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 year under review, the acting personnel committee was composed of Dr. Gerd Krick, Dr. Karl Schneider and Wilhelm Sachs.

In the fiscal year 2010, the compensation of the members of the Management Board of the general partner of Fresenius SE & Co. KGaA already took into account the newly worded requirements in accordance with the German Act on the Appropriateness of Executive Board Compensation (Gesetz zur Angemessenheit der Vorstandsvergütung – VorstAG), which entered into force on August 5, 2009. The Management Board compensation system was reviewed by an independent external compensation expert at the beginning of the fiscal year 2010 and later submitted to the shareholders' meeting of Fresenius SE (since January 28, 2010: Fresenius SE & Co. KGaA) for approval. On May 12, 2010, The shareholders' meeting approved of the Management Board compensation system with a majority of 99.51% 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 with the compensation paid and to reward them based on their duties and performance as well as their successes in managing the Company's economic and the financial position while giving due regard to the peer environment.

The compensation of the Management Board is, as a whole, performance-oriented and was composed of three elements in the fiscal year 2010:

  • non-performance-related compensation (basic salary)
  • performance-related compensation (variable bonus)
  • components with long-term incentive effects (stock options and postponed bonus payments)

In addition, six members of the Management Board had pension commitments in the reporting period.

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

The non-performance-related compensation was paid in twelve monthly installments as basic salary in the fiscal year 2010. Moreover, the members of the Management Board received additional benefits consisting mainly of insurance premiums, the private use of company cars, special payments such as rent supplements and reimbursement of certain other charges as well as contributions to pension and health insurance.

The performance-related compensation will also be granted for the fiscal year 2010 as a variable bonus. The amount of the bonus 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 variable bonus is based in its entirety on the respective net income attributable to Fresenius SE & Co. KGaA (after deduction of noncontrolling interest). For Mr. Baule and Dr. De Meo, half of the amount of the variable bonus in each case depends on the development of the net income attributable to Fresenius SE & Co. KGaA as well as 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. Half of the amount of the variable bonus of Dr. Wastler in each case 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. Dr. Lipps receives his compensation exclusively from Fresenius Medical Care. Furthermore, the Supervisory Board may grant a discretionary bonus for extraordinary performance.

For the fiscal years 2010 and 2009, the amount of cash payment of the Management Board of the general partner of Fresenius SE & Co. KGaA consisted of the following:

  Non-performance-related compensation Performance-related compensation Cash compensation (without long-term incentive components)
  Salary Other2 Bonus  
€ in thousands 2010 2009 2010 2009 2010 2009 2010 2009
1 Dr. Ben Lipps receives his compensation only from Fresenius Medical Care, of which Fresenius SE & Co. KGaA held 35% of the total subscribed capital. As Dr. Ben Lipps is a member of the Management Board of Fresenius Management SE, his compensation has to be included in the compensation report of the Fresenius Group.
2 Includes insurance premiums, private use of company cars, contributions to pension and health insurance as well as other benefits.
Dr. Ulf M. Schneider 900 800 47 56 908 1,032 1,855 1,888
Rainer Baule 500 425 42 41 608 800 1,150 1,266
Dr. Francesco De Meo 500 425 18 18 498 543 1,016 986
Dr. Jürgen Götz 375 325 30 28 464 424 869 777
Dr. Ben Lipps1 905 860 354 251 1,172 1,200 2,431 2,311
Stephan Sturm 500 425 85 85 574 732 1,159 1,242
Dr. Ernst Wastler 425 375 32 27 461 473 918 875
Total 4,105 3,635 608 506 4,685 5,204 9,398 9,345

  Non-performance-related compensation Performance-related compensation Cash compensation (without long-term incentive components)
  Salary Other2 Bonus  
€ in thousands 2010 2009 2010 2009 2010 2009 2010 2009
1 Dr. Ben Lipps receives his compensation only from Fresenius Medical Care, of which Fresenius SE & Co. KGaA held 35% of the total subscribed capital. As Dr. Ben Lipps is a member of the Management Board of Fresenius Management SE, his compensation has to be included in the compensation report of the Fresenius Group.
2 Includes insurance premiums, private use of company cars, contributions to pension and health insurance as well as other benefits.
Dr. Ulf M. Schneider 900 800 47 56 908 1,032 1,855 1,888
Rainer Baule 500 425 42 41 608 800 1,150 1,266
Dr. Francesco De Meo 500 425 18 18 498 543 1,016 986
Dr. Jürgen Götz 375 325 30 28 464 424 869 777
Dr. Ben Lipps1 905 860 354 251 1,172 1,200 2,431 2,311
Stephan Sturm 500 425 85 85 574 732 1,159 1,242
Dr. Ernst Wastler 425 375 32 27 461 473 918 875
Total 4,105 3,635 608 506 4,685 5,204 9,398 9,345

In the fiscal year, the directly paid bonus, excluding the payment to Dr. Ben Lipps, amounts to €3,463 thousand. This equals 79% of the total bonus. The remaining part in an amount of €897 thousand was converted into a component based on a multi-year assessment and the payment was postponed by two years.

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 variable bonus 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 bonus 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 expiry 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 interst) 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 correspondingly pro rata payment of the converted portion of the variable bonus. No interest is payable on the converted bonus claim from the time when it first arises until the time of its effective payment. In this way, the variable bonus 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.

The system of compensation for the Management Board moreover provides for a contractually stipulated cap or possibility of capping the amount of the annual compensation to be claimed by the member of the Management Board overall, i. e. including all variable compensation components. This makes it possible to adequately take account in particular of those extraordinary developments which are not in any relevant proportion to the performance of the Management Board.

Under the new compensation system, the amount of the basic 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.

In the fiscal year 2010, stock options based on the Stock Option Plan 2008 of Fresenius SE & Co. KGaA and the Fresenius Medical Care AG & Co. KGaA Stock Option Plan 2006 were granted as components with long-term incentive effects. The number of stock options to be allotted is defined in each case by the Supervisory Board at its discretion, with all members of the Management Board, except for the Chairman of the Management Board who receives double the number of stock options, receiving the same number of stock options.

The principles of both plans are described in more detail in note 34 of the notes of the Fresenius Group, Stock options.

For the fiscal years 2010 and 2009, the number and value of stock options issued as well as the value of the postponed performance-related compensation is shown in the table below.

The stated values of the stock options granted to members of the Management Board in the fiscal year 2010 correspond to their fair value at the time of grant, namely a value of €12.92 (2009: €8.24) per stock option of Fresenius SE & Co. KGaA and €8.07 (2009: €7.64) per stock option of FMC-AG & Co. KGaA. The exercise price of the granted stock options of Fresenius SE & Co. KGaA was €53.44 (2009: €36.89).

As the financial targets of the year 2010 were achieved, Dr. Ben Lipps is entitled to a stock-based compensation in an amount of €391 thousand (2009: €341 thousand) in accordance with the bonus agreement of Fresenius Medical Care. The entitlement is based on the development of the ordinary share of Fresenius Medical Care and has a three years vesting period.

At the end of the fiscal year 2010, the members of the Management Board held a total of 978,960 (2009: 901,500) stock options and convertible bonds of Fresenius SE & Co. KGaA and 598,870 (2009: 703,416) stock options and convertible bonds of FMC-AG & Co. KGaA.

LONG-TERM INCENTIVE COMPONENTS


  Stock options1 Postponed performance-related compensation2 Total
  Number Value, € in thousands Value, € in thousands Value, € in thousands
  2010 2009 2010 2009 2010 2009 2010 2009
1 Stock options that were granted in 2010 and 2009 under the Fresenius SE & Co. KGaA stock option plan. Dr. Ben Lipps received stock options under the Fresenius Medical Care stock option plan.
2 The details for Dr. Ben Lipps refer to a stock-based compensation with cash settlement.
Dr. Ulf M. Schneider 56,760 51,600 733 425 174 0 907 425
Rainer Baule 28,380 25,800 367 213 241 0 608 213
Dr. Francesco De Meo 28,380 25,800 367 213 131 0 498 213
Dr. Jürgen Götz 28,380 25,800 367 213 98 0 465 213
Dr. Ben Lipps 99,600 99,600 804 761 391 341 1,195 1,102
Stephan Sturm 28,380 25,800 367 213 208 0 575 213
Dr. Ernst Wastler 28,380 25,800 367 213 95 0 462 213
Total 298,260 280,200 3,372 2,251 1,338 341 4,710 2,592

  Stock options1 Postponed performance-related compensation2 Total
  Number Value, € in thousands Value, € in thousands Value, € in thousands
  2010 2009 2010 2009 2010 2009 2010 2009
1 Stock options that were granted in 2010 and 2009 under the Fresenius SE & Co. KGaA stock option plan. Dr. Ben Lipps received stock options under the Fresenius Medical Care stock option plan.
2 The details for Dr. Ben Lipps refer to a stock-based compensation with cash settlement.
Dr. Ulf M. Schneider 56,760 51,600 733 425 174 0 907 425
Rainer Baule 28,380 25,800 367 213 241 0 608 213
Dr. Francesco De Meo 28,380 25,800 367 213 131 0 498 213
Dr. Jürgen Götz 28,380 25,800 367 213 98 0 465 213
Dr. Ben Lipps 99,600 99,600 804 761 391 341 1,195 1,102
Stephan Sturm 28,380 25,800 367 213 208 0 575 213
Dr. Ernst Wastler 28,380 25,800 367 213 95 0 462 213
Total 298,260 280,200 3,372 2,251 1,338 341 4,710 2,592

The development and the status of the stock options of the Management Board in the fiscal year 2010 are shown in the following table:


  Dr. Ulf M. Schneider Rainer Baule Dr. Francesco De Meo Dr. Jürgen Götz Dr. Ben Lipps1 Stephan Sturm Dr. Ernst Wastler Total2
1 Dr. Ben Lipps holds stock options under the Fresenius Medical Care stock option plan.
2 Only stock options and convertible bonds of Fresenius SE & Co. KGaA, excluding stock options of Dr. Ben Lipps
Options outstanding on January 1, 2010                
number 322,500 187,050 81,600 88,530 703,416 139,320 82,500 901,500
average exercise price in € 36.65 34.42 46.66 46.74 28.44 41.63 44.04 39.53
Options granted during fiscal year                
number 56,760 28,380 28,380 28,380 99,600 28,380 28,380 198,660
average exercise price in € 53.44 53.44 53.44 53.44 42.68 53.44 53.44 53.44
Options exercised during fiscal year                
number 43,860 47,730 0 29,610 204,146 0 0 121,200
average exercise price in € 13.59 17.31   46.77 24.49     23.16
average stock price in € 64.91 59.71   64.44 43.14     62.75
Options outstanding on December 31, 2010                
number 335,400 167,700 109,980 87,300 598,870 167,700 110,880 978,960
average exercise price in € 42.51 42.51 48.41 48.90 32.15 43.63 46.44 44.38
average remaining life in years 5.3 5.3 5.7 5.6 4.4 5.4 5.5 5.4
range of exercise prices in € 21.33 to 57.27 21.33 to 57.27 36.89 to 57.27 36.89 to 57.27 14.47 to 42.68 29.92 to 57.27 21.33 to 57.27 21.33 to 57.27
Exercisable options on December 31, 2010                
number 160,820 80,410 25,000 10 300,070 80,410 27,400 374,050
average exercise price in € 35.56 35.56 47.49 57.27 27.61 37.91 40.11 37.20

  Dr. Ulf M. Schneider Rainer Baule Dr. Francesco De Meo Dr. Jürgen Götz Dr. Ben Lipps1 Stephan Sturm Dr. Ernst Wastler Total2
1 Dr. Ben Lipps holds stock options under the Fresenius Medical Care stock option plan.
2 Only stock options and convertible bonds of Fresenius SE & Co. KGaA, excluding stock options of Dr. Ben Lipps
Options outstanding on January 1, 2010                
number 322,500 187,050 81,600 88,530 703,416 139,320 82,500 901,500
average exercise price in € 36.65 34.42 46.66 46.74 28.44 41.63 44.04 39.53
Options granted during fiscal year                
number 56,760 28,380 28,380 28,380 99,600 28,380 28,380 198,660
average exercise price in € 53.44 53.44 53.44 53.44 42.68 53.44 53.44 53.44
Options exercised during fiscal year                
number 43,860 47,730 0 29,610 204,146 0 0 121,200
average exercise price in € 13.59 17.31   46.77 24.49     23.16
average stock price in € 64.91 59.71   64.44 43.14     62.75
Options outstanding on December 31, 2010                
number 335,400 167,700 109,980 87,300 598,870 167,700 110,880 978,960
average exercise price in € 42.51 42.51 48.41 48.90 32.15 43.63 46.44 44.38
average remaining life in years 5.3 5.3 5.7 5.6 4.4 5.4 5.5 5.4
range of exercise prices in € 21.33 to 57.27 21.33 to 57.27 36.89 to 57.27 36.89 to 57.27 14.47 to 42.68 29.92 to 57.27 21.33 to 57.27 21.33 to 57.27
Exercisable options on December 31, 2010                
number 160,820 80,410 25,000 10 300,070 80,410 27,400 374,050
average exercise price in € 35.56 35.56 47.49 57.27 27.61 37.91 40.11 37.20

The following table shows the total compensation of the Management Board of the general partner of Fresenius SE & Co. KGaA for the years 2010 and 2009:

  Cash compensation (without long-term incentive components) Long-term incentive components Total compensation (including long-term incentive components)
€ in thousands 2010 2009 2010 2009 2010 2009
Dr. Ulf M. Schneider 1,855 1,888 907 425 2,762 2,313
Rainer Baule 1,150 1,266 608 213 1,758 1,479
Dr. Francesco De Meo 1,016 986 498 213 1,514 1,199
Dr. Jürgen Götz 869 777 465 213 1,334 990
Dr. Ben Lipps 2,431 2,311 1,195 1,102 3,626 3,413
Stephan Sturm 1,159 1,242 575 213 1,734 1,455
Dr. Ernst Wastler 918 875 462 213 1,380 1,088
Total 9,398 9,345 4,710 2,592 14,108 11,937

  Cash compensation (without long-term incentive components) Long-term incentive components Total compensation (including long-term incentive components)
€ in thousands 2010 2009 2010 2009 2010 2009
Dr. Ulf M. Schneider 1,855 1,888 907 425 2,762 2,313
Rainer Baule 1,150 1,266 608 213 1,758 1,479
Dr. Francesco De Meo 1,016 986 498 213 1,514 1,199
Dr. Jürgen Götz 869 777 465 213 1,334 990
Dr. Ben Lipps 2,431 2,311 1,195 1,102 3,626 3,413
Stephan Sturm 1,159 1,242 575 213 1,734 1,455
Dr. Ernst Wastler 918 875 462 213 1,380 1,088
Total 9,398 9,345 4,710 2,592 14,108 11,937

The stock options and the entitlement to a stock-based compensation 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 2010 and 2009 are stated in the following table.

  Expenses for long-term incentive components
€ in thousands 2010 2009
Dr. Ulf M. Schneider 681 694
Rainer Baule 341 347
Dr. Francesco De Meo 268 171
Dr. Jürgen Götz 327 289
Dr. Ben Lipps 1,739 1,857
Stephan Sturm 341 357
Dr. Ernst Wastler 268 171
Total 3,965 3,886

  Expenses for long-term incentive components
€ in thousands 2010 2009
Dr. Ulf M. Schneider 681 694
Rainer Baule 341 347
Dr. Francesco De Meo 268 171
Dr. Jürgen Götz 327 289
Dr. Ben Lipps 1,739 1,857
Stephan Sturm 341 357
Dr. Ernst Wastler 268 171
Total 3,965 3,886

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