Report of the Supervisory Board

Chairman Supervisory Board Dr. Gerd Krick (picture)

In 2009, the Supervisory Board performed the duties assigned to it by law and by the Company’s Statutes, regularly advising and monitoring the Management Board. It was closely involved in all decisions that were of major importance to the Group.


Carrying out its monitoring and advisory activities, the Supervisory Board was kept regularly informed by the Management Board – in a timely manner and comprehensively, both in writing and orally – about the business development, economic and financial position, and profitability of the Company and the Group the corporate strategy and planning, risk situation, risk management and compliance, and important business events. In all, the Supervisory Board of Fresenius SE convened for four regular meetings in 2009, in March, May, October, and December. Detailed Management Board reports and comprehensive approval documents concerning the agenda were distributed to members of the Supervisory Board before all its meetings. At each of its regular meetings, the Supervisory Board used the Management Board’s reports as the basis for its comprehensive discussions about business development and important corporate decisions. All matters requiring Supervisory Board approval were submitted with sufficient time for proper scrutiny. After reviewing the related approval documents and detailed consultation with the Management Board, the Supervisory Board was able to give its approval in all matters submitted to it. The Supervisory Board was also informed about any important business events occurring between meetings and, in urgent cases, was requested to pass resolutions by written proceeding in lieu of a meeting. In addition, the Chairman of the Management Board regularly informed the Chairman of the Supervisory Board in individual discussions about the latest business developments and forthcoming decisions. Every member of the Supervisory Board attended at least half of the Supervisory Board meetings during their term of office in 2009.


The Supervisory Board’s monitoring and advisory activities were mainly centered on overall business operations as well as investments and the integration of recent acquisitions – especially APP Pharmaceuticals in the United States – in the business segments. The Supervisory Board thoroughly reviewed and discussed all other significant business activities with the Management Board. It approved the budget for 2010 and the Fresenius Group’s mid-term planning, following a detailed review and discussions with the Management Board. At its regular meetings and within the Audit Committee, the Supervisory Board also kept itself informed about the Group’s risk situation and risk management activities as well as compliance.


Further development of corporate governance at Fresenius was reviewed by the Supervisory Board. It took note of the Act on the Appropriateness of Executive Board Compensation (Gesetz zur Angemessenheit der Vorstandsvergütung – VorstAG) that came into force in Germany on August 5, 2009. In light of this new legislation, the Supervisory Board resolved to limit the duties of the Personnel Committee to preparing proposals in respect of the compensation system for the Management Board and the compensation of individual members of the Management Board and to resolving non-compensation-related terms of the contracts with the members of the Management Board. In addition, the Supervisory Board engaged experts to examine the appropriateness of the Management Board’s compensation and whether the new provisions of the VorstAG stipulating that management compensation be oriented to sustainable long-term corporate performance might require a modification of the Management Board contracts. On May 8, 2009, the Management Board and the Supervisory Board jointly issued a Declaration of Conformity in accordance with the German Corporate Governance Code in its version as of June 6, 2008.

For more information on corporate governance at Fresenius, please see the Corporate Governance Declaration.

The Management Board and the Supervisory Board of Fresenius SE have a duty to act in the best interests of the Company. In performing their activities, they do not pursue personal interests or bestow unjustified benefits on others. Any sideline activities or transactions with the Company by members of the corporate bodies must be reported to, and approved by, the Supervisory Board. The Supervisory Board reports to the Annual General Meeting on any conflicts of interest, and how they are dealt with.

Klaus-Peter Müller, a member of the Supervisory Board of Fresenius SE, is the chairman of the supervisory board of Commerzbank AG. The Fresenius Group maintains business relations with Commerzbank under customary conditions. Dr. Gerhard Rupprecht, a member of the Supervisory Board of Fresenius SE, is a member of the management board of Allianz SE and the chairman of the management board of Allianz Deutschland AG. Dr. Franceso De Meo, member of the Management Board of Fresenius SE, is a member of the supervisory board of Allianz Private Krankenversicherungs-AG. In 2009, the Fresenius Group paid € 7 million for insurance premiums to Allianz (2008: € 7 million).

Consultancy and other service relationships between Supervisory Board members and the Company only existed in the case of Dr. Schenk, who is a member of our Company’s Supervisory Board and is a partner in the international law firm Nörr Stiefenhofer Lutz (as of 2010: Noerr LLP). This law firm provided legal advice to the Fresenius Group in 2009. The Fresenius Group paid € 1 million to this law firm for services rendered in 2009 (2008: € 1 million), corresponding to 1.6 % of the total amount paid for legal advice in 2009. The Supervisory Board and its Audit Committee considered this mandate closely and it was approved by the Supervisory Board. Dr. Schenk did not take part in the voting. There are no other consulting or service contracts between Supervisory Board members and the Company.

There were no conflicts of interest involving members of the Supervisory or Management Boards in 2009. Members are required to notify the Supervisory Board immediately should such conflicts arise.

Fresenius has disclosed the information on related parties in the quarterly reports and in the note 35, Related party transactions.


The Personnel Committee, whose responsibilities now are to prepare proposals on the compensation system for the Management Board and the compensation for the individual members of the Management Board and to resolve the non-compensation-related terms of contracts with members of the Management Board, held two meetings and one conference call.

The Audit Committee held three meetings. There were also four conference calls. The main focus of its controlling activities was on the preliminary audit of the annual financial statements of Fresenius SE and the Group for 2008 and discussions with the auditors about their report and the terms of reference of the audit, paying special heed to APP Pharmaceuticals in the United States. The Audit Committee also reviewed the 2009 quarterly reports, the risk management system, the internal control system, an audit plan as well as the audit results of the internal audit department, and a controlling report on the development of the acquisitions. The Audit Committee also discussed the implications of the Accounting Law Modernization Act (BilMoG) that came into force in Germany on May 29, 2009.

The Supervisory Board delegated the resolutions on the terms of the financing of the APP Pharmaceuticals acquisition to the special “Transaction Financing APP Pharmaceuticals, Inc.” Committee set up for this purpose in 2008. In 2009, this committee held two conference calls and approved the issuance of Senior Notes to replace the bridge financing for the APP Pharmaceuticals acquisition.

The chairmen of the committees reported regularly to the next Supervisory Board meeting on the work of the committees.

The Nomination Committee did not convene. There is no Mediation Committee since the German Co-Determination Act (MitbestG), which provides for this committee, does not apply to Fresenius SE.

Information on the present composition of the committees can be found here.


There were no changes in the composition of the Management Board or the Supervisory Board in 2009.


The accounting records, the financial statements prepared according to the German Commercial Code (HGB) and the Management Report of Fresenius SE for 2009 were audited by KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin. They were elected as auditors at Fresenius SE’s Annual General Meeting on May 8, 2009, and were subsequently commissioned by the Supervisory Board. The auditors issued their unqualified audit opinion for these statements. The same applies to the consolidated financial statements of Fresenius SE prepared according to IFRS accounting principles and to the consolidated financial statements of Fresenius SE prepared voluntarily according to US GAAP.

Management Reports were added to the consolidated financial statements. The financial statements, the consolidated financial statements, the Management Reports, and the auditors’ reports were submitted to each member of the Supervisory Board of Fresenius SE within the required time. The Supervisory Board noted and approved the auditors’ findings. The Supervisory Board’s own review found no objections to the financial statements of Fresenius SE or the consolidated financial statements. The Supervisory Board agrees with the Management Reports and the statements contained therein with respect to future development.

At its meeting on March 12, 2010, the Supervisory Board approved the financial statements of Fresenius SE for 2009 as presented by the Management Board, thereby adopting them as official. The Supervisory Board also approved the consolidated financial statements of Fresenius SE prepared according to IFRS standards and the consolidated financial statements for 2009 prepared voluntarily according to US GAAP.

The auditors delivered a detailed report on the results of the audit during this meeting. They found no weaknesses in the internal control system and risk management with regard to the accounting process. The auditors attended all meetings of the Supervisory Board and the Audit Committee.

The Supervisory Board concurs with the proposal by the Management Board on the appropriation of the 2009 retained earnings.

The Supervisory Board would like to thank the Management Board and all employees for their outstanding achievements in a difficult economic environment.

Bad Homburg v. d. H., March 12, 2010

The Supervisory Board

Dr. Gerd Krick


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