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Compensation of the Management Board

The entire Supervisory Board of Fresenius Management SE is responsible for determining the compensation of the Management Board. The Supervisory Board is assisted in this task by a personnel committee. In the fiscal year 2013, the acting personnel committee was composed of Dr. Gerd Krick, Dr. Dieter Schenk, and Dr. Karl Schneider.

In 2012, the Supervisory Board of Fresenius Management SE adopted adjustments to the Management Board compensation system and introduced a combination plan (so-called LTIP 2013), consisting of the 2013 Stock Option Plan and the 2013 Phantom Stock Plan. On May 17, 2013, the Annual General Meeting approved of the changed compensation system with a majority of 96.39% of the votes cast.

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 successes 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 the fiscal year 2013:

  • non-performance-based compensation (fixed compensation and fringe benefits)
  • short-term performance-based compensation (one-year variable compensation)
  • components with long-term incentive effects (several-year variable compensation comprising stock options, share-based compensation with cash settlement (phantom stocks), and postponed payments of the one-year variable compensation)

In addition, there are pension commitments for the seven members of the Management Board.

The design of the individual components is based on the following criteria:

The fixed compensation was paid in 12 monthly installments in the fiscal year 2013. Mr. Rice Powell was paid a part of his fixed compensation from Fresenius Medical Care North America in 24 monthly installments. Moreover, the members of the Management Board received additional benefits consisting mainly of insurance premiums, the private use of a company car, special payments such as rent supplements and reimbursement of certain other charges, tuition fees, as well as contributions to pension and health insurance.

The performance-based compensation will also be granted for the fiscal year 2013 as a short-term cash component (one-year variable compensation) and as a compensation component with long-term incentive effects (stock options, share-based compensation with cash settlement (phantom stocks), and postponed payments of the one-year variable compensation). The amount of the one-year variable compensation in each case is dependent on certain target parameters oriented on the net income attributable to Fresenius SE & Co. KGaA and / or to the relevant business segments being achieved. In the case of the members of the Management Board with functional responsibility for the entire Group – such members being Dr. Schneider, Mr. Sturm, and Dr. Götz – the amount of the one-year variable compensation is based in its entirety on the respective net income attributable to Fresenius SE & Co. KGaA (after deduction of noncontrolling interest). For Mr. Henriksson and Dr. De Meo, approximately half of the amount of the one-year variable compensation depends on the development of the net income attributable to Fresenius SE & Co. KGaA and for the remainder on the development of the net income of the business segment (in each case after deduction of noncontrolling interest) for which the respective member of the Management Board is responsible. Approximately half of the amount of the one-year variable compensation of Dr. Wastler is oriented on the net income attributable to Fresenius SE & Co. KGaA (after deduction of noncontrolling interest) as well as on the net income before tax and extraordinary income / expenditures of the VAMED group. Mr. Rice Powell receives his compensation exclusively from Fresenius Medical Care. Furthermore, the Supervisory Board may grant a discretionary bonus for extraordinary performance.

For the fiscal years 2013 and 2012, the amount of cash payment of the Management Board of the general partner of Fresenius SE & Co. KGaA consisted of the following:

    Non-
performance-
based compensation
  Performance-based compensation Cash compensation (without long-term incentive components)
  Salary Other2   Bonus    
€ in thousands 2013 2012 2013 2012 2013 2012 2013 2012
Dr. Ulf M. Schneider 990 990 64 51 1,402 1,150 2,456 2,191
Rainer Baule (up to December 31, 2012) 0 550 0 26 0 801 0 1,377
Dr. Francesco De Meo 550 550 19 19 998 700 1,567 1,269
Dr. Jürgen Götz 415 415 34 34 690 600 1,139 1,049
Mats Henriksson (since January 1, 2013) 550 0 217 0 956 0 1,723 0
Dr. Ben Lipps (up to December 31, 2012)1 0 973 0 302 0 1,438 0 2,713
Rice Powell1 (since January 1, 2013) 941 0 169 0 373 0 1,483 0
Stephan Sturm 550 550 40 89 921 751 1,511 1,390
Dr. Ernst Wastler 470 470 35 34 660 587 1,165 1,091
Total 4,466 4,498 578 555 6,000 6,027 11,044 11,080

    Non-
performance-
based compensation
  Performance-based compensation Cash compensation (without long-term incentive components)
  Salary Other2   Bonus    
€ in thousands 2013 2012 2013 2012 2013 2012 2013 2012
Dr. Ulf M. Schneider 990 990 64 51 1,402 1,150 2,456 2,191
Rainer Baule (up to December 31, 2012) 0 550 0 26 0 801 0 1,377
Dr. Francesco De Meo 550 550 19 19 998 700 1,567 1,269
Dr. Jürgen Götz 415 415 34 34 690 600 1,139 1,049
Mats Henriksson (since January 1, 2013) 550 0 217 0 956 0 1,723 0
Dr. Ben Lipps (up to December 31, 2012)1 0 973 0 302 0 1,438 0 2,713
Rice Powell1 (since January 1, 2013) 941 0 169 0 373 0 1,483 0
Stephan Sturm 550 550 40 89 921 751 1,511 1,390
Dr. Ernst Wastler 470 470 35 34 660 587 1,165 1,091
Total 4,466 4,498 578 555 6,000 6,027 11,044 11,080

In the fiscal year 2013, the one-year variable compensation, excluding the payment to Mr. Rice Powell, amounted to €5,627 thousand. This equals 97% of the total one-year variable compensation of €5,830 thousand. The remaining part in an amount of €203 thousand was converted into a component based on a multi-year assessment and the payment was postponed by two years.

The maximum attainable and the minimum one-year variable compensations are presented as follows:

  2013
€ in thousands Minimum Maximum
Dr. Ulf M. Schneider 1,200 1,750
Dr. Francesco De Meo 750 1,250
Dr. Jürgen Götz 250 750
Mats Henriksson 750 1,250
Rice Powell 212 1,864
Stephan Sturm 850 1,150
Dr. Ernst Wastler 350 750

  2013
€ in thousands Minimum Maximum
Dr. Ulf M. Schneider 1,200 1,750
Dr. Francesco De Meo 750 1,250
Dr. Jürgen Götz 250 750
Mats Henriksson 750 1,250
Rice Powell 212 1,864
Stephan Sturm 850 1,150
Dr. Ernst Wastler 350 750

To ensure that the overall system of compensation of the members of the Management Board is oriented towards long-term and sustained corporate development, the compensation system provides that the share of long-term variable compensation components is at least equal in its amount to half of the total variable compensation components granted to the respective member of the Management Board. As a means of ensuring this minimum ratio in favor of the compensation components oriented towards the long term, it is expressly provided that the Supervisory Board may determine that the one-year variable compensation to be paid as a rule annually is converted (pro rata) into a variable compensation component based on a multi-year assessment, in order to also take account of any negative developments within the assessment period. This is done in such a way that the maturity of the yearly one-year variable compensation earned on a variable basis is postponed at the discretion of the Supervisory Board, either on a pro rata basis or in its entirety, by two years. At the same time, it is ensured that any payment is made to the member of the Management Board after expiration of such multi-year period only if (i) no subsequent adjustment of the decisive (i. e., adjusted by extraordinary effects) net income attributable to Fresenius SE & Co. KGaA (after deduction of noncontrolling interest) beyond an amount equal to a tolerance range of 10% is made, and (ii) the amount of net income attributable to Fresenius SE & Co. KGaA (adjusted for extraordinary effects) in the two relevant subsequent years is not substantially less than the net income attributable to Fresenius SE & Co. KGaA (adjusted by extraordinary effects, after deduction of noncontrolling interest) of the respective preceding fiscal years. In the event of the aforementioned conditions for payment being missed only to a minor and / or partial extent, the Supervisory Board may resolve on a corresponding pro rata payment of the converted portion of the one-year variable compensation. No interest is payable on the converted one-year variable compensation claim from the time when it first arises until the time of its effective payment. In this way, the one-year variable compensation can be converted pro rata or in its entirety into a genuine variable compensation component on a multi-year assessment basis, which also participates in any negative developments during the relevant assessment period.

In the financial year 2013, benefits under LTIP 2013 of Fresenius SE & Co. KGaA, and for Mr. Rice Powell, benefits under LTIP 2011 of Fresenius Medical Care AG & Co. KGaA, were granted as another component with long-term incentive effect. Such benefits consist, on the one hand, of share-based compensation with cash settlement (phantom stocks) and, on the other hand, of stock options on the basis of the Stock Option Plan 2013 of Fresenius SE & Co. KGaA and, for Mr. Rice Powell, on the basis of the Stock Option Plan 2011 of Fresenius Medical Care AG & Co. KGaA. The LTIP 2013 is available both for members of the Management Board and other executives. In accordance with the division of powers under stock corporation law, grants to members of the Management Board are made by the Supervisory Board of Fresenius Management SE, and grants to other executives are made by the Management Board. The number of stock options and phantom stocks for Management Board members to be granted is determined by the Supervisory Board at the Supervisory Board’s own discretion, provided that generally all Management Board members receive the same amount of stock options and phantom stocks, with the exception of the Chairman of the Management Board who receives double the respective amount of stock options and phantom stocks. At the time of the grant, the participants in LTIP 2013 may elect whether they wish to receive stock options and phantom stocks in a ratio of 75:25, or in a ratio of 50:50.

Exercise of the stock options and the phantom stocks granted under LTIP 2013 of Fresenius SE & Co. KGaA is subject to several conditions, such as expiry of a four-year waiting period, observance of vesting periods, achievement of the specified performance target, and continuance of the service or employment relationship. The vested stock options can be exercised within a period of four years. The vested phantom stocks are settled on March 1 of the year following the end of the waiting period.

The amount of the cash settlement pursuant to the Phantom Stock Plan 2013 is based on the volume-weighted average market price of the share of Fresenius SE & Co. KGaA during the three months preceding the exercise date.

The respective performance target has been reached if the adjusted consolidated net income of the Company (net income attributable to the shareholders of the Company) has increased by a minimum of 8% per year in comparison to the previous year within the waiting period, after adjustment for foreign currency effects. The performance target has also been achieved if the average annual growth rate of the adjusted consolidated net income of the Company during the four-year waiting period is at least 8%, adjusted for foreign-currency effects. If, with respect to one or more of the four reference periods within the waiting period, neither the adjusted consolidated net income of the Company has increased by a minimum of 8% per year in comparison to the previous year, after adjustment for foreign currency effects, nor the average annual growth rate of the adjusted consolidated net income of the Company during the four-year waiting period is at least 8%, adjusted for foreign-currency effects, the respective granted stock options and phantom stocks are forfeited on a pro-rata basis according to the proportion of the performance target that has not been achieved within the waiting period, i. e., by one fourth, by two fourths, by three fourths, or completely.

The principles of LTIP 2013 of Fresenius SE & Co. KGaA and of LTIP 2011 of Fresenius Medical Care AG & Co. KGaA are described in more detail in note 33 of the notes of the Fresenius Group, Stock options.

The previous share-based compensation component with cash settlement (performance shares) has been combined with the current share-based compensation component with cash settlement (phantom stocks). The members of the Management Board, with the exception of Mr. Rice Powell, were granted an entitlement to further share-based compensation with cash settlement (further phantom stocks, previously performance shares) in the fiscal year 2013. With regard to the performance target and waiting period, the same conditions that pertain to the phantom stocks granted under LTIP 2013 apply to them.

For the fiscal years 2013 and 2012, the number and value of stock options issued, the value of the share-based compensation with cash settlement (phantom stocks), and the value of the postponed performance-based compensation is shown in the following table.

The stated values of the stock options granted to members of the Management Board in the fiscal year 2013 correspond to their fair value at the time of grant, namely a value of €27.24 (2012: €21.19) per stock option of Fresenius SE & Co. KGaA and €8.92 (2012: €12.68) per stock option of Fresenius Medical Care AG & Co. KGaA. The exercise price of the granted stock options of Fresenius SE & Co. KGaA was €99.29 (2012: €78.33).

Long-term incentive components


    Stock options1    Postponed payment of the one-year variable compensation Share-based compensation with cash settlement (phantom stocks2) Total
  Number Value, € in thousands Value, € in thousands Value, € in thousands Value, € in thousands
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Dr. Ulf M. Schneider 30,000 56,760 817 1,203 0 0 864 100 1,681 1,303
Rainer Baule (up to Dec. 31, 2012) 0 28,380 0 601 0 99 0 100 0 800
Dr. Francesco De Meo 15,000 28,380 409 601 108 0 482 100 999 701
Dr. Jürgen Götz 15,000 28,380 409 601 0 0 482 100 891 701
Mats Henriksson (since Jan. 1, 2013) 15,000 0 409 0 65 0 482 0 956 0
Dr. Ben Lipps (up to Dec. 31, 2012) 0 74,700 0 947 0 0 0 768 0 1,715
Rice Powell (since Jan. 1, 2013) 74,700 0 666 0 0 0 358 0 1,024 0
Stephan Sturm 15,000 28,380 409 601 30 49 482 100 921 750
Dr. Ernst Wastler 15,000 28,380 409 601 0 0 482 100 891 701
Total 179,700 273,360 3,528 5,155 203 148 3,632 1,368 7,363 6,671

    Stock options1    Postponed payment of the one-year variable compensation Share-based compensation with cash settlement (phantom stocks2) Total
  Number Value, € in thousands Value, € in thousands Value, € in thousands Value, € in thousands
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Dr. Ulf M. Schneider 30,000 56,760 817 1,203 0 0 864 100 1,681 1,303
Rainer Baule (up to Dec. 31, 2012) 0 28,380 0 601 0 99 0 100 0 800
Dr. Francesco De Meo 15,000 28,380 409 601 108 0 482 100 999 701
Dr. Jürgen Götz 15,000 28,380 409 601 0 0 482 100 891 701
Mats Henriksson (since Jan. 1, 2013) 15,000 0 409 0 65 0 482 0 956 0
Dr. Ben Lipps (up to Dec. 31, 2012) 0 74,700 0 947 0 0 0 768 0 1,715
Rice Powell (since Jan. 1, 2013) 74,700 0 666 0 0 0 358 0 1,024 0
Stephan Sturm 15,000 28,380 409 601 30 49 482 100 921 750
Dr. Ernst Wastler 15,000 28,380 409 601 0 0 482 100 891 701
Total 179,700 273,360 3,528 5,155 203 148 3,632 1,368 7,363 6,671

At the end of the fiscal year 2013, the members of the Management Board held a total of 820,158 (2012: 1,072,400) stock options and convertible bonds (together referred to as stock options) of Fresenius SE & Co. KGaA and 361,050 (2012: 348,600) of Fresenius Medical Care AG & Co. KGaA.

The development and the status of the stock options of the Management Board in the fiscal year 2013 are shown in the following table:

Dr. Ulf M. SchneiderDr. Francesco De MeoDr. Jürgen GötzMats HenrikssonRice Powell1Stephan SturmDr. Ernst WastlerTotal2
Options outstanding on January 1, 2013
number315,400166,740144,06057,400336,150224,460164,3401,072,400
average exercise price in €57.6157.0858.7859.9642.8051.1956.4156.28
Options granted during fiscal year
number30,00015,00015,00015,00074,70015,00015,000105,000
average exercise price in €99.2999.2999.2999.2949.7699.2999.2999.29
Options exercised during fiscal year
number49,66068,12287,30013,80049,80069,66068,700357,242
average exercise price in €47.9043.7348.3633.8133.9138.8342.2743.82
average stock price in €103.2594.1998.8196.9151.0998.7399.7498.64
Options outstanding on December 31, 2013
number295,740113,61871,76058,600361,050169,800110,640820,158
average exercise price in €63.4770.6579.9276.1845.4760.5171.0167.21
average remaining life in years4.44.85.65.44.84.14.94.6
range of exercise prices in €33.81 to 99.2953.48 to 99.2971.28 to 99.2953.48 to 99.2931.97 to 57.3033.81 to 99.2953.48 to 99.2933.81 to 99.29
Exercisable options on December 31, 2013
number152,22041,858013,800174,30098,04038,880344,798
average exercise price in €47.9554.7553.4837.5746.3054.5549.27

Dr. Ulf M. SchneiderDr. Francesco De MeoDr. Jürgen GötzMats HenrikssonRice Powell1Stephan SturmDr. Ernst WastlerTotal2
Options outstanding on January 1, 2013
number315,400166,740144,06057,400336,150224,460164,3401,072,400
average exercise price in €57.6157.0858.7859.9642.8051.1956.4156.28
Options granted during fiscal year
number30,00015,00015,00015,00074,70015,00015,000105,000
average exercise price in €99.2999.2999.2999.2949.7699.2999.2999.29
Options exercised during fiscal year
number49,66068,12287,30013,80049,80069,66068,700357,242
average exercise price in €47.9043.7348.3633.8133.9138.8342.2743.82
average stock price in €103.2594.1998.8196.9151.0998.7399.7498.64
Options outstanding on December 31, 2013
number295,740113,61871,76058,600361,050169,800110,640820,158
average exercise price in €63.4770.6579.9276.1845.4760.5171.0167.21
average remaining life in years4.44.85.65.44.84.14.94.6
range of exercise prices in €33.81 to 99.2953.48 to 99.2971.28 to 99.2953.48 to 99.2931.97 to 57.3033.81 to 99.2953.48 to 99.2933.81 to 99.29
Exercisable options on December 31, 2013
number152,22041,858013,800174,30098,04038,880344,798
average exercise price in €47.9554.7553.4837.5746.3054.5549.27

The following table shows the total compensation of the Management Board of the general partner of Fresenius SE & Co. KGaA for the years 2013 and 2012:

Cash compensation (without long-term incentive components)Long-term incentive componentsTotal compensation (including long-term incentive components)
€ in thousands201320122013201220132012
Dr. Ulf M. Schneider2,4562,1911,6811,3034,1373,494
Rainer Baule (up to Dec. 31, 2012)01,377080002,177
Dr. Francesco De Meo1,5671,2699997012,5661,970
Dr. Jürgen Götz1,1391,0498917012,0301,750
Mats Henriksson (since Jan. 1, 2013)1,723095602,6790
Dr. Ben Lipps (up to Dec. 31, 2012)02,71301,71504,428
Rice Powell (since Jan. 1, 2013)1,48301,02402,5070
Stephan Sturm1,5111,3909217502,4322,140
Dr. Ernst Wastler1,1651,0918917012,0561,792
Total11,04411,0807,3636,67118,40717,751

Cash compensation (without long-term incentive components)Long-term incentive componentsTotal compensation (including long-term incentive components)
€ in thousands201320122013201220132012
Dr. Ulf M. Schneider2,4562,1911,6811,3034,1373,494
Rainer Baule (up to Dec. 31, 2012)01,377080002,177
Dr. Francesco De Meo1,5671,2699997012,5661,970
Dr. Jürgen Götz1,1391,0498917012,0301,750
Mats Henriksson (since Jan. 1, 2013)1,723095602,6790
Dr. Ben Lipps (up to Dec. 31, 2012)02,71301,71504,428
Rice Powell (since Jan. 1, 2013)1,48301,02402,5070
Stephan Sturm1,5111,3909217502,4322,140
Dr. Ernst Wastler1,1651,0918917012,0561,792
Total11,04411,0807,3636,67118,40717,751

The stock options and the entitlement to a share-based compensation (phantom stocks) can be exercised only after the expiry of the specified vesting period. Their value is recognized over the vesting period as expense in the respective fiscal year. The expenses attributable to the fiscal years 2013 and 2012 are stated in the following table.

ExpenSEs for Long-term incentive components


Stock optionsShare-based compensation with cash settlement (phantom stocks 1)Total expenses for share-based compensation
€ in thousands201320122013201220132012
Dr. Ulf M. Schneider9028779442996919
Rainer Baule (up to Dec. 31, 2012)04390420481
Dr. Francesco De Meo4514398642537481
Dr. Jürgen Götz4514398642537481
Mats Henriksson (since Jan. 1, 2013)23908603250
Dr. Ben Lipps (up to Dec. 31, 2012)02,13601,68103,817
Rice Powell (since Jan. 1, 2013)325044107660
Stephan Sturm4514398642537481
Dr. Ernst Wastler4514398642537481
Total3,2705,2089651,9334,2357,141

Stock optionsShare-based compensation with cash settlement (phantom stocks 1)Total expenses for share-based compensation
€ in thousands201320122013201220132012
Dr. Ulf M. Schneider9028779442996919
Rainer Baule (up to Dec. 31, 2012)04390420481
Dr. Francesco De Meo4514398642537481
Dr. Jürgen Götz4514398642537481
Mats Henriksson (since Jan. 1, 2013)23908603250
Dr. Ben Lipps (up to Dec. 31, 2012)02,13601,68103,817
Rice Powell (since Jan. 1, 2013)325044107660
Stephan Sturm4514398642537481
Dr. Ernst Wastler4514398642537481
Total3,2705,2089651,9334,2357,141

The short-term performance-based compensation is limited in its amount. As regards stock options and phantom stocks, there are contractually agreed limitation possibilities. This makes it possible to adequately take account in particular of those extraordinary developments that are not in any relevant proportion to the performance of the Management Board.

Under the compensation system, the amount of the fixed and the total compensation of the members of the Management Board was, and will be, assessed giving particular regard to the relevant comparison values of other DAX companies and similar companies of comparable size and performance from the relevant industrial sector.

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