and the acquisition of companies and other assets, excluding shareholders’ subscription rights. In particular in the course of mergers and acquisitions, it is not uncommon that existing shares serve as a consideration. The Company shall be enabled to benefit quickly and flexibly also from such acquisition opportunities, conserving liquidity and without having to consult the General Meeting, which is often not possible due to time constraints. Therefore, such an option of using treasury shares lies in the overall interest of the Company and its shareholders. In determining the valuation ratios, the General Partner will furthermore ensure that the interests of shareholders are reasonably safeguarded.
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The authorization further provides that treasury shares can also be issued in lieu of the utilization of a conditional capital of the Company, excluding the subscription right of shareholders, to employees of the Company and its affiliates, including members of the management of affiliates, and by doing so service options or obligations to purchase shares of the Company granted or to be granted to employees of the Company or its affiliates as well as members of the management of affiliates. This authorization creates the possibility to offer the respective beneficiaries shares of the Company within the scope of share option programs or employee benefit schemes without having to resort to conditional capital. The issue of treasury shares to employees and officers of the Company, in particular in view of long-term compensation components having the purpose of securing the Company’s sustainable success, can be in the best interest of the Company and its shareholders, since it may promote the identification of employees and officers with their company as well as the Company’s value substantially. The use of existing treasury shares instead of having to recourse to conditional capital can constitute an economically viable alternative.
The aforementioned option to use treasury shares in order to service long-term share-based compensation components excluding the subscription right of shareholders shall also be available in favor of the members of the General Partner’s Management Board. In order to take reasonable account of potential conflicts of interest resulting from the Company’s legal form as well as the securing of the allocation of competences according to stock corporation law, the corresponding authorization to use treasury shares will, however, not be granted to the General Partner (represented by the Management Board), but to its Supervisory Board.
The General Partner shall further be authorized to use treasury shares to service bonds carrying warrant or conversion rights or conversion obligations issued by the Company or companies affiliated with the Company as defined in section 17 AktG that exclude subscription rights according to section 186 (3) sentence 4 AktG. In order to comply with the rights resulting therefrom, it may be appropriate, considering the Company’s interests, to partially or entirely use treasury shares instead of shares resulting from a corresponding capital increase, which requires the subscription right of shareholders to be excluded.
Finally, the General Partner shall be authorized to exclude potential fractional amounts, if any, in an offer made to all shareholders. This is necessary for the technical processing of such an offer, in order to avoid the issue of fractions of shares. The General Partner will dispose of the shares excluded from the shareholders’ subscription right, called unassigned fractions (freie Spitzen), either by selling them via the stock exchange or otherwise at the best possible conditions for the Company.
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To further restrict the issue of shares excluded from the shareholders’ subscription right and with the intention to limit the dilution of shareholders’ influence in the best possible way, the General Partner may exercise the right to exclude subscription rights in the context of the use of treasury shares only to the extent that the pro-rata amount of these shares does not exceed 10% of the share capital at the time of effectiveness or at the time of exercise of these authorizations. If, during the term of this authorization to use treasury shares, other authorizations regarding the issuance or the sale of the Company’s shares or regarding the issuance of rights that allow for or oblige to subscribe the Company’s shares are exercised and thereby subscription rights are excluded, such exclusion of subscription rights will be taken into account when calculating the aforementioned limit.
The possible uses mentioned above are not limited to the Company’s treasury shares acquired on the basis of this or prior authorizing resolutions; they also apply to shares of the Company acquired pursuant to section 71d sentence 5 AktG. In this way, additional flexibility is for precautionary reasons created in accordance with this authorizing resolution, in the best interest of the Company, also with a view to using such treasury shares which have been acquired by a subsidiary or by third parties on behalf of the Company or a subsidiary.
The Management Board of the General Partner will also report on every use of this new authorization.
Fresenius Medical Care AG & Co. KGaA
The General Partner
Fresenius Medical Care Management AG
The Management Board
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IV. Further information regarding the convening
Total number of shares and voting rights
At the time of the convening of the Annual General Meeting, the share capital of the Company is composed of 292,888,145 non-par value shares and consists solely of bearer shares, of which each share grants one vote. Therefore, the total number of voting rights at the time of the convening of the Annual General Meeting amounts to 292,888,145 voting rights. Treasury shares do not entitle the Company to any voting right.
Virtual General Meeting without the physical presence of the shareholders
In accordance with sections 1 (1), (2), (6) sentence 1, (8) sentence 1 of the German Act on Measures in Corporate, Cooperative, Association, Foundation and Housing Law to Combat the Effects of the COVID-19 Pandemic in the version applicable as of 28 February 2021 (“COVID-19 Act”), the General Partner has decided, with the consent of the Supervisory Board, that the General Meeting will be held as a virtual General Meeting without the physical presence of the shareholders or their proxies and that the shareholders will cast their votes in particular also by means of electronic communication.
The General Meeting will be held at the Company's offices in Else-Kröner-Straße 1, 61352 Bad Homburg v.d. Höhe, Germany. This also is the location of the Meeting within the meaning of the German Stock Corporation Act. In order to protect the health of the shareholders and the physically present members of the Supervisory Board and the Management Board of the General Partner, a physical participation of shareholders or their proxies (other than the proxies named by the Company) is excluded.
Holding the General Meeting in the form of a virtual General Meeting under the COVID-19 Act results in modifications to the procedures of the General Meeting and to the shareholders’ rights. The entire General Meeting will be broadcast in audio and video on the internet for registered shareholders, shareholders will be able to exercise their voting rights via electronic communication and to issue a power of attorney, shareholders will have the right to ask questions via electronic communication, and shareholders who have exercised their voting rights will be able to object to resolutions of the General Meeting via electronic communication.
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We ask shareholders to pay particular attention to the following information on registering for the General Meeting, on exercising voting rights and on further shareholder rights.
Registering for the General Meeting and exercising shareholder rights
Only those shareholders who have registered with the Company in text form in the German or the English language by the end of 13 May 2021 (24:00 hours CEST), at the latest, at the following address
Fresenius Medical Care AG & Co. KGaA
c/o Computershare Operations Center
80249 Munich
Germany
Telefax: + 49 (0)89 30903-74675
E-Mail: anmeldestelle@computershare.de
and who have provided the Company with evidence of their entitlement to exercise shareholder rights in connection with the General Meeting are entitled to such rights. As evidence of such entitlement, shareholders must, by the end of 13 May 2021 (24:00 hours CEST) at the latest, provide evidence of their shareholding issued by the ultimate intermediary (usually their depositary institution) in text form in the German or English language to the aforementioned address referring to the beginning of 29 April 2021 (00:00 hours CEST) (“Evidence Date”).
After receipt of the registration and evidence of shareholding, registered shareholders will receive access cards on which the number of votes and the necessary access data for the internet-based General Meeting and Voting System (Shareholder Portal) are printed.
In order to ensure that the access cards are received in time, we ask shareholders to ensure that they register and send evidence of their shareholding to the Company in good time.
Significance of the Evidence Date
As regards the exercise of shareholder rights in connection with the General Meeting, only those who have provided evidence of share ownership are considered shareholders in relation to the Company. The right of exercising shareholder rights and the extent of the voting rights are solely determined by the shareholding on the Evidence Date. The Evidence Date is not accompanied by a lock on the sale of shares. Even a full or partial sale of the shareholding after the Evidence Date does not affect the voting right and the entitlement to exercise further shareholder rights in connection with the General Meeting. This also applies accordingly to the acquisition of shares after the Evidence Date. Persons who do not yet hold shares on the Evidence Date and become shareholders only thereafter are entitled to exercise shareholder rights for the shares held by them only to the extent that they are authorized by proxy or otherwise authorized to exercise rights. However, the Evidence Date has no significance for the entitlement to dividend as this entitlement only depends on the shareholder status on the day of the resolution on the distribution of profits by the Annual General Meeting.
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Internet-based General Meeting and Voting System (Shareholder Portal)
For the purpose of conducting the virtual General Meeting, the Company has set up an internet-based General Meeting and Voting System (Shareholder Portal) which enables shareholders and their proxies to exercise shareholder rights in connection with the General Meeting without physically attending the General Meeting.
The Shareholder Portal is available on the Company's website at www.freseniusmedicalcare.com/en/agm/. Access to the Shareholder Portal requires the entry of access data which will be sent to shareholders or their proxies after proper registration.
Irrespective of the other possibilities for exercising shareholders' rights in connection with the General Meeting described in detail below, shareholders or their proxies may use the Shareholder Portal to issue powers of attorney and instructions, cast their votes by postal vote, follow the broadcast of the General Meeting on 20 May 2021 and exercise further shareholders rights.
Procedure regarding the authorization of third parties
Shareholders may have their rights in connection with the General Meeting exercised by a proxy, e.g. the depositary bank, an association of shareholders or another person of their choice. If the shareholder authorizes more than one person, the Company can reject one or more of such persons. The issue of the power of attorney, its amendment and revocation as well as the evidence of authorization to be presented to the Company require the text form; intermediaries, shareholders’ associations and voting rights advisors within the meaning of section 134a (1) no. 3 AktG and other persons equivalent to intermediaries pursuant to section 135 (8) AktG may provide for deviating provisions in case of their authorization.
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To authorize third parties, shareholders can use the Shareholder Portal which is also available as an electronic channel for transmitting evidence of the appointment of a proxy to the Company. The granting of a power of attorney, its amendment, its revocation and the evidence of authorization of third parties via the Shareholder Portal can be made until the closure of the General Meeting on 20 May 2021. The deadlines for the exercise of the voting right by shareholders or their proxies as well as for authorizations by using the proxy form described below remain unaffected.
To authorize third parties, shareholders can also use the proxy form which will be sent to shareholders with their access card after registration and which will also be available on the Company's website at www.freseniusmedicalcare.com/en/agm/. If third parties are authorized by means of the proxy form, the fully completed form must have been received by the Company for organizational reasons by the end of 19 May 2021 (24:00 hours CEST), at the latest, at the following postal address, fax number or e-mail address:
Fresenius Medical Care AG & Co. KGaA
c/o Computershare Operations Center
80249 Munich
Germany
Telefax: + 49 (0)89 30903-74675
E-Mail: freseniusmedicalcare.hv@computershare.de
If a shareholder grants, amends or revokes authorizations to third parties in due time both electronically via the Shareholder Portal and by means of the proxy form or by other means, the last declaration made electronically via the Shareholder Portal will be considered binding regardless of the time of receipt of the declarations.
Even if a power of attorney is granted, registration and evidence of entitlement must be submitted in due time in accordance with the above provisions. This does not preclude the granting of a power of attorney after registration has been completed.
Even if a third party is granted a power of attorney, votes may be cast exclusively as described below by authorizing and instructing the proxies named by the Company or by way of a postal vote.
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Procedure regarding the authorization of proxies named by the Company acting on shareholders’ voting instructions
The Company offers that shareholders may issue powers of attorney to proxies named by the Company who are bound to shareholders’ voting instructions. Such persons are employees of the Company or of an affiliated company who vote on the respective items of the agenda on the basis of authorizations by shareholders and in accordance with the instructions issued by them. The proxies named by the Company are obligated to vote in accordance with the instructions. They cannot exercise the voting rights at their own discretion. To the extent there is no express and unambiguous instruction, the proxies named by the Company will abstain from voting on the respective voting matter.
To issue powers of attorney and instructions to the proxies named by the Company, shareholders can use the Shareholder Portal which is also available as an electronic channel for transmitting evidence of authorization of the proxies named by the Company to the Company. The granting of powers of attorney and instructions, their amendment, their revocation and the evidence of authorization of the proxies named by the Company can be made electronically via the Shareholder Portal until immediately prior to the beginning of the voting process in the General Meeting.
To issue powers of attorney and instructions to the proxies named by the Company, shareholders can also use the proxy form which will be sent to shareholders with their access card after registration and which will also be available on the Company's website at www.freseniusmedicalcare.com/en/agm/. If the proxy form is used, the fully completed form must have been received by the Company for organizational reasons by the end of 19 May 2021 (24:00 hours CEST), at the latest, at the following postal address, fax number or e-mail address:
Fresenius Medical Care AG & Co. KGaA
c/o Computershare Operations Center
80249 Munich
Germany
Telefax: + 49 (0)89 30903-74675
E-Mail: freseniusmedicalcare.hv@computershare.de
If a shareholder grants, amends or revokes powers of attorneys and instructions to the proxies named by the Company in due time both electronically via the Shareholder Portal and by means of the proxy form, the last declaration made electronically via the Shareholder Portal will be considered binding regardless of the time of receipt of the declarations.
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Even if a power of attorney is granted, registration and evidence of entitlement must be submitted in due time in accordance with the above provisions. This does not preclude the granting of a power of attorney after registration has been completed.
Voting by postal vote
Shareholders may cast their votes also by postal vote. Postal votes can either be cast electronically via the Shareholder Portal or by using the proxy form sent to shareholders with their access card after registration and which will also be available on the Company's website at www.freseniusmedicalcare.com/en/agm/.
Voting electronically by postal vote via the Shareholder Portal may be carried out until immediately prior to the beginning of the voting process in the General Meeting. Up to this point in time, it is also possible to revoke or amend votes cast via the Shareholder Portal.
Postal votes cast by means of the proxy form can be sent to the Company by post, fax or e-mail and, for organizational reasons, must be received by the Company at the following postal address, fax number or e-mail address at the latest by the end of 19 May 2021 (24:00 hours CEST):
Fresenius Medical Care AG & Co. KGaA
c/o Computershare Operations Center
80249 Munich
Germany
Telefax: + 49 (0)89 30903-74675
E-Mail: freseniusmedicalcare.hv@computershare.de
If a shareholder exercises voting rights by postal vote in due time both electronically via the Shareholder Portal and by means of the proxy form, the last electronic voting via the Shareholder Portal will be considered binding regardless of the time of receipt of the postal votes.
Binding nature of the votes (Information in accordance with Table 3 of the Annex to the Implementing Regulation (EU) 2018/1212)
The scheduled votes on the published resolution and election proposals on the agenda items 1 to 7 are each binding. On all votes, shareholders may vote "yes" (approval) or "no" (rejection), abstain from voting (abstention) or refrain from voting.
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Rights of shareholders pursuant to section 278 (3) AktG in connection with sections 122 (2), 126 (1), 127, 131 (1) AktG
Supplements to the agenda at the request of a minority according to section 278 (3) AktG in connection with section 122 (2) AktG
Shareholders whose total combined shares amount to the twentieth part of the share capital or the proportionate amount of the share capital of EUR 500,000.00 (that is equivalent to 500,000 non-par value shares), can request, according to section 278 (3) AktG in connection with section 122 (2) AktG, that items be placed on the agenda and notice thereof be given. For each new item, reasons or a draft resolution must be attached.
Supplemental requests must be received by the Company at least 30 days prior to the Meeting in writing; the day of receipt and the day of the General Meeting are not included in that calculation. Therefore, the last possible date for receipt is 19 April 2021 (24:00 hours CEST). Supplemental requests received after that date cannot be taken into account.
Applicants must provide evidence that they have held the minimum quantity of shares for at least ninety days prior to the day of the receipt of the supplemental request and that they hold the shares until the General Partner’s decision on the supplemental request (section 278 (3) AktG in connection with section 122 (2), (1) sentence 3 AktG).
We ask shareholders to submit any supplemental requests to the following address:
Fresenius Medical Care AG & Co. KGaA
Die persönlich haftende Gesellschafterin
Fresenius Medical Care Management AG
– Vorstand –
Else-Kröner-Straße 1
61352 Bad Homburg v.d. Höhe
Germany
Motions and proposals for election by shareholders according to section 278 (3) AktG in connection with sections 126 (1), 127 AktG
Prior to the General Meeting shareholders may send countermotions to the Company regarding proposals made by the General Partner and/or the Supervisory Board pertaining to a specific item on the agenda. Shareholders may also submit proposals for the election of members of the Supervisory Board (including the election of any such members of the Supervisory Board into the Company’s Joint Committee) and/or the auditors. Countermotions and proposals for election to be made accessible that have been received by the Company at the address mentioned below at least 14 days prior to the General Meeting, i.e. until 5 May 2021 (24:00 hours CEST) at the latest, will be made available on the Company’s website to the other shareholders, including the name of the shareholder and any reasons given, at www.freseniusmedicalcare.com/en/agm/. Reasons must be given for countermotions. For proposals for election, however, no reasons need to be given.
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Any comments of the management will also be published under the internet address provided above.
Countermotions and proposals for election are to be sent only to:
Fresenius Medical Care AG & Co. KGaA
– Investor Relations –
Else-Kröner-Straße 1
61352 Bad Homburg v.d. Höhe
Germany
Telefax: +49 (0)6172 609-2301
E-Mail: hauptversammlung@fmc-ag.com
Countermotions and reasons given do not need to be made accessible under the prerequisites of section 126 (2) sentence 1 AktG. Pursuant to section 126 (2) sentence 2 AktG, the reasons for a countermotion also do not need to be made accessible if they amount to more than 5,000 characters in total. Section 126 AktG applies analogously to the proposal of a shareholder for the election of members of the Supervisory Board (including the election of any such members of the Supervisory Board into the Company’s Joint Committee) and/or the auditors pursuant to section 127 AktG.
Proposals for the election of members of the Supervisory Board (including the election of any such members of the Supervisory Board into the Company’s Joint Committee) and/or the auditors pursuant to section 127 AktG will further only be made accessible if they contain the name, the profession exercised and the residential address of the proposed person or the name and registered office of the proposed legal entity.
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Pursuant to section 1 (2) sentence 3 of the COVID-19 Act, motions and election proposals by shareholders which are to be made accessible pursuant to section 126 AktG or section 127 AktG shall be considered as having been made at the General Meeting, provided that the shareholder making the motion or submitting the election proposal is properly legitimized and has registered for the General Meeting.
Right to ask questions by way of electronic communication
Pursuant to section 1 (2) sentence 1 and 2, (8) sentence 1 of the COVID-19 Act, shareholders are granted the right to submit questions by way of electronic communication. With the consent of the Supervisory Board the General Partner has stipulated that any questions must be submitted by way of electronic communication at least one day prior to the Meeting. The General Partner will decide how to answer the questions according to its dutiful, free discretion.
Shareholders who have registered for the General Meeting may submit their questions to the Company until 18 May 2021 (24:00 hours CEST) at the latest via the Shareholder Portal by using the input facility provided there for this purpose.
In the context of answering questions also the name of the shareholder or proxy submitting the question may be disclosed.
Further explanations on the rights of the shareholders under section 278 (3) AktG in connection with sections 122 (2), 126 (1), 127, 131 (1) AktG
Further explanations on the rights of the shareholders under section 278 (3) AktG in connection with sections 122 (2), 126 (1), 127, 131 (1) AktG are available on the Company’s website at www.freseniusmedicalcare.com/en/agm/.
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Opportunity to submit statements for publication prior to the General Meeting
The concept of the virtual General Meeting pursuant to the COVID-19 Act does not provide for shareholders to express their views on the agenda in speeches at the General Meeting. Beyond the requirements of the COVID-19 Act, however, shareholders and their proxies with their consent will be given the opportunity to submit statements in the form of video messages relating to the agenda prior to the General Meeting for publication in the Company's Shareholder Portal, where those statements can be viewed by shareholders and their proxies until the end of the General Meeting.
Shareholders and proxies providing their names can submit statements in video form until 16 May 2021 (24:00 hours CEST) at the latest via the Shareholder Portal.
Properly submitted statements disclosing the name of the submitting shareholder and, as the case may be, proxy will be published in the Shareholder Portal, provided that the following instructions are adhered to when submitting them.
Statements are to be submitted in German or English only and should not exceed a duration of three minutes. The background should be neutral. Only those statements are permitted in which the shareholder or, as the case may be, the proxy appears in person. After consent of the shareholder and, as the case may be, the proxy, in the Shareholder Portal and submission of the statement, such statement is published in the Shareholder Portal, including their names. The consent can be withdrawn at any time with effect for the future. Details of the technical and legal requirements for submitting the statement in the form of video messages are described on the Company's website at www.freseniusmedicalcare.com/en/agm/ and in the Shareholders Portal. Please note that there is no legal right to the publication of a statement. The Company reserves the right not to publish statements with a duration exceeding three minutes as well as statements not fulfilling the technical requirements or being without any relevant reference to the agenda of the General Meeting as well as statements which are not submitted by the aforementioned date. The same applies to statements with insulting or criminally relevant content or obviously false or misleading content. Furthermore, the Company reserves the right to publish only one statement per shareholder. Any motions, election proposals or questions contained in the submitted statements will not be considered. These are to be submitted exclusively via the channels described separately in this convening.
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Opportunity to object to resolutions of the General Meeting
Shareholders who have exercised their rights to vote are given the opportunity to object to resolutions of the General Meeting. If votes have been cast, corresponding declarations can be submitted via the Shareholder Portal as of the opening of the General Meeting and are possible until the Chairman of the Meeting closes the General Meeting.
Availability of documents and information
The following documents and the further information to be made available pursuant to section 278 (3) AktG in connection with section 124a AktG as well as all other information pertaining to the General Meeting are available on the Company’s website at www.freseniusmedicalcare.com/en/agm/:
| 1) | the annual financial statements and consolidated financial statements approved by the Supervisory Board for fiscal year 2020; |
| 2) | the management reports for Fresenius Medical Care AG & Co. KGaA and the group for fiscal year 2020 including the non-financial declaration for the group; |
| 3) | the report by the Supervisory Board of Fresenius Medical Care AG & Co. KGaA for fiscal year 2020; |
| 4) | the report by the General Partner on the information pursuant to sections 289a, 315a HGB; |
| 5) | the General Partner’s proposal on the allocation of distributable profit; |
| 6) | the annual report for the Fresenius Medical Care group for fiscal year 2020 which contains the Declaration on Corporate Governance as well as the Compensation Report for fiscal year 2020; |
| 7) | the written report of the General Partner regarding agenda item 7; and |
| 8) | the curriculum vitae of the candidates proposed for election to the Supervisory Board and to the Joint Committee. |
The voting results will be published on the Company’s website at www.freseniusmedicalcare.com/en/agm/ after the General Meeting. Information on the provision of confirmation on whether and how votes were counted pursuant to section 129 (5) AktG, which anyone who has voted can demand within one month as of the date of the General Meeting, can be found in the Shareholder Portal.
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Audio and video broadcast
The General Meeting will be broadcast in full in audio and video on 20 May 2021 from 10:00 hours CEST for registered shareholders via the Shareholder Portal. The broadcast of the introductory remarks by the Chairman of the Meeting and the speech by the chairman of the Management Board of the General Partner can be followed by the interested public on 20 May 2021 from 10:00 hours CEST on the Company's website at www.freseniusmedicalcare.com/en/agm/ without requiring access to the Shareholder Portal and thus prior registration for the General Meeting.
Time specifications in this Convening
The time specifications in this convening refer to the Central European Summer Time (CEST) unless explicitly stated otherwise. With regard to the Coordinated Universal Time (UTC) this translates to UTC = CEST minus two hours.
Hof an der Saale, April 2021
Fresenius Medical Care AG & Co. KGaA
The General Partner
Fresenius Medical Care Management AG
The Management Board
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Information for holders of American Depositary Receipts (ADR) regarding the Annual General Meeting
– ISIN: US3580291066 // CUSIP: 358029106 –
Holders of ADRs will generally submit their voting instructions to The Bank of New York Mellon Corporation, which, in its capacity as Depositary Bank, will try, as far as practically possible, to exercise the voting rights subject to German law and the provisions of the Articles of Association and according to the instructions provided by the holders of ADRs. However, the Depositary Bank and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. Guidelines as to the exercise of voting rights by means of “Proxy Voting” can be found in the materials of the General Meeting, which will be sent to the holders of ADRs. Voting instructions must be received by The Bank of New York Mellon Corporation by 10 May 2021 (prior to 17:00 hours EDT) at the latest.
The custodian banks are advised of the separate publications in the German Wertpapier-Mitteilungen.
Hof an der Saale, April 2021
Fresenius Medical Care AG & Co. KGaA
The General Partner
Fresenius Medical Care Management AG
The Management Board
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Privacy Notice
1. Controller, categories of processed data and purposes of data processing
Fresenius Medical Care AG & Co. KGaA, Else-Kröner-Straße 1, 61352 Bad Homburg v. d. Höhe, Germany (the “Company”), e-mail: ir@fmc-ag.com, processes personal data (in particular name, first name, address, e-mail address, number of shares, type of ownership of shares, number of the access card, and voting, and, as the case may be, name, first name and address of a proxy authorized by the respective shareholder) as controller in accordance with applicable data protection laws to enable shareholders to exercise their rights in the context of the virtual General Meeting. If shareholders or proxies contact the Company, the Company also processes the personal data necessary to respond to any requests (for example the contact data provided by the shareholder or proxy, such as e-mail address or telephone number). If applicable, the Company also processes personal data relating to questions, statements, countermotions, election proposals and requests of shareholders or proxies in the context of the virtual General Meeting.
If shareholders or proxies make use of the opportunity to submit questions in advance of the virtual General Meeting via the Shareholder Portal, the answers will – in general – be given by stating their names, which may be taken notice of in the virtual General Meeting. In the course of submission of questions, the shareholders or proxies have the opportunity to object that their names are stated.
Shareholders and proxies also have the possibility to submit statements in video form via the Shareholder Portal. These are published in the Shareholder Portal including the disclosure of the submitting shareholder’s and, as the case may be, proxy’s name and are accessible for all users of the Shareholder Portal. Shareholders and proxies may withdraw their consent to the publication of their statement at any time with effect for the future. This does not affect the lawfulness of data processing based on consent before its withdrawal.
2. Legal basis for data processing
The legal basis for the processing are Art. 6 (1) sentence 1 lit. a), Art. 6 (1) sentence 1 lit. c) as well as Art. 6 (1) sentence 1 lit. f) of the General Data Protection Regulation (“GDPR”).
3. Categories of recipients of personal data, data sources and retention period
The Company and, respectively, the service providers of the Company that are engaged in the context of the virtual General Meeting receive the personal data of the shareholders or proxies from the registration office, which receives the data either from the shareholders or proxies themselves or from the depositary banks of the shareholders. The service providers engaged by the Company receive only personal data from the Company that are required to provide the requested services, and process data only based on instructions by the Company. Additional personal data relating to questions, statements, countermotions, election proposals and requests of shareholders or proxies may also be collected in the context of the virtual General Meeting. Statements published in the Shareholder Portal are available there until the end of the General Meeting and subsequently will be deleted in a timely manner. In addition, personal data will be made available to shareholders and proxies in the context of the virtual General Meeting within the framework of statutory provisions. The personal data will be stored by the Company in accordance with legal obligations and for the avoidance of potential liability risks and will be deleted afterwards.
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4. Rights of data subjects and contact details of the data protection officer
In accordance with the statutory provisions, shareholders and proxies are at any time entitled as data subjects to exercise their rights of access, of rectification, of restriction, of objection and of erasure regarding the processing of their personal data and are also entitled to exercise their right to data portability in accordance with chapter III of the GDPR. Shareholders and proxies have a right to withdraw any consent given by them. Shareholders and proxies can assert these rights towards the Company free of charge via the contact details indicated above or directly vis-à-vis the data protection officer: Fresenius Medical Care AG & Co. KGaA, Mr. Giovanni Brugugnone, Else-Kröner-Straße 1, 61352 Bad Homburg v. d. Höhe, Germany, e-mail: datenschutzbeauftragter@fmc-ag.com. In addition, shareholders have the right to lodge a complaint with a supervisory authority pursuant to Art.77 GDPR.
Further information regarding the processing of personal data of shareholders or proxies in the course of the use of the Shareholder Portal are available in the Shareholder Portal.
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Exhibit 99.2
Convenience translation
Report by the Supervisory Board
of Fresenius Medical Care AG & Co. KGaA
for the Fiscal Year 2020
For Fresenius Medical Care, the past fiscal year was characterized by the Covid-19 pandemic and confronted the company with extraordinary challenges. As a healthcare company and global market leader in dialysis, Fresenius Medical Care is aware of its responsibility to improve the lives of patients around the world. The company can be proud that it has succeeded in guaranteeing medical care with its products and services despite the pandemic and the accompanying restrictions, and in maintaining high-quality production, supply chains and medical services.
In economic terms, the year under review was successful for the company. Fresenius Medical Care achieved a solid revenue and a strong earnings growth and has reached its aims for the fiscal year 2020 despite the Covid-19 pandemic.
Mr. Frank Maddux, MD, was appointed as a member of the Management Board of the General Partner, Fresenius Medical Care Management AG, (hereinafter the “Management Board”) in his function as Global Chief Medical Officer with effect as of January 1, 2020. He had previously been entrusted with the newly created position of Global Chief Medical Officer of the company and is to link clinical research and therapy even more closely. Apart from this new appointment, there were no significant events concerning the organization and composition of the Management Board or the Supervisory Board of Fresenius Medical Care AG & Co. KGaA (hereinafter the “Company”).
The Supervisory Board also in the past fiscal year observed all duties imposed on it by law, the Articles of Association and the Rules of Procedure. In this context it also took into account the recommendations of the German Corporate Governance Code. The Supervisory Board supervised the General Partner within its responsibility and regularly advised the Management Board and was involved in decisions of fundamental importance to the company.
1
Convenience translation
All relevant questions of the business policy, the company’s planning and the strategy were subject to the deliberations of the Supervisory Board. Reports of the Management Board on the progress of the business, the profitability and liquidity as well as on the situation and perspectives of the Company and the group formed the basis for the work of the Supervisory Board. Further topics were the risk situation and risk management. Additional items on the agenda were discussions on acquisition and investment projects. The Supervisory Board and its competent committees comprehensively discussed these as well as also all further significant business events. Furthermore, the Supervisory Board also in the past year reviewed the development of the acquisitions of the previous years. The Supervisory Board passed resolutions within its competencies according to law and the Articles of Association.
Meetings
In the past fiscal year, seven meetings of the Supervisory Board, some of which lasted several days, took place. Some of the meetings were held as video conferences due to the Covid-19 pandemic and the associated travel and meeting restrictions. The Supervisory Board also met regularly without the Management Board.
The participation rate of the members in the meetings of the Supervisory Board and its committees was 100%. The following table shows the participation of the members in the meetings of the Supervisory Board and the committees in the past fiscal year:
| Supervisory Board | Audit and Corporate Governance Committee | Nomination Committee |
Joint Committee |
Special Joint Committee | |
| Dr. Dieter Schenk (Chairman) |
7/7 | - | 2/2 | - | 3/3 |
| Rolf A. Classon (Vice Chairman) |
7/7 | 9/9 | 2/2 | 0/0 | - |
| William P. Johnston | 7/7 | 9/9 | - | 0/0 | - |
| Dr. Dorothea Wenzel | 7/7 | - | - | - | - |
| Pascale Witz | 7/7 | 9/9 | - | - | 3/3 |
| Prof. Dr. Gregor Zünd | 7/7 | - | - | - | - |
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Convenience translation
The Management Board and the Supervisory Board cooperate on a trust basis to the benefit of the company. The Supervisory Board was in regular contact with the Management Board and was always promptly and comprehensively informed by it. Between meetings, the Management Board reported to the Supervisory Board in writing. During the meetings, the Management Board also informed the Supervisory Board verbally. In addition, the Supervisory Board also last year was in contact with members of the senior management level. The members of the Management Board were further available to the Supervisory Board for follow-up queries. The Chairman of the Supervisory Board maintained continuous contact with the Management Board outside the meetings, in particular with the Chairman of the Management Board and consulted with him questions regarding strategy, business development, the risk situation, risk management and compliance of the company. In case of important occasions or events, the Chairman of the Management Board promptly informed the Chairman of the Supervisory Board. In such cases, the Chairman of the Supervisory Board subsequently informed the other members of the Supervisory Board in the next meeting at the latest. During the entire fiscal year, the Chairman of the Supervisory Board also was in close contact with the other members of the Supervisory Board. In the year under review, the Chairman of the Supervisory Board was also available for communication with investors to the extent permitted by law and in close coordination with the Management Board.
Focus of the discussions in the Supervisory Board
One of the main focus areas of the Supervisory Board’s discussions in the past year was supporting the Management Board in dealing with the challenges of the Covid-19 pandemic. As a result of the comprehensive and early measures initiated by the company already at the very beginning of the pandemic, the impact on patients was minimized and operations at the more than 4,000 dialysis centers worldwide were maintained without major interruptions. Production at Fresenius Medical Care’s worldwide manufacturing sites could also proceed largely without disturbances.
Fresenius Medical Care also expanded home dialysis as an important growth area. In the second quarter of the year under review, the home dialysis offering was expanded in the Europe, Middle East and Africa (EMEA) region. The integration of the NxStage home dialysis product portfolio in the EMEA region, which has now been completed, enables Fresenius Medical Care to offer even more patients treatment at home and a wider choice of treatment methods. Home dialysis is an important treatment option, particularly in the pandemic.
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Convenience translation
The business development, the competitive situation and the Management Board’s planning in the individual regions and functions were also focal points of the Supervisory Board’s discussions. In joint consultations with the Management Board, the development of the production quantities and their expansion were discussed. In the past year, the Supervisory Board also informed itself about the quality assurance systems and about the results of the product quality testing in the production facilities.
Another major focus of the Supervisory Board's discussions in the past fiscal year was the Strategy 2025, which the Management Board announced in October 2020, and the financial planning for the years 2021 to 2023.
In the past fiscal year, the Supervisory Board again discussed the development of cost reimbursement in the various health care systems, in particular in the U.S. One focus of the discussions was, inter alia, the U.S.-American CARES Act (Coronavirus Aid, Relief, and Economic Security Act), which is intended to compensate health care providers to a large extent for, among other things, the increased costs of measures to protect against Covid-19. With a view to the continued aim of increasing efficiency and the corresponding measures taken by the management already in previous years, the Supervisory Board further informed itself also in the past year about the success of the measures taken to improve the cost situation.
In the year under review, the Supervisory Board submitted the revised system for the compensation of the Management Board (Compensation System 2020+) to the Annual General Meeting of the Company for approval. It further proposed to the Annual General Meeting that, as part of the upcoming auditor rotation, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft be elected as auditor instead of KPMG AG Wirtschaftsprüfungsgesellschaft, which had audited the financial statements of the Company and the group so far. The Annual General Meeting of the Company on August 27, 2020 approved both resolution proposals with a majority of 95.05% and 98.82%, respectively, of the votes cast.
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Convenience translation
Due to the Covid-19 pandemic, the Annual General Meeting of the Company in the year under review took place later than originally scheduled and, in line with the framework created by the legislator with short notice, was held as a virtual general meeting without the physical presence of shareholders or their proxies.
In the year under review, two bonds with an aggregate volume of €1.25 billion were successfully issued in May and a bond with a volume of $1 billion in September.
In the year under review, the Company redeemed all of the approximately 11.8 million treasury shares it had acquired in the year under review and in previous years as part of share buyback programs.
The Supervisory Board was regularly informed about the company’s compliance. Findings of the internal audit department were also taken into account. In particular, the Supervisory Board has also informed itself intensively and on an ongoing basis about the findings, assessments and recommendations of the independent expert ("Monitor") engaged by the Company to monitor the internal compliance in fulfillment of its obligations under the agreements it entered into in March 2019 with the U.S. Department of Justice (DoJ) and the U.S. Securities and Exchange Commission (SEC) concerning violations of provisions of the U.S. Foreign Corrupt Practices Act (FCPA). The Supervisory Board will continue to closely monitor this topic.
Committees of the Supervisory Board
The Supervisory Board has formed professionally qualified committees from among its members that support the Supervisory Board as a whole in its supervisory and advisory functions. The respective chairmen have regularly reported to the Supervisory Board on the work of the committees. Details of the composition of the Supervisory Board’s committees can be found in the Declaration on Corporate Governance which can be found on pages 109 et seqq. of the annual report.
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Convenience translation
Audit and Corporate Governance Committee
The Audit and Corporate Governance Committee convened nine times in the past fiscal year. All members of this committee – Messrs. Rolf A. Classon (Chairman) and William P. Johnston (Vice Chairman) as well as Ms. Pascale Witz – are financial experts according to Sec. 100 para. 5 of the German Stock Corporation Act (AktG). The Chairman of the Audit and Corporate Governance Committee Mr. Classon also has specific knowledge and experience in applying accounting principles and internal control procedures and is also familiar with auditing.
In the past year, the committee dealt with the annual and consolidated financial statements, the proposal for the allocation of profit and the report according to Form 20-F for the SEC. It also discussed the quarterly reports with the Management Board. Furthermore, it dealt with the selection and the independence of the auditor of the annual and consolidated financial statements. In doing so, it also considered any additional non-audit services provided. Also, the audit engagement pertaining to the audit of the consolidated financial statements according to the International Financial Reporting Standards (IFRS) and the internal controls concerning the financial reporting, which are part of the report according to Form 20-F, was issued by the committee. The committee further negotiated the fee agreement with the auditor. Audit focal points and further key audit matters of the past fiscal year were the goodwill impairment assessment for the groups of cash-generating units Latin America and EMEA (Europa, Middle East and Africa), the valuation of receivables from dialysis treatments in the U.S., the consequences of the Covid-19 pandemic for the financial reporting including the reflection of the U.S.-American CARES Act in the income statement, the accounting of an investment in the U.S. at fair value, the potential consequences of cyber-attacks on the financial reporting, as well as, for the annual financial statements of the Company, the measurement of investments in affiliates as well as the recognition of net income from investments.
Representatives of the auditor participated in all meetings of the committee and informed the members of the committee of their auditing activities. In addition, they provided information on any significant results of their audit and were available for additional information. In the absence of the members of the Management Board, they reported on the cooperation with them.
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Convenience translation
The Audit and Corporate Governance Committee dealt with the supervision of the accounting and its process, with the effectiveness of the internal control system, the risk management system and the internal audit system as well as with the audit and compliance. The committee also dealt with the review of the internal control processes as well as with the measures taken by the Management Board for the successful elimination of the control weakness that had been identified in the previous year and related to the design and effectiveness of the internal controls on the revenue recognition in the North America business segment. In the course of its audit, the auditor audited the internal control system in relation to the accounting processes, the electronic reproduction of the consolidated financial statements and the group management report pursuant to Sec. 328 para. 1 of the German Commercial Code (HGB) (so-called ESEF documents) as well as the early risk recognition system. The audit showed that the General Partner has appropriately implemented the measures required under Sec. 91 para. 2 AktG, in particular regarding the establishment of a monitoring system, and that the monitoring system is suitable for the early identification of developments that may endanger the continued existence of the Company. The Management Board periodically reported to the committee on larger individual risks. It also regularly informed the committee on the compliance situation as well as on the audit plans and results of the internal audit.
The committee again reviewed the business relations of the Fresenius Medical Care group companies to Fresenius SE & Co. KGaA and the latter’s affiliated companies. It was confirmed in each case that these relationships corresponded to those between unrelated third parties.
Certain transactions of the Company with related parties may be subject to the approval of the Supervisory Board pursuant to Sec. 111b AktG since the German Act Implementing the Second Shareholder Rights Directive (ARUG II) came into force. The Supervisory Board has made use of the option to delegate the responsibility for the approval resolution to the Audit and Corporate Governance Committee. The prerequisites under which a transaction requires such approval did not arise in the year under review. In accordance with Sec. 111a para. 2 sentence 2 AktG, the Audit and Corporate Governance Committee reviewed whether transactions between the Company and related parties were conducted in the ordinary course of business and at arm’s length. No objections were raised in this respect.
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Convenience translation
The Chairman of the Audit and Corporate Governance Committee has regularly reported to the Supervisory Board on the results of the discussions and resolutions in the committee.
Nomination Committee
The Nomination Committee prepares candidate proposals and proposes to the Supervisory Board of the Company suitable candidates for its election proposals to the General Meeting. In the past fiscal year, the Nomination Committee convened two times, in particular to prepare the proposals for the election of the members of the Supervisory Board by the Annual General Meeting 2021.
Joint Committee
The Company has a Joint Committee which is composed of two members of the supervisory board of the General Partner as well as two members of the Supervisory Board of the Company. For certain matters, the Management Board requires the approval of the Joint Committee. In the past fiscal year, the Joint Committee did not convene since no meeting was required.
Special Joint Committee
In 2019, the Supervisory Board of the Company and the Supervisory Board of the General Partner had constituted a special joint committee (Special Joint Committee).
Within the scope of the responsibilities of the Supervisory Board, the Special Joint Committee was to review any consequences of the findings from the Company’s agreements with the DoJ and the SEC in 2019 and to make recommendations to the Supervisory Board. The Special Joint Committee convened three times in the year under review. The Chairman of the Special Joint Committee has regularly informed the Supervisory Board of the Company.
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Convenience translation
The Special Joint Committee within the scope of its review concluded that the findings of the aforementioned agreements do not indicate that any action beyond the review by the Supervisory Board is warranted.
Following its own review, the Supervisory Board concurred with this conclusion and resolved that on the basis of the facts available to it in connection with the findings of the aforementioned agreements, no measures are to be initiated that fall within its responsibility.
The Special Joint Committee was dissolved by resolution of the Supervisory Board of the Company and of the supervisory board of the General Partner on November 30, 2020 upon completion of the task for which it had been formed.
Corporate Governance
The members of the Supervisory Board in principle self-responsibly undertake educational and training measures required for their tasks, such as on changes in the legal framework and on new, future-oriented developments technologies, and are adequately supported in this respect by the Company.
In addition to the information provided to them by various external experts, also experts of the Company’s departments regularly report on relevant developments, such as – for example – relevant new developments in the revision of legal rules or in jurisprudence and also about recent developments in regulations on accounting and audit. In this way, the Supervisory Board, with the Company’s adequate assistance, ensures an ongoing qualification of its members and also a further development and updating of their expertise, power of judgment and experience, which is required for the Supervisory Board including its committees to duly perform their tasks.
New members of the Supervisory Board can meet the members of the Management Board and specialist managers for a discussion of fundamental and current topics and thereby gain an overview of the relevant topics of the company (“onboarding”). For targeted further training, internal information events are offered as required. In the reporting year, further training was provided for the members of the Supervisory Board on the provisions of the FCPA and on a regular basis on current developments in corporate governance and upcoming relevant legal regulations. In the reporting year, this included developments in corporate and capital market law and reimbursement in relevant healthcare systems.
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Convenience translation
The Supervisory Board reports to the General Meeting on possible conflicts of interests of its members and on the treatment of such conflicts. In the year under review, there were no conflicts of interest of board members that would have been required to be disclosed to the Supervisory Board and of which the Supervisory Board would inform the General Meeting.
Further details on corporate governance, in particular on the independence of the Supervisory Board members, on the membership in the supervisory boards of the General Partner, Fresenius SE & Co. KGaA or the latter’s general partner, the profile of skills and expertise for the Supervisory Board and the age limit for membership in the Company’s Supervisory Board, as well as the self-assessment of the activities of the Supervisory Board and its committees, can be found in the Declaration on Corporate Governance on pages 109 et seqq. of the annual report. The Declaration on Corporate Governance was discussed by the Supervisory Board and approved in its meeting of March 9, 2021.
The Declaration on Corporate Governance also includes the Declaration of Compliance in relation to the German Corporate Governance Code according to Sec. 161 AktG as resolved by the Management Board and Supervisory Board and published in December 2020. The Declaration of Compliance is permanently available to the public on the Company’s website www.freseniusmedicalcare.com/en in the section “Investors” and there in the sub-section “Corporate Governance”. The update to the Declaration of Compliance resolved by the Management Board and the Supervisory Board in February 2021 can be found there, too.
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Convenience translation
Annual and consolidated financial statements
The annual financial statements and the management report of Fresenius Medical Care AG & Co. KGaA were prepared in accordance with the regulations of the German Commercial Code (HGB). The consolidated financial statements and group management report follow Sec. 315e of the German Commercial Code (HGB) in accordance with IFRS as applicable in the European Union. Accountancy, the annual financial statements, the management report as well as the consolidated financial statements and the group management report for fiscal year 2020 were audited by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt am Main. Said company was elected as auditor by resolution of the Annual General Meeting of August 27, 2020 and mandated by the Supervisory Board. The auditor provided each of the aforementioned documents with an unqualified certificate. Mr. Peter Kartscher and Mr. Holger Lutz signed the respective audit certificate as the responsible auditors. The audit reports of the auditor were made available to the Audit and Corporate Governance Committee and the Supervisory Board. The Audit and Corporate Governance Committee reviewed the annual and consolidated financial statements as well as the management reports and included the audit reports of, and the discussions with, the auditor in its discussions. The Audit and Corporate Governance Committee reported to the Supervisory Board on this.
The Supervisory Board also reviewed the annual financial statements, the management report, the consolidated financial statements and the group management report in each case for the past fiscal year. The documents were provided to it in good time. The Supervisory Board declared its agreement with the result of the audit of the annual financial statements and the consolidated financial statements by the auditor. The representatives of the auditor who signed the audit reports participated in the discussions of the Supervisory Board of the annual and consolidated financial statements. They reported to the Supervisory Board on the significant findings of their audit and were available for additional information. Also according to the final results of its own review, no objections are to be raised by the Supervisory Board as regards the annual financial statements, the management report, the consolidated financial statements and the group management report.
In its meeting on February 22, 2021 the Supervisory Board discussed the draft of the report according to Form 20-F. The report according to Form 20-F was filed with the SEC on February 23, 2021.
The annual financial statements and management report of Fresenius Medical Care AG & Co. KGaA as well as the consolidated financial statements and the group management report for the past fiscal year, as presented by the General Partner, were approved by the Supervisory Board at its meeting on March 9, 2021.
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Convenience translation
The Supervisory Board also approved the General Partner’s proposal for the application of profit which provides for a dividend of €1.34 for each share.
Separate non-financial group report
The separate non-financial group report of Fresenius Medical Care AG & Co. KGaA was prepared in accordance with the regulations of the German Commercial Code (HGB) and will be published separately from the management report. Fresenius Medical Care therein reports selected non-financial information in reference to the international sustainability standard of the Global Reporting Initiative (GRI) (GRI Standards 2016).
The Supervisory Board made use of the option to have the separate non-financial group report verified by an external auditor. The separate non-financial group report was subjected to a limited assurance engagement review by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, in accordance with the international standard on assurance engagements ISAE 3000 (Revised). PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft issued a corresponding assurance statement.
The Supervisory Board reviewed the separate non-financial group report. The documents were provided to it in good time. The Supervisory Board declared its agreement with the result of the limited assurance engagement by the auditor. The representatives of the auditor who signed the note on the limited assurance engagement participated in the discussions of the Supervisory Board of the separate non-financial group report. They reported to the Supervisory Board on the significant findings of their limited assurance engagement and were available for additional information. Also according to the final results of its own review, no objections are to be raised by the Supervisory Board as regards the separate non-financial group report.
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Convenience translation
Dependency report
The General Partner prepared a report on its relationships to Fresenius SE & Co. KGaA and the latter’s affiliates in accordance with Sec. 312 AktG for the past fiscal year. The report contains the following final declaration:
“With regard to the legal transactions listed in this report on the relationships to affiliated companies, FMC-AG & Co. KGaA received appropriate compensation for each legal transaction in accordance with the circumstances of which we were aware at the time that the legal transactions were conducted. In the year under review there were no reportable measures taken or forgone.”
Both the Audit and Corporate Governance Committee and the Supervisory Board received the dependency report in good time and reviewed it. The auditor participated in the relevant meetings. It reported on the main results of its audit and was available for additional information. On February 26, 2021, the auditor added the following certificate to the dependency report:
“On the basis of our proper audit and judgment we confirm that 1. the factual disclosures provided in the report are correct, 2. the consideration paid by the Company for the legal transactions stated in the report was not inappropriately high.“
The Audit and Corporate Governance Committee and the Supervisory Board concur with the assessment of the auditor. Following the final results of its own review, the Supervisory Board does not raise any objections against the declaration of the General Partner at the bottom of the report on the relationships to affiliates.
Acknowledgements
Conclusively, the Supervisory Board thanks the members of the Management Board as well as all employees of the group for their outstanding and tireless efforts in an extremely challenging environment marked by the Covid-19 pandemic. Their very successful work performed under difficult conditions in the past fiscal year is highly appreciated!
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Convenience translation
Bad Homburg v.d. Höhe, March 9, 2021
On behalf of the Supervisory Board
sgd. Dr. Dieter Schenk
Chairman
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Exhibit 99.3
 |
Convenience Translation |
Explanatory report of the General Partner
on information according to Sec. 289a para. 1, Sec. 315a para. 1
of the German Commercial Code
The information contained in the management report to the consolidated financial statements and the annual financial statements of Fresenius Medical Care AG & Co. KGaA for the fiscal year 2020 according to Sec. 289a para. 1, Sec. 315a para. 1 of the German Commercial Code (HGB) are explained as follows:
Share capital held by the Company's shareholders as of December 31, 2020, totals approximately € 293 million, divided into 292,876,570 non-par bearer shares, and a nominal value of € 1 each. On the basis of the authorization granted by the Company's annual general meeting on May 12, 2011 to conduct a share buyback program, the Company repurchased 7,548,951 of its own shares during financial year 2013. The Company redeemed 6,549,000 of these repurchased shares on February 16, 2016. On the basis of the authorization granted by the Company's annual general meeting on May 12, 2016 to conduct a share buyback program, the Company repurchased further 660,000 of its shares from December 11, 2017 up to and including December 21, 2017, and further 431,000 of its shares from May 28, 2018 up to and including June 8, 2018. The Company redeemed the 1,091,000 shares repurchased in 2017 and 2018 on December 12, 2018. In the period from March 12, 2019 up to and including May 10, 2019, the Company repurchased further 3,770,772 shares for an average weighted stock price of € 71.55 on the basis of the authorization granted by the Company's annual general meeting on May 12, 2016. The Company redeemed the 3,770,772 shares repurchased in the period from March 12, 2019 up to and including May 10, 2019 on June 28, 2019. On the basis of the authorization granted by the Company's annual general meeting on May 12, 2016 to conduct a share buyback program, the Company repurchased further 10,795,151 shares for an average weighted stock price of € 63.50 per share in the period from June 17, 2019 up to and including April 1, 2020. On December 10, 2020, the Company redeemed these 10,795,151 treasury shares together with the remaining 999,951 shares repurchased pursuant to the share buyback program in 2013 for the purpose of capital reduction. Thus, as of December 31, 2020, the Company does not hold any treasury shares. The treasury shares were acquired in the course of share buyback programs on the stock exchange via the XETRA trading system and/or – for the share buyback program since June 17, 2019 – via selected multilateral trading facilities (MTF).
The rights of the shareholders are governed by the German Stock Corporation Act (AktG) and the Company's Articles of Association. This stipulates that each share shall be entitled to one vote at the Company's annual general meeting.
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| |
Convenience Translation |
The General Partner, Fresenius Medical Care Management AG, is responsible for managing and representing the Company. It does not participate in the profit or loss or the net assets of the Company. The General Partner's management authority also encompasses exceptional management measures which do not require the approval of the shareholders. Vis-à-vis the General Partner, the Company is represented by its Supervisory Board.
The General Partner will cease to be General Partner of the Company if and when all shares in the General Partner entity are no longer held directly or indirectly by one party, which at the same time must hold, directly or indirectly by means of controlled company as defined in Section 17 (1) AktG, more than 25 % of the Company's share capital. This does not apply if all the shares of the General Partner entity are held directly or indirectly by the Company. Additionally, the General Partner will cease to be the Company's General Partner if the shares in the General Partner entity are acquired by another person
| · | who does not at the same time acquire shares of the Company in the amount of more than 25 % of the Company's share capital, or |
| · | who has not, within three months after the effectiveness of such an acquisition, submitted and voluntary or mandatory takeover offer to the Company's shareholders according to the rules of the German Securities Acquisition and Takeover Act (WpÜG); the fair consideration offered to the shareholders must also reflect the consideration which the purchaser pays for the shares in the General Partner entity, if the amount for such consideration exceeds the amount of its equity capital. |
The other grounds for withdrawal as provided by the law remain unaffected with respect to the General Partner.
As of December 31, 2020, Fresenius SE & Co. KGaA, Bad Homburg v. d. Höhe, Germany holds 94,380,382 shares of the Company, which corresponds to a 32.23 % holding and hence exceeds 10 % of the Company's total share capital.
The appointment and removal of members of the Management Board of the General Partner entity are governed by Sections 84 and 85 AktG. Changes to the Articles of Association of the Company must be made in accordance with Sections 278 (3), 179 in conjunction with Section 133 AktG. The Articles of Association entitle the Company's Supervisory Board to make amendments to the Articles of Association which concern only its working without resolution of the general meeting.
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| |
Convenience Translation |
The General Partner is entitled, subject to approval by the Supervisory Board, to increase the Company's share capital as follows in accordance with the resolutions passed by the shareholders at the annual general meeting:
| · | Authorization to increase on one or more occasions up to August 26, 2025 the Company's share capital by up to a total of € 35 million by issuing new bearer ordinary shares in return for cash contributions (Authorized Capital 2020/I). |
| · | Authorization to increase on one or more occasions up to August 26, 2025 the Company's share capital by up to a total of € 25 million by issuing new bearer ordinary shares in return for cash contributions and/or investment in kind (Authorized Capital 2020/II). |
In both cases, the General Partner is entitled, with the approval of the Supervisory Board and in accordance with the resolutions passed at the general meeting, to take a decision on the exclusion of shareholders' pre-emption rights.
In addition, share capital shall be subject to a conditional increase of up to € 9.494 million. This conditional capital increase will only be carried out to the extent that options were issued in accordance with the Stock Option Plan 2011 based on the shareholders' resolutions of May 12, 2011 and May 12, 2016, provided the holders of such options exercises their rights and the Company does not issue any of its own treasury shares to settle those options. With regard to options issued to members of the Management Board of the General Partner entity, the Supervisory Board of that entity shall be responsible.
In accordance with the resolution taken at the annual general meeting on May 12, 2016, the General Partner is authorized to acquire treasury shares until May 11, 2021 and up to a maximum of 10 % of the share capital in place on the date of the resolution. At no stage shall the acquired shares together with the treasury shares held by the Company or attributable to it pursuant to Sections 71a ff. AktG exceed 10 % of the Company's share capital. The acquisition can be made via the stock exchange or by means of a public invitation to submit offers for sale. The authorization may not be used for the purposes of trading in its own shares. The General Partner is authorized to use the shares of the Company acquired on the basis of this or an earlier authorization for all legally admissible purposes, in particular also (i) to withdraw them from circulation without any requirement for a further resolution to be taken at the annual general meeting, (ii) to sell them to third parties in return for contributions in kind, (iii) rather than using conditional capital, to award them to employees of the Company and its affiliates (including to members of the executive managements of affiliates) and to use them to service rights or commitments to acquire shares of the Company, and (iv) to service bonds with option or conversation rights issued by the Company or by dependent companies as defined by Section 17 AktG.
Under certain circumstances, a change of control resulting from a takeover offer could impact several of the Company's long-term financing arrangements which include market standard change of control clauses. These clauses give creditors the right to call for early repayment of outstanding amounts in the event of a change of control. However, with regard to most of these financing agreements – in particular in case of bonds placed on the capital markets – this right to terminate only exists if the change of control involves the Company's rating or the corresponding financing instrument being downgraded.
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| |
Convenience Translation |
Hof an der Saale, March 2021
Fresenius Medical Care AG & Co. KGaA
represented by Fresenius Medical Care Management AG
as General Partner
| sgd. Dr. Katarzyna Mazur-Hofsäß | sgd. Dr. Olaf Schermeier |
| Member of the Management Board | Member of the Management Board |
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Exhibit 99.4
Supplemental Information FOR HOLDERS OF AMERICAN DEPOSITARY SHARES TO ACCOMPANY THE INVITATION AND AGENDA FOR THE 2021 ANNUAL GENERAL MEETING
In this document (1) “FMC-AG & Co. KGaA”, the “Company”, “we,” “us” or “our” refer to Fresenius Medical Care AG & Co. KGaA, a German partnership limited by shares, (2) “Fresenius Medical Care AG” and “FMC-AG” refer to the Company as a German stock corporation before the transformation of our legal form into a partnership limited by shares; (3) “Fresenius SE” refers to Fresenius SE & Co. KGaA, a German partnership limited by shares previously called Fresenius AG, a German stock corporation. “Group” refers to the Company including its subsidiaries. Each of “Management AG”, “FMC Management AG” and the “General Partner” refers to Fresenius Medical Care Management AG, FMC-AG & Co. KGaA’s general partner and a wholly owned subsidiary of Fresenius SE. “Management Board” and “our Management Board” refer to the members of the management board of Management AG and, except as otherwise specified (see, e.g., "(iv) Compensation of the Management Board and the Supervisory Board"), “Supervisory Board” and “our Supervisory Board” refer to the supervisory board of FMC-AG & Co. KGaA. The term “North America Segment” refers to our North America operating segment; the term “EMEA Segment” refers to the Europe, Middle East and Africa operating segment, the term “Asia-Pacific Segment” refers to our Asia-Pacific operating segment, and the term “Latin America Segment” refers to our Latin America operating segment. “THOUS” is used to denote the presentation of amounts in thousands and “M” is used to denote the presentation of amounts in millions. Share data are presented in actual amounts.
As a foreign private issuer under the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”), we are not subject to the SEC’s proxy rules. However, under the stipulations of the Pooling Agreement among us, Fresenius SE, our General Partner and our independent directors, FMC-AG & Co. KGaA has agreed that in connection with any exercise of voting or consent rights by our shareholders, we will furnish to the SEC and make available for holders of our American Depositary Shares ("ADSs") information which is generally comparable to that which would be provided by a U.S. corporation, except that we agreed to provide the following information as it would be provided by a foreign private issuer under the SEC’s rules:
| · | (i) Security Ownership of Certain Beneficial Owners of Fresenius Medical Care AG & Co. KGaA; |
| · | (ii) Trading Markets for our Securities; |
| · | (iii) Directors and Senior Management; |
| · | (iv) Compensation of the Management Board and the Supervisory Board; |
| · | (v) Fresenius Medical Care AG & Co. KGaA share-based plans, and |
| · | (vi) Material Transactions between FMC-AG & Co. KGaA and its subsidiaries and directors, officers and controlling persons of FMC-AG & Co. KGaA. |
The above information contained in this document, as well as the information in item (vii) “Principal Accountant Fees and Services,” has been derived principally from our Annual Report on Form 20-F for the year ended December 31, 2020 filed with the SEC (our “2020 20-F”).
Our 2020 20-F is available on the web site maintained by the SEC at www.sec.gov and on our web site at www.freseniusmedicalcare.com on the “News and Publications” page. The information in this document accompanies the information in the accompanying convenience translation of the Agenda and Invitation to the Annual General Meeting (“AGM”) to be held on May 20, 2021 (the “2021 AGM Invitation”) and the other reports furnished with the 2021 AGM Invitation.
| (i) | Security Ownership of Certain Beneficial Owners of Fresenius Medical Care AG & Co. KGaA and Fresenius SE & Co. KGaA |
Security ownership of certain beneficial owners of Fresenius Medical Care
Our outstanding share capital consists of shares issued only in bearer form. Accordingly, unless we receive information regarding acquisitions of our shares through a filing with the SEC or through the German statutory requirements referred to below, or except as described below with respect to our shares held in American Depositary Receipt (“ADR”) form, we face difficulties precisely determining who our shareholders are at any specified time or how many shares any particular shareholder owns.
Since we are a foreign private issuer under the rules of the SEC, our directors and officers are not required to report their ownership of our equity securities or their transactions in our equity securities pursuant to Section 16 of the Securities and Exchange Act of 1934. However, persons who become “beneficial owners” of more than 5% of our shares are required to report their beneficial ownership pursuant to Section 13(d) of the Securities and Exchange Act of 1934.
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In addition, under Article 19(1) of the Regulation (EU) No. 596/2014 of the European Parliament and of the Council of April 16, 2014 on market abuse (Market Abuse Regulation or “MAR”), persons discharging managerial responsibilities within an issuer of shares, as well as persons closely associated with them, are obliged to notify the issuer and the competent authority, i.e. for the Company as issuer, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht or “BaFin”), of every transaction conducted on their own account relating to the shares or debt instruments of the issuer or to derivatives or other financial instruments linked thereto no later than three business days after the date of the transaction. This notification obligation applies once the volume of all transactions of such person conducted within a calendar year exceeds a total amount of €20,000. Persons discharging managerial responsibilities include, inter alia, the members of management as well as supervisory boards.
In addition, holders of voting securities of a German company listed on the regulated market (Regulierter Markt) of a German stock exchange or a corresponding trading segment of a stock exchange within the European Union (“EU”) are, under Sections 33, 34 of the German Securities Trading Act (Wertpapierhandelsgesetz or “WpHG”), obligated to notify the company of held or attributed holdings whenever such holding reaches, exceeds or falls below certain thresholds, which have been set at 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% of a company’s outstanding voting rights. Such notification obligations will also apply pursuant to Section 38 of the WpHG to the direct or indirect holder of instruments granting an unconditional right to acquire voting rights when due or providing discretion as to the acquisition of shares or instruments that have a similar economic effect as well as pursuant to Section 39 of the WpHG to the aggregate of held or attributed voting rights and instruments (in each case excluding the 3% threshold).
Based on the most recent notices the Company received pursuant to Section 33 et seq. of the WpHG through April 6, 2021 from the shareholders listed below, they held (directly or indirectly) three percent or more of its outstanding voting rights:
| · | According to a notice pursuant to Sections 33, 34 of the WpHG filed by Harris Associates L.P. on March 29, 2021, Harris Associates L.P. is the beneficial owner of a total of 14,667,785 shares, or 5.01% of our shares as of March 25, 2021. |
| · | According to a notice pursuant to Sections 33, 34 of the WpHG filed by Artisan Partners Asset Management Inc. on December 17, 2020, Artisan Partners Asset Management Inc. is the beneficial owner of a total of 8,999,761 shares, or 3.07% of our shares as of December 14, 2020. |
| · | According to a notice pursuant to Sections 33, 34 of the WpHG filed by BlackRock, Inc. on April 2, 2020, the various BlackRock entities named in the notice are the beneficial owners of a total of 9,503,066 shares, or 3.12% of our shares and of instruments relating to 0.32% of the voting rights of FMC-AG & Co. KGaA as of March 30, 2020. |
| · | We have been informed that as of February 16, 2021, Fresenius SE owned 94,380,382 shares, or 32.2% of our outstanding shares. |
All notifications made by shareholders in accordance with the WpHG are published on the Company's website (www.freseniusmedicalcare.com) under "Investors – Shares – Shareholder Structure".
As the sole shareholder of our General Partner, Fresenius SE is barred from voting its shares on certain matters. See Item 16G, “Corporate governance – Supervisory Board” in our 2020 20-F. Subject to any applicable statutory limitations, all of our outstanding shares have the same voting rights.
As of December 31, 2020, no member of our Supervisory Board, the supervisory board of our General Partner or the Management Board beneficially owned 1% or more of our outstanding shares, according to the most recent information available. See Item "(iv) Compensation of the Management Board and the Supervisory Board" for information regarding share-based compensation, including the grants of cash-settled performance shares and provisions of the compensation system providing for mandatory share retention to promote share ownership. Additionally, stock option and other share-based plans are discussed in detail in note 20 of the notes to our consolidated financial statements included in our 2020 20-F. For information regarding outstanding options to purchase our shares, see "(v) Fresenius Medical Care AG & Co. KGaA share-based plans - Information on holdings under share-based plans."
Bank of New York Mellon, our ADR depositary, informed us, that as of December 31, 2020, 18,065,566 ADRs were held of record by 2,610 U.S. holders. For additional information regarding our ADRs and ADSs, see “Description of Securities,” filed as Exhibit 2.1 to our 2020 20-F.
Security ownership of certain beneficial owners of Fresenius SE
Fresenius SE’s share capital consists solely of ordinary shares, issued only in bearer form. Accordingly, Fresenius SE has difficulties precisely determining who its shareholders are at any specified time or how many shares any particular shareholder owns. However, under the WpHG, holders of voting securities of a German company listed on the regulated market (Regulierter Markt) of a German stock exchange or a corresponding trading segment of a stock exchange within the EU are obligated to notify a company of certain levels of holdings, as described above.
The Else Kröner-Fresenius-Stiftung is the sole shareholder of Fresenius Management SE, the general partner of Fresenius SE, and has sole power to elect the supervisory board of Fresenius Management SE. In addition, based on the most recent information available, Else Kröner-Fresenius Stiftung owns approximately 26.67% of the Fresenius SE ordinary shares. See Item (vi), “Material Transactions between FMC-AG & Co. KGaA and its Subsidiaries and Directors, Officers and Controlling Persons of FMC-AG & Co. KGaA” below.
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| (ii) | Trading Markets for our Securities |
Trading on the Frankfurt Stock Exchange
The principal trading market for our shares is the Frankfurt Stock Exchange (FWB® Frankfurter Wertpapierbörse). The shares of Fresenius Medical Care AG had been listed on the Frankfurt Stock Exchange since October 2, 1996. Trading in the shares of FMC-AG & Co. KGaA on the Frankfurt Stock Exchange commenced on February 13, 2006 under the symbol FME.
Our shares have been listed on the Regulated Market (Regulierter Markt) of the Frankfurt Stock Exchange and on the Prime Standard of the Regulated Market, which is a sub-segment of the Regulated Market with additional post-admission obligations. Admission to the Prime Standard requires the fulfillment of the following transparency criteria: publication of quarterly reports; preparation of financial statements in accordance with international accounting standards (International Financial Reporting Standards, “IFRS”); publication of a company calendar; convening of at least one analyst conference per year; and publication of ad-hoc messages (i.e., certain announcements of material developments and events) in English. Companies aiming to be listed in this segment have to apply for admission. Listing in the Prime Standard is a prerequisite for inclusion of shares in the selection indices of the Frankfurt Stock Exchange, such as the DAX®, the index of 30 major German stocks (which will be increased to include 40 companies in September 2021). Both FMC AG & Co. KGaA and Fresenius SE are included in the DAX®.
Deutsche Börse AG operates the Frankfurt Stock Exchange, which is the largest German stock exchange by value of shares traded. Our shares are traded on Xetra, the electronic trading system of the Frankfurt Stock Exchange. The trading hours for Xetra are between 9:00 a.m. and 5:30 p.m. Central European Time (“CET”). Only brokers and banks that have been admitted to Xetra by the Frankfurt Stock Exchange have direct access to the system and may trade on it. Private investors can trade on Xetra through their banks and brokers.
Deutsche Börse AG publishes information for all traded securities on the Internet, http://www.deutsche-boerse.com.
Transactions on Xetra and the Frankfurt Stock Exchange settle on the second business day following the trade. The Frankfurt Stock Exchange can suspend a quotation if orderly trading is temporarily endangered or if a suspension is deemed to be necessary to protect the public.
The Hessian Stock Exchange Supervisory Authority (Hessische Börsenaufsicht) and the Trading Monitoring Unit of the Frankfurt Stock Exchange (HÜST Handelsüberwachungsstelle) both monitor trading on the Frankfurt Stock Exchange.
BaFin, an independent federal authority, is responsible for the general supervision of securities trading pursuant to MAR, WpHG and other applicable laws.
Trading on the New York Stock Exchange
ADSs representing the shares of Fresenius Medical Care AG had been listed on the New York Stock Exchange (“NYSE”) since October 1, 1996. Trading in the ADSs representing the shares of FMC AG & Co. KGaA on the NYSE, under the symbol FMS, commenced in February of 2006. Effective December 3, 2012, we effected a two-for-one split of our outstanding ADSs, which changed the ratio our ADSs to shares from one ADSs representing one share to two ADSs representing one share. The Depositary for the ADSs is Bank of New York Mellon (the "Depositary"). For additional information regarding ADRs see “Information pertaining to Item 12. Description of Securities Other than Equity Securities - D. American Depositary Shares - Description of American depositary receipts;” filed as Exhibit 2.1 to our 2020 20-F.
Dividends
We generally pay annual dividends on our shares in amounts that we determine on the basis of FMC-AG & Co. KGaA’s prior year’s retained earnings (Bilanzgewinn) as shown in the statutory unconsolidated financial statements that we prepare under German law on the basis of the accounting principles of the German Commercial Code (Handelsgesetzbuch or HGB). The payment of dividends is subject to approval by a resolution of the general meeting of shareholders. Our goal is for the dividend development to be closely aligned with our growth in basic earnings per share, while maintaining dividend continuity.
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The General Partner and our Supervisory Board propose dividends to the AGM and the AGM approves dividends. The dividends are paid in respect of the fiscal year preceding the respective AGM. Since all of our shares are in bearer form, we remit dividends to the depositary bank (Depotbank) on behalf of the shareholders.
The table below provides information regarding the annual dividend per share that we paid on our shares. These payments were made in the years shown in the table. They relate to the results of operations in the year preceding the payment.
| 2020 | 2019 | 2018 | ||||||||||
| Per share amount | € | 1.20 | € | 1.17 | € | 1.06 | ||||||
At our AGM scheduled to be held on May 20, 2021, our General Partner and our Supervisory Board will propose to the shareholders a dividend of €1.34 per share for 2020, payable in 2021. The dividend is subject to approval by our shareholders at our AGM as described in the 2021 AGM Invitation.
Holders of ADSs will be entitled to receive dividends on the shares represented by the respective ADSs. We will pay any cash dividends payable to such holders to the depositary in euros and, subject to certain exceptions, the depositary will convert the dividends into U.S. dollars and, after deduction of its fees and any taxes, distribute the dividends to ADS holders. For additional information regarding the distribution of dividends to ADS holders, see part D. “American Depositary Shares,” in the “Description of Securities” filed as Exhibit 2.1 to our 2020 20-F. Fluctuations in the exchange rate between the U.S. dollar and the euro will affect the amount of dividends that ADS holders receive. Dividends paid to holders and beneficial holders of the ADSs will be subject to deduction of German withholding tax. You can find a discussion of German withholding tax in Item 10.E, “Taxation" in our 2020 20-F.
| (iii) | Directors and Senior Management |
General
As a partnership limited by shares, under the German Stock Corporation Act (“Aktiengesetz” or “AktG”), our corporate bodies are our General Partner, our Supervisory Board and our general meeting of shareholders. Our sole General Partner is Management AG, a wholly-owned subsidiary of Fresenius SE. Management AG is required to devote itself exclusively to the management of Fresenius Medical Care AG & Co. KGaA.
For a detailed discussion of the legal and management structure of Fresenius Medical Care AG & Co. KGaA, including the more limited powers and functions of the Supervisory Board compared to those of the General Partner, see Item 16G, “Corporate governance – The legal structure of FMC-AG & Co. KGaA,” in our 2020 20-F.
Our General Partner has a supervisory board and a management board. These two boards are separate and no individual may simultaneously serve as a member on both boards. A person may, however, serve on both the supervisory board of our General Partner and on our Supervisory Board.
The General Partner’s Supervisory Board
The supervisory board of Management AG consists of six members who are elected by Fresenius SE (acting through its general partner, Fresenius Management SE or “Fresenius” in the context of Item 6 of our 2020 20-F), the sole shareholder of Management AG. Pursuant to a pooling agreement for the benefit of the public holders of our shares, at least one-third (but no fewer than two) of the members of the General Partner’s supervisory board are required to be independent directors as defined in the pooling agreement, i.e., persons with no substantial business or professional relationship with us, Fresenius SE, the General Partner, or any affiliate of any of them.
Unless resolved otherwise by Fresenius SE in the general meeting of shareholders of Management AG, the terms of each of the members of the supervisory board of Management AG will expire at the end of the general meeting of shareholders held during the fourth fiscal year following the year in which the Management AG supervisory board member was elected by Fresenius SE, but not counting the fiscal year in which such member’s term begins. Fresenius SE, as the sole shareholder of Management AG, is at any time entitled to re-appoint members of the Management AG supervisory board. The most recent election of members of the General Partner’s supervisory board took place in May 2016. Members of the General Partner’s supervisory board may be removed only by a court decision or by a resolution of Fresenius SE in its capacity as sole shareholder of the General Partner. Neither our shareholders nor our separate Supervisory Board has any influence on the appointment of the supervisory board of the General Partner.
The General Partner’s supervisory board ordinarily acts by simple majority vote and the Chairman has a tie-breaking vote in case of any deadlock. The principal function of the General Partner’s supervisory board is to appoint and to supervise the General Partner’s Management Board in its management of the Company and to approve mid-term planning, dividend payments and other matters which are not in the ordinary course of business and are of fundamental importance to us. The General Partner’s supervisory board is also responsible for determining the compensation for the individual members of the Management Board as well as determining and reviewing the compensation system for the members of the Management Board.
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The table below provides the names of the current members of the supervisory board of Management AG and their ages. Dr. Schenk, Mr. Classon and Mr. Johnston are also members of the Supervisory Board of FMC AG & Co. KGaA.
| Name | Age (as of December 31, 2020) | ||
| Mr. Stephan Sturm, Chairman(1) | 57 | ||
| Dr. Dieter Schenk, Vice Chairman(1) (4) | 68 | ||
| Dr. Gerd Krick(1) | 82 | ||
| Mr. Rolf A. Classon(1) (2) (3) (4) | 75 | ||
| Mr. William P. Johnston(1) (2) (3) (4) | 76 | ||
| Ms. Rachel Empey | 44 |
(1) Members of the Human Resources Committee of the supervisory board of Management AG
(2) Members of the Audit and Corporate Governance Committee of FMC-AG & Co. KGaA. See "Governance and Board Practices," below.
(3) Independent director for purposes of our pooling agreement
(4) Member of the Regulatory and Reimbursement Assessment Committee of the supervisory board of Management AG. See "Governance and Board Practices," below.
MR. STEPHAN STURM has been Chairman of the Management Board of Fresenius Management SE since July 1, 2016, after serving for over 11 years as Fresenius’ Chief Financial Officer. Prior to joining Fresenius in 2005, he was a Managing Director of Credit Suisse First Boston (“CSFB”), from 2000 as Head of Investment Banking for Germany and Austria, and also served on CSFB’s European Management Committee. During his more than 13 years in investment banking, Stephan Sturm held various executive positions with BHF-Bank, Union Bank of Switzerland and CSFB in Frankfurt and London. Prior to entering investment banking in 1991, he was a management consultant at McKinsey & Co in Duesseldorf and Frankfurt. Mr. Stephan Sturm holds a degree in Business from Mannheim University. Additionally, Mr. Sturm is the Chairman of the supervisory board of Fresenius Kabi AG, Vice Chairman of the supervisory board of Vamed AG, Austria as well as a member of the supervisory board of Deutsche Lufthansa AG.
DR. DIETER SCHENK has been Vice Chairman of the supervisory board of Management AG since 2005 and is Vice Chairman of the supervisory board of Fresenius Management SE. Dr. Schenk was elected as the Chairman of our Supervisory Board in 2018; previously Dr. Schenk served as the Vice Chairman of our Supervisory Board. He is an attorney and tax advisor and was a partner in the law firm Noerr LLP (formerly Nörr Stiefenhofer Lutz) from 1986 until December 31, 2017. Additionally, he also serves as the Chairman of the supervisory board of Gabor Shoes AG, HWT invest AG and TOPTICA Photonics AG. Dr. Schenk is also Chairman of the Foundation Board of Else Kröner-Fresenius-Stiftung, the sole shareholder of Fresenius Management SE, which is the sole general partner of Fresenius SE & Co. KGaA.
MR. ROLF A. CLASSON has been a member of the supervisory board of Management AG since July 7, 2011 and a member of our Supervisory Board since May 12, 2011. Mr. Classon also has served on the Board of Directors of Catalent Inc. since August 2014 and as a member of the Board of Directors of Perrigo Company plc, since May 8, 2017. Mr. Classon was the Chairman of the Board of Directors for Hill-Rom Holdings, Inc. until March 6, 2018 as well as the Chairman of the Board of Directors for Tecan Group Ltd. until April 18, 2018.
MR. WILLIAM P. JOHNSTON has been a member of the supervisory board of Management AG since May 2006 and also serves on our Supervisory Board.
MS. RACHEL EMPEY became the Chief Financial Officer of Fresenius Management SE on August 1, 2017 and member of the supervisory board of Management AG on September 1, 2017. Prior to August 1, 2017, she served as Chief Financial and Strategy Officer of Telefónica Deutschland Holding AG and member of the Telefónica Deutschland Management Board, starting in 2011. Previously, Ms. Empey held a number of key international finance and controlling positions in the Telefónica group. She started her career as an audit executive at Ernst & Young and business analyst at Lucent Technologies. Ms. Empey is a chartered accountant and holds an MA (Hons) in Mathematical Sciences from the University of Oxford. Additionally, Ms. Empey has been the Vice Chairman of the supervisory board of Fresenius Kabi AG since October 2017 and has served on the Board of Directors of Inchcape plc since May 2016.
DR. GERD KRICK has been a member of the supervisory board of Management AG since December 2005 and was Chairman of our Supervisory Board until May 17, 2018. He is the Chairman of the supervisory board of Fresenius Management SE and of Fresenius SE & Co. KGaA. Additionally, Dr. Gerd Krick is also Chairman of the supervisory board of Vamed AG, Austria.
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The General Partner’s Management Board
Each member of the Management Board of Management AG is appointed by the supervisory board of Management AG for a maximum term of five years and is eligible for reappointment thereafter. Their terms of office expire in the years listed below.
The table below provides names, positions and terms of office of the current members of the Management Board of Management AG and their ages:
| Name | Age (as of December 31, 2020) |
Position | Year term expires | |||
| Mr. Rice Powell | 65 | Chief Executive Officer and Chairman of the Management Board | 2022 | |||
| Ms. Helen Giza | 52 | Chief Financial Officer | 2022 | |||
| Mr. William Valle | 60 | Chief Executive Officer for the North America Segment | 2025 | |||
| Dr. Olaf Schermeier | 48 | Chief Executive Officer of Global Research & Development | 2026 | |||
| Mr. Kent Wanzek | 61 | Chief Executive Officer of Global Manufacturing, Quality & Supply | 2022 | |||
| Mr. Harry de Wit | 58 | Chief Executive Officer for the Asia-Pacific Segment | 2023 | |||
| Dr. Katarzyna Mazur-Hofsäß | 57 | Chief Executive Officer for the EMEA Segment | 2026 | |||
| Mr. Franklin W. Maddux, MD | 62 | Global Chief Medical Officer | 2022 | |||
MR. RICE POWELL has been with the Company since 1997. He became Chairman and Chief Executive Officer of the Management Board of Management AG effective January 1, 2013. Mr. Powell is also a member of the Management Board of Fresenius Management SE and of the Board of Administration of Vifor Fresenius Medical Care Renal Pharma, Ltd., Switzerland. Mr. Powell was the Chief Executive Officer and director of Fresenius Medical Care North America until December 31, 2012. Mr. Powell has more than 40 years of experience in the health care industry, which includes various positions with Baxter International Inc., Biogen Inc. and Ergo Sciences Inc.
MS. HELEN GIZA was appointed Chief Financial Officer of the Management Board of Management AG effective November 1, 2019. Prior to joining Fresenius Medical Care, Ms. Giza held a number of key international finance and controlling positions at Takeda Pharmaceuticals, TAP Pharmaceuticals and Abbott Laboratories.
MR. WILLIAM VALLE was appointed Chief Executive Officer for Fresenius Medical Care North America (“FMCNA”) effective January 2017 and a member of the Management Board of Management AG on February 17, 2017. Prior to that, Mr. William Valle was executive vice president responsible for the dialysis service business and vascular access business of FMCNA from 2014 to 2017. Mr. Valle joined FMCNA in 2009 and has approximately 30 years of experience in the dialysis industry, holding executive positions in sales, marketing and business development at several dialysis companies including Gambro Healthcare, Inc.
DR. OLAF SCHERMEIER was appointed Chief Executive Officer for Global Research and Development on March 1, 2013. Dr. Schermeier serves on the supervisory board of Xenios AG and the board of directors of Unicyte AG. Prior to FMC-AG & Co. KGaA, Dr. Schermeier served as President of Global Research and Development for Dräger Medical, Lübeck, Germany. Dr. Schermeier has more than 20 years of experience in various areas of the health care industry, among others at Charité clinic and at Biotronik, Germany.
MR. KENT WANZEK has been with the Company since 2003. Mr. Wanzek is a member of the Management Board of Management AG since January 1, 2010 with responsibility for Global Manufacturing, Quality & Supply and prior to joining the Management Board had been in charge of North American operations for the Renal Therapies Group at FMCNA since 2004. Mr. Wanzek held several senior executive positions with companies in the health care industry, including Philips Medical Systems, Perkin-Elmer, Inc. and Baxter Healthcare Corporation.
MR. HARRY DE WIT assumed the role of Chief Executive Officer for the Asia-Pacific Segment on April 1, 2016. Mr. de Wit has worked in the medical device industry for 30 years. Mr. de Wit holds a master’s degree in Medicine from the VU University of Amsterdam in the Netherlands and a Bachelor of Science in Physiotherapy from the School of Physiotherapy of Den Bosch in the Netherlands.
DR. KATARZYNA MAZUR-HOFSÄß assumed the role of Chief Executive Officer for the EMEA Segment on September 1, 2018. Before joining the Company, she had been president for EMEA at the med-tech company Zimmer Biomet since 2013. She has 25 years of professional experience and held various positions in the medical and pharmaceutical industry from her positions, among others at Abbott Laboratories and Roche.
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MR. FRANKLIN W. MADDUX, MD was appointed Global Chief Medical Officer in 2019 and appointed to the Management Board on January 1, 2020. He is an expert nephrologist, IT entrepreneur and healthcare executive with more than 30 years of experience in healthcare. He joined the Company in 2009 and was appointed Executive Vice President for Clinical & Scientific Affairs and Chief Medical Officer for Fresenius Medical Care North America in 2011, where he was responsible for the delivery of high-quality, value-based care for the largest integrated renal care network on the continent.
The business address of all members of our Management Board and Supervisory Board is Else-Kröner-Strasse 1, 61352 Bad Homburg, Germany.
The Supervisory Board of FMC-AG & Co. KGaA
Our Supervisory Board consists of six members who are elected by the shareholders of FMC-AG & Co. KGaA in a general meeting. Generally, the terms of office of the members of the Supervisory Board will expire at the end of the general meeting of shareholders of FMC-AG & Co. KGaA, in which the shareholders discharge the Supervisory Board for the fourth fiscal year following the year in which they were elected, but not counting the fiscal year in which such member’s term begins. The next regular elections will take place in 2021. Before the expiration of their term, members of the Supervisory Board may be removed only by a court decision or by a resolution of the shareholders of FMC-AG & Co. KGaA with a majority of three quarters of the votes cast at such general meeting.
Fresenius SE, as the sole shareholder of Management AG, our General Partner, is barred from voting for election and/or removal of members of the Supervisory Board as well as from voting on discharge of the Supervisory Board, but it nevertheless has and will retain significant influence over the membership of the Supervisory Board in the foreseeable future. See Item 16G, “Corporate governance – The legal structure of FMC-AG & Co. KGaA” in our 2020 20-F.
The current Supervisory Board consists of six persons, three of whom – Messrs. Schenk (Chairman), Classon (Vice Chairman) and Johnston – are also members of the supervisory board of our General Partner. For information regarding those members of the Supervisory Board, see “The General Partner’s Supervisory Board,” above. The ages listed below are as of December 31, 2020.
MS. PASCALE WITZ, 54, has been a member of the Supervisory Board since May 12, 2016. Ms. Witz was the Executive Vice President of Global Diabetes and Cardiovascular of Sanofi S.A. as well as on Sanofi’s executive committee (equivalent to a management board), prior to which she held other executive positions in Sanofi S.A. and with GE Healthcare and Becton Dickinson. Ms. Witz has served on the Board of Directors of Regulus Therapeutics Inc. since June 1, 2017, Horizon Pharma plc since August 3, 2017 and Perkin Elmer Inc. since October 30, 2017. Additionally, Ms. Witz is president of PWH ADVISORS.
PROF. DR. GREGOR ZÜND, 61, has been appointed as a new member of the Supervisory Board on October 29, 2018. Prof. Dr. Zünd has been Chief Executive Officer of the University Hospital of Zurich since 2016. As Director of Research and Education he has been a member of the hospital’s executive board since 2008. In parallel, he has been Managing Director of the Center for Clinical Research and Head of the Surgical Research department at University Hospital Zurich. Until 2001, Prof. Zünd was Senior Physician at the Clinic for Cardiovascular Surgery at University Hospital Zurich. He spent several years at Texas Medical Center, Houston, and at Harvard Medical School, Boston. Gregor Zünd is Professor at the University of Zurich.
DR. DOROTHEA WENZEL, 51, became a member of the Supervisory Board effective May 16, 2019 and is currently the Executive Vice President and Head of the Global Business Unit Surface Solutions at Merck KGaA. Dr. Wenzel has previously held a number of finance and business positions in the health care industry at Merck KGaA, AXA Krankenversicherung AG and Medvantis Holding AG. Dr. Wenzel was also a Member of the Staff of the Committee for the Sustainability of the Financing of the Social Security Systems of the Federal Ministry of Health (Germany). Dr. Wenzel holds a doctorate in Health Economics and a diploma in business & computer sciences from the Technical University of Darmstadt.
The principal function of the Supervisory Board is to oversee the management of the Company but, in this function, the supervisory board of a partnership limited by shares has less power and scope for influence than the supervisory board of a stock corporation. The Supervisory Board is not entitled to appoint the General Partner or its executive bodies, nor may it subject the General Partner’s management measures to its consent or issue rules of procedure for the General Partner. Only the supervisory board of Management AG, elected solely by Fresenius SE, has the authority to appoint or remove members of the General Partner’s Management Board. See Item 16G, “Corporate governance – The legal structure of FMC-AG & Co. KGaA” in our 2020 20-F. Among other matters, the Supervisory Board will, together with the General Partner, determine the agenda for the AGM and make recommendations with respect to the approval of the Company’s financial statements and dividend proposals. The Supervisory Board will also propose nominees for election as members of the Supervisory Board. The Audit and Corporate Governance Committee of the Supervisory Board also recommends to the Supervisory Board a candidate as the Company’s auditor to audit our German statutory financial statements to be proposed by the Supervisory Board to our shareholders for approval and, as required by the SEC and NYSE audit committee rules, retains the services of our independent auditors to audit our IFRS financial statements included in the periodic reports that we file with the SEC.
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Governance Matters and Board Practices
ADSs representing our shares are listed on the NYSE. However, because we are a “foreign private issuer,” as defined in the rules of the SEC, we are exempt from substantially all of the governance rules set forth in Section 303A of the NYSE’s Listed Companies Manual, other than the obligation to maintain an audit committee in accordance with Rule 10A-3 under the Exchange Act, the obligation to notify the NYSE if any of our executive officers becomes aware of any material non-compliance with any applicable provisions of Section 303A, the obligation to file annual and interim written affirmations, on forms mandated by the NYSE, relating to our compliance with applicable NYSE governance rules, and the obligation to disclose the significant ways in which the governance standards that we follow differ from those applicable to U.S. companies under the NYSE governance rules. Many of the governance reforms instituted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including the requirements to provide shareholders with “say-on-pay” and “say-on-when” advisory votes related to the compensation of certain executive officers, are implemented through the SEC’s proxy rules. Because foreign private issuers are exempt from the proxy rules, these governance rules are not applicable to us. However, the Compensation System 2020+ for our Management Board was adopted subject to, and was approved by, our AGM on August 27, 2020. The Compensation System 2020+ is also reviewed by an independent external compensation expert as amendments to the system are made, the most recent review having been conducted in 2020. See item (iv) below, “Compensation of the Management Board and the Supervisory Board.” Similarly, the more detailed disclosure requirements regarding management compensation applicable to U.S. domestic companies (including requirements to provide pay ratio disclosure and a “Compensation Discussion and Analysis,” as well as a proposal for disclosure of the relationship between executive compensation actually paid and a registrant’s financial performance issued in 2015) are found in SEC Regulation S-K, whereas compensation disclosure requirements for foreign private issuers are set forth in Form 20-F. That form generally limits our compensation disclosure obligations to the information we disclose under German law, and we disclose the compensation paid to members of the Management Board, the Supervisory Board and the supervisory board of the General Partner in our Compensation Report. See "(iv) Compensation of the Management Board and the Supervisory Board” below. In 2015 the SEC also issued its proposed compensation “clawback” rule which would direct U.S. stock exchanges to establish listing standards that would require listed issuers to develop, implement and disclose policies providing for the recovery, under certain circumstances, of incentive-based compensation based on financial information that is subsequently restated. The proposal received extensive comments from issuers and participants in the securities markets. It has not been withdrawn and in 2019, action on the proposed rule was moved from the SEC's “long-term actions” agenda to its “current” agenda. If the SEC’s proposed clawback rule is eventually adopted as proposed, requirements of that rule would apply to both U.S. domestic and foreign private issuers and would impose clawback requirements without fraud or other misconduct as a necessary prerequisite. Under the terms and conditions of our LTIP 2016 plan, our MB LTIP 2019 plan and our MB LTIP 2020 plan (see item (iv) below, “Compensation of the Management Board and the Supervisory Board”), and the employment contracts concluded with the members of the Management Board, the Company is entitled to reclaim previously earned and paid compensation components. Such right to reclaim exists in case of relevant violations of internal guidelines or undutiful conduct.
As a German company FMC-AG & Co. KGaA follows German corporate governance practices. German corporate governance practices generally derive from the provisions of the AktG, capital market related laws, the German Codetermination Act (Mitbestimmungsgesetz, or “MitBestG”) and the German Corporate Governance Code. Pursuant to relevant judicial rulings, we are not subject to codetermination. Our Articles of Association also include provisions affecting our corporate governance. German standards differ from the corporate governance listing standards applicable to U.S. domestic companies which have been adopted by the NYSE. See item 16.G “Corporate governance,” in our 2020 20-F for information regarding our organizational structure, management arrangements and governance, including information regarding the legal structure of a KGaA, management by a general partner, certain provisions of our Articles of Association and the role of the Supervisory Board in monitoring the management of our company by our General Partner. Item 16.G. of our 2020 20-F includes a brief general summary of the principal differences between German and U.S. corporate governance practices, together with, as appropriate, a comparison to U.S. principles or practices.
For information relating to the terms of office of the Management Board and the supervisory board of the General Partner, Management AG, and of the Supervisory Board, and the periods in which the members of those bodies have served in office, see item (iii), “Directors and Senior Management,” above. For information regarding certain compensation payable to certain members of the General Partner’s Management Board after termination of employment, see item (iv), “Compensation of the Management Board and the Supervisory Board” below. Determination of the compensation system and of the compensation to be granted to the members of the Management Board is made by the full supervisory board of Management AG. It is assisted in these matters, particularly in the evaluation and assessment of the compensation of the members of the General Partner’s management board, by the Human Resources Committee of the General Partner’s supervisory board, the members of which are currently Stephan Sturm (Chairman) Dr. Gerd Krick (Vice Chairman), Rolf A. Classon, William P. Johnston, and Dr. Dieter Schenk.
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The Audit and Corporate Governance Committee of the Supervisory Board currently consists of Rolf A. Classon (Chairman), William P. Johnston (Vice Chairman), and Pascale Witz, all of whom are independent directors for purposes of SEC Rule 10A-3 and NYSE Rule 303A.06. The primary function of the Audit and Corporate Governance Committee is to assist FMC-AG & Co. KGaA’s Supervisory Board in fulfilling its oversight responsibilities, primarily through:
| · | overseeing FMC-AG & Co. KGaA’s accounting and financial reporting processes, the performance of the internal audit function and the effectiveness of the internal control systems; |
| · | overseeing the independence and performance of FMC-AG & Co. KGaA’s outside auditors |
| · | overseeing the effectiveness of our systems and processes utilized to comply with relevant legal and regulatory standards for global health care companies, including adherence to our Code of Ethics and Business Conduct; |
| · | overseeing the effectiveness of our risk management system; |
| · | overseeing our corporate governance performance according to the German Corporate Governance Code; |
| · | providing an avenue of communication among the outside auditors, management and the Supervisory Board; |
| · | overseeing our relationship with Fresenius SE & Co. KGaA and its affiliates and reviewing the report of our General Partner on relations with related parties and for reporting to the overall Supervisory Board thereon; |
| · | recommending to the Supervisory Board a candidate as an independent auditor to audit our German statutory financial statements (to be proposed by the Supervisory Board for election by our shareholders at our AGM) and approval of their fees; |
| · | retaining the services of our independent auditors to audit our consolidated financial statements and approval of their fees; and |
| · | pre-approving all audit and non-audit services performed by our independent auditors. |
The Audit and Corporate Governance Committee has also been in charge of conducting the internal investigation described in Item 15B, “Management’s annual report on internal control over financial reporting” in our 2020 20-F.
In 2005, we established a joint committee (the “Joint Committee”) (Gemeinsamer Ausschuss) of FMC-AG & Co. KGaA consisting of four members, two of which are members of the supervisory board of the General Partner, Management AG, designated by the General Partner, and two of which are members of our Supervisory Board elected by the AGM. The two members from the supervisory board of the General Partner are Dr. Gerd Krick and Stephan Sturm. The two members from our Supervisory Board are Rolf A. Classon and William P. Johnston. The Joint Committee advises on and approves certain extraordinary management measures, including:
| · | transactions between us and Fresenius SE and its subsidiaries (other than the Company and subsidiaries of the Company) if considerable importance is attributed to them and the value exceeds 0.25% of our consolidated revenue, and |
| · | acquisitions and sales of significant participations and parts of companies, the spin-off of significant parts of our business, initial public offerings of significant subsidiaries and similar matters. A matter is “significant” for purposes of this approval requirement if 40% of our consolidated revenues, our consolidated balance sheet total assets or consolidated profits, determined by reference to the arithmetic average of the said amounts shown in our audited consolidated accounts for the previous three fiscal years, are affected by the matter. |
Furthermore, a nomination committee prepares candidate proposals for the Supervisory Board and suggests suitable candidates to the Supervisory Board and for its election proposals to the General Meeting. The nomination committee of the Supervisory Board currently consists of Rolf A. Classon (Chairman) and Dr. Dieter Schenk (Vice Chairman).
The supervisory board of our General Partner, Management AG, is supported by a Regulatory and Reimbursement Assessment Committee, whose members are currently William P. Johnston (Chairman), Rolf A. Classon (Vice Chairman), and Dr. Dieter Schenk. The primary function of this committee is to assist and to represent the supervisory board in fulfilling its responsibilities, primarily through reviewing and analyzing the Company’s affairs in the area of its regulatory obligations and reimbursement structures for dialysis and other services. In the U.S., these reimbursement regulations are mandated by the Department of Health and Human Services and the Centers for Medicare and Medicaid Services (“CMS”) for dialysis and other services. Similar regulatory agencies exist country by country in the international regions to address the conditions for payment of dialysis and other treatments. Furthermore, the supervisory board of Management AG has its own nomination committee, which consists of Stephan Sturm (Chairman), Dr. Gerd Krick and Dr. Dieter Schenk.
We are exempt from the NYSE rule requiring companies listed on that exchange to maintain compensation committees and nominating committees consisting of independent directors. See Item 16G, “Corporate governance” in our 2020 20-F.
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| (iv) | Compensation of the Management Board and the Supervisory Board |
We are exempt from NYSE and SEC rules requiring listed companies to maintain compensation committees consisting of independent directors. We are also not subject to the compensation disclosure provisions of SEC Regulation S-K, which include a requirement to provide a “Compensation Discussion and Analysis” explaining the material elements of the compensation paid to a company’s CEO, CFO, and certain other highly compensated executive officers or employees. See Item 16G, “Corporate Governance” in our 2020 20-F. Instead, as a German publicly-held company, we prepare a Compensation Report in accordance with the requirements of the German Corporate Governance Code. Set forth below is a convenience translation of the Compensation Report of FMC-AG & Co. KGaA. In the Compensation Report, “the fiscal year” refers to the year ended December 31, 2020.
Report of the Management Board of Management AG, our General Partner
The Compensation Report of FMC-AG & Co. KGaA summarizes the main elements of the system for the compensation of the members of the Management Board of Fresenius Medical Care Management AG, the General Partner of FMC-AG & Co. KGaA, and in this regard especially explains the amounts and structure of the compensation paid to the Management Board. Furthermore, the principles and the amount of the compensation of the Supervisory Board of the Company are described in the Compensation Report.
The compensation system for the members of the Management Board of Fresenius Medical Care Management AG was amended with effect as from January 1, 2020 in accordance with the provisions of the German Stock Corporation Act (AktG), as amended by the German Act Implementing the Second (EU) Shareholder Rights Directive, and approved by the Annual General Meeting of FMC-AG & Co. KGaA on August 27, 2020 with a majority of more than 95% of the votes cast (“Compensation System 2020+”). The details of the Compensation System 2020+ can be found on the Company’s website at www.freseniusmedicalcare.com/en/about-us/management-board/compensation. The Compensation System 2020+ was implemented effective as of January 1, 2020 in the service agreements of all Management Board members. The compensation of the Management Board members for the fiscal year was determined in accordance with the Compensation System 2020+.
The Compensation Report is part of the Management Report and of the group management report of FMC-AG & Co. KGaA as at December 31, 2020 and was prepared in accordance with the provisions of the German Commercial Code (HGB). The Compensation Report also includes in section VI. “Tables of the value of benefits granted and received” compensation tables which correspond, to a large extent, to the structure and the form of the model tables of the German Corporate Governance Code in its previous version dated February 7, 2017, to allow for the comparability with the previous year's figures.
Compensation of the Management Board
The Supervisory Board of Fresenius Medical Care Management AG is responsible for determining the compensation of the members of the Management Board. The Supervisory Board of Fresenius Medical Care Management AG is assisted in this task by a personnel committee, the Human Resources Committee, a committee which is composed of individual members of the Supervisory Board of Fresenius Medical Care Management AG and which is also responsible for the tasks of a compensation committee. The Human Resources Committee is composed of Mr. Stephan Sturm (Chairman), Dr. Gerd Krick (Vice Chairman), Mr. Rolf A. Classon, Mr. William P. Johnston and Dr. Dieter Schenk.
The Compensation System 2020+ underlying the compensation of the Management Board for the fiscal year was developed with the support of external compensation experts. The objective of the Compensation System 2020+ is to enable the members of the Management Board to participate reasonably in a sustainable and long-term development of the Company’s business and to reward them based on their duties and performance as well as their success in managing the Company’s economic and financial position giving due regard to the peer environment and to make a significant contribution to implementing and further developing the business strategy.
In order to assess the appropriateness of the compensation system and the individual compensation of the Management Board members, the Supervisory Board of Fresenius Medical Care Management AG conducts a horizontal review of compensation amounts and structures. The amounts of the target total direct compensation (base salary, target Short-Term Incentive amount and grant amount under the Long-Term Incentive) and the respective components granted to each member of the Management Board are compared to compensation market data of companies of a comparable sector, country-coverage and size. Additionally, the base salary as well as the target amounts of the variable compensation components of the Management Board members are benchmarked against those of companies of relevant peer groups (these include DAX 30 companies as well as U.S. companies with comparable sector and size). For the fiscal year, the DAX 30 companies as of December 31, 2019 and – depending on the specific tasks of the respective member of the Management Board – the following companies listed in the U.S. were used: Anthem Inc., Baxter International Inc., Boston Scientific Corporation, Cigna Corporation, CVS Health Corporation, DaVita Inc., Encompass Health Corporation, Humana Inc., McKesson Corporation, Medtronic plc, and UnitedHealth Group Incorporated.
The Supervisory Board of Fresenius Medical Care Management AG also conducts a vertical review with respect to the compensation levels of the Company’s employees when determining the compensation system and the compensation of the Management Board members.
The compensation of the Management Board is, as a whole, performance-based and geared to promoting sustainable and long-term corporate development. In accordance with the Compensation System 2020+, it was in the fiscal year composed of non-performance-based and performance-based components:
| 1. | a non-performance-based compensation, consisting of “fixed compensation components” (base salary, fringe benefits and pension commitment) |
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| 2. | a short-term performance-based compensation, which is a one-year variable compensation (“Short-Term Incentive”) |
| 3. | components with long-term incentive effects (multi-year variable compensation comprised of share-based compensation with cash settlement and stock options, the latter granted in previous fiscal years) (“Long-Term Incentive”). |
Compensation components granted for the fiscal year
Maximum compensation amount
Maximum compensation for each Management Board member depending on the function
Further design elements
Share ownership
Malus and clawback
Severance payment cap
Upon the introduction of the Compensation System 2020+, the composition of the compensation components for the Management Board members has changed. The grant amounts for variable, performance-based compensation components are each determined as a multiple of the base salary. The multiplier for the short-term performance-based compensation is 1.05 and the multiplier for the long-term performance-based compensation is 1.35. This results in a long-term oriented compensation structure that is consistent for all Management Board members and less complex than the previous compensation system.
Until 2019 under the previous compensation system, the Management Board members were entitled to a part of their one-year variable compensation irrespective of the target achievement. This entitlement was abolished upon the introduction of the Compensation System 2020+ and the respective amount has been included in the base salary. Consequently, the base salary of the Management Board members for the fiscal year, compared to the base salary for the year 2019, has increased accordingly. In addition, further adjustments of the base salary were necessary in individual cases to keep the target total direct compensation of the Management Board members for the fiscal year on a level comparable to that of the year 2019 and to avoid any reduction by the introduction of the Compensation System 2020+.
For the Management Board members Mr. Rice Powell and Mr. William Valle, a regular salary review and adjustment has been carried out in addition to the conversion of the compensation system in the fiscal year.
I. Fixed compensation components
The fixed compensation granted to the Management Board members comprises a base salary, fringe benefits and – if individually agreed – a pension commitment.
The base salary is paid in Germany or Hong Kong (applicable to Mr. Harry de Wit, who is resident in Hong Kong) in twelve equal monthly installments. To the extent the base salary is paid to members of the Management Board in the U.S., the payment is made in accordance with local customs in twenty-six equal installments.
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In addition, the members of the Management Board receive fringe benefits based on their service agreements. In the fiscal year these consisted mainly of the private use of company cars, special payments such as the payment of school fees, housing, rent and relocation supplements, reimbursement of air travel expenses, reimbursement of fees for the preparation of tax returns, reimbursement of charges, contributions to pension schemes (other than the pension commitments set out herein), contributions to accident, life and health insurance or other insurances as well as tax equalizations resulting from different tax rates applicable in Germany and, as the case may be, the country in which the Management Board member is personally liable to taxes. For details regarding the tax equalizations, please see section V. “Miscellaneous.”
The pension commitments of the members of the Management Board are described in section IV. "Commitments to members of the Management Board in the event of a termination of their appointment" of this Compensation Report.
II. Variable compensation components
The variable compensation components comprise a short-term performance-based compensation component (Short-Term Incentive) and a long-term performance-based compensation component (Long-Term Incentive) that includes a mandatory share ownership element. The target Short-Term Incentive amount equals 105% (multiplier of 1.05) of the respective Management Board member’s relevant base salary. The grant amount under the Long-Term Incentive equals 135% (multiplier of 1.35) of the respective Management Board member’s relevant base salary.
Variable compensation components granted under the Compensation System 2020+ in the fiscal year
For the Short-Term Incentive, the target achievement and payout are capped at 120% of the applicable target Short-Term Incentive amount. For the Long-Term Incentive, the target achievement is capped at 200% for each grant. In addition, the proceeds from each grant of the Long-Term Incentive are capped at 400% of the grant amount for each grant, thus also capping the opportunity to profit from the share price development in the applicable performance period. The Supervisory Board of Fresenius Medical Care Management AG has also agreed on a cap option for the variable compensation components in the event of extraordinary developments.
In addition, individual members of the Management Board may receive a variable compensation for their Management Board activities from compensation components granted for previous fiscal years.
The members of the Management Board were granted, for the last time, for the year 2019 the so-called Share Based Award to the extent that they were entitled to a one-year variable compensation under the compensation system applicable until December 31, 2019. The Share Based Award is the amount of the one-year variable compensation that under the compensation system applicable until December 31, 2019 was to be converted into virtual shares of the Company not backed by equity of the Company as an amount to be deferred. The Share Based Award is attributable to the compensation components with long-term incentive effect.
To the extent that members of the Management Board were entitled to a Share Based Award under the compensation system applicable until December 31, 2019, they can in principle receive a share-based compensation, at the earliest, after a period of three years following the respective allocation dates. The share-based compensation is paid in cash and its amount depends on the share price of FMC-AG & Co. KGaA upon exercise. In special cases (e.g. occupational disability, retirement, non-renewal of expired service agreements by the company) a shorter period may apply.
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To the extent that members of the Management Board have been granted performance shares under the Fresenius Medical Care AG & Co. KGaA Long Term Incentive Plan 2016 (“LTIP 2016”) or the Fresenius Medical Care Management Board Long Term Incentive Plan 2019 (“MB LTIP 2019”), they may under certain conditions – and, under the MB LTIP 2019, for the first time in 2023 – receive share-based compensation with cash settlement from these performance shares. Furthermore, under the Fresenius Medical Care AG & Co. KGaA Long Term Incentive Program 2011 (“LTIP 2011”) individual members of the Management Board may under certain conditions exercise previously granted stock options or receive a share-based compensation with cash settlement from Phantom Stock already granted.
On the basis of the plan conditions of the MB LTIP 2020, the MB LTIP 2019 and the LTIP 2016 and in accordance with the service agreements concluded with the Management Board members, variable compensation components that have already been earned and paid may be reclaimed, in particular in case of relevant violations of internal guidelines or undutiful conduct (Clawback).
Short-Term Incentive
Under the Compensation System 2020+, the members of the Management Board are entitled to receive a Short-Term Incentive which may result in a cash payment. The Short-Term Incentive rewards the Management Board members for the Company’s performance in the relevant fiscal year. The Short-Term Incentive is linked to the achievement of three financial and one non-financial performance target.
The target Short-Term Incentive amount to be granted to each member of the Management Board, which is paid out at a target achievement level of 100%, equals 105% (multiplier of 1.05) of the Management Board member’s relevant base salary. The Short-Term Incentive is measured based on the achievement of four performance targets: 20% relate to Revenue, 20% to Operating Income, 40% to Net Income and 20% to the achievement of specific and measurable sustainability criteria.
The underlying financial figures of the financial performance targets are determined at constant currency and are adjusted for certain effects in line with the specifications determined before the beginning of the performance period, e.g. the effects from certain acquisitions and divestments, to ensure comparability of the financial figures with the operational performance.
For the fiscal year, an impairment of goodwill and tradenames in the Latin America Segment has materialized with an impact of €194,468 THOUS as a consequence of the macro-economic down-turn and increasing risk adjustment rates for several countries in the Latin America Segment. In particular to ensure the comparability of the underlying financial figures of the performance targets with the Company's operating performance and to adequately recognize the actual performance of the members of the Management Board, the Supervisory Board of Fresenius Medical Care Management AG has decided to disregard the Latin America Segment impairment in question, which solely relates to the carrying amounts, when determining the relevant target achievement for the Short-Term Incentive.
For Dr. Katarzyna Mazur-Hofsäß (member of the Management Board responsible for the region Europe, Middle East and Africa (EMEA)), Mr. William Valle (member of the Management Board responsible for the region North America (NA)) and Mr. Harry de Wit (member of the Management Board responsible for the region Asia-Pacific (AP)), who are responsible for a particular region, the Revenue and the Operating Income relate to the relevant financial figures of the respective region. For Mr. Rice Powell and Ms. Helen Giza as Management Board members with corporate group functions as well as for Dr. Olaf Schermeier (member of the Management Board responsible for Global Research and Development), Mr. Kent Wanzek (member of the Management Board responsible for Global Manufacturing, Quality and Supply) and Mr. Franklin W. Maddux, MD (member of the Management Board and Global Chief Medical Officer) the Revenue and the Operating Income relate to the relevant financial figures of the Group. The Net Income target always relates to that of the Group. By measuring the performance targets on a regional as well as on a group level, both the financial performance of the individual regions and that of the Group are reflected.
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The Supervisory Board of Fresenius Medical Care Management AG has defined the target values of the underlying financial figures for each financial performance target that lead to a target achievement of 0% (lower threshold), 50%, 100% and 120% (cap).
In addition to the financial performance targets, the Compensation System 2020+ has incorporated sustainability as a non-financial performance target of the short-term variable compensation. This performance target underlines the Company’s commitment to implement its global sustainability program. The sustainability performance target is based on a qualitatively measurable sustainability target that relates to various sustainability areas.
The following applies for each performance target: If the lower target value is not exceeded, a target achievement of 0% applies. If the upper target value is exceeded, a target achievement of 120% (cap) applies. If the actual financial or non-financial figures lie between the respective target values for a target achievement of 0% to 100% or 100% to 120%, the target achievement is determined by linear interpolation.
The following table shows the target values applied in the fiscal year and their achievement for the financial targets.
| Target values and target achievement | ||||||||||||||||||||
| Target achievement | ||||||||||||||||||||
| Target Values(1) | in the fiscal year | |||||||||||||||||||
| 0% | 100% | 120% | Absolute | Relative | ||||||||||||||||
| in € M | in € M | in € M | in € M | in % | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Group | ≤17,477 | =18,880 | ≥19,229 | 18,395 | 65.44 | |||||||||||||||
| NA | ≤12,195 | =13,168 | ≥13,412 | 12,732 | 55.14 | |||||||||||||||
| EMEA | ≤2,693 | =2,809 | ≥2,863 | 2,840 | 111.55 | |||||||||||||||
| AP | ≤1,859 | =1,985 | ≥2,023 | 1,923 | 50.68 | |||||||||||||||
| Operating Income | ||||||||||||||||||||
| Group | ≤2,444 | =2,533 | ≥2,572 | 2,519 | 83.88 | |||||||||||||||
| NA | ≤1,989 | =2,053 | ≥2,080 | 2,130 | 120.00 | |||||||||||||||
| EMEA | ≤389 | =402 | ≥407 | 419 | 120.00 | |||||||||||||||
| AP | ≤325 | =335 | ≥340 | 345 | 120.00 | |||||||||||||||
| Net Income | ≤1,285 | =1,349 | ≥1,377 | 1,349 | 98.86 | |||||||||||||||
(1) The target values for a target achievement of 50% follow from the linear interpolation for a target achievement between 0% and 100% and are therefore not listed separately.
The achievement of the sustainability target is measured at the group level to ensure close collaboration across the Company’s operating segments in the field of sustainability. For this purpose, eight material sustainability areas were defined: patients, anti-bribery and anti-corruption, employees, data privacy and security, human rights, supply chain, environment as well as occupational health and safety. The progress in each sustainability area is measured by the degree of implementation of pre-defined management concepts that include purpose, goals and objectives, responsibility and ownership, coverage, reporting and communication, results and progress as well as policy, guideline and training. The eight sustainability areas and seven management concepts result in 56 sustainability criteria.
For the period from 2020 to 2022, the yearly progress of the implementation of these sustainability criteria will be assessed by an external auditor and measured in two steps using an audited control and calculation model.
Within the control and calculation model, the degree of implementation of these sustainability criteria is evaluated in a first step using a predefined questionnaire. For each question 0 points, 0.25 points, 0.5 points, 0.75 points or 1 point can be achieved depending on the degree of implementation. Based on the evaluation of the questionnaire, the score for each sustainability criterion is determined in a second step. The score for each sustainability criterion can also be 0 points, 0.25 points, 0.5 points, 0.75 points or 1 point. To calculate the achieved score for each sustainability criterion, the average of the points over the number of questions per sustainability criterion is calculated. If the thus calculated average deviates from the aforementioned scores, it is rounded down to the next lower score. For example, a score of 0.45 points would lead to a score of 0.25 points for a sustainability criterion.
To determine the total score for the sustainability target, the sum of the points achieved for the 56 sustainability criteria is calculated. The Supervisory Board of Fresenius Medical Care Management AG has set the following target values for the fiscal year: A total score of 10.75 or less results in a target achievement of 0%, a total score of 18.00 results in a target achievement of 100% and a total score of 20.00 or more results in a target achievement of 120%.
The total score achieved in the fiscal year was 24.50. This resulted in a sustainability target achievement of 120%.
The degree of the overall target achievement for the Short-Term Incentive is determined based on the weighted arithmetic mean of the target achievement of each performance target. Multiplying the degree of the respective overall target achievement with the target Short-Term Incentive amount results in the final Short-Term Incentive amount. Subject to the approval by the Supervisory Board of Fresenius Medical Care Management AG, the final Short-Term Incentive amount is paid to the respective Management Board member in cash. Since the overall target achievement is capped at 120%, the final Short-Term Incentive amount is also capped at 120% of the respective target Short-Term Incentive amount.
14
The following table shows the target achievement per performance target as well as the overall target achievement of the individual Management Board members for the fiscal year:
| Overall target achievement | ||||||||||||||||||||
| in % | ||||||||||||||||||||
| Target achievement | ||||||||||||||||||||
| Revenue | Operating Income | Net Income | Sustainability target | Overall target achievement | ||||||||||||||||
| Rice Powell | 65.44 | 83.88 | 98.86 | 120.00 | 93.41 | |||||||||||||||
| Helen Giza | 65.44 | 83.88 | 98.86 | 120.00 | 93.41 | |||||||||||||||
| Franklin W. Maddux, MD | 65.44 | 83.88 | 98.86 | 120.00 | 93.41 | |||||||||||||||
| Dr. Katarzyna Mazur-Hofsäß | 111.55 | 120.00 | 98.86 | 120.00 | 109.85 | |||||||||||||||
| Dr. Olaf Schermeier | 65.44 | 83.88 | 98.86 | 120.00 | 93.41 | |||||||||||||||
| William Valle | 55.14 | 120.00 | 98.86 | 120.00 | 98.57 | |||||||||||||||
| Kent Wanzek | 65.44 | 83.88 | 98.86 | 120.00 | 93.41 | |||||||||||||||
| Harry de Wit | 50.68 | 120.00 | 98.86 | 120.00 | 97.68 | |||||||||||||||
15
For the fiscal year and the previous year, the amount of cash compensation payments to members of the Management Board (without components with long-term incentive effects) consists of the following:
| Amount of Cash Compensation | ||||||||||||||||||||||||||||||||
| in € THOUS | ||||||||||||||||||||||||||||||||
| Short-term performance- | Cash compensation | |||||||||||||||||||||||||||||||
| based | (without long-term | |||||||||||||||||||||||||||||||
| Non-performance-based compensation | compensation | incentive components) | ||||||||||||||||||||||||||||||
| Base salary(1) | Fringe benefits | |||||||||||||||||||||||||||||||
| 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | |||||||||||||||||||||||||
| Members of the Management Board serving as of December 31, 2020 | ||||||||||||||||||||||||||||||||
| Rice Powell | 1,769 | 1,340 | 429 | 256 | 1,734 | 1,970 | 3,932 | 3,566 | ||||||||||||||||||||||||
| Helen Giza(3) | 855 | 108 | 320 | (4) | 440 | (4) | 839 | 159 | 2,014 | 707 | ||||||||||||||||||||||
| Franklin W. Maddux, MD(3) | 805 | - | 200 | - | 790 | - | 1,795 | - | ||||||||||||||||||||||||
| Dr. Katarzyna Mazur-Hofsäß | 910 | 700 | 33 | 94 | 1,050 | 1,131 | 1,993 | 1,925 | ||||||||||||||||||||||||
| Dr. Olaf Schermeier | 725 | 510 | 137 | 136 | 711 | 750 | 1,573 | 1,396 | ||||||||||||||||||||||||
| William Valle | 1,366 | 866 | 327 | 237 | 1,414 | 1,035 | 3,107 | 2,138 | ||||||||||||||||||||||||
| Kent Wanzek | 792 | 607 | 212 | 127 | 777 | 866 | 1,781 | 1,600 | ||||||||||||||||||||||||
| Harry de Wit | 735 | 520 | 327 | 337 | 754 | 841 | 1,816 | 1,698 | ||||||||||||||||||||||||
| Former member of the Management Board who resigned during the year 2019(5) | ||||||||||||||||||||||||||||||||
| Michael Brosnan | - | 633 | - | 211 | - | 1,117 | - | 1,961 | ||||||||||||||||||||||||
| Total: | 7,957 | 5,284 | 1,985 | 1,838 | 8,069 | 7,869 | 18,011 | 14,991 | ||||||||||||||||||||||||
(1) Until 2019 under the previous compensation system, the Management Board members were entitled to a part of their one-year variable compensation irrespective of the target achievement. This entitlement was abolished upon the introduction of the Compensation System 2020+ and the respective amount has been included in the base salary. Consequently, the base salary of the Management Board members for the fiscal year, compared to the base salary for the year 2019, has increased accordingly. In addition, further adjustments of the base salary were necessary in individual cases to keep the target total direct compensation of the Management Board members for the fiscal year on a level comparable to that of the year 2019 and to avoid any reduction by the introduction of the Compensation System 2020+. For the Management Board members Mr. Rice Powell and Mr. William Valle, a regular salary review and adjustment has been carried out in addition to the conversion of the compensation system in the fiscal year.
(2) Please note for purposes of comparison between the amounts indicated and those of the fiscal year that the compensation is subject to foreign exchange rate fluctuations depending on whether it is contractually denominated in euro (Ms. Helen Giza and Dr. Katarzyna Mazur-Hofsäß as well as Dr. Olaf Schermeier and Mr. Harry de Wit) or U.S. dollar (Messrs. Rice Powell, Franklin W. Maddux MD, William Valle, Kent Wanzek and Michael Brosnan). The translation of U.S. dollar amounts was done at the average exchange rate for the applicable calendar year.
(3) Please note for purposes of comparison of the amounts indicated for the fiscal year that Ms. Helen Giza was appointed as member of the Management Board only with effect as of November 1, 2019 and Mr. Franklin W. Maddux, MD with effect as of January 1, 2020 and, therefore, they have received compensation payments to be set out herein in each case commencing only as of such respective dates.
(4) The fringe benefits of Ms. Helen Giza include a payment of €200 THOUS for the fiscal year and a payment of €400 THOUS for the year 2019, which Ms. Helen Giza received in connection with her appointment to the Management Board. In the year 2021, Ms. Helen Giza will receive a further payment of €200 THOUS in connection with her appointment to the Management Board.
(5) Mr. Michael Brosnan resigned from the Management Board with effect as of the end of October 31, 2019. Therefore, the amounts of his non-performance-based compensation as set out herein relate to the period until October 31, 2019.
The Share Based Award that is attributable to the components with long-term incentive effect was granted for the last time for the year 2019. In accordance with the targets achieved in the year 2019, the members of the Management Board who were members of the Management Board on December 31, 2019 and the member of the Management Board who resigned during the year 2019 (Mr. Michael Brosnan) acquired entitlements to Share Based Awards valued in total at €2,623 THOUS. Based on this already fixed value, the allocation of the specific number of virtual shares made by the Supervisory Board of Fresenius Medical Care Management AG took place in March of the fiscal year on the basis of the then current price conditions of the shares of FMC-AG & Co. KGaA. This number will also serve as multiplier for the share price on the applicable exercise date and, thus, as the basis for the determination of the payment amount of the respective share-based compensation.
Long-Term Incentive
On the basis of the Compensation System 2020+, the Management Board members were granted so-called Performance Shares for the fiscal year under the MB LTIP 2020 as a Long-Term Incentive. The MB LTIP 2020 was approved in the fiscal year by the Supervisory Board of Fresenius Medical Care Management AG upon recommendation of the Human Resources Committee and follows on the MB LTIP 2019, under which, as of the end of 2019, no further Performance Shares may be granted.
The Performance Shares granted to the members of the Management Board under MB LTIP 2020 are non-equity, cash-settled virtual compensation instruments with a performance period of three years. Any proceeds from Performance Shares are subject to the achievement of three equally weighted performance targets and further depend on the development of the stock exchange price of the shares of the Company. The proceeds from the Performance Shares (after taxes and contributions) are paid over to a credit institution which uses them for the purchase of shares of the Company on the stock exchange. The shares acquired in this way are subject to a holding period of at least one year. The proceeds from the Long-Term Incentive are therefore not accessible to the Management Board members prior to the lapse of a period of at least four years.
16
The grant amount for the Performance Shares equals 135% (multiplier of 1.35) of the relevant base salary of the respective member of the Management Board. In order to determine the number of Performance Shares to be granted to the respective Management Board member, the respective grant amount is divided by the value per Performance Share determined in accordance with IFRS 2 and considering the average share price of the shares of the Company over a period of 30 calendar days prior to each respective grant date. The number of Performance Shares to vest for each member of the Management Board depends on the achievement of the performance targets.
The target achievement is measured based on the achievement of three equally weighted financial performance targets: Revenue growth (“Revenue Growth”), Net Income growth (“Net Income Growth”) and return on invested capital (ROIC).
Revenue Growth and Net Income Growth are determined at constant currency.
In particular to ensure the comparability of the underlying financial figures of the performance targets with the Company’s operating performance and to adequately recognize the actual performance of the members of the Management Board for the components with long-term incentive effects, the Supervisory Board of Fresenius Medical Care Management AG has decided to disregard the impairment in Latin America that solely relates to the carrying amounts and is described in connection with the Short-Term Incentive above also when determining the relevant target achievement for the fiscal year under the LTIP 2016 (grant 2018), the MB LTIP 2019 (grant 2019) and the MB LTIP 2020 (grant 2020).
The Supervisory Board of Fresenius Medical Care Management AG has defined specific target values for each performance target that lead to a target achievement of 0% (lower threshold), 100% and 200% (cap).
The following applies for each performance target: If the lower target value is not exceeded, a target achievement of 0% applies. If the upper target value is exceeded, a target achievement of 200% (cap) applies. If the actual financial figures are between the respective target values for a target achievement of 0% and 100% or 100% and 200%, the target achievement is determined by linear interpolation. The achievement of each performance target is determined annually. The three performance targets are weighted equally to determine the yearly target achievement. At the end of the three-year performance period, the Supervisory Board of Fresenius Medical Care Management AG determines the overall target achievement by taking the average of the yearly target achievements of the applicable performance period.
Based on the overall target achievement, the number of Performance Shares to vest is determined for each member of the Management Board. Such number of Performance Shares to vest may increase or decrease over the performance period. A total loss as well as (at most) doubling of the granted Performance Shares (200% target achievement cap) is possible. After the final determination of the overall target achievement, the number of vested Performance Shares is multiplied with the last 30 calendar days’ average price of the shares of the Company prior to each respective vesting date to calculate a corresponding cash amount as proceeds from the vested Performance Shares. The overall proceeds from a Performance Share are capped at 400% of the respective grant amount.
17
The target values applied in the fiscal year for Performance Shares granted under the MB LTIP 2020 and the target achievement of the performance targets for the fiscal year are as follows:
| Growth/ROIC | Target achievement | Weight | |||
|
Performance target 1: Revenue Growth |
≤ 1% | 0% | 1/3 | ||
| 6% | 100% | ||||
| ≥ 11% | 200% | ||||
|
Performance target 2: Net Income Growth |
≤ 0% | 0% | 1/3 | ||
| 5% | 100% | ||||
| ≥ 10% | 200% | ||||
|
Performance target 3: ROIC |
≤ 5.5% | 0% | 1/3 | ||
| 6% | 100% | ||||
| ≥ 6.5% | 200% |
Under the MB LTIP 2020, a total of 159,607 Performance Shares with a total value of €9,842 THOUS were granted to the members of the Management Board for the first time in the fiscal year. The fair value of the Performance Shares issued in November of the fiscal year amounted on the grant date to €61.27 for commitments in euros (applicable to Ms. Helen Giza, Dr. Katarzyna Mazur-Hofsäß, Dr. Olaf Schermeier and Mr. Harry de Wit) and to $72.17 (€61.94) for commitments in U.S. dollars (applicable to Messrs. Rice Powell, Franklin W. Maddux MD, William Valle and Kent Wanzek).
In the previous year, 114,999 Performance Shares with a total value of € 7,158 THOUS were granted under the MB LTIP 2019. The fair value of the Performance Shares issued in July 2019 amounted on the grant date to €62.10 for commitments in euro (applicable to Dr. Katarzyna Mazur-Hofsäß, Dr. Olaf Schermeier and Mr. Harry de Wit) and to $69.71 (€62.69) for commitments in U.S. dollars (applicable to Messrs. Rice Powell, Michael Brosnan (member of the Management Board until October 31, 2019), William Valle and Kent Wanzek). Ms. Helen Giza was granted Performance Shares in December 2019 whose fair value on the grant date was €60.58.
For the fiscal year, the number of Performance Shares granted to the members of the Management Board is shown, in each case compared to the previous year, individualized in the following table:
| Long-Term Incentive Components | ||||||||
| Number of | ||||||||
| Performance Shares | ||||||||
| granted(1) | ||||||||
| 2020 | 2019 | |||||||
| Members of the Management Board serving as of December 31, 2020 | ||||||||
| Rice Powell | 35,030 | 25,127 | ||||||
| Helen Giza(2) | 17,465 | 13,399 | ||||||
| Franklin W. Maddux, MD(2) | 15,954 | - | ||||||
| Dr. Katarzyna Mazur-Hofsäß | 18,588 | 12,927 | ||||||
| Dr. Olaf Schermeier | 14,809 | 12,927 | ||||||
| William Valle | 27,053 | 12,564 | ||||||
| Kent Wanzek | 15,694 | 12,564 | ||||||
| Harry de Wit | 15,014 | 12,927 | ||||||
| Former member of the Management Board who resigned during the year 2019(3) | ||||||||
| Michael Brosnan | - | 12,564 | ||||||
| Total: | 159,607 | 114,999 | ||||||
| (1) The grants were made pursuant to the MB LTIP 2020 for the fiscal year and pursuant to the MB LTIP 2019 for the year 2019. |
| (2) Please note for purposes of comparison of the number of Performance Shares granted for the fiscal year that Ms. Helen Giza was appointed as member of the Management Board only with effect as of November 1, 2019 and Mr. Franklin W. Maddux, MD with effect as of January 1, 2020 and, therefore, they have received compensation payments to be set out herein in each case commencing only as of such respective dates. |
| (3) Mr. Michael Brosnan resigned from the Management Board with effect as of the end of October 31, 2019. |
At the end of the fiscal year, the members of the Management Board in office on December 31 of the fiscal year held a total of 159,607 Performance Shares under the MB LTIP 2020 (2019: 0), 102,435 Performance Shares under the MB LTIP 2019 (2019: 102,435) and 135,473 Performance Shares under the LTIP 2016 (2019: 211,878).
18
For the fiscal year, the value of the share-based compensation with cash settlement granted to the members of the Management Board is shown, in each case compared to the previous year, individualized in the following table:
| Long-Term Incentive Components | ||||||||
| in € THOUS | Share-based | |||||||
| compensation | ||||||||
| with cash settlement(1) | ||||||||
| 2020 | 2019(2) | |||||||
| Members of the Management Board serving as of December 31, 2020 | ||||||||
| Rice Powell | 2,170 | 2,232 | ||||||
| Helen Giza(3) | 1,070 | 865 | ||||||
| Franklin W. Maddux, MD(3) | 988 | - | ||||||
| Dr. Katarzyna Mazur-Hofsäß | 1,139 | 1,180 | ||||||
| Dr. Olaf Schermeier | 907 | 1,053 | ||||||
| William Valle | 1,676 | 1,133 | ||||||
| Kent Wanzek | 972 | 1,076 | ||||||
| Harry de Wit | 920 | 1,083 | ||||||
| Former member of the Management Board who resigned during the year 2019(4) | ||||||||
| Michael Brosnan | - | 1,160 | ||||||
| Total: | 9,842 | 9,782 | ||||||
| (1) This includes Performance Shares pursuant to the MB LTIP 2020 (for the fiscal year) and to the MB LTIP 2019 (for the year 2019) as well as Share Based Awards (for the year 2019). The share-based compensation amounts are based on the fair value on the grant date. |
| (2) Please note for purposes of comparison between the amounts indicated for 2019 and those of the fiscal year that the compensation is subject to foreign exchange rate fluctuations depending on whether it is contractually denominated in euro (Ms. Helen Giza and Dr. Katarzyna Mazur-Hofsäß as well as Dr. Olaf Schermeier and Mr. Harry de Wit) or U.S. dollar (Messrs. Rice Powell, Franklin W. Maddux MD, William Valle, Kent Wanzek and Michael Brosnan). The translation of U.S. dollar amounts was done at the closing rate of the applicable grant date. |
| (3) Please note for purposes of comparison of the amounts indicated for the fiscal year that Ms. Helen Giza was appointed as member of the Management Board only with effect as of November 1, 2019 and Mr. Franklin W. Maddux, MD with effect as of January 1, 2020 and, therefore, they have received compensation payments to be set out herein in each case commencing only as of such respective dates. |
| (4) Mr. Michael Brosnan resigned from the Management Board with effect as of the end of October 31, 2019. |
The components with long-term incentive effect entitle to a cash payment or can be exercised only after the expiration of the predefined waiting and/or vesting periods. Their value is distributed over the waiting periods and is proportionally accounted for as an expense in the respective fiscal year.
19
The expenses pertaining to components with long-term incentive effects for the fiscal year and for the previous year are set out in the following table:
| Expenses for Long-Term Incentive Components | ||||||||||||||||||||||||
| in € THOUS | Share-based | |||||||||||||||||||||||
| compensation with | Share-based | |||||||||||||||||||||||
| Stock Options | cash settlement(1) | compensation | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Members of the Management Board serving as of December 31, 2020 | ||||||||||||||||||||||||
| Rice Powell | - | 327 | 2,666 | 2,588 | 2,666 | 2,915 | ||||||||||||||||||
| Helen Giza(2) | - | - | 333 | 10 | 333 | 10 | ||||||||||||||||||
| Franklin W. Maddux, MD(2) | - | - | 206 | - | 206 | - | ||||||||||||||||||
| Dr. Katarzyna Mazur-Hofsäß | - | - | 691 | 224 | 691 | 224 | ||||||||||||||||||
| Dr. Olaf Schermeier | - | 109 | 1,256 | 1,226 | 1,256 | 1,335 | ||||||||||||||||||
| William Valle(3) | - | - | 1,331 | 731 | 1,331 | 731 | ||||||||||||||||||
| Kent Wanzek | - | 153 | 1,190 | 1,272 | 1,190 | 1,425 | ||||||||||||||||||
| Harry de Wit | - | - | 1,457 | 1,001 | 1,457 | 1,001 | ||||||||||||||||||
| Former member of the Management Board who resigned during the year 2019(4) | ||||||||||||||||||||||||
| Michael Brosnan | - | 164 | - | 3,552 | - | 3,716 | ||||||||||||||||||
| Total: | - | 753 | 9,130 | 10,604 | 9,130 | 11,357 | ||||||||||||||||||
| (1) This includes expenses for Performance Shares under the MB LTIP 2020 (for the fiscal year only), under the MB LTIP 2019 and under the LTIP 2016, expenses for Phantom Stock under the LTIP 2011 and expenses for the Share Based Award. |
| (2) Please note for purposes of comparison of the amounts indicated for the fiscal year that Ms. Helen Giza was appointed as member of the Management Board only with effect as of November 1, 2019 and Mr. Franklin W. Maddux, MD with effect as of January 1, 2020 and, therefore, they have received compensation payments to be set out herein in each case commencing only as of such respective dates. |
| (3) The amounts indicated for stock options do not include the expenses from stock options which have been granted to the member of the Management Board William Valle prior to his appointment to the Management Board. |
| (4) Mr. Michael Brosnan resigned from the Management Board with effect as of the end of October 31, 2019. The expenses for long-term incentive components result from the compensation components granted to Mr. Michael Brosnan under the LTIP 2011, the LTIP 2016, the MB LTIP 2019 and the Share Based Award which are payable or can be exercised, as the case may be, on the relevant regular vesting date in accordance with the respective plan conditions. |
Performance Shares under the MB LTIP 2019
In 2019, grants of Performance Shares under the MB LTIP 2019 constituted a component of the compensation of the members of the Management Board. As of the end of year 2019, grants under the MB LTIP 2019 are no longer possible. However, individual members of the Management Board may exercise Performance Shares which have previously been granted and, taking into consideration vesting periods, the achievement of defined performance targets as well as, subject to deviating agreements in the individual case, the continuation of the service relationship, receive (for the first time in 2023) a share-based compensation with cash settlement from Performance Shares under the MB LTIP 2019. At December 31 of the fiscal year, the members of the Management Board then in office held a total of 102,435 Performance Shares (2019: 102,435) under the MB LTIP 2019.
Performance Shares under the LTIP 2016
Until the end of year 2018, grants of Performance Shares under the LTIP 2016 constituted a component of the compensation of the members of the Management Board. As of the end of year 2018 grants under the LTIP 2016 are no longer possible. However, individual members of the Management Board may exercise Performance Shares which have previously been granted and, taking into consideration vesting periods, the achievement of defined performance targets as well as, subject to deviating stipulations in the individual case, the continuation of the service relationship, receive (for the first time in the fiscal year) a share-based compensation with cash settlement from Performance Shares under the LTIP 2016. At December 31 of the fiscal year, the members of the Management Board then in office held a total of 135,473 Performance Shares (2019: 211,878) under the LTIP 2016.
Stock options and Phantom Stock under the LTIP 2011
Until the end of the year 2015, grants under the LTIP 2011, which consisted of the Phantom Stock Plan 2011 and the Stock Option Plan 2011, constituted a component of the compensation for the members of the Management Board. As of the end of the fiscal year 2015, grants under the LTIP 2011 are no longer possible. However, individual members of the Management Board may exercise Phantom Stock or stock options which have previously been granted, taking into consideration blackout periods, the achievement of defined performance targets as well as, subject to deviating stipulations in the individual case, the continuation of the service relationship.
At December 31 of the fiscal year the members of the Management Board then in office did not hold any Phantom Stock (2019: 23,336) pursuant to the Phantom Stock Plan 2011 and a total of 465,308 stock options (2019: 452,989) originating from the Stock Option Plan 2011. For details regarding the conditional capital used to secure the Stock Option Plan 2011, please see the section “Conditional Capital” in note 17 of the notes to the consolidated financial statements of the Company in our 2020 20-F.
20
The development and status of stock options in the fiscal year of the members of the Management Board serving at December 31 of the fiscal year are shown in more detail in the following table:
| Development and Status of the Stock Options | ||||||||||||||||||||||||||||||||||||||
| Rice Powell | Helen Giza | Franklin
W. Maddux, MD(1) | Dr. Katarzyna Mazur-Hofsäß | Dr. Olaf Schermeier | William Valle(1) | Kent Wanzek | Harry de Wit | Total | ||||||||||||||||||||||||||||||
| Number | 256,781 | - | 45,000 | - | 96,488 | 30,000 | 69,720 | - | 497,989 | |||||||||||||||||||||||||||||
| Options outstanding January 1, 2020 | Weighted average exercise price in € | 66.06 | - | 67.97 | - | 63.88 | 76.99 | 76.99 | - | 68.00 | ||||||||||||||||||||||||||||
| Number | 32,681 | - | - | - | - | - | - | - | 32,681 | |||||||||||||||||||||||||||||
| Options exercised during the fiscal year | Weighted average exercise price in € | 52.99 | - | - | - | - | - | - | - | 52.99 | ||||||||||||||||||||||||||||
| Weighted average share price in € | 72.00 | - | - | - | - | - | - | - | 72.00 | |||||||||||||||||||||||||||||
| Number | 224,100 | - | 45,000 | - | 96,488 | 30,000 | 69,720 | - | 465,308 | |||||||||||||||||||||||||||||
| Weighted average exercise price in € | 67.97 | - | 67.97 | - | 63.88 | 76.99 | 76.99 | - | 69.05 | |||||||||||||||||||||||||||||
| Options outstanding December 31, 2020 | Weighted average remaining contractual life in years | 2.24 | - | 2.24 | - | 1.99 | 2.57 | 2.57 | - | 2.26 | ||||||||||||||||||||||||||||
| Range of exercise prices in € | 49.93 - 76.99 | - | 49.93 - 76.99 | - | 49.76 - 76.99 | 76.99 | 76.99 | - | 49.76 - 76.99 | |||||||||||||||||||||||||||||
| Number | 224,100 | - | 45,000 | - | 96,488 | 30,000 | 69,720 | - | 465,308 | |||||||||||||||||||||||||||||
| Options exercisable December 31, 2020 | Weighted average exercise price in € | 67.97 | - | 67.97 | - | 63.88 | 76.99 | 76.99 | - | 69.05 | ||||||||||||||||||||||||||||
(1) The stock options as set out herein for Messrs. Franklin W. Maddux, MD and William Valle have been granted before the respective appointment to the Management Board.
III. Total Compensation
The structure for the total compensation of the Management Board for the fiscal year is as follows:
Caps and maximum compensation
| Maximum compensation |
(1) STI = Short-Term Incentive
(2) LTI = Long-Term Incentive
The Compensation System 2020+ provides for an overall maximum compensation amount for each Management Board member. These maximum compensation amounts limit the payouts and allocations of the total compensation granted to a Management Board member for a fiscal year, irrespective of the dates of the payouts and allocations. The maximum compensation amount for each Management Board member can be below the sum of the potentially achievable payouts and allocations from the individual compensation components granted for a fiscal year.
21
The maximum compensation amounts are defined based on the currency of the base salary as stated in the respective Management Board member’s service agreement and amount to €12,000 THOUS or $13,434 THOUS for the Chairman of the Management Board (CEO), €9,500 THOUS or $10,635 THOUS for the CEO North America and €7,000 THOUS or $7,836 THOUS for all other current Management Board functions.
The amount of the total compensation of the Management Board for the fiscal year and for the previous year is shown in the following table:
Total Compensation
in € THOUS
| Total compensation | ||||||||||||||||||||||||
| Cash compensation | Components with | (including long-term | ||||||||||||||||||||||
| (without long-term | long-term | incentive | ||||||||||||||||||||||
| incentive components) | incentive effect | components) | ||||||||||||||||||||||
| 2020 | 2019(1) | 2020 | 2019(1) | 2020 | 2019(1) | |||||||||||||||||||
| Members of the Management Board serving as of December 31, 2020 | ||||||||||||||||||||||||
| Rice Powell | 3,932 | 3,566 | 2,170 | 2,232 | 6,102 | 5,798 | ||||||||||||||||||
| Helen Giza(2) | 2,014 | 707 | 1,070 | 865 | 3,084 | 1,572 | ||||||||||||||||||
| Franklin W. Maddux, MD(2) | 1,795 | - | 988 | - | 2,783 | - | ||||||||||||||||||
| Dr. Katarzyna Mazur-Hofsäß | 1,993 | 1,925 | 1,139 | 1,180 | 3,132 | 3,105 | ||||||||||||||||||
| Dr. Olaf Schermeier | 1,573 | 1,396 | 907 | 1,053 | 2,480 | 2,449 | ||||||||||||||||||
| William Valle | 3,107 | 2,138 | 1,676 | 1,133 | 4,783 | 3,271 | ||||||||||||||||||
| Kent Wanzek | 1,781 | 1,600 | 972 | 1,076 | 2,753 | 2,676 | ||||||||||||||||||
| Harry de Wit | 1,816 | 1,698 | 920 | 1,083 | 2,736 | 2,781 | ||||||||||||||||||
| Former member of the Management Board who resigned during the year 2019(3) | ||||||||||||||||||||||||
| Michael Brosnan | - | 1,961 | - | 1,160 | - | 3,121 | ||||||||||||||||||
| Total: | 18,011 | 14,991 | 9,842 | 9,782 | 27,853 | 24,773 | ||||||||||||||||||
(1) Please note for purposes of comparison between the amounts indicated and those of the fiscal year that the compensation is subject to foreign exchange rate fluctuations depending on whether it is contractually denominated in euro (Ms. Helen Giza and Dr. Katarzyna Mazur-Hofsäß as well as Dr. Olaf Schermeier and Mr. Harry de Wit) or U.S. dollar (Messrs. Rice Powell, Franklin W. Maddux MD, William Valle, Kent Wanzek and Michael Brosnan). In principle, the translation of U.S. dollar amounts was done at the average exchange rate for the applicable calendar year; the translation of U.S. dollar amounts for Performance Shares granted under the MB LTIP 2020 (for the fiscal year) and under the MB LTIP 2019 (for the year 2019) was done at the closing rate of the applicable grant date.
(2) Please note for purposes of comparison of the amounts indicated for the fiscal year that Ms. Helen Giza was appointed as member of the Management Board only with effect as of November 1, 2019 and Mr. Franklin W. Maddux, MD with effect as of January 1, 2020 and, therefore, they have received compensation payments to be set out herein in each case commencing only as of such respective dates.
(3) Mr. Michael Brosnan resigned from the Management Board with effect as of the end of October 31, 2019.
Personal investment from the variable compensation for the fiscal year
In order to let the members of the Management Board participate adequately in the sustainable corporate development, the Supervisory Board decided that the members of the Management Board – by mutual agreement – acquire shares in FMC-AG & Co. KGaA for a portion of their Short-Term Incentive. The shares acquired in this way may only be sold by the respective member of the Management Board after a period of three years from the date of acquisition has expired. The respective portion of the Short-Term Incentive for which a member of the Management Board acquires shares in FMC-AG & Co. KGaA depends on the respective overall target achievement.
| 22 |
The net amounts to be invested by the members of the Management Board are as follows:
| Personal Investment from the Net Short-Term Incentive for the Fiscal Year | ||||||||
| in THOUS | ||||||||
| Amount | Currency | |||||||
| Rice Powell | 597 | $ | ||||||
| Helen Giza | 253 | € | ||||||
| Franklin W. Maddux, MD | 272 | $ | ||||||
| Dr. Katarzyna Mazur-Hofsäß | 189 | € | ||||||
| Dr. Olaf Schermeier | 214 | € | ||||||
| William Valle | 324 | $ | ||||||
| Kent Wanzek | 268 | $ | ||||||
| Harry de Wit | 153 | € | ||||||
As a consequence of this personal investment, between 36% and 60% of the Short-Term Incentive for the fiscal year of the respective member of the Management Board will be invested in shares of the Company, which can be sold or exercised, respectively, at the earliest after a period of three years. This calculation is based on the simplified assumption of a personal tax and duty burden of 50% on the payout of the Short-Term Incentive.
The Supervisory Board further decided that the members of the Management Board – by mutual agreement – acquire shares in FMC-AG & Co. KGaA for a portion of their components with long-term incentive effects granted to them as Management Board members. The shares acquired in this way may only be sold by the respective member of the Management Board after a period of three years from the date of acquisition has expired. The respective portion of the components with long-term incentive effects for which a member of the Management Board acquires shares in FMC-AG & Co. KGaA depends on the respective overall target achievement under the LTIP 2016 (grant 2018) and under the MB LTIP 2019 (grant 2019). Accordingly, the concrete amounts to be invested from the payouts from the aforementioned long-term incentive grants can be determined in 2022 (for the grant 2018 under the LTIP 2016) and in 2023 (for the grant 2019 under the MB LTIP 2019) only. The acquisition of the shares in FMC-AG & Co. KGaA by the members of the Management Board shall be made after the amounts to be invested have been determined. The investment of the proceeds from the MB LTIP 2020 in shares of the Company as provided for under the MB LTIP 2020 remains unaffected.
IV. Commitments to members of the Management Board in the event of a termination of their appointment
The following pension commitments and other benefits are also components of the compensation for the members of the Management Board: Individual contractual pension commitments for the members of the Management Board Messrs. Rice Powell, Dr. Olaf Schermeier, William Valle, Kent Wanzek and Harry de Wit have been granted by Fresenius Medical Care Management AG.
Each of the individual contractual pension commitments by Fresenius Medical Care Management AG provides for a pension and survivor benefit (Hinterbliebenenversorgung) as of the time of conclusively ending active work (at age 65 at the earliest) or upon occurrence of disability or incapacity to work (Berufs- oder Erwerbsunfähigkeit) or of reduction of earning capacity (Erwerbsminderung), calculated by reference to the amount of the recipient’s most recent base salary. Members of the Management Board who have been members of the Management Board for at least ten years at the time of their final retirement from active employment have this entitlement already upon reaching the age of 63 (early retirement); in this case, the benefits are reduced by 0.5% per calendar month that the member leaves active employment before reaching the age of 65.
The retirement pension will be based on 30% of the most recent base salary (for the Management Board members Rice Powell, Dr. Olaf Schermeier and Kent Wanzek) or the 5-year average of the last base salaries (for the Management Board members William Valle and Harry de Wit) and will increase for each complete year of service by 1.5 percentage points up to a maximum of 45%. Current pensions increase according to legal requirements (Sec. 16 of the German Act to improve company pension plans, “BetrAVG”). 30% of the gross amount of any post-retirement income from an activity of the Management Board member is in principle offset against the pension. If a Management Board member dies, the surviving spouse receives a pension amounting to 60% of the pension claim resulting at that time. Furthermore, the deceased Management Board member’s own legitimate children (leibliche eheliche Kinder) receive an orphan’s pension amounting to 20% of the pension claim resulting at that time, until the completion of their education or they reach 25 years of age, at the latest. All orphans’ pensions and the surviving spouse’s pension together, however, reach a maximum of 90% of the Management Board member’s pension. If a Management Board member leaves the Management Board before reaching the age of 65, the rights to the aforementioned benefits remain, however the pension to be paid is reduced – unless the Management Board member is leaving because of the occurrence of an event insured against (occupational disability, incapacity to work, pension payments to surviving dependents in case of death or, if applicable, early retirement) – in proportion to the ratio of the actual years of service as a Management Board member to the potential years of service until reaching the age of 65.
| 23 |
Based on individual contractual commitments, the Management Board members Messrs. Rice Powell, Franklin W. Maddux MD, William Valle and Kent Wanzek additionally participated in the U.S.-based 401(k) savings plan in the fiscal year; in this regard, contributions in the amount of $8,550 (€7,486) (2019: $8,400 (€7,504)) were earned in the fiscal year in each case and allocated in January 2021 to the members of the Management Board mentioned above. This plan generally allows employees in the U.S. to invest a limited portion of their gross salaries in retirement pension programs. The Company supports its employees at this with contributions of up to 50% of the yearly made payments.
Furthermore, the Management Board member Mr. Rice Powell has acquired non-forfeitable benefits from participation in employee pension plans of Fresenius Medical Care North America, which provide payment of pensions as of the age of 65 and the payment of reduced benefits as of the age of 55. In March 2002, the rights to receive benefits from the pension plans were frozen at the level then applicable.
Additions to pension provisions in the fiscal year for the members of the Management Board in office on December 31 of the fiscal year amounted to €4,082 THOUS (2019: €6,751 THOUS). The pension commitments are shown in the following table:
| Development and Status of Pension Commitments | ||||||
| in € THOUS | ||||||
| As of | As of | |||||||||||
| January 1, 2020 | Additions | December 31, 2020(1) | ||||||||||
| Rice Powell | 16,249 | (1,522 | ) | 14,727 | ||||||||
| Helen Giza | - | - | - | |||||||||
| Franklin W. Maddux, MD | - | - | - | |||||||||
| Dr. Katarzyna Mazur-Hofsäß | - | - | - | |||||||||
| Dr. Olaf Schermeier | 1,523 | 477 | 2,000 | |||||||||
| William Valle | - | 4,152 | 4,152 | |||||||||
| Kent Wanzek | 4,778 | 418 | 5,196 | |||||||||
| Harry de Wit | 1,702 | 557 | 2,259 | |||||||||
| Total: | 24,252 | 4,082 | 28,334 | |||||||||
(1) The pension commitment of Messrs. Rice Powell, Willam Valle and Kent Wanzek is denominated in U.S. dollar. For the calculation of the pension provisions an exchange rate of €0.84/$1 was applied.
A post-employment non-competition covenant was agreed by all members of the Management Board. If such covenant becomes applicable, the members of the Management Board for a period of up to two years shall receive compensation amounting to half of their respective annual base salaries for each year of application of the non-competition covenant. The service agreements of the members of the Management Board contain no express provisions that are triggered by a change of control.
The service agreements concluded with the members of the Management Board provide for a severance payment cap. Under this cap, payments in connection with the early termination of a Management Board activity may not exceed the value of two years’ compensation and may not compensate more than the remaining term of the service agreement. For the calculation of the relevant annual compensation, only the non-performance-based compensation components are applied. If Fresenius Medical Care Management AG terminates the service agreement for good cause or would be entitled to do so, no severance payments are made.
V. Miscellaneous
All members of the Management Board have received individual contractual commitments for the continuation of their compensation in cases of sickness for a maximum of twelve months; after six months of sick leave, insurance benefits may be set off against such payments. If a Management Board member dies, the surviving dependents will be paid three more monthly installments after the month of death, not to exceed, however, the amount due between the time of death and the scheduled expiration of the respective service agreement.
Mr. Michael Brosnan was a member of the Management Board until the end of October 31, 2019. In his termination agreement, it was agreed with respect to the compensation components provided in his service agreement for the period from November 1, 2019 to December 31, 2020 that he will receive a base salary of $850 THOUS (€744 THOUS) p.a. (pro rata for the period from November 1, 2019 to December 31, 2019). In the fiscal year, Mr. Michael Brosnan received fringe benefits in the form of reimbursement of fees for the preparation of tax returns and for financial planning, insurance benefits, contributions to pension, accident, life and health insurances and housing, rent and relocation supplements as well as tax burden compensation due to varying tax rates in Germany and the U.S. (net compensation) and a car allowance in the total amount of $257 THOUS (€225 THOUS) (2019: $17 THOUS (€15 THOUS) for the period from November 1, 2019 to December 31, 2019). Additionally, Mr. Michael Brosnan participated in the U.S.-based 401(k) savings plan until December 31, 2020. For the period from January 1, 2020 to December 31, 2020, Mr. Michael Brosnan also received an amount equivalent to 30% of his base salary. The compensation components granted to Mr. Michael Brosnan under the LTIP 2016, the MB LTIP 2019 and in the form of Share Based Awards are payable or exercisable in accordance with the respective plan conditions. As of January 1, 2021, Mr. Michael Brosnan receives an annual compensation for the agreed post-employment non-competition covenant in the amount of $553 THOUS (€451 THOUS) p.a. for a period of two years. It was agreed with Mr. Michael Brosnan that he is entitled to receive a retirement pension on the basis of the individual contractual pension commitment of Fresenius Medical Care Management AG in the annual amount of $405 THOUS (€330 THOUS) from January 1, 2021. The compensation for the agreed post-employment non-competition covenant is credited against the retirement pension.
| 24 |
Mr. Dominik Wehner was a member of the Management Board until the end of December 31, 2017. In his termination agreement, it was agreed with respect to the compensation components provided in his service agreement for the period from January 1, 2018 to March 31, 2022 that he will annually receive a base salary of €425 THOUS and an amount of 30% of his base salary. In addition, Mr. Dominik Wehner is entitled to fringe benefits such as the private use of his company car, reimbursement of fees for the preparation of tax returns and for financial planning, insurance benefits and contributions to pension and health insurance in a total amount of approximately €35 THOUS p.a. The compensation components granted to Mr. Dominik Wehner under the LTIP 2011, the LTIP 2016 and in form of Share Based Awards are payable or can be exercised, as the case may be, upon the relevant regular vesting date in accordance with the respective plan conditions. As of the completion of the age of 65, Mr. Dominik Wehner will receive a company-funded retirement pension in accordance with the individual contractual pension commitment by Fresenius Medical Care Management AG, as described before.
Mr. Ronald Kuerbitz, who was a member of the Management Board until February 17, 2017, received an annual non-compete compensation from February 17, 2017 for a period of two years; this compensation amounted in the fiscal year to €0 THOUS (2019: €90 THOUS). It was also agreed with him that, after the end of his service agreement, he would act as an advisor to National Medical Care, Inc. from August 14, 2017 until the end of August 13, 2019. The consideration granted for such services (including reimbursement of expenses) amounts to €0 THOUS (2019: €167 THOUS) for the fiscal year. As of the completion of the age of 65, Mr. Ronald Kuerbitz will receive a company-funded retirement pension of $146 THOUS (€119 THOUS) per year.
Mr. Roberto Fusté, who was a member of the Management Board until March 31, 2016, received pension payments in the amount of approximately €274 THOUS (2019: €274 THOUS) in the fiscal year.
Prof. Emanuele Gatti, who was a member of the Management Board until March 31, 2014, received pension payments in the amount of €355 THOUS in the fiscal year (2019: €355 THOUS).
Instead of a pension provision, a consulting agreement was entered into with Dr. Ben Lipps, who was the Chairman of the Management Board until December 31, 2012, for the period from January 1, 2013 to December 31, 2021. Under this consulting agreement, Dr. Ben Lipps provides consulting services on certain fields and within a specified time frame and is subject to a non-compete covenant. The consideration to be granted by Fresenius Medical Care Management AG for such services (including reimbursement of expenses) amounted for 2019 to €568 THOUS. An amendment to the agreement was made in 2019 which provides for a one-off payment of €1,129 THOUS for the remaining term of the agreement. This payment, too, was made in 2019. All payments for services to be performed by him under the consulting agreement have thus been made.
In accordance with applicable legal provisions, no loans or advance payments for future compensation components were made to the members of the Management Board of Fresenius Medical Care Management AG in the fiscal year.
The payments to U.S. members of the Management Board Rice Powell, Helen Giza, Franklin W. Maddux MD, William Valle and Kent Wanzek were paid in part in the U.S. (in U.S. dollar) and in part in Germany (in euro). For the part paid in Germany, it was agreed with the members of the Management Board Rice Powell, Franklin W. Maddux, MD and Kent Wanzek that due to varying tax rates in both countries, the increased or lower tax burden to such members of the Management Board arising from German tax rates in comparison to U.S. tax rates will be balanced or will be paid back by them (net compensation). Pursuant to a modified net compensation agreement, these members of the Management Board will be treated as if they were taxed in their home country, the United States, only. Therefore, the gross amounts may be retroactively changed. Since the actual tax burden can only be calculated in connection with the preparation of the Management Board members' tax returns, subsequent adjustments may have to be made, which will then be retroactively covered in future compensation reports.
To the extent permitted by law, Fresenius Medical Care Management AG undertook to indemnify the members of the Management Board from claims against them arising out of their work for the Company and its affiliates, to the extent such claims exceed their liability under German law. To secure such obligations, a Directors & Officers liability insurance exists with a deductible that corresponds to the specifications according to the German Stock Corporation Act.
Former members of the Management Board did not receive any compensation in the fiscal year other than mentioned herein, whereupon the total compensation amounted to €629 THOUS (2019: €2,984 THOUS). As of December 31 of the fiscal year, pension obligations, in accordance with IAS 19, towards this group of persons exist in an amount of €36,587 THOUS (2019: €37,373 THOUS).
VI. Tables of the value of benefits granted and received
The German Corporate Governance Code in the previous version dated February 7, 2017 provided that the compensation report shall include information for each member of the Management Board on the benefits granted and received as well as on pension expenses for the fiscal year. The model tables provided in the appendix to the German Corporate Governance Code in the referenced version were recommended to be used to present this information.
| 25 |
The following tables include information on the value of benefits granted and received. They correspond, to a large extent, to the structure and form of the model tables of the German Corporate Governance Code in its previous version dated February 7, 2017, to allow for the comparability with the previous year's figures:
Benefits granted to serving members of the Management Board as of December 31, 2020
in € THOUS
| Rice Powell | Helen Giza | |||||||||||||||||||||||||||||||
| Chairman of the Management Board | Chief Financial Officer | |||||||||||||||||||||||||||||||
Member of the Management Board since December 21, 2005(1) | Member
of the Management Board since November 1, 2019 | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2020 | 2019(2) | 2020 | 2020 | 2020 | 2019(2) | |||||||||||||||||||||||||
| Minimum | Maximum | Minimum | Maximum | |||||||||||||||||||||||||||||
| Base salary | 1,769 | 1,769 | 1,769 | 1,340 | 855 | 855 | 855 | 108 | ||||||||||||||||||||||||
| Fringe benefits | 429 | 429 | 429 | 256 | 320 | 320 | 320 | 440 | ||||||||||||||||||||||||
| Total non-performance-based compensation | 2,198 | 2,198 | 2,198 | 1,596 | 1,175 | 1,175 | 1,175 | 548 | ||||||||||||||||||||||||
| One-year variable compensation | 1,857 | - | 2,228 | 2,211 | 898 | - | 1,077 | 179 | ||||||||||||||||||||||||
| Multi-year variable compensation / components with long-term incentive effects | 2,170 | - | 9,361 | 2,232 | 1,070 | - | 4,617 | 865 | ||||||||||||||||||||||||
| thereof Share Based Award - New Incentive Bonus Plan 2010 | ||||||||||||||||||||||||||||||||
| 3-year term | - | - | - | 657 | - | - | - | 53 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2019 | ||||||||||||||||||||||||||||||||
| 4-year term | - | - | - | 1,575 | - | - | - | 812 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2020 | ||||||||||||||||||||||||||||||||
| 3-year term(3) | 2,170 | - | 9,361 | - | 1,070 | - | 4,617 | - | ||||||||||||||||||||||||
| Total non-performance-based compensation and performance-based compensation | 6,225 | 2,198 | 13,787 | 6,039 | 3,143 | 1,175 | 6,869 | 1,592 | ||||||||||||||||||||||||
| Pension expense | - | - | - | 828 | - | - | - | - | ||||||||||||||||||||||||
| Value of benefits granted | 6,225 | 2,198 | 13,787 | (4) | 6,867 | 3,143 | 1,175 | 6,869 | (4) | 1,592 | ||||||||||||||||||||||
| Franklin W. Maddux, MD | Dr. Katarzyna Mazur-Hofsäß | |||||||||||||||||||||||||||||||
| Chief Medical Officer | Member of the Management Board for EMEA | |||||||||||||||||||||||||||||||
| Member of the Management Board since January 1, 2020 | Member of the Management Board since September 1, 2018 | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2020 | 2019(2) | 2020 | 2020 | 2020 | 2019(2) | |||||||||||||||||||||||||
| Minimum | Maximum | Minimum | Maximum | |||||||||||||||||||||||||||||
| Base salary | 805 | 805 | 805 | - | 910 | 910 | 910 | 700 | ||||||||||||||||||||||||
| Fringe benefits | 200 | 200 | 200 | - | 33 | 33 | 33 | 94 | ||||||||||||||||||||||||
| Total non-performance-based compensation | 1,005 | 1,005 | 1,005 | - | 943 | 943 | 943 | 794 | ||||||||||||||||||||||||
| One-year variable compensation | 846 | - | 1,015 | - | 956 | - | 1,147 | 1,155 | ||||||||||||||||||||||||
| Multi-year variable compensation / components with long-term incentive effects | 988 | - | 4,264 | - | 1,139 | - | 4,914 | 1,180 | ||||||||||||||||||||||||
| thereof Share Based Award - New Incentive Bonus Plan 2010 | ||||||||||||||||||||||||||||||||
| 3-year term | - | - | - | - | - | - | - | 377 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2019 | ||||||||||||||||||||||||||||||||
| 4-year term | - | - | - | - | - | - | - | 803 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2020 | ||||||||||||||||||||||||||||||||
| 3-year term(3) | 988 | - | 4,264 | - | 1,139 | - | 4,914 | - | ||||||||||||||||||||||||
| Total non-performance-based compensation and performance-based compensation | 2,839 | 1,005 | 6,284 | - | 3,038 | 943 | 7,004 | 3,129 | ||||||||||||||||||||||||
| Pension expense | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Value of benefits granted | 2,839 | 1,005 | 6,284 | (4) | - | 3,038 | 943 | 7,004 | (4) | 3,129 | ||||||||||||||||||||||
(1) The indicated date refers to the appointment as a member of the Management Board of the General Partner.
(2) Please note for purposes of comparison between the amounts indicated and those of the fiscal year that the compensation is subject to foreign exchange rate fluctuations depending on whether it is contractually denominated in euro (Ms. Helen Giza and Dr. Katarzyna Mazur-Hofsäß as well as Dr. Olaf Schermeier and Mr. Harry de Wit) or U.S. dollar (Messrs. Rice Powell, Franklin W. Maddux MD, William Valle and Kent Wanzek). In principle, the translation of U.S. dollar amounts was done at the average exchange rates for the applicable calendar year; the translation of U.S. dollar amounts for Performance Shares granted under the MB LTIP 2020 (for the fiscal year) and under the MB LTIP 2019 (for the year 2019) was done at the closing rate of the applicable grant date.
(3) The Company shares acquired by the members of the Management Board from the allocations are subject to a holding period of at least one year.
(4) The amount as set out herein represents the maximum sum that can be achieved for the individual compensation components. Additionally, the maximum compensation applies (€12,000 THOUS or $13,434 THOUS for the Chairman of the Management Board (CEO), €9,500 THOUS or $10,635 THOUS for the CEO North America and €7,000 THOUS or $7,836 THOUS for all other current Management Board functions).
| 26 |
Benefits granted to serving members of the Management Board as of December 31, 2020
in € THOUS
| Dr. Olaf Schermeier | William Valle | |||||||||||||||||||||||||||||||
| Member of the Management Board for Global Research and Development | Member of the Management Board for North America | |||||||||||||||||||||||||||||||
| Member of the Management Board since March 1, 2013 | Member of the Management Board since February 17, 2017 | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2020 | 2019(1) | 2020 | 2020 | 2020 | 2019(1) | |||||||||||||||||||||||||
| Minimum | Maximum | Minimum | Maximum | |||||||||||||||||||||||||||||
| Base salary | 725 | 725 | 725 | 510 | 1,366 | 1,366 | 1,366 | 866 | ||||||||||||||||||||||||
| Fringe benefits | 137 | 137 | 137 | 136 | 327 | 327 | 327 | 237 | ||||||||||||||||||||||||
| Total non-performance-based compensation | 862 | 862 | 862 | 646 | 1,693 | 1,693 | 1,693 | 1,103 | ||||||||||||||||||||||||
| One-year variable compensation | 761 | - | 914 | 842 | 1,434 | - | 1,721 | 1,430 | ||||||||||||||||||||||||
| Multi-year variable compensation / components with long-term incentive effects | 907 | - | 3,915 | 1,053 | 1,676 | - | 7,230 | 1,133 | ||||||||||||||||||||||||
| thereof Share Based Award - New Incentive Bonus Plan 2010 | ||||||||||||||||||||||||||||||||
| 3-year term | - | - | - | 250 | - | - | - | 345 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2019 | ||||||||||||||||||||||||||||||||
| 4-year term | - | - | - | 803 | - | - | - | 788 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2020 | ||||||||||||||||||||||||||||||||
| 3-year term(2) | 907 | - | 3,915 | - | 1,676 | - | 7,230 | - | ||||||||||||||||||||||||
| Total non-performance-based compensation and performance-based compensation | 2,530 | 862 | 5,691 | 2,541 | 4,803 | 1,693 | 10,644 | 3,666 | ||||||||||||||||||||||||
| Pension expense | 504 | 504 | 504 | 179 | 4,152 | 4,152 | 4,152 | 0 | ||||||||||||||||||||||||
| Value of benefits granted | 3,034 | 1,366 | 6,195 | (3) | 2,720 | 8,955 | 5,845 | 14,796 | (3) | 3,666 | ||||||||||||||||||||||
| Kent Wanzek | Harry de Wit | |||||||||||||||||||||||||||||||
| Member of the Management Board for Global Manufacturing, Quality and Supply | Member of the Management Board for Asia-Pacific | |||||||||||||||||||||||||||||||
| Member of the Management Board since January 1, 2010 | Member of the Management Board since April 1, 2016 | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2020 | 2019(1) | 2020 | 2020 | 2020 | 2019(1) | |||||||||||||||||||||||||
| Minimum | Maximum | Minimum | Maximum | |||||||||||||||||||||||||||||
| Base salary | 792 | 792 | 792 | 607 | 735 | 735 | 735 | 520 | ||||||||||||||||||||||||
| Fringe benefits | 212 | 212 | 212 | 127 | 327 | 327 | 327 | 337 | ||||||||||||||||||||||||
| Total non-performance-based compensation | 1,004 | 1,004 | 1,004 | 734 | 1,062 | 1,062 | 1,062 | 857 | ||||||||||||||||||||||||
| One-year variable compensation | 832 | - | 998 | 1,002 | 772 | - | 926 | 858 | ||||||||||||||||||||||||
| Multi-year variable compensation / components with long-term incentive effects | 972 | - | 4,194 | 1,077 | 920 | - | 3,969 | 1,083 | ||||||||||||||||||||||||
| thereof Share Based Award - New Incentive Bonus Plan 2010 | ||||||||||||||||||||||||||||||||
| 3-year term | - | - | - | 289 | - | - | - | 280 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2019 | ||||||||||||||||||||||||||||||||
| 4-year term | - | - | - | 788 | - | - | - | 803 | ||||||||||||||||||||||||
| thereof Performance Shares - MB LTIP 2020 | ||||||||||||||||||||||||||||||||
| 3-year term(2) | 972 | - | 4,194 | - | 920 | - | 3,969 | - | ||||||||||||||||||||||||
| Total non-performance-based compensation and performance-based compensation | 2,808 | 1,004 | 6,196 | 2,813 | 2,754 | 1,062 | 5,957 | 2,798 | ||||||||||||||||||||||||
| Pension expense | 474 | 474 | 474 | 379 | 619 | 619 | 619 | 1,795 | ||||||||||||||||||||||||
| Value of benefits granted | 3,282 | 1,478 | 6,670 | (3) | 3,192 | 3,373 | 1,681 | 6,576 | (3) | 4,593 | ||||||||||||||||||||||
(1) Please note for purposes of comparison between the amounts indicated and those of the fiscal year that the compensation is subject to foreign exchange rate fluctuations depending on whether it is contractually denominated in euro (Ms. Helen Giza and Dr. Katarzyna Mazur-Hofsäß as well as Dr. Olaf Schermeier and Mr. Harry de Wit) or U.S. dollar (Messrs. Rice Powell, Franklin W. Maddux MD, William Valle and Kent Wanzek). In principle, the translation of U.S. dollar amounts was done at the average exchange rates for the applicable calendar year; the translation of U.S. dollar amounts for Performance Shares granted under the MB LTIP 2020 (for the fiscal year) and under the MB LTIP 2019 (for the year 2019) was done at the closing rate of the applicable grant date.
(2) The Company shares acquired by the members of the Management Board from the allocations are subject to a holding period of at least one year.
(3) The amount as set out herein represents the maximum sum that can be achieved for the individual compensation components. Additionally, the maximum compensation applies (€12,000 THOUS or $13,434 THOUS for the Chairman of the Management Board (CEO), €9,500 THOUS or $10,635 THOUS for the CEO North America and €7,000 THOUS or $7,836 THOUS for all other current Management Board functions).
| 27 |
| Allocations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| in € THOUS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Serving members of the Management Board as of December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rice Powell | Helen Giza | Franklin W. Maddux, MD | Dr. Katarzyna Mazur-Hofsäß | Dr. Olaf Schermeier | William Valle | Kent Wanzek | Harry de Wit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chairman
of the | Chief
Financial Officer Member of the Management Board since November 1, 2019 | Chief
Medical Officer Member of the Management Board since January 1, 2020 | Member
of the Management Board for EMEA Member of the Management Board since September 1, 2018 | Member
of the Management Board for Global Research and Development Member of the Management Board since March 1, 2013 | Member
of the Management Board for North America Member of the Management Board since February 17, 2017 | Member
of the Management Board for Global Manufacturing, Quality and Supply Member of the Management Board since January 1, 2010 | Member
of the Management Board for Asia-Pacific Member of the Management Board since April 1, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | 2020 | 2019(2) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Base salary | 1,769 | 1,340 | 855 | 108 | 805 | - | 910 | 700 | 725 | 510 | 1,366 | 866 | 792 | 607 | 735 | 520 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Fringe benefits | 429 | 256 | 320 | 440 | 200 | - | 33 | 94 | 137 | 136 | 327 | 237 | 212 | 127 | 327 | 337 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-performance based compensation | 2,198 | 1,596 | 1,175 | 548 | 1,005 | - | 943 | 794 | 862 | 646 | 1,693 | 1,103 | 1,004 | 734 | 1,062 | 857 | ||||||||||||||||||||||||||||||||||||||||||||||||
| One-year variable compensation | 1,734 | 1,970 | 839 | 159 | 790 | - | 1,050 | 1,131 | 711 | 750 | 1,414 | 1,035 | 777 | 866 | 754 | 841 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Multi-year variable compensation / components with long-term incentive effects | 4,331 | 494 | - | - | 1,154 | - | - | - | 1,469 | 740 | 1,295 | 207 | 1,873 | 459 | 1,427 | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| thereof Share Based Award - New Incentive Bonus Plan 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3-year term | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2015 | - | 150 | - | - | - | - | - | - | - | 53 | - | - | - | 115 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2016 | 659 | - | - | - | - | - | - | - | 226 | - | - | - | 272 | - | 184 | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| thereof LTIP 2011 - Stock Option Plan 2011 (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8-year term | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2011 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2012 | 171 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2013 | 450 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2014 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| thereof LTIP 2011 - Phantom Stock Plan 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5-year term | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2014 | - | 344 | - | - | - | - | - | - | - | - | - | 207 | - | 344 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2015 | 748 | - | - | - | 450 | - | - | - | - | 687 | 450 | - | 449 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| thereof LTIP 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4-year term | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant 2016 | 2,303 | - | - | - | 704 | - | - | - | 1,243 | - | 845 | - | 1,152 | - | 1,243 | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-performance-based and performance-based compensation | 8,263 | 4,060 | 2,014 | 707 | 2,949 | - | 1,993 | 1,925 | 3,042 | 2,136 | 4,402 | 2,345 | 3,654 | 2,059 | 3,243 | 1,698 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Pension expense | - | 828 | - | - | - | - | - | - | 504 | 179 | 4,152 | - | 474 | 379 | 619 | 1,795 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Allocation | 8,263 | 4,888 | 2,014 | 707 | 2,949 | - | 1,993 | 1,925 | 3,546 | 2,315 | 8,554 | 2,345 | 4,128 | 2,438 | 3,862 | 3,493 | ||||||||||||||||||||||||||||||||||||||||||||||||
(1) The indicated date refers to the appointment as a member of the Management Board of the General Partner.
(2) Please note for purposes of comparison between the amounts indicated and those of the fiscal year that the compensation is subject to foreign exchange rate fluctuations depending on whether it is contractually denominated in euro (Ms. Helen Giza and Dr. Katarzyna Mazur-Hofsäß as well as Dr. Olaf Schermeier and Mr. Harry de Wit) or U.S. dollar (Messrs. Rice Powell, Franklin W. Maddux MD, William Valle and Kent Wanzek). The plan terms of the Share Based Award and of the LTIP 2011 entitle to allocations in euro. In principle, the translation of U.S. dollar amounts was done at the average exchange rates for the applicable calendar year; the translation of U.S. dollar amounts for the LTIP 2016 was done at the closing rate of the applicable vesting date.
(3) The amounts for the Stock Option Plan 2011 as set out herein correspond to the intrinsic value of the stock options at the time of exercise.
28
Compensation of the Supervisory Board
The compensation of the FMC-AG & Co. KGaA Supervisory Board is set out in section 13 of the Articles of Association. The Annual General Meeting 2020 of FMC-AG & Co. KGaA on August 27, 2020 resolved to amend section 13 of the Articles of Association and the compensation of the Supervisory Board with effect from January 1, 2021. In particular, the variable performance-based compensation component presented below will be abolished. The resolution of the Annual General Meeting on the remuneration of the members of the Supervisory Board can be found on the Company’s website at www.freseniusmedicalcare.com/en/about-us/supervisory-board/remuneration.
For the fiscal year, the members of the Supervisory Board were compensated on the basis of and in accordance with section 13 of the Articles of Association in the version applicable in the fiscal year as follows:
Each Supervisory Board member received a base salary of $88 THOUS (2019: $88 THOUS) for the full fiscal year, payable in four equal installments at the end of a calendar quarter. The Chairman of the Supervisory Board received additional compensation of $88 THOUS (2019: $88 THOUS) and the Vice Chairman received additional compensation of $44 THOUS (2019: $44 THOUS) in each case for the full fiscal year.
In addition, each member of the Supervisory Board received, as a variable performance-based compensation component (hereinafter also: “performance-based compensation”), additional remuneration which was based on the respective average growth of earnings per share of the Company (EPS) during the period of the last three fiscal years prior to the payment date (“3-year Average EPS Growth”). The amount of the performance-based compensation was $60 THOUS in case of achieving a 3-year Average EPS Growth corridor from 8.00% to 8.99%, $70 THOUS in the corridor from 9.00% to 9.99% and $80 THOUS in case of a 3-year Average EPS Growth of 10.00% or more. If the aforementioned targets were reached, the respective variable remuneration amounts of the performance-based compensation were earned to their full extent, i.e., within these margins there was no pro rata remuneration. In any case, this component was capped at the maximum amount of $80 THOUS per annum. Reciprocally, the members of the Supervisory Board were only entitled to the remuneration component if the 3-year Average EPS Growth of at least 8.00% was reached. Provided that the relevant targets had been achieved, the remuneration was, in principle, disbursed on a yearly basis following approval of the Company’s annual financial statements at the end of the calendar quarter in which the Company’s annual financial statements were approved. For the fiscal year, the 3-year Average EPS Growth for the years 2018, 2019 and 2020 was relevant.
In application of the principles above, for the fiscal year no entitlement to a payment of performance-based compensation was achieved (2019: $0 THOUS).
As a member of a committee, a Supervisory Board member of FMC-AG & Co. KGaA additionally annually received $44 THOUS (2019: $44 THOUS). A member of a committee who served as chairman or vice chairman of a committee additionally received $22 THOUS and $11 THOUS a year, respectively (2019: $22 THOUS and $11 THOUS, respectively), payable in identical installments at the end of a calendar quarter. For memberships in the Nomination Committee of the Supervisory Board and in the Joint Committee of the Company as well as in the capacity of their respective chairmen and vice chairmen, no separate remuneration was granted to the members of the Supervisory Board. In accordance with section 13e para. 3 of the Articles of Association of FMC-AG & Co. KGaA, the members of the Joint Committee are, however, entitled to receive an attendance fee in the amount of $3.5 THOUS.
Should a member of the FMC-AG & Co. KGaA Supervisory Board at the same time be a member of the Supervisory Board of the General Partner Fresenius Medical Care Management AG and receive compensation for his/her work on the Supervisory Board of Fresenius Medical Care Management AG, the compensation for the work as a FMC-AG & Co. KGaA Supervisory Board member shall be reduced by half. The same applies to the additional compensation for the Chairman of the FMC-AG & Co. KGaA Supervisory Board and the Vice Chairman, to the extent that they are at the same time chairman and vice chairman, respectively, of the Supervisory Board of Fresenius Medical Care Management AG. To the extent the vice chairman of the FMC-AG & Co. KGaA Supervisory Board is at the same time chairman of the Supervisory Board at Fresenius Medical Care Management AG, he shall receive no additional compensation for his work as vice chairman of the FMC-AG & Co. KGaA Supervisory Board.
The compensation of the members of the Supervisory Board of Fresenius Medical Care Management AG and the compensation of the members of its committees are charged to FMC-AG & Co. KGaA in accordance with section 7 para. 3 of the Articles of Association of FMC-AG & Co. KGaA.
The members of the Supervisory Board of FMC-AG & Co. KGaA are to be reimbursed for the expenses incurred in the exercise of their office, which also include the applicable VAT.
For the benefit of the members of the Supervisory Board of FMC-AG & Co. KGaA a Directors & Officers liability insurance exists with a deductible that corresponds to the specifications according to the AktG.
29
The total compensation of the Supervisory Board of FMC-AG & Co. KGaA, including the amount charged by Fresenius Medical Care Management AG to FMC-AG & Co. KGaA, is stated in the following tables:
| Compensation of the Supervisory Board | ||||||||||||||||||||||||||||||||||||||||
| in € THOUS(1) | ||||||||||||||||||||||||||||||||||||||||
| Base
salary for Supervisory Board at FMC Management AG | Base
salary for Supervisory Board at FMC-AG & Co. KGaA | Compensation
for committee services at FMC Management AG | Compensation
for committee services at FMC-AG & Co. KGaA | Total
amount of non- performance- based compensation | ||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||
| Dr. Dieter Schenk | 39 | 39 | 116 | 118 | 127 | 120 | 26 | 19 | 308 | 296 | ||||||||||||||||||||||||||||||
| Stephan Sturm(2) | 154 | 157 | - | - | 111 | 100 | - | - | 265 | 257 | ||||||||||||||||||||||||||||||
| Rolf A. Classon | 39 | 39 | 77 | 79 | 106 | 118 | 58 | 49 | 280 | 285 | ||||||||||||||||||||||||||||||
| Rachel Empey(3) | 77 | 79 | - | - | - | - | - | - | 77 | 79 | ||||||||||||||||||||||||||||||
| William P. Johnston | 39 | 39 | 39 | 39 | 116 | 108 | 48 | 59 | 242 | 245 | ||||||||||||||||||||||||||||||
| Dr. Gerd Krick(4) | 77 | 79 | - | - | 58 | 59 | - | - | 135 | 138 | ||||||||||||||||||||||||||||||
| Dr. Dorothea Wenzel(5) | - | - | 77 | 45 | - | - | - | - | 77 | 45 | ||||||||||||||||||||||||||||||
| Pascale Witz(6) | - | - | 77 | 79 | - | - | 74 | 60 | 151 | 139 | ||||||||||||||||||||||||||||||
| Prof. Dr. Gregor Zünd(7) | - | - | 77 | 79 | - | - | - | - | 77 | 79 | ||||||||||||||||||||||||||||||
| Total | 425 | 432 | 463 | 439 | 518 | 505 | 206 | 187 | 1,612 | 1,563 | ||||||||||||||||||||||||||||||
(1) Shown without VAT and withholding tax; translation of U.S. dollar amounts at average exchange rates for the applicable calendar year.
(2) Chairman of the Supervisory Board of FMC Management AG, but not a member of the Supervisory Board of FMC-AG & Co. KGaA; compensation paid by FMC Management AG.
(3) Member of the Supervisory Board of FMC Management AG, but not a member of the Supervisory Board of FMC-AG & Co. KGaA; compensation paid by FMC Management AG.
(4) Member of the Supervisory Board of FMC Management AG, but not a member of the Supervisory Board of FMC-AG & Co. KGaA; compensation paid by FMC Management AG.
(5) Member of the Supervisory Board of FMC-AG & Co. KGaA, but not a member of the Supervisory Board of FMC Management AG; compensation paid by FMC-AG & Co. KGaA. Please note for purposes of comparison of the amounts indicated for the fiscal year that Dr. Dorothea Wenzel was appointed as a member of the Supervisory Board of FMC-AG & Co. KGaA as of May 16, 2019, and, therefore, received compensation payments to be set out herein as of this date.
(6) Member of the Supervisory Board of FMC-AG & Co. KGaA, but not a member of the Supervisory Board of FMC Management AG; compensation paid by FMC-AG & Co. KGaA.
(7) Member of the Supervisory Board of FMC-AG & Co. KGaA, but not a member of the Supervisory Board of FMC Management AG; compensation paid by FMC-AG & Co. KGaA.
| Compensation of the Supervisory Board | ||||||||||||||||||||||||||||||||
| in € THOUS(1) | ||||||||||||||||||||||||||||||||
| Performance-based | Performance-based | |||||||||||||||||||||||||||||||
| compensation in | compensation in | Performance-based | ||||||||||||||||||||||||||||||
| FMC Management AG | FMC-AG & Co. KGaA | compensation | Total compensation | |||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
| Dr. Dieter Schenk | - | - | - | - | - | - | 308 | 296 | ||||||||||||||||||||||||
| Stephan Sturm(2) | - | - | - | - | - | - | 265 | 257 | ||||||||||||||||||||||||
| Rolf A. Classon | - | - | - | - | - | - | 280 | 285 | ||||||||||||||||||||||||
| Rachel Empey(3) | - | - | - | - | - | - | 77 | 79 | ||||||||||||||||||||||||
| William P. Johnston | - | - | - | - | - | - | 242 | 245 | ||||||||||||||||||||||||
| Dr. Gerd Krick(4) | - | - | - | - | - | - | 135 | 138 | ||||||||||||||||||||||||
| Dr. Dorothea Wenzel(5) | - | - | - | - | - | - | 77 | 45 | ||||||||||||||||||||||||
| Pascale Witz(6) | - | - | - | - | - | - | 151 | 139 | ||||||||||||||||||||||||
| Prof. Dr. Gregor Zünd(7) | - | - | - | - | - | - | 77 | 79 | ||||||||||||||||||||||||
| Total | - | - | - | - | - | - | 1,612 | 1,563 | ||||||||||||||||||||||||
(1) Shown without VAT and withholding tax; translation of U.S. dollar amounts at average exchange rates for the applicable calendar year.
(2) Chairman of the Supervisory Board of FMC Management AG, but not a member of the Supervisory Board of FMC-AG & Co. KGaA; compensation paid by FMC Management AG.
(3) Member of the Supervisory Board of FMC Management AG, but not a member of the Supervisory Board of FMC-AG & Co. KGaA; compensation paid by FMC Management AG.
(4) Member of the Supervisory Board of FMC Management AG, but not a member of the Supervisory Board of FMC-AG & Co. KGaA; compensation paid by FMC Management AG.
(5) Member of the Supervisory Board of FMC-AG & Co. KGaA, but not a member of the Supervisory Board of FMC Management AG; compensation paid by FMC-AG & Co. KGaA. Please note for purposes of comparison of the amounts indicated for the fiscal year that Dr. Dorothea Wenzel was appointed as a member of the Supervisory Board of FMC-AG & Co. KGaA as of May 16, 2019, and, therefore, received compensation payments to be set out herein as of this date.
(6) Member of the Supervisory Board of FMC-AG & Co. KGaA, but not a member of the Supervisory Board of FMC Management AG; compensation paid by FMC-AG & Co. KGaA.
(7) Member of the Supervisory Board of FMC-AG & Co. KGaA, but not a member of the Supervisory Board of FMC Management AG; compensation paid by FMC-AG & Co. KGaA.
(v) Fresenius Medical Care AG & Co. KGaA share-based plans
As of December 31, 2020, the Company has various share-based compensation plans, which may either be equity- or cash-settled.
Fresenius Medical Care AG & Co. KGaA long-term incentive plans during 2016–2020 (“Performance Shares”)
As of May 11, 2016, the issuance of stock options and Phantom Stock under the Fresenius Medical Care AG & Co. KGaA Long Term Incentive Program 2011 (“LTIP 2011”) terminated. Furthermore, as of January 1, 2019 the issuance of Performance Shares under the Fresenius Medical Care AG & Co. KGaA Long Term Incentive Plan 2016 (“LTIP 2016”) terminated. Additionally, the Management Board has approved and adopted the Fresenius Medical Care AG & Co. KGaA NxStage Long Term Incentive Plan (“NxStage LTIP”) for the management board and managerial staff members of NxStage in the course of the integration of NxStage into the Company. A grant has been made once in 2019. Furthermore, as of January 1, 2020 the issuance of Performance Shares under the Fresenius Medical Care Management Board Long Term Incentive Plan 2019 (“MB LTIP 2019”) terminated.
30
In order to continue to enable the members of the Management Board, the members of the management boards of affiliated companies and managerial staff members to adequately participate in the long-term, sustained success of the Company, successor programs were introduced. For members of the Management Board, the Supervisory Board of Management AG has approved and adopted the Fresenius Medical Care Management Board Long Term Incentive Plan 2020 (“MB LTIP 2020”) effective January 1, 2020. For the members of the management boards of affiliated companies and managerial staff members, the Management Board has approved and adopted the Fresenius Medical Care AG & Co. KGaA Long Term Incentive Plan 2019 (“LTIP 2019”) effective January 1, 2019.
The LTIP 2016, the NxStage LTIP, the MB LTIP 2019, the LTIP 2019 and the MB LTIP 2020 are each variable compensation programs with long-term incentive effects which grant or granted so-called “Performance Shares”. Performance Shares are non-equity, cash-settled virtual compensation instruments which may entitle plan participants to receive a cash payment depending on the achievement of pre-defined performance targets further defined below as well as the Company’s share price development.
The following table provides an overview of these plans.
| MB LTIP 2020 | LTIP 2019 | MB LTIP 2019 | NxStage LTIP | LTIP 2016 | |
| Eligible persons | Members of the Management Board | Other Plan participants | Members of the Management Board | Other Plan participants | Members of the Management Board and other plan participants |
| Grant in the years | 2020–2023 | 2019–2021 | 2019 | 2019 | 2016–2018 |
| Months in which a Grant may occur | November (2020), March (2021–2023)(1) |
July, December | July, December | February | July, December |
(1) If the appointment as a member of the Management Board comes into effect after the regular grant date in March, the grant date may differ.
For members of the Management Board, the Supervisory Board of Management AG will, in due exercise of its discretion and taking into account the individual responsibility and performance of each Management Board member, determine an initial value for each grant for any awards to Management Board members. For plan participants other than the members of the Management Board, such determination will be made by the Management Board. The initial grant value is determined in the currency in which the respective participant receives his or her base salary at the time of the grant. In order to determine the number of Performance Shares each plan participant receives, the respective grant value will be divided by the value per Performance Share at the time of the grant, which is mainly determined based on the average price of the Company’s shares over a period of thirty calendar days prior to the respective grant date.
The number of granted Performance Shares may change over the performance period of three years, depending on the level of achievement of the following: (i) revenue growth at constant currency (“Revenue Growth”), (ii) growth of the net income attributable to the shareholders of FMC-AG & Co. KGaA at constant currency (“Net Income Growth”) and (iii) return on invested capital (“ROIC”). For the LTIP 2019 exclusively, the level of achievement for Performance Shares granted in year 2019 may be subject to an increase if certain targets in relation to the second phase of the Company’s Global Efficiency Program (“GEP-II targets”) and in relation to the Free Cash Flow (“Free Cash Flow target”) are achieved.
Revenue, net income and ROIC are determined according to the Company’s consolidated reported and audited figures in Euro for the financial statements prepared in accordance with IFRS, applying the respective plan terms. Revenue Growth, Net Income Growth and the fulfillment of the GEP-II targets, for the purpose of the relevant plan, are determined at constant currency.
The performance targets to be applied for the fiscal year for Performance Shares granted in the fiscal year under the MB LTIP 2020 and under the LTIP 2019 are presented in the table below.
| Growth/ROIC | Target achievement | Weight | |||
|
Performance target 1: Revenue Growth |
≤ 1% | 0% | 1/3 | ||
| 6% | 100% | ||||
| ≥ 11% | 200% | ||||
|
Performance target 2: Net Income Growth |
≤ 0% | 0% | 1/3 | ||
| 5% | 100% | ||||
| ≥ 10% | 200% | ||||
|
Performance target 3: ROIC |
≤ 5.5% | 0% | 1/3 | ||
| 6% | 100% | ||||
| ≥ 6.5% | 200% |
If Revenue Growth, Net Income Growth or ROIC range between these values, the respective degree of target achievement will be linearly interpolated between these values.
31
For Performance Shares granted throughout 2016 to 2019, an annual target achievement level of 100% will be reached for the Revenue Growth performance target if Revenue Growth is 7% in each individual year of the three-year performance period; Revenue Growth of 0% will lead to a target achievement level of 0% and the maximum target achievement level of 200% will be reached in case of Revenue Growth of at least 16%. If Revenue Growth ranges between these values, the degree of target achievement will be linearly interpolated between these values.
For Performance Shares granted throughout 2016 to 2019, an annual target achievement level of 100% for the Net Income Growth performance target will be reached if Net Income Growth is 7% in each individual year of the three-year performance period. In case of Net Income Growth of 0%, the target achievement level will also be 0%; the maximum target achievement of 200% will be reached in the case of Net Income Growth of at least 14%. Between these values, the degree of target achievement will be determined by means of linear interpolation.
For ROIC, an annual target achievement level of 100% will be reached if the target ROIC as defined for the applicable year is reached. For Performance Shares granted throughout 2016 to 2019, the target ROIC is 7.3% for 2016, 7.5% for 2017, 7.7% for 2018, 7.9% for 2019 and 8.1% for 2020. A target achievement level of 0% will be reached if the ROIC falls below the target ROIC for the applicable year by 0.2 percentage points or more, whereas the maximum target achievement level of 200% will be reached if the target ROIC for the respective year is exceeded by 0.2 percentage points or more. The degree of target achievement will be determined by means of linear interpolation if the ROIC ranges between these values. In case the annual ROIC target achievement level in the third year of a performance period for Performance Shares granted throughout years 2016 to 2019 is equal to or higher than the ROIC target achievement level in each of the two previous years of such performance period, the ROIC target achievement level of the third year is deemed to be achieved for all years of the applicable performance period.
For all plans, the achievement level for each of the three performance targets will be weighted annually at one-third to determine the yearly target achievement for each year of the three-year performance period. The level of overall target achievement over the three-year performance period will then be determined on the basis of the mean of these three average yearly target achievements. The overall target achievement can be in a range of 0% to 200%. For Performance Shares granted in fiscal year 2019 under the LTIP 2019, the overall target achievement shall be increased by 20 percentage points if the GEP-II targets achievement is 100%. Furthermore, the overall target achievement for Performance Shares granted in year 2019 under the LTIP 2019 shall be increased by 20 percentage points if the Free Cash Flow target achievement is 200%. In case of a GEP-II targets achievement between 0% and 100% and a Free Cash Flow target achievement between 0% and 200%, the increase of the overall target achievement will be calculated by means of linear interpolation. The overall target achievement shall not exceed 200%.
The number of Performance Shares granted to the plan participants at the beginning of the performance period will each be multiplied by the level of overall target achievement in order to determine the final number of Performance Shares.
For the MB LTIP 2020, the final number of Performance Shares is generally deemed earned three years after the day of a grant. The number of such vested Performance Shares is then multiplied by the average Company share price over a period of thirty calendar days prior to the lapse of this vesting period. The respective resulting amount, which is capped in total at an amount equaling 400% of the grant value received by the participant, less taxes and contributions is paid over to a credit institution which uses it for the purchase of shares of the Company on the stock exchange. The shares acquired in this way are subject to a holding period of at least one year. In addition, the Supervisory Board has decided that the members of the Management Board – by mutual agreement – will acquire shares in FMC-AG & Co. KGaA for a portion of their components with long-term incentive effects granted to them as Management Board members under the LTIP 2016 and MB LTIP 2019. See “(iv) Compensation of the Management Board and the Supervisory Board – Personal Investment from the variable compensation for the fiscal year.”
For plan participants of the LTIP 2019, the final number of Performance Shares is generally deemed earned three years after the day of a respective grant. The number of such vested Performance Shares is then multiplied by the average Company share price over a period of thirty calendar days prior to the lapse of this vesting period. The respective resulting amount, which is capped in total at an amount equaling 400% of the grant value received by the participant, will then be paid to the plan participants as cash compensation.
For the MB LTIP 2019, the final number of Performance Shares is generally deemed earned four years after the day of a respective grant. The number of such vested Performance Shares is then multiplied by the average Company share price over a period of thirty calendar days prior to the lapse of this vesting period. The resulting amount will then be paid to the plan participants as cash compensation.
For plan participants of the NxStage LTIP, the final number of Performance Shares granted in February 2019 is generally deemed earned in December 2022. The number of such vested Performance Shares is then multiplied by the average Company share price over a period of thirty calendar days prior to the lapse of this vesting period. The resulting amount will then be paid to the plan participants as cash compensation.
For plan participants of the LTIP 2016, the final number of Performance Shares is generally deemed earned four years after the day of a grant. The number of such vested Performance Shares is then multiplied by the average Company share price over a period of thirty calendar days prior to the lapse of this vesting period. The resulting amount will then be paid to the plan participants as cash compensation.
32
During 2020, the Company awarded 159,607 Performance Shares under the MB LTIP 2020 at a measurement date weighted average fair value of €64.20 each and a total fair value of €10,247 THOUS, which will be revalued if the fair value changes. The total fair value will be amortized over the vesting period.
During 2020, the Company awarded 800,165 Performance Shares under the LTIP 2019 at a measurement date weighted average fair value of €64.06 each and a total fair value of €51,259 THOUS, which will be revalued if the fair value changes. The total fair value will be amortized over the vesting period.
During 2019, the Company awarded 114,999 Performance Shares under the MB LTIP 2019 at a measurement date weighted average fair value of €60.70 each and a total fair value of €6,980 THOUS, which will be revalued if the fair value changes. The total fair value will be amortized over the vesting period.
During 2019, the Company awarded 817,089 Performance Shares under the LTIP 2019 at a measurement date weighted average fair value of €62.16 each and a total fair value of €50,790 THOUS, which will be revalued if the fair value changes. The total fair value will be amortized over the vesting period.
During 2019, the Company awarded 55,978 Performance Shares under the NxStage LTIP at a measurement date weighted average fair value of €62.17 each and a total fair value of €3,480 THOUS, which will be revalued if the fair value changes. The total fair value will be amortized over the vesting period.
Fresenius Medical Care AG & Co. KGaA long-term incentive program 2011 (stock options and “Phantom Stock”)
On May 12, 2011, the 2011 Stock Option Plan (“2011 SOP”) was established by resolution of the Company’s AGM. The 2011 SOP, together with the Phantom Stock Plan 2011, which was established by resolution of the General Partner’s Management and supervisory boards, forms the Company’s LTIP 2011. Under the LTIP 2011, participants were granted awards, which consisted of a combination of stock options and Phantom Stock. The final grant under the LTIP 2011 was made in December 2015 and, as of May 11, 2016, the issuance of stock options and Phantom Stock under the LTIP 2011 terminated. Awards under the LTIP 2011 were subject to a four-year vesting period. Vesting of the awards granted was subject to achievement of pre-defined performance targets. The 2011 SOP was established with a conditional capital increase up to €12,000 THOUS subject to the issue of up to twelve million non-par value bearer shares with a nominal value of €1.00 per share.
Stock options granted under the LTIP 2011 have an eight-year term and can be exercised for the first time after a four-year vesting period. The exercise price of stock options granted under the LTIP 2011 shall be the average stock exchange price on the Frankfurt Stock Exchange of the Company’s shares during the 30 calendar days immediately prior to each grant date. Stock options granted under the LTIP 2011 to U.S. participants are non-qualified stock options under the United States Internal Revenue Code of 1986, as amended. Stock options under the LTIP 2011 are not transferable by a participant or a participant’s heirs, and may not be transferred, pledged, assigned, or disposed of otherwise.
Phantom Stock awards under the LTIP 2011 entitled the holders to receive payment in euro from the Company upon exercise of the Phantom Stock. The payment per Phantom Stock in lieu of the issuance of such stock was based upon the share price on the Frankfurt Stock Exchange of one of the Company’s shares on the exercise date. Phantom Stock awards had a five-year term and could be exercised for the first time after a four-year vesting period. For participants who were U.S. taxpayers, the Phantom Stock was deemed to be exercised in any event in the month of March following the end of the vesting period.
New incentive bonus plan
Since January 1, 2020 and under the Company’s new compensation system, the issuance of awards under the New Incentive Bonus Plan (“NIBP”) is no longer possible. In 2019, the members of the Management Board were eligible for performance-related compensation that depended upon achievement of pre-defined targets. The targets were measured based on the adjusted net income growth attributable to the shareholders of FMC-AG & Co. KGaA at constant currency (”Adjusted Net Income Growth“), adjusted net cash provided by (used in) operating activities after capital expenditures, before acquisitions and investments (“Adjusted Free Cash Flow”) in percent of revenues and adjusted operating margin (“Adjusted Operating Margin“), and were derived from the comparison of targeted and actually achieved figures. Targets were divided into Company level targets and those to be achieved in individual regions and areas of responsibility.
Performance-related bonuses for 2019 consisted proportionately of a cash component and a cash-settled share-based component. Upon meeting the annual targets, the cash component for the year 2019 was paid in year 2020, after the consolidated financial statements for 2019 had been approved. The share-based component is subject to a three-year vesting period, although a shorter period may apply in special cases (e.g. occupational disability, retirement and employment contracts which were not extended by the Company). The amount of cash for the payment relating to the share-based component shall be based on the share price of Fresenius Medical Care AG & Co. KGaA shares upon exercise. For each of the members of the Management Board, the amount of the achievable pay component as well as of the allocation value of the cash-settled share-based compensation was capped.
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Share-based compensation related to this plan for fiscal years ended 2020, 2019 and 2018 was €0, €2,623 THOUS and €3,414 THOUS, respectively.
Information on holdings under share-based plans
At December 31, 2020 and 2019, the members of the Management Board and plan participants other than the members of the Management Board held the following Performance Shares under the share-based plans:
| Performance Shares | ||||||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||
| Members of the | Members of the | |||||||||||||||||||||||
| Management | Other plan | Management | Other plan | |||||||||||||||||||||
| Board | participants | Total | Board | participants | Total | |||||||||||||||||||
| MB LTIP 2020 | 159,607 | - | 159,607 | - | - | - | ||||||||||||||||||
| LTIP 2019 | 8,869 | 1,522,102 | 1,530,971 | - | 797,659 | 797,659 | ||||||||||||||||||
| MB LTIP 2019 | 102,435 | 12,564 | 114,999 | 102,435 | 12,564 | 114,999 | ||||||||||||||||||
| NxStage LTIP | - | 40,530 | 40,530 | - | 45,007 | 45,007 | ||||||||||||||||||
| LTIP 2016 | 135,473 | 947,133 | 1,082,606 | 211,878 | 1,747,142 | 1,959,020 | ||||||||||||||||||
Additionally, at December 31, 2020, the members of the Management Board held 465,308 stock options (December 31, 2019: 452,989) and plan participants other than the members of the Management Board held 2,735,766 stock options (December 31, 2019: 3,036,000) under the 2011 SOP.
Members of the Management Board did not hold any Phantom Stock under the LTIP 2011 as of December 31, 2020 (December 31, 2019: 23,336). Plan participants other than the members of the Management Board also did not hold any Phantom Stock under the LTIP 2011 as of December 31, 2020 (December 31, 2019: 311,650).
Additional information on share-based plans
The table below provides reconciliations for stock options outstanding at December 31, 2020, as compared to December 31, 2019 and 2018.
| Transactions | ||||||||
| Weighted | ||||||||
| average | ||||||||
| exercise | ||||||||
| Options | price | |||||||
| Stock options for shares | (in thousands) | € | ||||||
| Balance at December 31, 2018 | 3,896 | 68.85 | ||||||
| Granted | - | - | ||||||
| Exercised(1) | 329 | 51.72 | ||||||
| Forfeited | 78 | 75.08 | ||||||
| Balance at December 31, 2019 | 3,489 | 70.32 | ||||||
| Granted | - | - | ||||||
| Exercised(2) | 235 | 53.00 | ||||||
| Expired | 53 | 75.65 | ||||||
| Balance at December 31, 2020 | 3,201 | 71.50 | ||||||
| (1) The average share price at the date of exercise of the options was €67.62. | ||||||||
| (2) The average share price at the date of exercise of the options was €71.75. |
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The following tables provide a summary of fully vested options outstanding and exercisable at December 31, 2020 and December 31, 2019, respectively:
| Stock options 2020 | ||||||||||||||||||||||||
| Outstanding | Exercisable | |||||||||||||||||||||||
| Weighted | Weighted | Weighted | ||||||||||||||||||||||
| Range of | average | average | average | |||||||||||||||||||||
| exercise | Number | remaining | exercise | Number | exercise | |||||||||||||||||||
| prices | of | contractual | price | of | price | |||||||||||||||||||
| in € | options | life | in € | options | in € | |||||||||||||||||||
| 45.01 | - | 50.00 | 630,870 | 1.44 | 49.91 | 630,870 | 49.91 | |||||||||||||||||
| 50.01 | - | 55.00 | - | - | - | - | - | |||||||||||||||||
| 55.01 | - | 60.00 | 31,080 | 1.92 | 58.63 | 31,080 | 58.63 | |||||||||||||||||
| 60.01 | - | 65.00 | - | - | - | - | - | |||||||||||||||||
| 65.01 | - | 70.00 | - | - | - | - | - | |||||||||||||||||
| 70.01 | - | 75.00 | - | - | - | - | - | |||||||||||||||||
| 75.01 | - | 80.00 | 2,539,124 | 2.58 | 77.03 | 2,539,124 | 77.03 | |||||||||||||||||
| 3,201,074 | 2.35 | 71.50 | 3,201,074 | 71.50 | ||||||||||||||||||||
| Stock options 2019 | ||||||||||||||||||||||||
| Outstanding | Exercisable | |||||||||||||||||||||||
| Weighted | Weighted | Weighted | ||||||||||||||||||||||
| Range of | average | average | average | |||||||||||||||||||||
| exercise | Number | remaining | exercise | Number | exercise | |||||||||||||||||||
| prices | of | contractual | price | of | price | |||||||||||||||||||
| in € | options | life | in € | options | in € | |||||||||||||||||||
| 45.01 | - | 50.00 | 767,001 | 2.38 | 49.90 | 767,001 | 49.90 | |||||||||||||||||
| 50.01 | - | 55.00 | 825 | 0.93 | 52.27 | 825 | 52.27 | |||||||||||||||||
| 55.01 | - | 60.00 | 133,375 | 1.24 | 57.68 | 133,375 | 57.68 | |||||||||||||||||
| 60.01 | - | 65.00 | - | - | - | - | - | |||||||||||||||||
| 65.01 | - | 70.00 | - | - | - | - | - | |||||||||||||||||
| 70.01 | - | 75.00 | - | - | - | - | - | |||||||||||||||||
| 75.01 | - | 80.00 | 2,587,788 | 3.58 | 77.03 | 2,587,788 | 77.03 | |||||||||||||||||
| 3,488,989 | 3.23 | 70.32 | 3,488,989 | 70.32 | ||||||||||||||||||||
During the fiscal years ended December 31, 2020, 2019, and 2018, the Company received cash of €12,445 THOUS, €17,014 THOUS and €43,508 THOUS, respectively, from the exercise of stock options (see note 17 of the notes to the consolidated financial statements in our 2020 20-F). The intrinsic value of stock options exercised for the twelve-month periods ended December 31, 2020, 2019, and 2018 was €4,402 THOUS, €5,231 THOUS and €29,440 THOUS, respectively.
The compensation expense related to equity-settled stock option programs was determined based upon the fair value on the grant date and the number of stock options granted which was recognized over the four-year vesting period. In connection with the 2011 SOP, the Company incurred compensation expense of €0, €1,992 THOUS and €6,713 THOUS for the fiscal years ended December 31, 2020, 2019 and 2018, respectively.
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The compensation expense related to cash-settled share-based payment transactions is determined based upon the fair value at the measurement date and the number of Phantom Stock or Performance Shares granted which will be recognized over the vesting period. The compensation expense that the Company recognized for Performance Shares for the fiscal years ended December 31, 2020, 2019 and 2018, respectively, is presented in the table below.
| Compensation expense related to cash-settled plans | ||||||||||||
| in € THOUS | ||||||||||||
| 2020 | 2019 | 2018 | ||||||||||
| MB LTIP 2020 | 2,115 | - | - | |||||||||
| LTIP 2019 | 13,689 | 4,771 | - | |||||||||
| MB LTIP 2019 | 820 | 656 | - | |||||||||
| NxStage LTIP | 513 | 572 | - | |||||||||
| LTIP 2016 | 21,864 | 30,304 | 4,152 | |||||||||
| LTIP 2011 | 1,894 | 5,724 | (8,799 | ) |
For additional information on share-based plans, including a description of MB LTIP 2020, see part (iv), “Compensation of the Management Board and the Supervisory Board.”
Care Coordination stock incentive plans
In 2014, the Company established a subsidiary stock incentive plan for Sound Inpatient Physicians, Inc. (“Sound”). The Company divested its controlling interest in Sound on June 28, 2018 (see note 4 c) of the notes to the consolidated financial statements in our 2020 20-F for information). For the years ended December 31, 2020 and 2019, the Company did not record stock compensation expense associated with the Sound subsidiary stock incentive plan (2018: €87,157 THOUS).
| (vi) | Material Transactions between FMC-AG & Co. KGaA and its Subsidiaries and Directors, Officers and Controlling Persons of FMC-AG & Co. KGaA |
In connection with the formation of FMC-AG, and the combination of the dialysis businesses of Fresenius SE and W.R. Grace & Co. in 1996, Fresenius SE and its affiliates and FMC-AG and its affiliates entered into several agreements for the purpose of giving effect to the Merger and defining our ongoing relationship. Fresenius SE and W.R. Grace & Co. negotiated these agreements. The information below summarizes the material aspects of certain agreements, arrangements and transactions between FMC-AG & Co. KGaA and Fresenius SE, their affiliates and with certain of our equity method investees. The following descriptions are not complete and are qualified in their entirety by reference to those agreements, which have been filed with the SEC and the NYSE. We believe that the leases, the supply agreements and the service agreements summarized below are no less favorable to us and no more favorable to Fresenius SE than would have been obtained in arm's-length bargaining between independent parties. The trademark and other intellectual property agreements summarized below were negotiated by Fresenius SE and W.R. Grace & Co., and, taken independently, are not necessarily indicative of market terms.
In the discussion below regarding our contractual and other relationships with Fresenius SE:
| · | the term "we (or us) and our affiliates" refers only to FMC-AG & Co. KGaA and its subsidiaries; and |
| · | the term "Fresenius SE and its affiliates" refers only to Fresenius SE and affiliates of Fresenius SE other than FMC-AG & Co. KGaA and its subsidiaries. |
| 36 |
Real property leases
The Company is a party to real estate lease agreements with Fresenius SE Companies (as defined below), which mainly include leases for the Company’s corporate headquarters in Bad Homburg, Germany and production sites in Schweinfurt and St. Wendel, Germany. The leases have maturities up to the end of 2029.
Below is a summary resulting from the above described lease agreements with related parties.
| Lease agreements with related parties | ||||||||||||||||||||||||||||||||
| in € THOUS | ||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||
| Depreciation | Interest expense | Lease expense (1) | Depreciation | Interest expense | Lease expense (1) | Lease income | Lease expense | |||||||||||||||||||||||||
| Fresenius SE | 7,925 | 740 | 2,452 | 4,580 | 501 | 4,005 | - | 8,745 | ||||||||||||||||||||||||
| Fresenius SE affiliates | 13,236 | 1,272 | 572 | 12,589 | 1,396 | 452 | - | 15,852 | ||||||||||||||||||||||||
| Total | 21,161 | 2,012 | 3,024 | 17,169 | 1,897 | 4,457 | - | 24,597 | ||||||||||||||||||||||||
| (1) | Short-term leases and expenses relating to variable lease payments are exempted from balance sheet recognition. |
| Lease agreements with related parties | ||||||||||||||||
| in € THOUS | ||||||||||||||||
| December 31, 2020 | December 31, 2019 | |||||||||||||||
| Right-of- use asset | Lease liability | Right-of- use asset | Lease liability | |||||||||||||
| Fresenius SE | 58,073 | 58,610 | 30,336 | 30,820 | ||||||||||||
| Fresenius SE affiliates | 80,188 | 81,410 | 91,879 | 92,126 | ||||||||||||
| Total | 138,261 | 140,020 | 122,215 | 122,946 | ||||||||||||
Trademarks
Fresenius SE continues to own the name “Fresenius” and several marks containing "Fresenius" (hereinafter referred to as “Fresenius Marks”). Fresenius SE and Fresenius Medical Care Deutschland GmbH, one of our German subsidiaries (hereinafter referred to as “D-GmbH”), have entered into agreements containing the following provisions. Fresenius SE has granted to D-GmbH, for our benefit and that of our affiliates, an exclusive, worldwide, royalty-free, perpetual license to use "Fresenius Medical Care" in our names, and to use the Fresenius marks, including some combination marks containing the Fresenius name that were used by the worldwide dialysis business of Fresenius SE, and the “Fresenius Marks” as a trademark in all aspects of the renal business. D-GmbH, for our benefit and that of our affiliates, has also been granted a worldwide, royalty-free, perpetual license to use the "Fresenius Marks" in the former National Medical Care non-renal business if it is used as part of a trademark containing the words "Fresenius Medical Care" together with one or more descriptive words, such as "Fresenius Medical Care Vascular Care" or "Fresenius Medical Care Physician Services".
We and our affiliates have the right to use "Fresenius Marks" in other medical businesses only with the consent of Fresenius SE. Fresenius SE may not unreasonably withhold its consent. Fresenius SE will not use or license third parties to use the Fresenius Marks in the renal business worldwide and will not use the Fresenius Marks alone or in combination with any other words in the US and Canada, except in combination with one or more additional words such as “Pharma Home Care” as a service mark in connection with its home care business.
Services agreements and products
The Company is party to service agreements with Fresenius SE and certain of its affiliates (collectively the “Fresenius SE Companies”) to receive services, including, but not limited to: administrative services, management information services, employee benefit administration, insurance, information technology services, tax services and treasury management services. The Company also provides central purchasing services to Fresenius SE Companies. These related party agreements generally have a duration of 1 to 5 years and are renegotiated on an as needed basis when the agreement comes due. The Company provides administrative services to one of its equity method investees.
The Company sells products to Fresenius SE Companies and purchases products from Fresenius SE Companies and equity method investees. In addition, Fresenius Medical Care Holdings, Inc. (“FMCH”) purchases heparin supplied by Fresenius Kabi USA, Inc. (“Kabi USA”), through an independent group purchasing organization (“GPO”). Kabi USA is an indirect, wholly-owned subsidiary of Fresenius SE. The Company has no direct supply agreement with Kabi USA and does not submit purchase orders directly to Kabi USA. FMCH acquires heparin from Kabi USA, through the GPO contract, which was negotiated by the GPO at arm’s length on behalf of all members of the GPO.
| 37 |
The Company entered into a ten-year agreement with a Fresenius SE Company for the manufacturing of infusion bags. In order to establish the new production line, the Company purchased machinery from said Fresenius SE Company in the amount of €206 THOUS, €7,183 THOUS and €4,497 THOUS during the year ended December 31, 2020, 2019 and 2018, respectively.
In December 2010, the Company and Galenica Ltd. (now known as Vifor Pharma Ltd.) formed the renal pharmaceutical company Vifor Fresenius Medical Care Renal Pharma Ltd., an equity method investee of which the Company owns 45%. The Company has entered into exclusive supply agreements to purchase certain pharmaceuticals from, as well as certain exclusive distribution agreements with, Vifor Fresenius Medical Care Renal Pharma Ltd. Under the terms of certain unconditional purchase agreements, the Company is obligated to purchase approximately €302,092 THOUS of pharmaceuticals, of which €296,647 THOUS is committed at December 31, 2020 for 2021. The terms of these agreements run up to four years.
Under the CMS Comprehensive ESRD Care Model, the Company and participating physicians formed entities known as ESCOs as part of a payment and care delivery model that seeks to deliver better health outcomes for Medicare ESRD patients while lowering CMS's costs. The Company has entered into participation/service agreements with these ESCOs, which are accounted for as equity method investees.
Below is a summary, including the Company’s receivables from and payables to the indicated parties resulting from the above described transactions with related parties.
| Service agreements and products with related parties | ||||||||||||||||||||||||||||||||||||||||
| in € THOUS | ||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2018 | December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||
| Sales of goods and services | Purchases of goods and services | Sales of goods and services | Purchases of goods and services | Sales of goods and services | Purchases of goods and services | Accounts receivable | Accounts payable | Accounts receivable | Accounts payable | |||||||||||||||||||||||||||||||
| Service agreements (1) | ||||||||||||||||||||||||||||||||||||||||
| Fresenius SE | 250 | 29,174 | 153 | 29,114 | 445 | 24,456 | 251 | 3,655 | 35 | 360 | ||||||||||||||||||||||||||||||
| Fresenius SE affiliates | 4,708 | 102,323 | 4,420 | 105,832 | 3,819 | 101,590 | 824 | 7,944 | 2,003 | 6,416 | ||||||||||||||||||||||||||||||
| Equity method investees | 19,730 | - | 49,052 | - | 58,362 | - | 74,935 | - | 68,300 | - | ||||||||||||||||||||||||||||||
| Total | 24,688 | 131,497 | 53,625 | 134,946 | 62,626 | 126,046 | 76,010 | 11,599 | 70,338 | 6,776 | ||||||||||||||||||||||||||||||
| Products | ||||||||||||||||||||||||||||||||||||||||
| Fresenius SE | - | - | 3 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Fresenius SE affiliates | 41,180 | 44,164 | 44,771 | 37,279 | 33,564 | 39,181 | 10,330 | 5,732 | 16,803 | 3,405 | ||||||||||||||||||||||||||||||
| Equity method investees | - | 474,100 | - | 469,474 | - | 399,667 | - | 57,207 | - | 36,262 | ||||||||||||||||||||||||||||||
| Total | 41,180 | 518,264 | 44,774 | 506,753 | 33,564 | 438,848 | 10,330 | 62,939 | 16,803 | 39,667 | ||||||||||||||||||||||||||||||
| (1) | In addition to the above shown accounts payable, accrued expenses for service agreements with related parties amounted to €5,368 and €8,352 at December 31, 2020 and 2019. |
| 38 |
Financing
The Company receives short-term financing from and provides short-term financing to Fresenius SE. The Company also utilizes Fresenius SE’s cash management system for the settlement of certain intercompany receivables and payables with its subsidiaries and other related parties. As of December 31, 2020 and December 31, 2019, the Company had accounts receivable from Fresenius SE related to short-term financing in the amount of €1,037 THOUS and €71,078 THOUS, respectively. As of December 31, 2020, the Company did not have accounts payable to Fresenius SE related to short-term financing. As of December 31, 2019, the Company had accounts payable to Fresenius SE related to short-term financing in the amount of €38,050 THOUS. The interest rates for these cash management arrangements are set on a daily basis and are based on the then-prevailing overnight reference rate, with a floor of zero, for the respective currencies.
On August 19, 2009, the Company borrowed €1,500 THOUS from the General Partner on an unsecured basis at 1.335%. The loan repayment has been extended periodically and is currently due on August 20, 2021 with an interest rate of 0.825%. On November 28, 2013, the Company borrowed an additional €1,500 THOUS with an interest rate of 1.875% from the General Partner. The loan repayment has been extended periodically and is currently due on November 23, 2021 with an interest rate of 1.025%.
At December 31, 2019, a subsidiary of Fresenius SE held unsecured bonds issued by the Company in the amount of €1,000 THOUS. At December 31, 2020, the subsidiary of Fresenius SE held the unsecured bonds issued by the Company in the amount of €1,000 THOUS. These bonds were issued in 2011 with a coupon of 5.25% and interest payable semiannually until maturity in 2021. For further information on these bonds, see note 14 of the notes to the consolidated financial statements in our 2020 20-F.
At December 31, 2020 and December 31, 2019, the Company borrowed from Fresenius SE in the amount of €13,320 THOUS at an interest rate of 0.825% and €18,865 THOUS on an unsecured basis at an interest rate of 0.930%, respectively. For further information on this loan agreement, see note 13 of the notes to the consolidated financial statements in our 2020 20-F.
Key management personnel; General Partner reimbursement
Due to the Company’s legal form of a German partnership limited by shares, the General Partner holds a key management position within the Company. In addition, as key management personnel, members of the Management Board and the Supervisory Board, as well as their close relatives, are considered related parties.
The Company’s Articles of Association provide that the General Partner shall be reimbursed for any and all expenses in connection with management of the Company’s business, including remuneration of the members of the General Partner’s supervisory board and the members of the Management Board. The aggregate amount reimbursed to the General Partner was €33,284 THOUS, €23,905 THOUS and €14,612 THOUS, respectively, for its management services during 2020, 2019 and 2018 and included an annual fee of €120 THOUS as compensation for assuming liability as general partner. The annual fee is set at 4% of the amount of the General Partner’s share capital (€3,000 THOUS as of December 31, 2020). As of December 31, 2020 and December 31, 2019, the Company had accounts receivable from the General Partner in the amount of €4,061 THOUS and €977 THOUS, respectively. As of December 31, 2020 and December 31, 2019, the Company had accounts payable to the General Partner in the amount of €20,863 THOUS and €34,170 THOUS, respectively.
For information regarding compensation of the Management Board and the Supervisory Board of the Company, see part (iv), “Compensation of the Management Board and the Supervisory Board.”
| (vii) | Principal Accountant Fees and Services |
At our AGM on August 27, 2020, PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (“PwC”), Frankfurt am Main, was approved to serve as our new independent accountants beginning with the 2020 fiscal year, thereby replacing KPMG AG Wirtschaftsprüfungsgesellschaft (“KPMG”), Berlin, as the Company’s auditors.
In 2020, 2019 and 2018, fees for the auditors and their affiliates were expensed as follows:
| Fees | ||||||||||||||||||||||||
| in € THOUS | ||||||||||||||||||||||||
| Consolidated group | thereof Germany | Consolidated group | thereof Germany | Consolidated group | thereof Germany | |||||||||||||||||||
| 2020 | 2019 | 2018 | ||||||||||||||||||||||
| Audit fees - PwC | 9,386 | 1,608 | - | - | - | - | ||||||||||||||||||
| Audit fees - KPMG | 455 | - | 10,113 | 1,665 | 7,845 | 1,322 | ||||||||||||||||||
| Audit-related fees - PwC | 510 | 394 | - | - | - | - | ||||||||||||||||||
| Audit-related fees - KPMG | 87 | 45 | 615 | 525 | 320 | 316 | ||||||||||||||||||
| Tax fees - PwC | 951 | 54 | - | - | - | - | ||||||||||||||||||
| Tax fees - KPMG | 310 | - | 318 | - | 1,069 | 115 | ||||||||||||||||||
| Other fees - PwC | 5,236 | 5,236 | - | - | - | - | ||||||||||||||||||
| Other fees - KPMG | 42 | - | 41 | - | 251 | 234 | ||||||||||||||||||
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Audit fees are the aggregate fees billed by the Company’s auditors for the audit of the Company’s consolidated financial statements and the statutory financial statements of FMC-AG & Co. KGaA and certain of its subsidiaries, reviews of interim financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements. Fees related to the audit of internal control over financial reporting are included in audit fees.
Audit-related fees are fees charged by the Company’s auditors for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under audit fees. This category mainly comprises fees billed by PwC for comfort letters, agreed-upon procedure engagements and other attestation services subject to regulatory requirements. Fees billed by KPMG comprises fees for comfort letters, consultation on accounting issues, agreed-upon procedure engagements and other attestation services subject to regulatory requirements.
Tax fees are fees for professional services rendered by PwC for tax compliance, tax advice on implications for actual or contemplated transactions, tax consulting associated with international transfer prices, as well as support services related to tax audits. Tax fees billed by KPMG comprises fees for tax compliance, tax advice on implications for actual or contemplated transactions, tax consulting associated with international transfer prices, and expatriate employee tax services, as well as support services related to tax audits.
In 2020, other fees include amounts related to services from PwC, mainly in regard to corporate governance. Prior to 2020, other fees included amounts related to services from KPMG in regard to the harmonization of the IT-landscape as well as amounts related to supply chain consulting fees.
Fees billed by the Company’s auditors for non-audit services in Germany include fees for the services described above within the audit-related fees, tax fees and other fees.
Audit Committee's pre-approval policies and procedures
As a German company, we prepare statutory financial statements under German law on the basis of the accounting principles of the German Commercial Code (Handelsgesetzbuch or HGB) and consolidated financial statements in accordance with IFRS. Our Supervisory Board engages our independent auditors to audit these financial statements, in consultation with our Audit and Corporate Governance Committee and subject to election by our shareholders at our AGM in accordance with German law.
Our financial statements are also included in registration statements and reports that we file with the SEC. Our Audit and Corporate Governance Committee engages our independent auditors to audit these financial statements in accordance with Rule 10A-3 under the Exchange Act and Rule 303A.06 of the NYSE Governance Rules. See also the description in "Item (iii). Directors and Senior Management" above.
Our Audit and Corporate Governance Committee also adopted a policy requiring management to obtain the committee's approval before engaging our independent auditors to provide any permitted non-audit services to us or our subsidiaries. Pursuant to this policy, which is designed to assure that such engagements do not impair the independence of our auditors, the Audit and Corporate Governance Committee pre-approves a catalog of specific non-audit services that may be performed by our auditors. The catalog also provides for additional approval requirements based on fee amount.
The General Partner’s Chief Financial Officer reviews all individual management requests to engage our auditors as a service provider in accordance with this catalog and, if the requested services are permitted pursuant to the catalog, approves the request accordingly. Services that are not included in the catalog or are included but exceed applicable fee levels are passed on either to the chairman of the Audit and Corporate Governance Committee or to the full committee, for approval on a case by case basis. In addition, the Audit and Corporate Governance Committee is informed about all approvals on a quarterly basis. Neither the chairman of our Audit and Corporate Governance Committee nor the full committee is permitted to approve any engagement of our auditors if the services to be performed either fall into a category of services that are not permitted by applicable law or would be inconsistent with maintaining the auditors' independence.
During 2020, the total fees paid to the Audit and Corporate Governance Committee members for service on the committee were $165 THOUS (€144 THOUS).
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