Report of the Supervisory Board

In 2019, the Supervisory Board of Fresenius SE & Co. KGaA fulfilled its obligations in accordance with the provisions of the law, the articles of association, and the rules of procedure. It regularly advised the Management Board of the general partner, Fresenius Management SE, regarding the management of the Company and supervised the management in accordance with its Supervisory Board responsibilities.

Cooperation between the management and the Supervisory Board

Carrying out its monitoring and advisory activities, the Supervisory Board was regularly kept informed by the management in a timely and comprehensive oral and written manner about, among other things:

  • all important matters relating to business policy,
  • the course of business,
  • profitability,
  • the situation of the Company and of the Group,
  • corporate strategy and planning,
  • the risk situation,
  • risk management and compliance, and
  • important business events.

Based on the reports provided by the Management Board of the general partner, the Supervisory Board discussed all ­significant business transactions in both the Audit Committee and in its plenary meetings. The Management Board of the general partner discussed the Company’s strategic direction with the Supervisory Board. The Supervisory Board passed resolutions within its legal and Company statutory authority.

The Supervisory Board of Fresenius SE & Co. KGaA convened for four regular meetings in 2019 – in March, May, October, and December. Before the meetings, the Management Board of the general partner sent detailed reports and comprehensive approval documents to the members of the Supervisory Board. At the meetings, the Supervisory Board discussed in detail the sales and earnings growth, based on the reports provided by the general partner’s Management Board. They also discussed significant Company decisions.

All matters requiring Supervisory Board approval were submitted with sufficient time for proper scrutiny. After reviewing the related approval documents and following detailed consultation with the Management Board of the general partner, the Supervisory Board approved all matters submitted to it.

The Supervisory Board was also informed about any important business events occurring between meetings. In addition, the Chairman of the general partner’s Management Board regularly informed the Chairman of the Supervisory Board in separate meetings about the latest development of the business and forthcoming decisions and discussed them with him.

With the exception of Prof. Dr. Löw-Friedrich and Ms. Stars, both of whom were unable to attend the Super­visory Board meeting in December, all of the meetings of the Supervisory Board and the Audit Committee in 2019 were attended by all current members of the Supervisory Board and the Audit Committee of Fresenius SE & Co. KGaA. Thus, every member of the Supervisory Board of Fresenius SE & Co. KGaA attended more than half of the Supervisory Board Meetings and meetings of the committees to which they belong in 2019.

Participation in meetings of the Supervisory Board and the Audit Committee is reported individually for each member on the Company’s website. Information on this can be found under “Supervisory Board”.

Main focus of the Supervisory Board’s activities

In 2019, the Supervisory Board mostly focused its monitoring and consulting activities on business operations and investments carried out by the business segments. The Supervisory Board thoroughly reviewed and discussed all business activ­ities of significance to the Company with the Management Board of the general partner. The Supervisory Board also dealt with the following items:

  • 2020 budget
  • medium-term planning of the Fresenius Group
  • business segment strategies (particularly the business outlook for Fresenius Kabi and Fresenius Vamed)
  • completion of the FCPA investigation at Fresenius Medical Care

At its meetings and within the Audit Committee, the Super­visory Board also kept itself regularly informed about the Group’s risk situation and risk management activities as well as compliance.

At the meeting on March 14, 2019, the Supervisory Board dealt intensively with the audit and approval of the financial statements, the consolidated financial statements (IFRS) as well as the management report and Group management report of Fresenius SE & Co. KGaA. The results for 2018 were discussed on the basis of a detailed report provided by the Chairman of the Audit Committee and statements by the auditor. At the same meeting, a resolution was passed on profit distribution proposed by the general partner, Fresenius Management SE, and the Group Non-financial Report for 2018. In addition, the business segments reported in detail on the course of business in the first two months of the fiscal year. The focus was on Fresenius Kabi. The final planning for the years 2019 to 2021 was also presented. Another item discussed was the agenda of the Annual General Meeting of Fresenius SE & Co. KGaA on May 17, 2019. Finally, the Supervisory Board conducted its annual efficiency review at this meeting.

At its meeting on May 17, 2019, immediately following the Annual General Meeting, the Supervisory Board passed resolutions on the appointment of the auditor of the annual and consolidated financial statements as well as the auditor of the Group Non-financial Report for 2019. In addition, the Management Board reported on business performance for the months January through April 2019.

At the Supervisory Board meeting on October 11, 2019, the members of the Supervisory Board were informed in detail about business performance from January through September 2019. The focus was on the Fresenius Vamed business segment. The Management Board of the general partner reported on the conclusion of the FCPA investigation at Fresenius Medical Care, and compliance, regulatory topics, and legal risks. Furthermore, as a precautionary measure to avoid ­possible uncertainties in connection with the announced amendment to the German Corporate Governance Code, a resolution was passed on the declaration of conformity with the German Corporate Governance Code.

The meeting of the Supervisory Board on December 5, 2019, focused on the development of business in 2019. Plans for the years 2020 to 2022 for the Group and separately for all four segments were also presented. The Chairman of the Audit Committee reported in detail on the status of prepa­ration of the financial statements. Furthermore, a resolution was again passed on the declaration of conformity with the German Corporate Governance Code.

Corporate Governance

On October 29, 2019, and December 20, 2019, the Supervisory Board and the Management Board of the general partner jointly issued a Declaration of Conformity in accordance with the German Corporate Governance Code under Section 161 of the German Stock Corporation Act (AktG).

The Management Board of the general partner and the Supervisory Board of Fresenius SE & Co. KGaA 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 secondary activities or dealings with the Company by members of the corporate bodies must immediately be reported to, and approved by, the Supervisory Board.

There were no conflicts of interest of Supervisory Board members in 2019.

There are regular separate preliminary meetings of the employee representatives and consultations among the shareholder representatives.

The members of the Supervisory Board independently take on necessary training and further education measures required for their tasks. They keep themselves regularly informed, through internal and external sources, about the latest requirements with regard to their supervisory activities. The Super­visory Board at all times ensures that its members are suitably qualified, keep their professional knowledge up to date, and further develop their judgment and expertise. Fresenius provi­des appropriate support in this regard. External experts as well as experts from the Company provide information about important developments, for example about relevant new laws and precedents, or changes in the IFRS accounting and auditing standards. In addition, the Company holds an onboarding event for new members of the Supervisory Board.

For more information on Corporate Governance at Fresenius, please see the Corporate Governance Declaration and Report.

Group Non-financial Report

KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, audited the Group Non-financial Report for 2019. This was done in accordance with a resolution of the Supervisory Board of May 17, 2019, and the subsequent appointment.

The Group Non-financial Report and the audit report of the appointed auditor were made available to each member of the Supervisory Board of the Company in good time. At their meetings on March 11 and 12, 2020, the Audit Committee and then the Supervisory Board discussed all the documents in detail.

The auditor delivered a detailed report on the results of the audit at each of these meetings. The Audit Committee and the Supervisory Board approved the auditor’s findings. The Audit Committee’s and the Supervisory Board’s own review also found no objections to the Group Non-financial Report. At its meeting on March 12, 2020, the Supervisory Board approved the Group Non-financial Report presented by the general partner.

The Group Non-financial Report is published on pages 91 to 135 of the Annual Report and the auditor’s findings are published on page 134 f. of the Annual Report.

Work of the committees

The Audit Committee held three meetings and four conference calls in 2019. The main focus of its monitoring activities was on the preliminary audit of the annual financial statements of Fresenius SE & Co. KGaA and the Group for 2018 and discussions with the auditor about their reports and the terms of reference of the audit. Another matter dealt with by the Audit Committee was its recommendation to the Supervisory Board regarding which auditing firm to propose as auditor for the annual financial statements and consolidated financial statements for 2019. The Supervisory Board proposed to the 2019 Annual General Meeting,

a) to elect KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, as auditor of the annual financial statements and consolidated financial statements for the 2019 fiscal year and as auditor for the possible audit review of the half-yearly financial report for the first half of 2019 and other interim financial information within the meaning of Section 115 (7) WpHG for 2019, and

b) to appoint PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, as auditors for the possible review of interim financial information for the 2020 fiscal year prepared before the 2020 Annual General Meeting.

This proposal was based on a recommendation to this effect by the Audit Committee. The Audit Committee also dealt with the following items in detail:

  • the 2019 quarterly reports,
  • monitoring reports on progress of acquisitions,
  • Compliance and Internal Audit with a focus on the accounting-based internal control system of Fresenius Medical Care,
  • review of the risk management system, the internal control system, and the internal auditing system, and
  • approval of non-auditing services provided by KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin.

The Chairman of the Audit Committee reported regularly in subsequent Supervisory Board meetings on the work of the committee.

The Chairman of the Audit Committee maintains a regular dialog between the Supervisory Board and the Audit Committee, on the one hand, and auditors, on the other, even outside of meetings.

The Company’s Nomination Committee did not meet in 2019.

The Joint Committee is responsible for approving certain important transactions of Fresenius SE & Co. KGaA and certain legal transactions between the Company and the Else Kröner-Fresenius-Stiftung. In 2019, no transactions were carried out that required its approval. For this reason, it did not meet in 2019.

There is no Mediation Committee because the Supervisory Board of Fresenius SE & Co. KGaA does not appoint the Management Board members of Fresenius Management SE.

For more information about the committees, their com­position, and their work methods, please refer to the Corporate Governance Declaration and Report.

Personnel

Dr. Karl Schneider resigned from the Joint Committee as of December 31, 2019. Mr. Klaus-Peter Müller was appointed his successor with effect from January 1, 2020. Otherwise, there were no changes to the composition of the Management Board of the general partner Fresenius Management SE and the Supervisory Board of Fresenius SE & Co. KGaA and its committees in 2019.

Financial statements and consolidated financial statements

KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, audited the accounting records, the annual financial statements prepared in accordance with the accounting principles of the German Commercial Code (HGB), and the Company’s management report for 2019. The firm was elected as auditor in accordance with a resolution passed at the Annual General Meeting of Fresenius SE & Co. KGaA on May 17, 2019, and was subsequently commissioned by the Supervisory Board. The Company’s financial statements, management report, and the consolidated financial statements were prepared in accordance with IFRS accounting principles and with the regulations governing such statements under Section 315e of the German Commercial Code (HGB). The auditors of KPMG issued their unqualified audit opinion for these statements.

The financial statements, the consolidated financial statements, the management reports, and the auditor’s reports were submitted to each member of the Company’s Supervisory Board within the required time. At their meetings on March 11 and 12, 2020, the Audit Committee and then the Supervisory Board discussed all the documents in detail.

The auditor gave a detailed report on the results of the audit at each of these meetings. The auditor found no weaknesses in the risk management system or the internal control system with regard to the accounting process. The auditor attended all meetings of the Supervisory Board and all meetings and conference calls of the Audit Committee.

The Audit Committee and the Supervisory Board approved the auditor’s findings. Independent reviews by the Audit Committee and the Supervisory Board raised no objections to the Company’s financial statements and management report or the consolidated financial statements and the Group management report. At its meeting on March 12, 2020, the Supervisory Board approved the financial statements and management reports presented by the general partner and the statements contained therein with respect to future development.

The Supervisory Board concurs with the general partner’s proposal for the 2019 profit distribution.

The Supervisory Board would like to thank the members of the Management Board of the general partner and all employees for their achievements.

Bad Homburg v. d. H., March 12, 2020

The Supervisory Board of Fresenius SE & Co. KGaA

Dr. Gerd Krick

Chairman