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.
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.
| (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.
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.
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.
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.
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.
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.
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.
| (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) |
| 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.
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.
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.
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.
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 | |
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.
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.
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).
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.
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.
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
(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.
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.
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.
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.
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.
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).
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).
| 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
Management Board
Member of the
Management Board since
December 21, 2005(1) | | |
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.
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.
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.
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.
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.
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.
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. | |
| | | |
| | |
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.
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. |
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.
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. |
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 | |
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).
