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Corporate Governance Report and Declaration on Corporate Governance

Corporate Governance Report and Declaration on Corporate Governance

The Management Board of Fresenius Medical Care Management AG and the Supervisory Board of Fresenius Medical Care AG & Co. KG aA are committed to responsible management that is focused on achieving a sustainable increase in the value of the Company. Long-term corporate strategies, solid financial management, strict adherence to legal and ethical business standards, and transparency in the communication of the company are its key elements.

The Management Board of the General Partner, Fresenius Medical Care Management AG, and the Supervisory Board of Fresenius Medical Care AG & Co. KGaA hereinafter report pursuant to section 289a of the German Commercial Code (Handelsgesetzbuch – HGB) and to number 3.10 of the German Corporate Governance Code (Deutscher Corporate Governance Kodex – DCGK) on the Company’s corporate governance.

The Declaration on Corporate Governance is publicly available on the Company’s website at www.fmc-ag.de in the section Investor Relations / Corporate Governance/ Declaration on Corporate Governance.

Declaration on corporate governance

Group Management and Supervision Structure

The legal form of the Company is that of a partnership limited by shares (Kommanditgesellschaft auf Aktien – KGaA). The statutory bodies are the General Meeting, the Supervisory Board and the General Partner, which is Fresenius Medical Care Management AG. In the year under review 2012, there were no significant changes to the Group’s management and supervision structure. The group management and supervisory structure is displayed in the chart 2.13.1.

Structure of Fresenius Medical Care AG & Co. KGaA

The Articles of Association of Fresenius Medical Care AG & Co. KGaA, which also specify the responsibilities of the bodies of the Company, are available online at www.fmc-ag.de in the section Investor Relations/ Corporate Governance/ Articles of Association.

Fresenius Medical Care aims for a corporate governance that ensures the highest transparency possible. The Management Board of the General Partner manages the business of the Company. In addition to the Company’s Supervisory Board, Fresenius Medical Care Management AG has its own Supervisory Board.

Functioning of the Management Board and the Supervisory Board as well as Composition and Functioning of their Committees

The German Stock Corporation Act prescribes a dual management system for stock corporations (Aktiengesellschaft) as well as for partnerships limited by shares consisting of a management body and a supervisory board. The peculiarity in the case of the legal form of a KGaA is that its business activities are conducted by a personally liable shareholder (General Partner). In the case of Fresenius Medical Care AG & Co. KGaA, this is Fresenius Medical Care Management AG, whose Management Board is also responsible for conducting the business activities of the KGaA. Within the scope of statutory allocation of competences, the Supervisory Board is responsible for supervising and advising the Management Board and it is involved in making decisions that are fundamental to the Company. The duties and responsibilities of both bodies are clearly defined by legislation and are strictly separated from one another.

The General Partner and its bodies

The General Partner – Fresenius Medical Care Management AG – represented by its Management Board is responsible for managing the Company and conducting the Company’s business. Its actions and decisions are directed towards the interests of the Company. Within the scope of filling managerial positions, the Management Board considers diversity and especially female representation in terms of selection from professionally qualified candidates. About one third of the participants of the stock option programs, which are reserved for managers, are female. In the year under review, the Management Board of the General Partner was composed of seven members.

In addition to observing legislation, the Articles of Association and the principles as explained herein, the General Partner’s Management Board conducts the business activities of the Company in accordance with the applicable rules of procedure within the meaning of section 77 para. 2 of the German Stock Corporation Act (Aktiengesetz – AktG) and number 4.2.1 Sentence 2 of the German Corporate Governance Code. These rules of procedure define the principles of cooperation and provide for the schedule of responsibilities. Matters of special significance and scope are decided by the full Management Board in accordance with the rules of procedure. Deliberations of the Management Board are conducted by the Chairman of the Management Board or, if the latter is unavailable, by the Board member responsible for commercial matters or, if the latter is also unavailable, by the Board member who is the senior-most member in age of the Board Members present. The Chairman determines the order of the agenda items and the modus of voting. Unless unanimity or the acting of all Members of the Management Board is required by mandatory legal regulations or the Articles of Association, the Management Board adopts resolutions at meetings by simple majority of votes cast, and outside the meetings by simple majority of its members.

The rules of procedure determine that meetings of the Management Board are held as the circumstances require, but at least once a month. In practice, meetings of the Management Board generally take place twice a month.

In various cases, the rules of procedure require the Management Board to obtain the prior consent of the Supervisory Board or the competent Supervisory Board committee of the General Partner.

The Members of the Management Board and their areas of responsibility are introduced in the notes to the annual financial statements of Fresenius Medical Care AG & Co. KGaA for the year under review (the “notes”) under “Management Board of the General Partner Fresenius Medical Care Management AG” (www.fmc-ag.de in the section Investor Relations/ Publications 2012/ Financial Statements according to German law (HGB)), on the internet at www.fmc-ag.de in the section Our Company/ Management/ Management Board and in the “Management board” section.

As a stock corporation, Fresenius Medical Care Management AG also has its own Supervisory Board consisting of six members, which is chaired by Dr. Ulf M. Schneider. Other Members of the Supervisory Board of Fresenius Medical Care Management AG are Messrs. Dr. Dieter Schenk (Vice Chairman), Rolf A. Classon, William P. Johnston, Dr. Gerd Krick and Dr. Walter L. Weisman. As far as Members of the Supervisory Board of Fresenius Medical Care Management AG are also Members of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA, further information with regard to them can be found within the scope of information provided with regard to the Members of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA in the notes under the header “Supervisory Board” (www.fmc-ag.de in the section Investor Relations/ Publications 2012/ Financial Statements according to German law (HGB)), on the internet at www.fmc-ag.de in the section Our Company/ Management/ Supervisory Board and in the “Corporate report”. In addition to this, for the year under review the following information is provided with regard to Dr. Schneider, who is not a member of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA:

Dr. Ulf M. Schneider

Chairman of the Management
Board of Fresenius Management SE

Supervisory Boards

Fresenius Kabi AG (Chairman)
HELIOS Kliniken GmbH (Chairman)
Fresenius Medical Care Group France S.A.S.,
France (Chairman)
Fresenius Kabi España S.A.U., Spain
Fresenius HemoCare Netherlands B.V.,
The Netherlands
FPS Beteiligungs AG (Chairman; as of 25 April 2012)

Others

Fresenius Kabi USA, Inc., USA (Board of Directors)
FHC (Holdings), Ltd., Great Britain
(Board of Directors)

The Supervisory Board of Fresenius Medical Care Management AG appoints the Members of the Management Board and supervises and advises the Management Board in its management responsibilities. In accordance with number 5.1.3 of the German Corporate Governance Code, the Supervisory Board has established rules of procedure. Unaffected by the independence requirements according to statutory rules and to the demands of the German Corporate Governance Code, Fresenius Medical Care Management AG has committed itself by virtue of a so-called Pooling Agreement with Fresenius SE & Co. KGaA (inter alia) to a specific form of independence as defined therein. Pursuant to the Pooling Agreement, an “independent member” is a member of the Supervisory Board with no substantial business or professional relationship with Fresenius Medical Care AG & Co. KGaA, its General Partner, Fresenius SE & Co. KGaA, or its General Partner Fresenius Management SE, or any affiliates of these companies.

Supervisory Board of the Company

The Supervisory Board of Fresenius Medical Care AG & Co. KGaA advises and supervises the business activities as conducted by the General Partner and performs the other duties assigned to it by law and by the Articles of Association. It is involved in strategy and planning as well as all matters of fundamental importance for the Company.

The Supervisory Board of Fresenius Medical Care AG & Co. KGaA consists of the following six members: Dr. Gerd Krick (Chairman), Dr. Dieter Schenk (Vice Chairman), Rolf A. Classon, Prof. Dr. Bernd Fahrholz, William P. Johnston and Dr. Walter L. Weisman. Further information on the Members of the Supervisory Board can be found in the notes under the header “Supervisory Board” (www.fmc-ag.de in the section Investor Relations/ Publications 2012/ Financial Statements according to German law (HGB)), on the internet at www.fmc-ag.de in the section Our Company/ Management/ Supervisory Board and in the“Directorships”.

All Members of the Supervisory Board are elected by the General Meeting of Fresenius Medical Care AG & Co. KGaA as the competent election body according to the provisions of the German Stock Corporation Act. Such resolution of the General Meeting requires a majority of at least three quarters of the votes cast. Fresenius SE & Co. KGaA is excluded from voting on this issue (further explanations on this matter can be found under “Further Information regarding Corporate Governance” in the section titled “Shareholders”). When discussing its recommendations for the election of Members of the Supervisory Board to the General Meeting, the Supervisory Board will take into account the international activities of the enterprise, potential conflicts of interest, what it considers an adequate number of independent Supervisory Board Members and diversity. This includes the aim to establish an appropriate female representation on a long-term basis. As the composition of the Supervisory Board needs to be aligned with the interests of the enterprise and has to ensure the effective supervision and consultation of the Management Board, it is a matter of principle and of prime importance that each member is suitably qualified. In the enterprise’s interest not to limit the selection of qualified candidates in a general way, the Supervisory Board confines itself to a general declaration of intent and particularly refrains from fixed diversity quotas and from an age limit. Therefore, the Supervisory Board has overall refrained from determining and taking into account specific objectives with respect to its composition when proposing candidates and from publishing the state of their implementation in the Corporate Governance Report. Accordingly, non-compliance is declared in the declaration of compliance of the 2012 financial year insofar. The declaration of compliance is included hereinafter, and can also be viewed on the Company’s website under www.fmc-ag.de in the section Investor Relations/ Corporate Governance/ Declaration of Compliance.

There is a strict separation between the Members of the Supervisory Board and those of the Management Board: simultaneous membership in both the Supervisory Board and the Management Board is not compatible with the law. In the year under review, the Supervisory Board did not include any members who were also Members of the General Partner’s Management Board during the previous two years. The Members of the Company’s Supervisory Board are independent in their decisions and are not bound by requirements or instructions of third parties.

The Supervisory Board consists of what it considers an adequate number of independent members, who also do not entertain any personal or business relations with the company, its corporate bodies, a controlling shareholder or an enterprise associated with the latter which may cause a substantial and not merely temporary conflict of interests. Details on the treatment of potential conflicts of interests are set out in the section “Legal relationships with members of the Company’s corporate bodies” below.

The term of office of the Members of the Supervisory Board is five years; the current term of office ends on conclusion of the General Meeting for 2016.

Details on the election, constitution and term of office of the Supervisory Board, its meetings and the adoption of resolutions, as well as its rights and obligations, are set out in Articles 8 et seq. of the Company’s Articles of Association, which can be viewed on the Company’s website under www.fmc-ag.de in the section Investor Relations/ Corporate Governance/ Articles of Association. According to number 5.1.3 of the German Corporate Governance Code, the Supervisory Board has furthermore adopted rules of procedure which set out, among other things, the modalities for convening meetings and the manner in which resolutions are adopted. Accordingly, the Supervisory Board meets at least twice per calendar half year. The deliberations of the Supervisory Board are conducted by the Chairman or, if the latter is unavailable, by his deputy, who also determines the order of the agenda items and the type of voting. As a rule, the Supervisory Board decides by simple majority of votes cast unless other majorities are prescribed by a mandatory provision of law. The Chairman of the Supervisory Board is responsible for coordinating and directing the Supervisory Board and represents the Supervisory Board vis-à-vis third parties.

In accordance with number 5.6 of the German Corporate Governance Code, the Members of the Supervisory Board regularly carry out efficiency evaluations with regard to their work. These take place in the form of open discussions in plenary meetings. On these occasions, also the complexity and the design of the presentations, as well as the meetings’ procedure and structuring are discussed. The results of the evaluations carried out show that each of the Supervisory Board and the committees are efficiently organised and that the co-operation of the Supervisory and Management Boards of the General Partner works very well, too.

The Members of the Supervisory Board regularly update themselves via in-house sources and via external sources about the current status of supervisory requirements. In addition to information provided to them by several external experts, also experts of the Company’s departments regularly provide reports about relevant developments, such as – for example – relevant new developments in the revision of legal rules or in jurisprudence and also about recent developments in regulations on accounting according to U.S. GAAP and IFRS. In this way, the Supervisory Board, with the Company’s reasonable assistance, ensures an ongoing qualification of its members and also a further development and updating of their expertise, power of judgment and experience, which is required for the Supervisory Board including its committees to duly perform their tasks.

In the year under review, five meetings of the Supervisory Board – partly lasting for several days – and several telephone conferences have taken place. Significant discussion topics have been the effects of the changes in the cost reimbursement system in the U.S., consequences of the worldwide economic situation for opportunities and risks for the development of the Company’s business, possibilities to extent the current business as well as product innovations in development.

Further details about the aforementioned members’ memberships in other statutory supervisory boards or in comparable domestic or foreign supervisory committees of business enterprises can be found in the notes to the financial statements under “Supervisory Board” (www.fmc-ag.de in the section Investor Relations / Publications 2012 / Financial Statements according to German law (HGB)), on the internet at www.fmc-ag.de in the section Our Company / Management / Supervisory Board and in the “Corporate report”.

Committees of the Supervisory Boards

A) Committees of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA

From the midst of its members, the Supervisory Board of Fresenius Medical Care AG & Co. KGaA forms two standing committees, the Audit and Corporate Governance Committee and the Nomination Committee. Furthermore, there is a Joint Committee consisting of two members from each the Supervisory Board of the Company and the Supervisory Board of the General Partner.

Audit and Corporate Governance Committee

The Supervisory Board of Fresenius Medical Care AG & Co. KGaA established an Audit and Corporate Governance Committee. During the year under review Messrs. Dr. Walter L. Weisman (Chairman), Prof. Dr. Bernd Fahrholz (Vice Chairman), Dr. William P. Johnston and Dr. Gerd Krick were members of this Committee.

The Audit and Corporate Governance Committee assists and advises the Supervisory Board and performs the duties incumbent on it by law and in accordance with the German Corporate Governance Code. Without prejudice to the responsibilities of the Supervisory Board, it also reviews the report of the General Partner on relationships with affiliated companies. In addition, the Audit and Corporate Governance Committee examines the report according to Form 20-F, which in addition to other disclosures includes the consolidated financial statements and the Group management report.

With the consent of the Supervisory Board, the Audit and Corporate Governance Committee adopted rules of procedure. The rules of procedure of the Audit and Corporate Governance Committees provide that between three and five members may belong to this Committee. The chairman shall not be a former member of the Management Board of the Company. All members of the Audit and Corporate Governance Committee must be independent within the meaning of the Articles of Association of the Company (section 12 para. 2 sentence 3), which means that, apart from their membership in the Supervisory Board of the General Partner, they do not have any substantial business, professional or personal relationship with the Company or any of its affiliates. The question of independence is assessed solely by the Supervisory Board of the Company, with such independence as a rule being assumed where the member in question satisfies the requirements for independence pursuant to section 100 para. 5 of the German Stock Corporation Act and those of the New York Stock Exchange. Furthermore, members of the Audit and Corporate Governance Committee are required to possess expert knowledge in the finance and accounting sector. All members are independent within this meaning and were appointed to the Committee based on their specialist knowledge, their independence and their experience.

The Audit and Corporate Governance Committee convenes as circumstances require, but at least four times a year in any case. Meetings of the Audit and Corporate Governance Committee are lead by its chairman. A quorum of the body is constituted by the majority of its members. Subsequent to the meetings, the Audit and Corporate Governance Committee reports regularly through its chairman to the Supervisory Board of the Company and together with the latter addresses issues falling under the responsibility of the committee. In consultation with the Audit and Corporate Governance Committee, the Supervisory Board proposed KPMG AG Wirtschaftsprüfungsgesellschaft as auditor of the annual financial statements for the year under review.

Nomination Committee

In accordance with number 5.3.3 of the German Corporate Governance Code, the Supervisory Board has furthermore established a Nomination Committee. In the year under review, the Company’s Nomination Committee included Dr. Gerd Krick (Chairman), Dr. Walter L. Weisman and Dr. Dieter Schenk. The Nomination Committee prepares Supervisory Board candidate proposals, and suggests suitable candidates to the Supervisory Board for the latter’s nomination proposals to the General Meeting. In the year under review, the Nomination Committee was not convened as there was no demand to do so.

Joint Committee

Since 2006, Fresenius Medical Care AG & Co. KGaA has established a Joint Committee whose composition and activity is provided for in Articles 13a et seq. of the Articles of Association of the Company; these provisions can be viewed on the Company’s website under www.fmc-ag.de in the section Investor Relations/ Corporate Governance/ Articles of Association. The Joint Committee is convened only as required, namely in cases of certain legal transactions defined in the Articles of Association as substantial transactions and for which the General Partner requires the consent of this body.

The Joint Committee is composed of two members of the Supervisory Board of the General Partner and two members of the Supervisory Board of the Company, with the chairman of this body being appointed by the General Partner. For the General Partner, Dr. Ulf M. Schneider and Dr. Gerd Krick have been named as members of the Joint Committee. By resolution of May 12, 2011, the General Meeting of the Company furthermore appointed Dr. Walter L. Weisman and William P. Johnston as members of the Joint Committee for Fresenius Medical Care AG & Co. KGaA.

The Joint Committee constitutes a quorum if at least three members are attending a meeting. As a rule, resolutions are adopted by simple majority of votes. When the Joint Committee has met, it reports to the General Meeting on its work; in this regard, section 171 para. 2 sentence 1 and sentence 2 (first half-sentence) as well as section 176 para. 1 sentence 1 of the German Stock Corporation Act apply mutatis mutandis. If resolutions have been adopted by the second vote being cast by the chairman, this fact must be disclosed in the report of the Joint Committee.

In the year under review, the Joint Committee was not convened as the requirements for a meeting have not been fulfilled.

Further details on the memberships of members of the aforementioned committees in other statutory supervisory boards or in comparable domestic or foreign supervisory committees of business enterprises can be found in the notes to the financial statements under “Supervisory Board” (www.fmc-ag.de in the section Investor Relations / Publications 2012 / Financial Statements according to German law (HGB)) and on the internet at www.fmc-ag.de in the section Our Company/ Management/ Supervisory Board.

B) Committees of the Supervisory Board of the General Partner

Furthermore, at the level of the Supervisory Board of the General Partner, Fresenius Medical Care Management AG, further Committees have been in place. The purpose of these committees is to raise the efficiency of the Supervisory Board’s work and to deal with special issues of a complex nature, such as the composition and compensation of the Management Board, candidate proposals of the Supervisory Board of the General Partner as well as regulatory requirements and reimbursement of services in the dialysis field. These committees act only in a consulting capacity.

In the year under review, the Human Resources Committee was composed of Dr. Ulf M. Schneider (Chairman), Dr. Gerd Krick, Mr. William P. Johnston and Dr. Walter L. Weisman.

In the year under review, members of the Regulatory and Reimbursement Assessment Committee were Messrs. William P. Johnston (Chairman), Rolf A. Classon (Vice Chairman) and Dr. Dieter Schenk.

Corresponding to number 5.3.3 of the German Corporate Governance Code, the Supervisory Board has furthermore established a Nomination Committee. In the year under review, the Nomination Committee of the General Partner’s Supervisory Board included Dr. Ulf M. Schneider (Chairman), Dr. Gerd Krick (Deputy Chairman) and Dr. Walter L. Weisman. The Nomination Committee prepares Supervisory Board candidate proposals, and suggests suitable candidates to the General Partner’s Supervisory Board for the latter’s nomination proposals to its General Meeting. In the year under review, the Nomination Committee was not convened as there was no demand to do so.

Further details about the aforesaid members’ membership in other statutory Supervisory Boards or in comparable domestic or foreign supervisory committees of business enterprises can be found in the notes to the financial statements under “Supervisory Board” (www.fmc-ag.de in the section Investor Relations/ Publications 2012/ Financial Statements according to German law (HGB)), on the internet at www.fmc-ag.de in the section Our Company / Management / Supervisory Board and in the “Corporate report”.

Co-operation of General Partner and Supervisory Board of the Company

Good corporate governance requires an efficient co-operation between the management and the Supervisory Board on the basis of mutual trust. The General Partner and the Supervisory Board of the Company work together closely in the Company’s interest: their joint goal is to increase the Company’s value in the long term in compliance with the corporate governance principles and compliance regulations. The General Partner regularly informs the Company’s Supervisory Board about all relevant issues regarding business policy, corporate planning and strategic enhancement, about the profitability of the Company as well as the development of business and the Group’s position including an assessment of the risk situation. In the expired fiscal year, the Supervisory Board regularly advised the management, i. e. the Management Board of the General Partner, on the Company’s management and supervised it in line with its responsibility as Supervisory Board of the partnership limited by shares.

Relevant information on corporate governance practices

Compliance

Global business activities result in global responsibility. As the global market leader in dialysis, Fresenius Medical Care is aware of its responsibility.

We are committed to conduct the Company’s business activities in compliance with local laws and regulations. We seek to demonstrate professionalism, honesty and integrity in the business relationships with our patients, customers, suppliers and other business partners, with the public authorities and the payors within the healthcare system, with our employees, shareholders and the general public.

For us, compliance means adhering to defined ethical and legal guidelines as part of our business activities. Observing compliance guidelines is an integral part of our corporate culture. We have implemented Fresenius Medical Care’s compliance program in all of our business regions. Thus, our compliance guidelines apply to all our subsidiaries.

Our compliance program comprises of a code of conduct that has been approved by the Management Board. The code of conduct applies worldwide in every business section and combines our longterm interests with those of our partners. It describes our Company’s business standards and emphasizes our commitment to operate in accordance with the applicable laws and regulations and with our own company policies. The code of conduct is based on the core values of our Company: quality, honesty and integrity, innovation and improvement, respect, teamwork and dignity. Our corporate culture and policy as well as our entire business activities are guided by these values. Each employee is called on to ensure, by complying with the laws as well as the guidelines and rules of the code of conduct, that Fresenius Medical Care is appreciated as a partner of integrity and reliability in the healthcare system for patients, customers, suppliers, public authorities and the general public.

All employees have the possibility of reporting suspected violations of applicable laws or company policies. Information on violations may also be provided anonymously.

Further details can be obtained from the code of conduct published on the website of the Company at www.fmc-ag.de in the section Our Company/ Compliance/ Code of Conduct.

In his capacity as the Chief Compliance Officer, the member of the Management Board responsible for compliance regularly provides a compliance update to the Audit and Corporate Governance Committee of Fresenius Medical Care AG & Co. KGaA and to the Supervisory Board of Fresenius Medical Care Management AG.

We continued our compliance training activities in 2012. As part of this training, local compliance officers were given the opportunity at conferences to exchange their experiences with the compliance officers from their respective business regions. As the chart below shows, these officers are assigned a key role: They are responsible that each employee is informed about our code of conduct and its goals. At the same time, they are responsible for related training measures. Compliance officers act as contacts for our employees and can be reached via special telephone numbers or by e-mail. Of course, our local compliance officers can also be approached in person.

In the year under review, we strengthened the network and global cooperation within our compliance organization and promoted the exchange on company- wide compliance topics by hosting our compliance conferences in several regions.

Organisationsstruktur des Compliance-Programms

In addition, we have leveraged current resources to strategically strengthen our compliance program through initiatives like online employee training and increased communication within the Company.

Our compliance program is also an integral part of our risk and opportunity management.

Risk and Opportunity Management

At Fresenius Medical Care, an integrated management system is in place to ensure that risks and opportunities are already identified at an early stage, optimizing the risk profile and minimizing the costs potentially related to the occurrence of risks through timely intervention. Our risk management is therefore an important component of the corporate management of Fresenius Medical Care. The adequateness and effectiveness of our internal control systems for the financial reporting are reviewed on a regular basis by the Management Board and by our auditor.

Further information about the risk and opportunity management system, our internal control system for the financial reporting and the compliance program can be found in the risk management section of the management report, on the internet under www.fmc-ag.de in the section Investor Relations / Publications 2012 / Financial Statements according to German law (HGB) and in the “Corporate report”.

German corporate governance code and declaration of compliance

The German Corporate Governance Code includes key recommendations for the management and supervision of companies listed on a German stock exchange with the aim of making the rules for managing and supervising companies in Germany more transparent for investors. The code is also intended to enhance the trust of the public as well as that of employees and customers in the management and supervision of listed stock corporations.

The Management Board of Fresenius Medical Care Management AG and the Supervisory Board of Fresenius Medical Care AG & Co. KGaA endorse the principles set forth in the German Corporate Governance Code. The majority of the guidelines, recommendations and suggestions in the code have been an integral and active part of Fresenius Medical Care’s day-to-day operations since the founding of the Company. Comprehensive information regarding corporate governance is available on our website at www.fmc-ag.de in the Investor Relations section.

The annually required Declaration of Compliance according to section 161 of the German Stock Corporation Act issued by the Management Board of Fresenius Medical Care Management AG and the Supervisory Board of Fresenius Medical Care AG & Co. KGaA as of December 2012 as well as previous Declarations of Compliance are made permanently available to shareholders according to section 161 para. 2 of the German Stock Corporation Act and number 3.10 of the German Corporate Governance Code among other extensive information on corporate governance on the Company’s website at www.fmc-ag.de in the section Investor Relations/ Corporate Governance/ Declaration of Compliance.

Declaration by the Management Board of the general partner of Fresenius Medical Care AG & Co. KGaA, Fresenius Medical Care Management AG, and by the Supervisory Board of Fresenius Medical Care AG & Co. KGaA on the German Corporate Governance Code pursuant to Section 161 German Stock Corporation Act (Aktiengesetz)

The Management Board of the general partner of Fresenius Medical Care AG & Co. KGaA, Fresenius Medical Care Management AG, (hereafter the Management Board) and the Supervisory Board of Fresenius Medical Care AG & Co. KGaA declare that since issuance of the previous declaration of compliance in December 2011 the recommendations of the “German Corporate Governance Code Government Commission” published by the Federal Ministry of Justice in the official section of the Federal Gazette (hereafter the Code) in the version of May 26, 2010 as well as in the version of May 15, 2012 since its publication in the Federal Gazette have been met and that the recommendations of the Code in the version of May 15, 2012 will be met in the future. Only the following recommendations have not been and will not be met:

Code number 4.2.3 paragraph 4:
Severance payment cap

Pursuant to code number 4.2.3 paragraph 4, in concluding Management Board contracts, care shall be taken to ensure that payments made to a Management Board member on premature termination of his/her contract, including fringe benefits, do not exceed the value of two years’ compensation (severance payment cap) and compensate no more than the remaining term of the employment contract. The severance payment cap shall be calculated on the basis of the total compensation for the past full financial year and if appropriate also the expected total compensation for the current financial year.

These recommendations are not met insofar as the employment contracts of the Members of the Management Board do not contain severance payment arrangements for the case of premature termination of the contract and consequentially do not contain a limitation of any severance payment amount. Uniform severance payment arrangements of this kind would contradict the concept practiced by Fresenius Medical Care in accordance with the German Stock Corporation Act according to which employment contracts of the Members of the Management Board are, in principle, concluded for the period of their appointment. They would also not allow for a well-balanced assessment in the individual case.

Code number 5.1.2 paragraph 2 sentence 3:
Age limit for Members of the Management Board

Pursuant to code number 5.1.2 paragraph 2 sentence 3 an age limit shall be specified for Members of the Management Board. As in the past, Fresenius Medical Care will refrain from determining an age limit for Members of the Management Board in the future since this would unduly limit the selection of qualified candidates.

Code number 5.4.1 paragraph 2 and paragraph 3:
Specification of concrete objectives regarding the composition of the Supervisory Board and their consideration when making recommendations to the competent election bodies

Pursuant to code number 5.4.1 paragraph 2 and paragraph 3, the Supervisory Board shall specify concrete objectives regarding its composition and, when making recommendations to the competent election bodies, take these objectives into account. The objectives specified by the Supervisory Board and the status of the implementation shall be published in the Corporate Governance Report. These recommendations are not met.

As the composition of the Supervisory Board needs to be aligned to the enterprise’s interest and has to ensure the effective supervision and consultation of the Management Board, it is a matter of principle and of prime importance that each member is suitably qualified. When discussing its recommendations to the competent election bodies, the Supervisory Board will take into account the international activities of the enterprise, potential conflicts of interest, the number of independent Supervisory Board Members within the meaning of code number 5.4.2, and diversity. This includes the aim to establish an appropriate female representation on a longterm basis.

However, in the enterprise’s interest not to limit the selection of qualified candidates in a general way, the Supervisory Board confines itself to a general declaration of intent and particularly refrains from fixed diversity quotas and from an age limit. As the next regular elections of the Supervisory Board will take place in the year 2016, reasonably a report on implementation of the general declaration of intent cannot be made till then.

Bad Homburg, December 2012
Management Board of the general partner of
Fresenius Medical Care AG & Co. KGaA,
Fresenius Medical Care Management AG, and
Supervisory Board of Fresenius Medical
Care AG & Co. KGaA

Further information regarding corporate governance

Shareholders

Company shareholders exercise their rights and voting powers in the General Meeting. Each ordinary share of Fresenius Medical Care AG & Co. KGaA entitles the holder to one vote at the General Meeting. The preference shares of Fresenius Medical Care AG & Co. KGaA do not grant any voting rights. As compensation, preference shareholders receive a preference in earnings distribution and a higher dividend. Shares with multiple or preference voting rights do not exist. As a matter of principle, the General Partner (as far as it would be a shareholder in the Company, which was not the case in the year under review), respectively, its sole shareholder, Fresenius SE & Co. KGaA, can exercise at the General Meeting the voting rights connected with the ordinary shares it holds in Fresenius Medical Care AG & Co. KGaA. However, the General Partner and its sole shareholder are subject to various rules preventing them by law from voting on certain resolutions. These include, among others, the election of the Supervisory Board, formal approval of the actions of the General Partner and the Members of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA, as well as the election of the auditor of the annual financial statements. This is to guarantee that the shareholders in the partnership limited by shares (KGaA) can solely decide on these matters, particularly those concerning the control of the Management.

General Meeting

According to the principles of the German Stock Corporation Act (Aktiengesetz), shareholders can exercise their voting rights at the Annual General Meeting themselves, by proxy via a representative of their choice, or by a company-nominated proxy acting on their instructions. Proxy voting instructions to a company nominee can be issued before and during the Annual General Meeting until the end of the open discussion period.

In the year under review, the Annual General Meeting of Fresenius Medical Care AG & Co. KGaA took place on May 10, 2012 in Frankfurt/Main (Germany). Approximately 78% of the ordinary share capital and approximately 2% of the preference share capital were represented. In 2011, more than 79% of the ordinary share capital and about 2.2% of the preference share capital were represented at the Annual General Meeting. All shareholders who were not able to participate had the possibility to follow the speech of the Chairman of the Management Board live on the internet. At the Annual General Meeting, resolutions were passed on the following topics:

  • approval of the annual financial statements for the fiscal year 2011,
  • allocation of distributable profit,
  • approval of the actions of the General Partner and the Supervisory Board,
  • election of the auditors and consolidated group auditors for the fiscal year 2012,
  • resolution on the amendment to section 12 para. 2 sentence 2 of the Company’s articles of association (composition of the Audit and Corporate Governance Committee).

All documents and information about the General Meeting and in particular the voting results and the speech of the Chairman of the Management Board are available on our website at www.fmc-ag.de in the section Investor Relations/Annual General Meeting.

Legal relationships with members of the Company’s corporate bodies

When making decisions and in connection with the tasks and activities performed by them, the Members of the Management Board of the General Partner and of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA, as well as the Supervisory Board of Fresenius Medical Care Management AG, do not pursue personal interests or give unjustified advantages to other people. Any outside activities or business dealings with the Company by members of the corporate bodies are to be disclosed to the Supervisory Board immediately and are subject to its approval, if necessary. The Supervisory Board reports to the General Meeting about possible conflicts of interests and how to deal with them. Furthermore, Dr. Ben J. Lipps as the Chairman of Fresenius Medical Care Management AG’s Management Board, in the year under review, with the approval of Fresenius Medical Care Management AG’s Supervisory Board, without a change remained at the same time a member of the Management Board of Fresenius Management SE. The Members of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA Dr. Krick (Chairman) and Dr. Schenk (Vice Chairman) were, in the year under report, also Members of the Supervisory Board of Fresenius Medical Care Management AG (Dr. Schenk as Vice Chairman) and of the Supervisory Board of Fresenius Management SE (Dr. Krick as Chairman, Dr. Schenk as Deputy Chairman), the general partner of Fresenius SE & Co. KGaA. Furthermore, Dr. Krick is the Chairman of the Supervisory Board of Fresenius SE & Co. KGaA. Dr. Schenk continues to be chairman of the administrative board of the Else Kröner-Fresenius-Stiftung, the sole shareholder of Fresenius Management SE as well as limited shareholder of Fresenius SE & Co. KGaA, and co-executor of the estate of Mrs. Else Kröner. Dr. Krick receives a pension from Fresenius SE & Co. KGaA due to his previous work on the Management Board of the company. During the year under review, consulting or other service relationships between Members of the Supervisory Board and the Company existed only in the case of Dr. Schenk, who was in the year under review a member of the Supervisory Board of the Company and of the Supervisory Board of Fresenius Medical Care Management AG, a member of the Supervisory Board of Fresenius Management SE and, at the same time, a partner of the law firm Noerr LLP. In the year under review, the companies of the internationally operating law firm Noerr acted for Fresenius Medical Care AG & Co. KGaA and affiliated companies as legal advisor. The Supervisory Board of Fresenius Medical Care Management AG and the Supervisory Board of Fresenius Medical Care AG & Co. KGaA have concerned themselves with each of the assignments in a detailed manner; moreover, the Supervisory Board dealt with the fee volume for the legal advice rendered by the law firm Noerr in proportion to the fee volume for other law firms. As regards specific mandates for future services to be provided by law firm Noerr and as regards the first three quarters of the year under review, the Supervisory Board of Fresenius Medical Care Management AG and the Supervisory Board of Fresenius Medical Care AG & Co. KGaA have already given their consent to such activity, with Dr. Schenk abstaining from the vote. The resolutions were in each case passed on the basis of a written document for the Supervisory Board specifically stating each single mandate and the invoices rendered for each mandate. All payments rendered to the law firm Noerr in the year under review were made only after the approval of both Supervisory Boards. Any services rendered in the fourth quarter of the year under review will presumably be topic of the Supervisory Board’s Meeting in March 2013 and will also be compensated only after approval has been obtained.

In the year under review, an amount of approximately €1.4 M (plus VAT) was paid or processed for payment in December 2012 by Fresenius Medical Care to law firm Noerr (2011: approximately €1.4 MIO). This represents less than 3% of Fresenius Medical Care’s worldwide legal and other consultancy fees.

Information on Directors’ Dealings and Shareholding

According to section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG), Members of the Management and Supervisory Boards or other employees in management positions are required to inform the Company when buying or selling shares in Fresenius Medical Care and related financial instruments if the volume exceeds €5,000 within a single year. During fiscal year 2012, we received a total of fifteen disclosures according to section 15a of the German Securities Trading Act, on which further information is provided in the chart 2.13.3.

In accordance with applicable regulation, we have published these disclosures on our website at www.fmc-ag.de in the section Investor Relations/Corporate Governance/Directors’ Dealings/Single Dealings.

T. 2.13.3

Director’s Dealings 2012

 
 
Notifying Date Issuer Notifying Party Transaction
       
March 9, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Ben J. Lipps,
Chairman of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
March 6, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Sale
Quotation/Price per Share: €52,60550
Quantity: 70,935
Amount: €3,731,571.14
Place: XETRA
Comments: Sale of Ordinay Shares
March 14, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Walter L. Weisman,
Member of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA
Date of Transaction:
March 9, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ADR; ISIN US 3580291066)
Type of Transaction: Purchase
Quotation/Price per Share: $68.17
Quantity: 2,000
Amount: $136,340.00
Place: NYSE
Comments: Purchase of Ordinay Shares (ADR)
March 27, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Rolf A. Classon,
Member of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA
Date of Transaction:
March 23, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ADR; ISIN US 3580291066)
Type of Transaction: Purchase
Quotation/Price per Share: $68.50
Quantity: 2,857
Amount: $195,714.49
Place: NYSE
Comments: Purchase of Ordinay Shares (ADR)
May 16, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Emanuele Gatti,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
May 17, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €52.60
Quantity: 25,469
Amount: €1,339,669.40
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
May 16, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Ben J. Lipps,
Chairman of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
May 17, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €52,692998
Quantity: 99,600
Amount: €5,248,222.80
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
June 6, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Michael Brosnan,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
June 5, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €53.71
Quantity: 1,140
Amount: €61,229.40
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
June 26, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Roberto Fusté,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
June 26, 2012
Bezeichnung des Wertpapiers/Finanzinstruments:
Fresenius Medical Care AG & Co. KGaA Stammaktie (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €54,522365
Quantity: 10,469
Amount: €570,794.64
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
November 16, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Rainer Runte,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
November 13, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €52,997595
Quantity: 35,469
Amount: €1,879,771.70
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
November 16, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Rainer Runte,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
November 13, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Purchase
Quotation/Price per Share: €52,08648333
Quantity: 600
Amount: €31,567.51
Place: XETRA
Comments: Purchase of ordinary shares
November 23, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Emanuele Gatti,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
November 23, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €51,615761
Quantity: 45,000
Amount: €2,322,709.25
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
November 30, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Roberto Fusté,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
November 28, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €51,187736
Quantity: 40,275
Amount: €2,061,586.07
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
December 12, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Michael Brosnan,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
December 7, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €53,703031
Quantity: 2,280
Amount: €122,442.84
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
December 12, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Ben J. Lipps,
Chairman of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
December 10, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €54,0828
Quantity: 199,200
Amount: €10,773,293.76
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)
December 12, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Dr. Ben J. Lipps,
Chairman of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
December 11, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Purchase
Quotation/Price per Share: €53,9688
Quantity: 55,000
Amount: €2,968,284.00
Place: XETRA
Comments: Purchase of ordinary shares
December 14, 2012 Fresenius Medical Care AG & Co. KGaA, 61346 Bad Homburg v.d.H. Roberto Fusté,
Member of the Management Board of Fresenius Medical Care Management AG
Date of Transaction:
December 13, 2012
Title of Security / Right:
Fresenius Medical Care AG & Co. KGaA Ordinary Share (ISIN DE 0005785802)
Type of Transaction: Exercise of stock options against cash settlement
Quotation/Price per Share: €54,193635
Quantity: 4,773
Amount: €258,666.22
Place: XETRA
Comments: Exercise of stock options on Fresenius Medical Care shares of the stock option plan and sale of the shares (cash settlement)

Transparency of our Reporting

Fresenius Medical Care meets all transparency requirements imposed by number 6 of the German Corporate Governance Code. We attach special importance to informing our shareholders simultaneously and uniformly about our Company in our regular financial reporting events. Ad hoc releases and our corporate website play an essential role in these efforts. They provide investors and other interested persons equally with direct and timely access to the information we release.

All ad hoc releases as well as other news are published on our website at www.fmc-ag.de in the section Investor Relations/ News. We keep our shareholders informed of key dates on the website of Fresenius Medical Care at www.fmc-ag.de in the section Investor Relations/ Financial Calendar.

Financial Accounting and Audit, Stock Exchange Listing

Fresenius Medical Care prepares its consolidated financial statements in accordance with the United States Generally Accepted Accounting Principles (U.S. GAAP) and in U.S. dollars. In line with this, the consolidated financial statements as well as the interim consolidated quarterly reports are also prepared in accordance with these principles. The consolidated financial statements are published within the first 90 days of the end of each fiscal year, and the quarterly reports within the first 45 days of the end of each quarter.

As required by law, consolidated financial statements and a Group management report as well as quarterly reports continue to be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

The annual financial statements and the management report of Fresenius Medical Care AG & Co. KGaA are prepared in accordance with the German Commercial Code (Handelsgesetzbuch, HGB). The annual financial statements are decisive for the distribution of the annual profit.

Moreover, an annual report of Fresenius Medical Care, which equally reflects the requirements of U.S. GAAP and the German Commercial Code, is published each year.

Fresenius Medical Care shares are listed on the stock exchange in the U.S. (as American Depositary Receipts) and in Germany. We are therefore subject to a number of regulations and recommendations regarding the management, administration and monitoring of our Company. On the one hand, in addition to mandatory requirements under stock corporation and commercial law, we comply with the regulations of Deutsche Börse and adhere to most of the recommendations of the German Corporate Governance Code. On the other hand, being a non U.S. company (a “foreign private issuer”) we are subject to the regulations connected to our listing in the U.S. Observance of the Sarbanes-Oxley Act (SOX) and portions of the Corporate Governance Rules of the New York Stock Exchange in particular is required. The Sarbanes-Oxley Act includes provisions governing companies and their auditors and is aimed at improving financial reporting, ensuring auditor independence and implementing other matters. The extension of regulations for financial reporting and internal control systems is intended to increase the trust of investors and other parties interested in the Company. We fully meet all of the current requirements applicable to our Company.

Fresenius Medical Care’s declaration concerning significant differences between the systems of corporate governance in Germany and the U.S. – which is based on the listing standards of the New York Stock Exchange – can be accessed on the internet under www.fmc-ag.de in the section Investor Relations/ Corporate Governance/ NYSE-Declaration.

Compensation report

The compensation report of Fresenius Medical Care AG & Co. KGaA summarizes the main elements of the compensation system for the Members of the Management Board of Fresenius Medical Care Management AG as general partner of Fresenius Medical AG & Co. KGaA and in this regard notably explains the amounts and structure of the compensation paid to the Management Board. Furthermore, the principles and the amount of the remuneration of the Supervisory Board are described. The compensation report is part of the management report of the annual financial statements and the annual consolidated group financial statements of Fresenius Medical Care AG & Co. KGaA as of December 31, 2012. The compensation report is prepared on the basis of the recommendations of the German Corporate Governance Code and also includes the disclosures as required pursuant to the applicable statutory regulations, notably in accordance with the German Commercial Code (HGB).

Compensation of the Management Board

The entire Supervisory Board of Fresenius Medical Care Management AG is responsible for determining the compensation of the Management Board. The Supervisory Board is assisted in this task by a personnel committee, the Human Resources Committee. In the year under review, the Human Resources Committee was composed of Dr. Ulf M. Schneider (Chairman), Dr. Gerd Krick (Vice Chairman), William P. Johnston and Dr. Walter L. Weisman.

I. Structure and amount of compensation

The current Management Board compensation system was last approved by resolution of the General Meeting of Fresenius Medical Care AG & Co. KGaA on May 12, 2011, with a majority of 99.71% of the votes cast. Furthermore, this Management Board compensation system was reviewed by an independent external compensation expert at the beginning of the year under review.

The objective of the compensation system is to enable the Members of the Management Board to participate reasonably in the sustainable 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.

The compensation of the Management Board is, as a whole, performance-based and was composed of three elements in fiscal year 2012:

  • non-performance-based compensation (base salary),
  • performance-based compensation (variable bonus),
  • components with long-term incentive effects (stock options, share-based compensation with cash settlement).

The individual components are designed on the basis of the following criteria:

In fiscal year 2012, the non-performance-based compensation was paid in monthly installments, or with respect to several US resident Members of the Management Board in bi-weekly installments as base salary. Moreover, the Members of the Management Board received additional benefits consisting mainly of payment for insurance premiums, the private use of company cars, special payments such as foreign supplements, rent supplements, reimbursement of fees for the preparation of tax returns and reimbursement of certain other charges and additional contributions to pension and health insurance.

Performance-based compensation will also be awarded for the fiscal year 2012 as a short-term cash component (annual bonus) and a longer-term share-based compensation component (stock options, share-based compensation with cash settlement). The amount of the performance-based compensation component in each case depends on the achievement of individual and common targets:

The targets used to determine bonus awards for the Members of the Management Board are measured by growth of consolidated after-tax earnings (EAT growth), the development of free cash flow (cash flow before acquisitions) and operating profit margin. All values are derived from the comparison of target amounts and actual results. Furthermore, targets are divided into Group level (consolidated) targets and those to be achieved in individual regions. Lastly, the various target parameters are weighted differently by their relative share in the aggregate amount of variable compensation depending on the respective (regional) areas of responsibility assumed by the Members of the Management Board.

Variable compensation was based upon EAT growth of at least 6% in the year under review, with the maximum bonus payable upon achievement of EAT growth of 15% (cap). Furthermore, the Members of the Management Board assuming Group functions and the Members of the Management Board with regional responsibilities were also evaluated by reference to the development of free cash flow within the Group or in the relevant regions, respectively, during the period under review, with the targets being within a range of rates between 3 and 6% of the respective free cash flow related to the turnover. For Board members with regional responsibilities, variable compensation was also based on growth of regional operating margins within the year under review, with targets ranging between 13 and 18.5%.

As a rule, for Members of the Management Board with Group functions – these are Dr. Ben J. Lipps ( until December 31, 2012), Mr. Michael Brosnan and Dr. Rainer Runte – EAT growth accounts for 80% of variable compensation and is thus weighted higher than for Board Members having responsibility for regional earnings (these are Mr. Roberto Fusté, Dr. Emanuele Gatti and Mr. Rice Powell) or in the Global Manufacturing Operations division (Mr. Kent Wanzek), where EAT growth accounts for 60%. Twenty percent of variable compensation for all Members of the Management Board is based upon achievement of the target for free cash flow; likewise, 20% of variable compensation is based upon achievement of target operating profit margins in the regions.

In the year under review, the bonus components to be paid via cash payment in principle consisted of a short-term annual cash bonus and – subject to the separate phantom stock component in accordance with the terms of the Company’s Phantom Stock Plan 2011 which will be described hereinafter – a further share-based compensation component (longterm), to be paid by way of cash settlement based on the performance of the stock exchange price of the ordinary shares of Fresenius Medical Care AG & Co. KGaA. If the annual targets are achieved, the cash is paid after the end of the respective fiscal year in which the target is achieved. The share-based portion of the variable bonus to be granted yearly in case of achievement of the yearly targets is subject to a three- or four-year vesting period, although a shorter period may apply in special cases (e. g. professional incapacity, entry into retirement, non-renewal by the company of expired service agreements). The amount of the cash payment of this share-based compensation is based on the share price of Fresenius Medical Care AG & Co. KGaA ordinary shares upon exercise after the three- or fouryear vesting period. Therefore, the share-based portion of the variable bonus is included in long-term incentive compensation. The annual targets of the aforementioned and respectively applicable key data are valued at a maximum of 120% and subject to a fixed multiplier, thereby limiting the variable compensation.

In determining the variable compensation, the longterm compensation components (including the stock option and phantom stock components described below) are granted in amounts which constitute at least 50% of the total variable components. Should this turn out not to be the case mathematically, the Management Board members’ contracts provide that the portion of variable compensation payable as short-term annual bonus shall be reduced and the portion payable as long-term share-based cash components be correspondingly increased, in order to meet this requirement. Total performance-based compensation payable for each of the Members of the Management Board is also capped. The share-based compensation components also contain a limitation for cases of extraordinary developments. The Supervisory Board may also grant a discretionary bonus for extraordinary performance.

In addition, a special bonus component applied in some cases for fiscal years 2006, 2007 and 2008 which was linked to the achievement of targets measured only over this three-year period but whose payment was also subject, in part, to a vesting period of several years through 2012. This bonus component also included special components linked to the achievement of extraordinary financial targets related to special integration measures ( e. g. in connection with the acquisition of Renal Care Group in the U.S.) and thus required the achievement of an extraordinary increase in earnings. The present report also reflects those payments based on this earlier bonus component but exercised and paid only in the year under review (see table 2.13.7 “Expenses for long-term incentive components”).

For fiscal years 2012 and 2011 the amount of cash compensation payments to Members of the General Partner’s Management Board without long-term incentive components are shown in table 2.13.4.

T. 2.13.4

Amount of cash payments

in € THOUS
               
  Non-performance related compensation Performance related compensation Cash compensation (without long-term incentive components)
  Salary Other1 Bonus  
  2012 2011 2012 2011 2012 2011 2012 2011
1Includes insurance premiums, private use of company cars, rent supplements, contributions to pension and health insurance and other benefits.
Dr. Ben J. Lipps 973 862 302 182 1,438 1,078 2,713 2,122
Michael Brosnan 525 467 247 183 776 584 1,548 1,234
Roberto Fusté 550 500 251 188 692 552 1,493 1,240
Dr. Emanuele Gatti 700 675 115 121 937 734 1,752 1,530
Rice Powell 771 682 31 27 1,235 978 2,037 1,687
Dr. Rainer Runte 440 425 41 42 650 531 1,131 998
Kent Wanzek 405 359 29 17 649 515 1,083 891

Total

4,364 3,970 1,016 760 6,377 4,972 11,757 9,702

In addition to the aforementioned payment of a portion of the variable bonus payable to Members of the Management Board in the form of a share-based compensation component with cash settlement, stock options under the Company’s Stock Option Plan 2011 and phantom stock awards under the Phantom Stock Plan 2011 were granted as additional components with long-term incentive effects in fiscal year 2012. The Stock Option Plan 2011, together with the Phantom Stock Plan 2011, forms the Long Term Incentive Plan 2011 (LTIP 2011).

Members of the Management Boards of affiliated companies, managerial staff members of the Company and of certain affiliated companies, and the Members of the Management Board of the General Partner are entitled to participate in LTIP 2011. Under LTIP 2011 a combination of stock options and phantom stock awards are granted to the participants. Stock options and phantom stock awards will be granted on specified grant days during a period of five years. The number of stock options and phantom stock awards to be granted to the Members of the General Partner’s Management Board is determined by the General Partner’s Supervisory Board in its discretion. In principle all Members of the Management Board are entitled to receive the same quantity, with the exception of the Chairman of the Management Board, who is entitled to receive double the number of stock options and phantom stock awards granted to the Management Board Members, and the Vice Chairman of the Management Board who is entitled to receive one and a half times such number. At the time of the grant participants can choose a ratio based on the value of the stock options vs. the value of phantom stock awards in a range between 75:25 and 50:50. The exercise of stock options and phantom stock awards is subject to several conditions, including the expiration of a four year waiting period, the consideration of black-out periods, the achievement of a defined success target and the existence of a service or employment relationship. Stock options may be exercised within four years and phantom stock awards within one year after the expiration of the waiting period. For Management Board Members who are U.S. tax payers specific conditions apply with respect to the exercise period of phantom stock awards. The success target is achieved in each case if, after the grant to participants, either the adjusted basic income per ordinary share increases by at least eight per cent per annum in comparison to the previous year in each case or – if this is not the case – the compounded annual growth rate of the adjusted basic income per ordinary share during the four years of the waiting period reflects an increase of at least eight per cent per annum. If with regard to any year or more than one of the four years within the waiting period neither the adjusted basic income per ordinary share increases by at least eight per cent per annum in comparison to the previous year nor the compounded annual growth rate of the adjusted basic income per ordinary share during the four years of the waiting period reflects an increase of at least eight per cent per annum, the stock options and phantom stock awards subject to such waiting period are cancelled in the proportion of 25% for each year in which the target is not achieved within the waiting period, up to 100%. For the purposes of this compensation report phantom stock awards are included in the share-based compensation component with cash settlement and therefore in the long-term incentive components and disclosed accordingly hereunder.

Additional information regarding the terms of Stock Option Plan 2011 and of the two other employee participation programs in place at January 1, 2012 and secured by conditional capital, which entitled their participants to convertible bonds or stock options (from which, however, in fiscal year 2012 no further options could be issued), are described in more detail in the notes of the annual financial statements / annual consolidated group financial statements in the section on conditional capital and in the capital and in the “Financial report”

Under Stock Option Plan 2011 in the year under review 2,166,035 stock options were granted in total (in 2011: 1,947,231), with 310,005 stock options (in 2011: 307,515) granted to the Management Board Members. Moreover, in fiscal year 2012 178,729 (in 2011: 215,638) phantom stock awards were granted under the Phantom Stock Plan 2011, 23,407 awards (in 2011: 29,313) granted to Management Board Members.

For fiscal years 2012 and 2011 the number and value of stock options issued to Members of the Management Board and the value of other share-based compensation with cash settlement paid to them is shown individually in table 2.13.5.

T. 2.13.5

Long-term incentive effect

               
  Stock options Share-based compensation with cash settlement1 Total
  Number Value in € THOUS Value in € THOUS Value in € THOUS
  2012 2011 2012 2011 2012 2011 2012 2011
1This includes Phantom Stocks granted to Board Members during the fiscal year. The share-based compensation amounts are based on the grant date fair value.
Dr. Ben J. Lipps 74,700 74,700 947 1,004 768 684 1,715 1,688
Michael Brosnan 37,350 37,350 474 502 403 357 877 859
Roberto Fusté 37,350 37,350 474 502 375 346 849 848
Dr. Emanuele Gatti 29,880 29,880 379 402 558 505 937 907
Rice Powell 56,025 56,025 710 753 628 570 1,338 1,323
Dr. Rainer Runte 37,350 34,860 474 469 361 372 835 841
Kent Wanzek 37,350 37,350 474 502 361 334 835 836

Total

310,005 307,515 3,932 4,134 3,454 3,168 7,386 7,302

The stated values of the stock options granted to the Members of the Management Board in fiscal year 2012 correspond to their fair value at the time of grant, namely a value of €12.68 (2011: €13.44) per stock option. The exercise price for the stock options granted in 2012 is €57.30 (2011: €52.48).

At the end of fiscal year 2012, the Members of the Management Board held a total of 2,201,205 stock options and convertible bonds, which are collectively referred to as stock options (2011: 2,354,875 stock options).

The development and status of stock options of the Members of the Management Board in fiscal year 2012 are shown in more detail in table 2.13.6.

T. 2.13.6

Development and status of the stock options

         
  Options outstanding January 1, 2012 Options granted during the fiscal year
  Number Weighted
average
exercise price
in €
Number Weighted
average
exercise price
in €
1 Due to the leaving on age grounds of Dr. Ben J. Lipps as of December 31, 2012, his stock options remain unaffected by the ending of his service agreement according to the plan terms.
Dr. Ben J. Lipps 572,700 37.20 74,700 57.30
Michael Brosnan 306,948 33.56 37,350 57.30
Roberto Fusté 377,336 32.11 37,350 57.30
Dr. Emanuele Gatti 375,287 31.40 29,880 57.30
Rice Powell 280,125 39.90 56,025 57.30
Dr. Rainer Runte 319,329 34.98 37,350 57.30
Kent Wanzek 123,150 43.04 37,350 57.30

Total

2,354,875 35.31 310,005 57.30
           
           
  Options exercised during the fiscal year  
  Number Weighted
average
exercise price
in €
Weighted
average
share price
in €
Dr. Ben J. Lipps 298,800 33.30 53.62
Michael Brosnan 3,420 12.88 53.71
Roberto Fusté 55,517 13.40 52.07
Dr. Emanuele Gatti 70,469 17.91 51.97
Rice Powell - - -
Dr. Rainer Runte 35,469 18.33 53.00
Kent Wanzek -   -

Total

463,675 27.28 53.14
       
           
  Options outstanding December 31, 2012   Options exercisable December 31, 2012
  Number Weighted average exercise price in € Weighted average remaining contractual life in years Range of exercise prices in € Number Weighted average exercise price in €
Dr. Ben J. Lipps 348,6001 44.85 5.36 30.49 - 57.30 99,6001 31.97
Michael Brosnan 340,878 36.37 3.51 1 1.42 - 57.30 216,378 28.53
Roberto Fusté 359,169 37.62 3.41 1 1.42 - 57.30 234,669 31.04
Dr. Emanuele Gatti 334,698 36.55 3.33 1 1.42 - 57.30 225,138 30.32
Rice Powell 336,150 42.80 4.52 31.97 - 57.30 149,400 33.79
Dr. Rainer Runte 321,210 39.42 3.59 14.47 - 57.30 199,200 32.97
Kent Wanzek 160,500 46.36 5.40 31.97 - 57.30 36,000 33.73

Total

2,201,205 40.10 4.06 11.42 - 57.30 1,160,385 31.28

Based on the targets achieved in fiscal year 2012, performance-based bonuses payable in the form of share-based compensation with cash settlement totalling €2,141 THOUS (2011: €1,657 THOUS) were earned by Members of the Management Board. On the basis of that value of the share-based compensation, determination of the specific number of shares will not be made by the Supervisory Board until March 2013, based on the then current price of the ordinary shares of Fresenius Medical Care AG & Co. KGaA. This number will then serve as a multiplier for the share price and as a base for calculation of the payment after the three-year vesting period.

Phantom stock awards with a total value of €1,313 THOUS (in 2011: €1,511 THOUS) were granted to the Management Board Members under the Company’s Phantom Stock Plan 2011 in July 2012 as further share-based compensation component with cash settlement.

The amount of the total compensation of the General Partner’s Management Board for fiscal years 2012 and 2011 is shown in table 2.13.7.

T. 2.13.7

Total compensation

in € THOUS
           
  Cash compensation (without longterm incentive components) Components with long-term incentive effect Total compensation (including longterm incentive components)
  2012 2011 2012 2011 2012 2011
Dr. Ben J. Lipps 2,713 2,122 1,715 1,688 4,428 3,810
Michael Brosnan 1,548 1,234 877 859 2,425 2,093
Roberto Fusté 1,493 1,240 849 848 2,342 2,088
Dr. Emanuele Gatti 1,752 1,530 937 907 2,689 2,437
Rice Powell 2,037 1,687 1,338 1,323 3,375 3,010
Dr. Rainer Runte 1,131 998 835 841 1,966 1,839
Kent Wanzek 1,083 891 835 836 1,918 1,727

Total

11,757 9,702 7,386 7,302 19,143 17,004

Long term incentive compensation components, i. e. stock options and share-based compensation components with cash settlement, can be exercised only after the expiration of the specified vesting period. Their value is recognized over the vesting period as expense in the respective fiscal year of the vesting period. Compensation expenses for long-term incentive compensation attributable to fiscal years 2012 and 2011 are shown in table 2.13.8.

T. 2.13.8

Expenses for long-term incentive components

in € THOUS
       
  Stock options Share-based compensation with cash settlement Share-based compensation
  2012 2011 2012 2011 2012 2011
Dr. Ben J. Lipps 2,136 1,098 1,681 780 3,817 1,878
Michael Brosnan 309 186 186 95 495 281
Roberto Fusté 383 408 221 125 604 533
Dr. Emanuele Gatti 348 398 469 405 817 803
Rice Powell 537 501 439 439 976 940
Dr. Rainer Runte 374 404 188 299 562 703
Kent Wanzek 309 186 164 80 473 266

Total

4,396 3,181 3,348 2,223 7,744 5,404

The amount of the base salary and the amount of the total compensation of the Members of the Management Board in accordance with the requirements of the compensation system have been and will be measured taking into account relevant reference values of other DAX-listed companies and of similar companies with comparable size and performance in the relevant industry sector.

II. Commitments to Members of the Management Board for the Event of the Termination of their Appointment

There are individual contractual pension commitments for the Management Board Members Roberto Fusté, Dr. Emanuele Gatti and Dr. Rainer Runte. In fiscal year 2012 further individual pension commitments have been made for the Management Board Members Michael Brosnan, Rice Powell and Kent Wanzek. Under all of these commitments, Fresenius Medical Care as of December 31, 2012 has aggregate pension obligations of €14,775 THOUS (as of December 31, 2011: €6,776 THOUS).

Each of the pension commitments provides for a pension and survivor benefit as of the time of conclusively ending active work, at age 65 at the earliest (at age 60 at the earliest with respect to Dr. Emanuele Gatti) or upon occurrence of disability or incapacity to work (Berufs- oder Erwerbsunfähigkeit), however, calculated by reference to the amount of the recipient’s most recent base salary.

The retirement pension will pay of 30% from the last base salary 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 Law to improve company pension plans, “BetrAVG”). Thirty percent of the gross amount of any post-retirement income from an activity of the Management Board member is offset against the pension obligation. Any amounts to which the Management Board Members or their surviving dependents, respectively, are entitled from other company pension rights of the Management Board member, even from service agreements with other companies are to be set off. If a Management Board member dies, the surviving spouse receives a pension amounting to 60% of the resulting pension claim 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 resulting pension claim at that time, until the completion of their education or they reach 25 years of age, at the latest. All orphans’ pensions and the spousal pension together reach a maximum of 90% of the Management Board member’s pension, however. If a Management Board member leaves the Management Board of Fresenius Medical Care Management AG before he reaches 65 or (in the case of Dr. Gatti) 60, except in the event of a disability or incapacity to work (Berufs- oder Erwerbsunfähigkeit), the rights to the aforementioned benefits remain, although the pension to be paid is reduced in proportion to the ratio of the actual years of service as a Management Board member to the potential years of service until reaching 65 or (in the case of Dr. Gatti) 60 years of age.

With Dr. Ben J. Lipps, the Chairman of the Management Board until December 31, 2012, there is an individual agreement instead of a pension provision, to the effect that, upon termination of his employment contract/service agreement with Fresenius Medical Care Management AG, he will be retained to render consulting services to the Company for a period of 10 years. Accordingly Fresenius Medical Care Management AG and Dr. Ben J. Lipps entered into a consulting agreement for the period January 1, 2013 to December 31, 2022. By this consulting agreement Dr. Ben J. Lipps will provide consulting services on certain fields and within a specified time frame as well as considering a non-compete covenant. The annual consideration for the fiscal year 2013 for such services would amount to approximately 45% of the non-performance-linked compensation components paid to him in fiscal year 2012 (including reimbursement of expenses, temporary reimbursement of expenses for property leases, company car provided temporarily as well as pension payments for the surviving spouse in case of death). Based on calculation at this time the annual value for such services for the fiscal years starting from 2014 will be reduced down to approximately 40% of the non-performance-linked compensation components paid to him in fiscal year 2012. The present value of this agreement amounted to €3,987 THOUS as of December 31, 2012.

Management Board Members Rice Powell, Michael Brosnan and Kent Wanzek participated in the U.S.- based 401(k) savings plan in the year under review. This plan generally allows employees in the U.S. to invest a portion of their gross salaries in retirement pension programs. The company supports this investment, for full-time employees with at least one year of service, with a contribution of 50% of the investment made, up to a limit of 6% of income – whereupon the allowance paid by the Company is limited to 3% of the income – or a maximum of $17,000 ($22,500 for employees 50 years of age or older). The aforementioned Management Board Members were each contractually enabled to participate in this plan; in the past fiscal year the company paid out $9,239.50 (in the previous year: $9,310.00) respectively in this regard.

Furthermore, the Management Board Members Dr. Ben J. Lipps, Rice Powell and Michael Brosnan have acquired non-forfeitable benefits from participation in employee pension plan 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 obligations in fiscal year 2012 amounted to €8,109 THOUS (2011: €1,013 THOUS) The pension commitments are shown in table 2.13.9.

T. 2.13.9

Development and status of pension commitments

in € THOUS
       
  As of January
1, 2012
Increase As of December 31, 2012
Dr. Ben J. Lipps 648 79 727
Michael Brosnan 69 1,251 1,320
Roberto Fusté 2,132 883 3,015
Dr. Emanuele Gatti 3,770 1,230 5,000
Rice Powell 131 3,695 3,826
Dr. Rainer Runte 874 393 1,267
Kent Wanzek - 578 578

Total

7,624 8,109 15,733

A post-employment non-competition covenant was agreed upon with all Management Board Members. If such covenant becomes applicable, the Management Board Members receive compensation amounting to half their annual base salaries for each year of respective application of the non-competition covenant, up to a maximum of two years. The employment contracts of the Management Board Members contain no express provisions that are triggered by a change of control of the Company.

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 12 months, although 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 agreement.

III. Miscellaneous

In fiscal year 2012, no loans or advance payments of future compensation components were made to Members of the Management Board of Fresenius Medical Care Management AG.

The payments to United States Management Board Members Dr. Ben J. Lipps, Michael Brosnan 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, the Company has agreed that due to varying tax rates in both countries, the increased tax burden to such Management Board Members arising from German tax rates in comparison to U.S. tax rates will be balanced (net compensation). Pursuant to a modified net compensation agreement, these Management Board Members 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 subsequently in connection with preparation of the 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, if such claims exceed their liability under German law. To secure such obligations, the Company has obtained Directors & Officers liability insurance carrying a deductible which complies with the requirements of the German Stock Corporation Act. The indemnity applies for the time in which each member of the Management Board is in office and for claims in this connection after termination of membership on the Management Board in each case.

Former Members of the Management Board did not receive any compensation in fiscal year 2012 other than that mentioned above under “Commitments to Members of the Management Board for the Event of the Termination of their Appointment”. As of December 31, 2012 pension obligations to former Board Members exist in an amount of €646 THOUS (2011: €499 THOUS).

Compensation of the Fresenius Medical Care AG & Co. KGaA Supervisory Board

The compensation of the Fresenius Medical Care AG & Co. KGaA Supervisory Board is set out in clause 13 of the Articles of Association.

In accordance with this provision, the Members of the Supervisory Board are to be reimbursed for the expenses incurred in the exercise of their offices, which also include the applicable VAT.

As compensation, each Supervisory Board member receives in the first instance a fixed salary of $80,000 per respective complete fiscal year, payable in four equal instalments at the end of a calendar quarter. Should the General Meeting resolve on a higher compensation, with a majority of three-fourths of the votes cast and taking the annual results into account, such compensation shall apply.

The chairman of the Supervisory Board receives additional compensation of $80,000 and his deputy additional compensation of $40,000 per respective complete fiscal year. In addition, each member of the Supervisory Board receives a variable performance related compensation as an additional remuneration which is based upon 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 variable remuneration component is $60,000 in case of achieving a 3-year average EPS growth corridor from 8.00 to 8.99%, $70,000 in the corridor from 9.00 to 9.99% and $80,000 in case of a growth of 10.00% or more. If the aforementioned targets are reached, the respective variable remuneration amounts are earned to their full extent, i. e. within these margins there is no pro rata remuneration. In any case, this variable component is limited to a maximum of $80,000 per annum. Reciprocally, the Members of the Supervisory Board are only entitled to the variable remuneration component if the 3 year average EPS growth of at least 8.00% is reached. The variable remuneration component, based on the target achievement, is in principle disbursed on a yearly basis, namely following approval of the Company’s annual financial statements, this for the fiscal year 2012 based on the 3-year average EPS growth for the fiscal years 2010, 2011 and 2012.

As a member of a committee, a Supervisory Board member of Fresenius Medical Care AG & Co. KGaA additionally annually receives $40,000, or, as chairman or vice chairman of a committee, $60,000 or $50,000, respectively payable in identical instalments at the end of a calendar quarter. For memberships in the Nomination Committee and in the Joint Committee as well as in the capacity of their respective chairmen and deputy chairmen, no separate remuneration shall be granted.

Should a member of the Fresenius Medical Care AG & Co. KGaA Supervisory Board be a member of the Supervisory Board of the General Partner Fresenius Medical Care Management AG at the same time, and receive compensation for his work on the Supervisory Board of Fresenius Medical Care Management AG, the compensation for the work as a Fresenius Medical Care AG & Co. KGaA Supervisory Board member shall be reduced by half. The same applies to the additional compensation for the chairman of the Fresenius Medical Care AG & Co. KGaA Supervisory Board and his deputy, to the extent that they are at the same time chairman and deputy, respectively, of the Supervisory Board of Fresenius Medical Care Management AG. If the deputy chairman of the Fresenius Medical Care 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 deputy chairman of the Fresenius Medical Care AG & Co. KGaA Supervisory Board to this extent.

The compensation for the Supervisory Board of Fresenius Medical Care Management AG and the compensation for its committees were charged to Fresenius Medical Care AG & Co. KGaA in accordance with section 7 para. 3 of the Articles of Association of Fresenius Medical Care AG & Co. KGaA.

The total compensation of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA including the amount charged by Fresenius Medical Care Management AG to Fresenius Medical Care AG & Co. KGaA, is listed in the tables 2.13.10 and 2.13.11, with the table 2.13.10 fixed compensation, whilst the table 2.13.11 sets out the performance related compensation.

T. 2.13.10

Fixed compensation of the Supervisory Board

in € THOUS1
         
  Fixed compensation for Supervisory Board at FMC Management AG Fixed compensation 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 Non-Performance Related Compensation
  2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
1Shown without VAT and withholding tax; translation of $ amounts at respective average exchange rates for the respective year. 2Chairman of the Supervisory Board of FMC Management AG, but not Member of the Supervisory Board of FMC AG & Co. KGaA; compensation paid by FMC Management AG. 3Member of the Supervisory Board of FMC AG & Co. KGaA until May 12, 2011, Member of the Supervisory Board and Member of committee of FMC Management AG until July 7, 2011. 4Member of the Supervisory Board of FMC AG & Co. KGaA, but not Member of the Supervisory Board of FMC Management AG; compensation paid by FMC AG & Co. KGaA. 5Member of the Supervisory Board of FMC AG & Co. KGaA as of May 12, 2011, Member of the Supervisory Board of FMC Management AG as of July 7, 2011.
Dr. Gerd Krick 31 29 93 86 47 43 31 29 202 187
Dr. Dieter Schenk 47 43 47 43 39 36 - - 133 122
Dr. Ulf M. Schneider2 125 115 - - 54 50 - - 179 165
Dr. Walter L. Weisman 31 29 31 29 39 36 47 43 148 137
John Gerhard Kringel3 - 14 - 11 - 22 - - - 47
William P. Johnston 31 29 31 29 93 86 31 29 186 173
Prof. Dr. Bernd Fahrholz4 - - 62 57 - - 39 32 101 89
Rolf A. Classon5 31 14 31 22 47 22 - - 109 58

Total

296 273 295 277 319 295 148 133 1,058 978
T. 2.13.11

Performance related compensation of the Supervisory Board

in € THOUS1
         
  Performance related compensation in FMC Management AG Performance related compensation in FMC AG & Co. KGaA Performance related compensation Total compensation
  2012 2011 2012 2011 2012 2011 2012 2011
1Shown without VAT and withholding tax; translation of $ amounts at respective average exchange rates for the respective year. 2Chairman of the Supervisory Board of FMC Management AG, but not Member of the Supervisory Board of FMC AG & Co. KGaA. 3Member of the Supervisory Board of FMC AG & Co. KGaA until May 12, 2011 and of FMC Management AG until July 7, 2011. 4Amount for the year 2011 reflects the factual payment made in the reporting year, including a surplus payment (compared to the last annual report), which results from the non simultaneous retirement from both Supervisory Boards. 5Member of the Supervisory Board of FMC AG & Co. KGaA, but not Member of the Supervisory Board of FMC Management AG. 6Member of the Supervisory Board of FMC AG & Co. KGaA as of May 12, 2011 and of FMC Management AG as of July 7, 2011. 7Amount for the year 2011 reflects the factual payment made in the reporting year, including a surplus payment (compaired to the last annual report), which results from the non simultaneous appointment to both Supervisory Boards.
Dr. Gerd Krick 27 22 27 22 54 44 256 231
Dr. Dieter Schenk 27 22 27 22 54 44 187 166
Dr. Ulf M. Schneider2 54 43 - - 54 43 233 208
Dr. Walter L. Weisman 27 22 27 22 54 44 202 181
John Gerhard Kringel 3,4 - 14 - 8 - 22 - 69
William P. Johnston 27 22 27 22 54 44 240 217
Prof. Dr. Bernd Fahrholz5 - - 54 43 54 43 155 132
Rolf A. Classon6,7 27 11 27 17 54 28 163 86

Total

189 156 189 156 378 312 1,436 1,290
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