Implementation of the German corporate governance guidelines and Declaration of Conformity

The German Corporate Governance Code (Code) was established to increase confidence in the corporate governance of publicly traded companies. It aims to provide more transparency for domestic and foreign investors on existing regulations covering the management and monitoring of companies. The Management and Supervisory Boards of Fresenius SE support the principles set out in the Code. Our value-enhancing strategies, as well as the majority of the guidelines, recommendations, and proposals for responsible management contained in the Code, have been basic components of our activities for many years. Extensive information on the subject of corporate governance can be found on our website.

The Management and Supervisory Boards of Fresenius SE have issued the following Declaration of Conformity pursuant to Section 161 of the German Stock Corporation Act (AktG) and have made it available to shareholders:

“Declaration by the Management Board and the Supervisory Board of Fresenius SE on the recommendations of the Government Commission on the German Corporate Governance Code as amended on June 18, 2009, pursuant to Section 161 AktG:

The Management Board and the Supervisory Board of Fresenius SE declare that the recommendations of the “Government Commission on the German Corporate Governance Code” published by the Federal Ministry of Justice (Justizministerium) in the official section of the electronic Federal Gazette (Bundesanzeiger) are being complied with and that they were complied with in the past. The Management Board and the Supervisory Board also intend to follow the recommendations of the German Corporate Governance Code in the future. Only the following recommendations have not been or are not being adhered to:

  • Pursuant to clause 5.4.1 of the Code, an age limit should be determined for the members of the Supervisory Board. According to clause 5.1.2 paragraph 2, the same should apply to the members of the Management Board. As in the past, Fresenius will refrain from introducing an age limit for members of the Management Board and the Supervisory Board, as this would generally limit the selection of qualified candidates.
  • Regarding the composition of the Management Board and in respect of the proposals for the election of members to the Supervisory Board (clauses 5.1.2 paragraph 2 and 5.4.1 of the Code), the Supervisory Board of Fresenius SE will, in future, continue to take diversity into account. Already now, the company’s international engagement is borne in mind for both bodies.
  • Pursuant to clause 4.2.3 paragraph 4 of the Code, upon termination of an employment agreement for a Management Board member, it should be ensured that the payments to the Management Board member whose service for the company is prematurely terminated shall not, including all ancillary payments, exceed the value of two annual remunerations (compensation cap) and shall remunerate for no more than the remaining term of the service agreement. The service agreements of the Fresenius SE Management Board members do not include a provision dealing with the early termination of service for the company without cause. Such compensation provision would contradict the concept to conclude the service agreements with the Management Board members for the period of their appointment, such concept practiced by Fresenius since long and in accordance with the German Stock Corporation Act (Aktiengesetz). Applying this concept, any early termination of the service agreement requires cause.
  • Pursuant to clause 3.8 paragraph 2 of the Code, any D & O insurance for the Supervisory Board should provide for a deductible which reflects the mandatory deductible for Management Board members as introduced by the Act on the Appropriateness of Executive Board Compensation (VorstAG). Such deductible amounts to 10 % of the damage, but up to a maximum amount of one and a half times the fixed annual remuneration. The D & O insurance currently taken out for the Fresenius group is a group insurance for a multitude of individuals which does not contain a deductible in the recommended amount. For the Management Board of Fresenius SE, the next periodic renewal of the D & O insurance in July 1, 2010 will provide for a deductible that complies with the requirements of the Act on the Appropriateness of Executive Board Compensation (VorstAG). It has been decided to introduce a corresponding deductible also for the Supervisory Board as from July 1, 2010.

Since the delivery of the last declaration of conformity in May 2009 with the in May 2009 declared and explained divergences from the recommendations pursuant to clauses 4.2.2 paragraph 1, 4.2.3 paragraph 3, 4.2.3 paragraph 4, 5.1.2 paragraph 2 and 5.4.1, Fresenius SE has complied with the recommendations of the “Government Commission on the German Corporate Governance Code” as amended on 6 June, 2008.

Bad Homburg, March 2010
The Supervisory Board       The Management Board

In accordance with clause 3.10 of the Code, this declaration and all past declarations are published on our website at www.fresenius.com in the Who we are / Corporate Governance section, where they can be downloaded.

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