• 02.1
  Operations and Business Environment
• 02.2
  Results of Operations, financial Situation, Assets and Liabilities
• 02.3
  Non-financial Performance Indicators
• 02.4
  Risk Report
• 02.5
  Subsequent Events
• 02.6
  Outlook

02.3

Non-financial Performance Indicators

EMPLOYEES

At the end of 2008, 64,666 people (full-time equivalents) were employed by Fresenius Medical Care: 3,260 or 5.3 % more than in the previous year.

The increase in employee numbers is primarily the result of continued organic growth in our dialysis services business in all regions, as well as numerous acquisitions in Europe and Asia. No employees were laid off due to factory closures or similar measures such as deconsolidations. This continues the trend of previous years. The number of employees has grown by an average of 8 % per year since the Company was founded in 1996.

The highest percentage increase in employee numbers – 15 % compared to 2007 – was again recorded in the Asia-Pacific region. Organic growth was supported by clinic and production acquisitions in Australia, Malaysia, Singapore, Taiwan, China, and Korea. In all other regions, the number of clinics and, as a result, the number of employees, also rose.

At the end of the year, approximately 3,600 people were employed by Fresenius Medical Care in Germany, accounting for nearly 6 % of the total workforce, another example of our high degree of internationalization.

In Germany, the average age of Fresenius Medical Care employees was 40.3 years in 2008, almost unchanged from the previous year. The average period of employment increased from 10 years in 2007 to 10.1 years in 2008. In Germany our rate of staff turnover was again very low at 2.8 %; in the previous year it was 2.3 %.

Fresenius Medical Care’s personnel costs totalled $3.45 billion in 2008, about 10 % more than in 2007 ($3.13 billion). Personnel costs comprised about 32 % of revenue, unchanged compared to 2007. Average cost per employee was about $53,000 in 2008 (2007: $50,800).

HUMAN RESOURCES DEVELOPMENT AND MARKETING

Fresenius Medical Care is continually expanding its extensive range of activities in the dialysis industry. This means that the employees of the Group have access to high-quality continuing professional development (CPD) and develop professional skills in a broad range of medical, business, and technical fields. As an employer, Fresenius Medical Care makes a concerted effort to gear the numbers and expertise of its qualified employees and senior managers towards the current and future needs of the Company. Targeted human resources development measures and the attraction of new staff both play an important role in this.

In all areas of Fresenius Medical Care expertise, our employees must possess a high degree of specialized knowledge and have a passion for quality. Only then can we achieve our goal: using our medical services and products to help dialysis patients to lead better lives. Fresenius Medical Care surveys worldwide have repeatedly shown that our employees view this goal as integral to their work.

An important focus of our human resources development is ensuring that our employees utilize and optimize their professional strengths and talents to the best of their ability. Human resources development encourages employees to take advantage of and improve their skills and advance their careers as specialists, managers and project managers. This is achieved through life-long learning, continuous feedback on performance and work quality, and providing professional challenges that are in line with employee ability. Senior management – supported by human resource experts – is committed to ensuring that these instruments are implemented throughout the entire company. At the beginning of 2008, the Group created the position of Global Human Resources Director. The Human Resources Director is also responsible for managing selected human resources development projects worldwide, thus enabling synergies and local experiences to be used and improved in a targeted way.

In 2008, Fresenius Medical Care in North America began to focus on new learning modules for medical staff in clinics, and, once again, employee commitment was extremely high. A staff survey demonstrated the high motivation of employees to help redesign or improve processes, thus providing important input for the further improvement of CPD.

The great wealth of employee innovation became apparent during the crisis in the southeast of the United States when Hurricane Gustav and Hurricane Ike were approaching the Gulf Coast in the fall. Fresenius Medical Care teams mobilized emergency care for our patients and employees in the disaster areas exceptionally quickly. The Company provided accommodation, generators, food, fuel, and additional staff. Thanks to the dedication of everyone involved, we were able to continue providing life-saving dialysis treatment for both current and new patients.

Our innovative human resources development program for specialized dialysis personnel in the Asia-Pacific region (presented in detail in the 2007 annual report) got off to a successful start. In January 2008, 25 young men and women began studying at the Fresenius Medical Care Institute of Dialysis Nursing (F.I.D.N.); more than 300 students are expected in 2009. The F.I.D.N., the leading education center of its kind in the world, ensures high dialysis care standards and thus plays a pioneering role in providing quality in the healthcare industry.

In 2008, we continued our longstanding cooperation with the International Business Academy INSEAD (in Fontainebleau and Singapore). Here, senior managers from our subgroups come together on an international level. Further CPD modules for managers are being organized in each region. Preparations are currently underway so that special modules for the Company’s senior management can start next year. These modules will support managers in meeting the leadership requirements of a growing and highly integrated global company.

Fresenius Medical Care is one of the world’s largest employers of medical personnel. Finding the right staff for our expanding company is one of the most important tasks of human resources. Therefore, the main objective of our presence at recruitment fairs, in print media, and at selected universities is to demonstrate that we are an attractive employer.

Thanks to a uniform technological platform, our management in North America can now carry out human resource planning more quickly and with more precision.

VOCATIONAL TRAINING

An important factor in ensuring that a company is fit for the future is the professional training of young people in the company. This is why we take vocational training very seriously. We increased the number of trainee positions at all our German sites by an additional 10 %, on top of a 30 % increase in the previous year.

We are focusing our marketing activities to an increasing extent towards schools, working with them to inform even more young people about the advantages of vocational training within our company. We talk to students - and teachers. We invite students to our production sites to find out about corporate life and provide them with advice on applying for jobs; in our “SchuleWirtschaft” (SchoolBusiness) workshop, we deliver a range of CPD courses for teachers. In the middle of September, we held our second open day at Group headquarters in Bad Homburg with the theme “interactive education”.

The many visitors to the event learned about the trainee and vocational degree programs offered by our company, demonstrating that Fresenius Medical Care is an attractive provider of vocational training for young people. Last year we saw the first signs of the success of these marketing activities: bucking the trend of the vocational training market, we received considerably more high-quality applications than in previous years. This is further proof that we are an attractive employer for both high school graduates and trainees.

At the beginning of December, for the first time, Fresenius Medical Care trainees participated in the innovation contest “Jugend denkt Zukunft” (Young Foresight). This took place at companies all over Germany, supported by politicians and professional and trade associations. The goal of the innovation contest is to encourage trainees to engage with a company and develop innovative ideas for its future that will result in new products and services by 2020. In a one-week workshop including discussions with company representatives, participants generated ideas for our Company’s future. They also worked on product development and marketing processes in order to develop “innovative concepts for the customer service of the future”. Their ideas and proposals were put forward in a concluding presentation.

At the end of October, a ceremony was held in Bad Homburg in honor of the trainees who completed their training and vocational college students who graduated in 2008. Awards were presented to several chamber and state winners, and two students from the accadis College in Bad Homburg received special mention for their excellent academic achievements.

PROFIT SHARING

Our employees identify themselves to a high degree with the Company, which is a major contributing factor to our long-term success. This identification is supported by the fact that employees have a stake in the success of Fresenius Medical Care. The level of profit-sharing is linked to the Company’s operating result (EBIT), thus offering a value-oriented incentive. In 2008, each eligible employee received €1,527 through the profit-sharing program. Two-thirds of the bonus was paid to the employees in the form of shares; the final third was available either as cash or shares.

STOCK OPTION PLAN

Senior managers participate in the Company’s economic success and the development of the Fresenius Medical Care shares through stock option plans. The stock option program implemented in 2006 is directly linked to the success of the Company. Over a period of five years, our senior managers receive up to fifteen million options for ordinary bearer shares. These are exercisable after a waiting period of three years, if the adjusted earnings per share (EPS) hurdle of 8 % is achieved in every year of the waiting period. If this hurdle is achieved in only one or two years, the options are reduced accordingly. If the hurdle is not achieved at all, the options are cancelled. The 2006 stock option program enables managers to participate in both the financial opportunities and risks of the Company, making an internationally competitive remuneration system available to them.

In 2008, some 600 senior managers participated in the future success of Fresenius Medical Care’s through this program. Further information on the stock option plan can be found here.